Cases 270-311 Labor

G.R. No.
L-4148 July 16, 1952

MANILA TERMINAL COMPANY, INC., petitioner,
vs.
THE COURT OF INDUSTRIAL RELATIONS and MANILA TERMINAL RELIEF AND MUTUAL AID
ASSOCIATION,respondents.
Fats!
Manila Terminal Company, Inc. hereinafter to be referred as to the petitioner, undertook the arrastre service
in some of the piers in Manila's Port Area at the request and under the control of the nited !tates Army. The
petitioner hired some thirty men as "atchmen on t"elve#hour shifts at a compensation of P$ per day for the
day shift and P% per day for the ni&ht shift.
The "atchmen of the petitioner continued in the service "ith a number of substitutions and additions, their
salaries havin& been raised durin& the month of 'ebruary to P( per day for the day shift and P%.)* per day for
the ni&htshift. The private respondent sent a letter to +epartment of ,abor requestin& that the matter of
overtime pay be investi&ated. -ut nothin& "as done by the +ept of ,abor.
,ater on, the petitioner instituted the system of strict ei&ht#hour shifts.
The private respondent .led an amended petition "ith the Court of Industrial /elations prayin&, amon&
others, that the petitioner be ordered to pay its "atchmen or police force overtime pay from the
commencement of their employment.
-y virtue of Customs Administrative 0rder 1o. 23 and 45ecutive 0rder 1o. ))2 of the President of the
Philippines, the entire police force of the petitioner "as consolidated "ith the Manila 6arvor Police of the
Customs Patrol !ervice, a 7overnment a&ency under the e5clusive control of the Commissioner of Customs
and the !ecretary of 'inance The Manila Terminal /elief and Mutual Aid Association "ill hereafter be referred
to as the Association.
8ud&e 9. 8imene: ;anson of the Court of Industrial /elations in his decision ordered the petitioner to pay to its
police force but re&ards to overtime service after the "atchmen had been inte&rated into the Manila 6arbor
Police, the has no <urisdiction because it a=ects the -ureau of Customs, an instrumentality of the 7overnment
havin& no independent personality and "hich cannot be sued "ithout the consent of the !tate.
The petitioner .led a motion for reconsideration. The Association also .led a motion for reconsideration in so
far its other demands "ere dismissed. -oth resolutions "ere denied.
The public respondent decision "as to pay the private respondents their overtime on re&ular days at the
re&ular rate and additional amount of )* percent, overtime on !undays and le&al holidays at the re&ular rate
only, and "atchmen are not entitled to ni&ht di=erential pay for past services. The petitioner has .led a
present petition for certiorari.
Iss"es!
a. >hether or not the CI/ has no <urisdiction to render a money <ud&ment involvin& obli&ation in arrears.
b. >hether or not the a&reement under "hich its police force "ere paid certain speci.c "a&es for t"elve#hour
shifts, included overtime compensation.
c. >hether or not the Association is barred from recovery by estoppel and laches.
d. >hether or not the nullity or invalidity of the employment contract precludes any recovery by the
Association.
e. "hether or not the Common"ealth Act 1o. (((( does not authori:e recovery of back overtime pay.
Pa&e # of #$%
CASES IN LA&OR STANDARDS 'ARTICLE ()*#+,-

S
S
S
v
s
.
C
A
F
A
C
T
He.d!
The !upreme Court a?rmed the appealed decision that the petitioner's "atchmen "ill be entitled to e5tra
compensation only from the dates they respectively entered the service of the petitioner, hereafter to be duly
determined by the Court of Industrial /elations.
0n the .rst issue, the Court of Industrial /elations has no <urisdiction to a"ard a money <ud&ment "as already
overruled by this Court on the case of +etective @ protective -ureau, Inc. vs. Court of Industrial /elations and
nited 4mployees >elfare Association that under Common"ealth Act 1o. 3A$ the Court is empo"ered to
make the order for the purpose of settlin& disputes bet"een the employer and employee.
0n the second issue, based on the case of +etective @ Protective -ureau, Inc. vs. Court of Industrial /elations
and nited 4mployees >elfare Association, the la" &ives them the ri&ht to e5tra compensation. And they
could not be held to have impliedly "aived such e5tra compensation, for the obvious reason that could not
have e5pressly "aived it.
0n the third issue, the principle of estoppel and the laches cannot "ell be invoked a&ainst the Association. it
"ould be contrary to the spirit of the 4i&ht 6our ,abor ,a", under "hich as already seen, the laborers cannot
"aive their ri&ht to e5tra compensation. If the principle of estoppel and laches is to be applied, the employee
may be compelled to accomplish the same thin& by mere silence or lapse of time, thereby frustratin& the
purpose of la" by indirection.
0n the fourth issue, the employee in renderin& e5tra service at the request of his employer has a ri&ht to
assume that the latter has complied "ith the requirement of the la", and therefore has obtained the required
permission from the +epartment of ,abor. This "as based on the case of 7otamo ,umber Co. vs. Court of
Industrial /elations, "herein both parties are in pari delicto. Moreover, the 4i&ht#6our ,a", in providin& that
Bany a&reement or contract bet"een the employer and the laborer or employee contrary to the provisions of
this Act shall be null avoid ab initio.C
0n the .fth issue, based on 'air ,abor !tandards Act of the nited !tates "hich provides that Bany employer
"ho violates the provisions of section )A% and section )AD of this title shall be liable to the employee or
employees a=ected in the amount of their unpaid minimum "a&es or their unpaid overtime compensation as
the case may be,B E a provision not incorporated in Common"ealth Act 1o. (((, our 4i&ht#6our ,abor ,a".
>e cannot a&ree to the proposition, because sections $ and * of Common"ealth Act ((( e5pressly provides
for the payment of e5tra compensation in cases "here overtime services are required, "ith the result that the
employees or laborers are entitled to collect such e5tra compensation for past overtime "ork. To hold
other"ise "ould be to allo" an employer to violate the la" by simply, as in this case, failin& to provide for
and pay overtime compensation.
'I/!T +I9I!I01
/0.R. No. #++1((. Dee23er #4, 5+++6
SOCIAL SECURITY SYSTEM, petitioner, vs. THE COURT OF APPEALS and CONCHITA
AYALDE, respondents.
SC RULED IN FA7OR OF SSS
Pa&e 5 of #$%
D E C I S I O N
YNARES*SANTIA0O, J.!
In a petition before the !ocial !ecurity Commission, Mar&arita Tana, "ido" of the late I&nacio Tana, !r.,
alle&ed that her husband "as, before his demise, an employee of Conchita Ayalde as a farmhand in the t"o
F)G su&arcane plantations she o"ned Fkno"n as 6da. 1o. Audit -#DA located in Pontevedra, ,a Carlota CityG
and leased from the niversity of the Philippines Fkno"n as 6da. Audit -#3*#M situated in ,a 7ran<a, ,a
Carlota CityG. !he further alle&ed that Tana "orked continuously si5 F%G days a "eek, four F(G "eeks a month,
and for t"elve F3)G months every year bet"een 8anuary 3H%3 to April 3HDH. 'or his labor, Tana alle&edly
received a re&ular salary accordin& to the minimum "a&e prevailin& at the time. !he further alle&ed that
throu&hout the &iven period, social security contributions, as "ell as medicare and employees compensation
premiums "ere deducted from TanaIs "a&es. It "as only after his death that Mar&arita discovered that Tana
"as never reported for covera&e, nor "ere his contributionsJpremiums remitted to the !ocial !ecurity !ystem
F!!!G. Consequently, she "as deprived of the burial &rant and pension bene.ts accruin& to the heirs of Tana
had he been reported for covera&e.
6ence, she prayed that the Commission issue an order directin&K
3. respondents Conchita Ayalde and Antero Ma&hari as her administrator to pay the premium
contributions of the deceased I&nacio Tana, !r. and report his name for !!! covera&eL and
). the !!! to &rant petitioner Mar&arita Tana the funeral and pension bene.ts due her.M3N
The !!!, in a petition#in#intervention, revealed that neither 6da. -#DA nor respondents Ayalde and
Ma&hari "ere re&istered members#employers of the !!!, and consequently, I&nacio Tana, !r. "as never
re&istered as a member#employee. ,ike"ise, !!! records reOected that there "as no "ay of verifyin&
"hether the alle&ed premium contributions "ere remitted since the respondents "ere not re&istered
members#employers. -ein& the a&ency char&ed "ith the implementation and enforcement of the provisions
of the !ocial !ecurity ,a", as amended, the !!! asked the CommissionIs leave to intervene in the case.M)N
In his ans"er, respondent Antero Ma&hari raised the defense that he "as a mere employee "ho "as
hired as an overseer of 6da. -#DA sometime durin& crop years 3H%(#%* to 3HD3#D), and as such, his <ob "as
limited to those de.ned for him by the employer "hich never involved matters relatin& to the !!!. 6ence, he
prayed that the case a&ainst him be dismissed for lack of cause of action.M$N
AYALDE8S CONTENTION! 'or her part, respondent Ayalde belied the alle&ation that I&nacio Tana, !r.
"as her employee, admittin& only that he "as hired intermittently as an independent contractor to plo",
harro", or burro" 6da. 1o. Audit -#3*#M. Tana used his o"n carabao and other implements, and he follo"ed
his o"n schedule of "ork hours. Ayalde further alle&ed that she never e5ercised control over the manner by
"hich Tana performed his "ork as an independent contractor. Moreover, Ayalde averred that "ay back in
3HD3, the niversity of the Philippines had already terminated the lease over 6da. -#3*#M and she had since
surrendered possession thereof to the niversity of the Philippines. Consequently, I&nacio Tana, !r. "as no
lon&er hired to "ork thereon startin& in crop year 3HD3#D), "hile he "as never contracted to "ork in 6da. 1o.
Audit -#DA. !he also prayed for the dismissal of the case considerin& that I&nacio Tana, !r. "as never her
employee.M(N
After hearin& both parties, the !ocial !ecurity Commission issued a /esolution on 8anuary )2, 3H22, the
dispositive portion of "hich readsK
After a careful evaluation of the testimonies of the petitioner and her "itnesses, as "ell as the testimony of
the respondent to&ether "ith her documentary evidences, this Commission .nds that the late I&nacio Tana
"as employed by respondent Conchita Ayalde from 8anuary 3H%3 to March 3HDH. The testimony of the
petitioner "hich "as corroborated by A&aton ,iba"as and Aurelio Tana, co#"orkers of the deceased I&nacio
Tana, su?cienty established the latterIs employment "ith the respondent.
As re&ards respondent Antero Ma&hari, he is absolved from liability because he is a mere employee of
Conchita Ayalde.
P/4MI!4! C01!I+4/4+, this Commission .nds and so holds that the late I&nacio Tana had been employed
continuously from 8anuary 3H%3 to March 3HDH in 6da. -#DA and 6da. -#3*#M "hich are o"ned and leased,
Pa&e 1 of #$%
respectively, by respondent Conchita FConcepcionG Ayalde "ith a salary based on the Minimum >a&e
prevailin& durin& his employment.
1ot havin& reported the petitionerIs husband for covera&e "ith the !!!, respondent Conchita FConcepcionG
Ayalde is, therefore, liable for the payment of dama&es equivalent to the death bene.ts in the amount of
PD,A%D.(A plus the amount of PD*A.AA representin& funeral bene.t or a total of PD,23D.(A.
'urther, the !!! is ordered to pay to the petitioner her accrued pension coverin& the period after the *#year
&uaranteed period correspondin& to the employerIs liability.
!0 0/+4/4+.CM*N
/espondent Ayalde .led a motion for reconsiderationM%N"hich the Commission denied for lack of merit in
an 0rder dated 1ovember $, 3H22.MDN
1ot satis.ed "ith the CommissionIs rulin&, Ayalde appealed to the Court of Appeals, docketed as CA#7./.
!P 1o. 3%()D, raisin& the follo"in& assi&nment of errorsK
I
The !ocial !ecurity Commission erred in not .ndin& that there is su?cient evidence to sho" thatK
FaG The deceased I&nacio Tana, !r. never "orked in the farmland of respondent#appellant situated in
Pontevedra, ,a Carlota City, other"ise kno"n as 6acienda 1o. Audit -#DA, FPontevedra -#DA 'arm for shortG,
in any capacity, "hether as a daily or monthly laborer or as independent contractorL ISSUE! >64T64/ 0/
10T TA1A I! A1 4MP,0;44 0' C01C6ITA A;A,+4P ;es.
FbG +urin& the time that respondent#appellant "as leasin& a portion of the land of the niversity of the
Philippines, other"ise kno"n as 6acienda Audit 1o. -#3*#M, F,a 7ran<a -#3* 'arm for shortG, the deceased
I&nacio Tana, !r. "as hired thereat on a Qpakya"I basis, or as an independent contractor, performin& the
services of an QaradorI FPlo"erG, for "hich he "as pro.cient, usin& his o"n carabao and farmin& implements
on his o"n time and discretion "ithin the period demanded by the nature of the <ob contracted.
II
The !ocial !ecurity Commission erred in holdin& that there is no evidence "hatsoever to sho" that
respondent#appellant "as no lon&er leasin& ,a 7ran<a -#3* 'arm.
III
The !ocial !ecurity Commission erred in not holdin& that the deceased I&nacio Tana, havin& been hired as an
independent contractor on Qpakya"I basis, did not fall "ithin the covera&e of the !ocial !ecurity ,a".M2N
>64T64/ 0/ 10T TA1A, A! A1 I1+4P41+41T C01T/ACT0/ 'A,,! >IT6I1 T64 C094/A74 0' T64 !! ,A>
CA DECISION! The Court of Appeals rendered <ud&ment in favor of respondent#appellant Conchita
Ayalde and dismissed the claim of petitioner Mar&arita Tan.
The !!!, as intervenor#appellee, .led a Motion for /econsideration, "hich "as denied on the &round that
the ar&uments advanced are Rmere reiterations of issues and ar&uments already considered and passed upon
in the decision in question "hich are utterly insu?cient to <ustify a modi.cation or reversal of said
decision.CMHN
6ence, this petition for revie" on certiorari on the follo"in& assi&ned errorsK
Pa&e 4 of #$%
3G The Court of Appeals "as in error in rulin& that an employee "orkin& under the RpakyawC
system is considered under the la" to be an independent contractor.
)G The Court of Appeals "as in error in not &ivin& due consideration to the fundamental tenet that
doubts in the interpretation and implementation of labor and social "elfare la"s should be
resolved in favor of labor.
$G The Court of Appeals "as in error in disre&ardin& the settled rule that the factual .ndin&s of
administrative bodies on matters "ithin their competence shall not be disturbed by the courts.
(G The Court of Appeals "as in error in rulin& that even &rantin& ar&uendo that I&nacio Tana "as
employed by Conchita Ayalde, such employment did not entitle him to compulsory covera&e
since he "as not paid any re&ular daily "a&e or basic pay and he did not "ork for an
uninterrupted period of at least si5 months in a year in accordance "ith !ection 2F<G F3G of the !!
,a".
T9e pivota. iss"e to be resolved in this petition is "hether or not an a&ricultural laborer "ho "as hired
on RpakyawC basis can be considered an employee entitled to compulsory covera&e and correspondin&
bene.ts under the !ocial !ecurity ,a".
Petitioner, !ocial !ecurity !ystem For !!!G, ar&ues that the deceased I&nacio Tana, !r., "ho "as hired by
Conchita Ayalde on RpakyawC basis to perform speci.c tasks in her su&arcane plantations, should be
considered an employeeL and as such, his heirs are entitled to pension and burial bene.ts.
The Court of Appeals, ho"ever, ruled other"ise, reversin& the rulin& of the !ocial !ecurity Commission
and declarin& that the late I&nacio Tana, !r. "as an independent contractor, and in the absence of an
employer#employee relationship bet"een Tana and Ayalde, the latter cannot be compelled to pay to his heirs
the burial and pension bene.ts under the !! ,a".
At the outset, "e reiterate the "ell#settled doctrine that the e5istence of an employer#employee
relationship is ultimately a question of fact.M3AN And "hile it is the &eneral rule that factual issues are not
"ithin the province of the !upreme Court, said rule is not "ithout e5ception. In cases, such as this one,
"here there are conOictin& and contradictory .ndin&s of fact, this Court has not hesitated to scrutini:e the
records to determine the facts for itself.M33N 0ur disquisition of the facts shall be our &uide as to "hose
.ndin&s are supported by substantial evidence.
The mandatory covera&e under the !!! ,a" F/epublic Act 1o. 33%3, as amended by P+ 3)A) and P+
3%$%G is premised on the e5istence of an employer#employee relationship, and !ection 2FdG de.nes an
RemployeeC as Rany person "ho performs services for an employer in "hich either or both mental and
physical e=orts are used and "ho receives compensation for such services "here there is an employer#
employee relationship.C The essential elements of an employer#employee relationship areK FaG the selection
and en&a&ement of the employeeL FbG the payment of "a&esL FcG the po"er of dismissalL and FdG the po"er of
control "ith re&ard to the means and methods by "hich the "ork is to be accomplished, "ith the po"er of
control bein& the most determinative factor.M3)N
There is no question that Tana "as selected and his services en&a&ed by either Ayalde herself, or by
Antero Ma&hari, her overseer. Corollarily, they also held the prero&ative of dismissin& or terminatin& TanaIs
employment. The dispute is in the question of payment of "a&es. Claimant Mar&arita Tana and her
corroboratin& "itnesses testi.ed that her husband "as paid daily "a&es Rper quincenaC as "ell as on
RpakyawC basis. Ayalde, on the other hand, insists that Tana "as paid solely on RpakyawC basis. To support
her claim, she presented payrolls coverin& the period 8anuary of 3HD( to 8anuary of 3HD%LM3$N and 1ovember
of 3HD2 to May of 3HDH.M3(N
A careful perusal of the records readily sho" that the e5hibits o=ered are not complete, and are but a
mere samplin& of payrolls. >hile the names of the supposed laborers appear therein, their si&natures are
no"here to be found. And "hile they cover the years 3HD*, 3HD% and portions of 3HD2 and 3HDH, they do not
cover the 32#year period durin& "hich Tana "as supposed to have "orked in AyaldeIs plantations. Also an
admitted fact is that these e5hibits only cover 6da. -DA, Ayalde havin& averred that all her records and
payrolls for the other plantation F6da. -#3*#MG "ere either destroyed or lost.M3*N
Pa&e % of #$%
To our mind, these documents are not only sadly lackin&, they are also un"orthy of credence. The fact
that TanaIs name does not appear in the payrolls for the years 3HD*, 3HD% and part of 3HD2 and 3HDH, is no
proof that he did not "ork in 6da. -DA in the years 3H%3 to 3HD(, and the rest of 3HD2 and 3HDH. The
veracity of the alle&ed documents as payrolls are doubtful considerin& that the laborers named therein never
a?5ed their si&natures to sho" that they actually received the amounts indicated correspondin& to their
names. Moreover, no record "as sho"n pertainin& to 6da. -#3*#M, "here Tana "as supposed to have
"orked. 4ven Ayalde admitted that she hired Tana as RaraorC and sometimes as laborer durin& millin& in
6da. -#3*#M.M3%N In li&ht of her incomplete documentary evidence, AyaldeIs denial that Tana "as her
employee in 6da. -#DA or 6da. -#3*#M must fail.
In contrast to AyaldeIs evidence, or lack thereof, is Mar&arita TanaIs positive testimony, corroborated by
t"o F)G other "itnesses. 0n the matter of "a&es, they testi.ed as follo"sK
Mar&arita TanaK
S. +urin& the employment of your late husband, "as he paid any "a&esP
A. ;es, he "as paid.
S. >hat "as the manner of payment of his salary, "as it on Rpakya"C or daily basisP
A. +aily basis.
S. 6o" many times did he receive his salary in a monthIs timeP
A. ) times.
S. ;ou mean, payday in 6da. -#DA is every 3* daysP
A. ;es, sir.
5 5 5 5 5 5 5 5 5
ATT;. 7A,9A1K
To prove that it is material to the main question because if ever the hacienda maintains complete payrolls
of their employees, then the burden of proof lies in the petitionerT..
64A/I17 0''IC4/K
,et the "itness ans"er, if she kno"s.
>IT14!!K
There "as no payroll, only pad paper.
ATT;. 7A,9A1K Fcontinuin&G
S. >ere the names of "orkers of the hacienda all listed in that pad paper every paydayP
A. ;es, "e <ust si&n on pad paper because "e have no payroll to be si&ned.
5 5 5 5 5 5 5 5 5
S. >hat do you understand by payrollP
Pa&e ) of #$%
A. Payroll is the list "here the "hole laborers are listed and receive their salaries.
S. And ho" did that di=er from the pad paper "hich you said you si&nedP
A. There is a di=erence.
S. >hat is the di=erenceP
A. In the payroll, at the end there is a column for si&nature but in the pad paper, "e only si&n directly.
S. +id it contain the amount that you receiveP
A. ;es, sir.
S. And the date correspondin& to the payroll padP
A. I am not sure but it only enumerates our names and then "e "ere &iven our salaries.
S. 1o", did you have a copy of thatP
ATT;. 7A,9A1K
0b<ection, ;our 6onor, it is not the petitioner "ho had a copy, it is usually the o"ner because the
preparation of the payrolls is done by the employer "hoT..
ATT;. 17C0K
That is "hy IIm askin& T..
64A/I17 0''IC4/K
,et the "itness ans"er. 0b<ection overruled.
>IT14!!K
I donIt have.
5 5 5 5 5 5 5 5 5
S. >hen you are receivin& daily "a&e of P(.AA ho" much "as your quincenal to&ether "ith your
husbandP
A. The hi&hest salary I received for my o"n "as P$A.AA in one quincena.
S. >hat about the salary of your husband, ho" muchP
A. The same.
S. >as this P$A.AA per quincena later on increasedP
A. There "as an increase because formerly it "as P(.AA no" it is P2.AA.
S. In 3HDH ho" much "as your husbandIs salary per quincenaP
Pa&e $ of #$%
A. In one quincena my husband receives P%A.AA "hile I only receive P$A.AA.M3DN
A7AT01 ,I-A>A!K
S. +urin& your employment, do you si&n payrolls everytime you dra" your salaryP
A. >e si&n on intermediate pad.
S. ;ou mean, the practice of the hacienda is to have the names of the laborers receivin& that salaries
listed on that intermediate padP
A. ;es, sir.M32N
A/4,I0 TA1AK
S. -y the "ay, ho" many times did you receive your salaries in a monthP
A. >e receive our "a&es t"ice a month that is, every 3* days.
S. +id you si&n payrolls everytime you received your salariesP
A. In the pad paper as substitute payroll.
S. +o you kno" if all the "orkers of the hacienda "ere listed in that payrollsP
A. ;es, sir.
S. >ho "as in char&e in &ivin& your salariesP
A. Antero Ma&hari.M3HN
These "itnesses did not "aver in their assertion that "hile Tana "as hired by Ayalde as an RaraorC on
RpakyawC basis, he "as also paid a daily "a&e "hich AyaldeIs overseer disbursed every .fteen F3*G days. It
is also undisputed that they "ere made to ackno"led&e receipt of their "a&es by si&nin& on sheets of ruled
paper, "hich are di=erent from those presented by Ayalde as documentary evidence. In .ne, "e .nd that the
testimonies of Mar&arita Tana, A&aton ,iba"as and Aurelio Tana prevail over the incomplete and inconsistent
documentary evidence of Ayalde.
In the parallel case of !pulencia "ce #lant an $tora%e &. NLR', the petitioners ar&ued that since Manuel
P. 4sitaIs name does not appear in the payrolls of the company it necessarily means that he "as not an
employee. This Court heldK
RPetitioners further ar&ue that Qcomplainant miserably failed to present any documentary evidence to prove
his employment. There "as no timesheet, pay slip andJor payrollJcash voucher to speak of. Absence of these
material documents are necessarily fatal to complainantIs cause.I
>e do not a&ree. 1o particular form of evidence is required to prove the e5istence of an employer#employee
relationship. Any competent and relevant evidence to prove the relationship may be admitted. 'or, if only
documentary evidence "ould be required to sho" that relationship, no schemin& employer "ould ever be
brou&ht before the bar of <ustice, as no employer "ould "ish to come out "ith any trace of the ille&ality he
has authored considerin& that it should take much "ei&htier proof to invalidate a "ritten
instrument. Thus, as in this case "here the employer#employee relationship bet"een petitioners and 4sita
"as su?ciently proved by testimonial evidence, the absence of time sheet, time record or payroll has
become inconsequential.CM)AN Fnderscorin& oursG
Clearly, then, the testimonial evidence of the claimant and her "itnesses constitute positive and credible
evidence of the e5istence of an employer#employee relationship bet"een Tana and Ayalde. As the employer,
the latter is duty#bound to keep faithful and complete records of her business a=airs, not the least of "hich
Pa&e ( of #$%
"ould be the salaries of the "orkers. And yet, the documents presented have been selective, fe" and
incomplete in substance and content. Consequently, Ayalde has failed to convince us that, indeed, Tana "as
not her employee.
The ar&ument is raised that Tana is an independenent contractor because he "as hired and paid "a&es
on RpakyawC basis. >e .nd this assertion to be specious for several reasons.
'irst, "hile Tana "as sometimes hired as an RaraorC or plo"er for intermittent periods, he "as hired to
do other tasks in AyaldeIs plantations. Ayalde herself admitted as much, althou&h she minimi:ed the e5tent
of TanaIs labors. 0n the other hand, the claimant and her "itnesses "ere direct and .rm in their testimonies,
to "itK
MA/7A/ITA TA1AK
S. >as your late husbandIs "ork continuous or notP
A. 6is "ork "as continuous e5cept on !undays.
S. Mrs. >itness, in 8anuary 3H%3, ho" many days in a "eek did your late husband "orkP
A. ( "eeks in 8anuary 3H%3.
S. And ho" many months for that year did he "orkP
A. 3) months.
S. Is this "orkin& pattern of your husband, considerin& that you testi.ed that he "orked continuously,
the same all throu&hout his employment from 3H%3 to 3HD2P
A. ;es, he "orked continuously from 3H%3 to 3HD2 for % days a "eek, ( "eeks a month and 3) months
each year.
S. Mrs. >itness, ho" many months did your husband "ork in 3HDH considerin& that he died in 3HDHP
A. $ months.
S. >hat "as the nature of the "ork of your late husband from 3H%3 until his death in 3HDHP
A. Cuttin& canes, haulin& canes "ith the use of canecarts, plo"in&, haulin& fertili:ers, "eedin& and
stubble cleanin&.
5 5 5 5 5 5 5 5 5
S. 1o", the other co#"orkers of yours, you said they "ere A&aton ,iba"as, 1arciso +ueUas, 8uan
+ueUas, and Aurelio Tana, "hat "ere their <obsP
A. 6aulin& canes by the use of bull carts and cuttin& canes. Their "orks are the same "ith that of my
husbandIs.
S. -ut you mentioned amon& the duties of your husband as RaradorC meanin& V plo"in& the .eldsP
A. ;es, he "as also plo"in& because that is one of his duties.M)3N
A7AT01 ,I-A>A!K
S. 6o" about petitioner Mar&arita Tana and the late I&nacio Tana, "ere they re&ular "orkers, or e5tra
Pa&e , of #$%
"orkersP
A. They "ere re&ular "orkers.
S. In your case, Mr. >itness, considerin& that accordin& to you, you are only a relief "orker, please
inform the Commission ho" many months each year from 3H%3 to 3H2( did you "ork in 6da. -#DA
and 6da. -#3*M "ith Conchita AyaldeP
A. +urin& millin& season, I "orked ) months, durin& cultivation if they are short of plo"ers then they
"ould call me to "ork for at least $ months as a plo"er.
S. !o, all in all, each year, from 3H%3 to 3H2( your avera&e "orkin& months in 6da. -#DA and -#3*M are
* months each yearP
A. ;es, sir.
S. Mr. >itness, to prove that you have "orked there, "ill you please inform at least * laborers of 6da. -#
DA and -#3*M of Conchita AyaldeP
A. 8uan +ueUas, 1arciso +ueUas, Aurelio Tana, I&nacio and Mar&arita Tana.
5 5 5 5 5 5 5 5 5
S. >ill you please inform the Commission if the deceased I&nacio Tana "hich is accordin& to you, "as a
re&ular "orker of the ) haciendas, if ho" many months did he "ork durin& lifetime from 3H%3 until he
died in 3HDHP
A. 6is "ork "as continuous.
S. And by continuous you mean he "orked strai&ht 3) months each year e5cept in 3HDHP
A. 6e "orked only for 3A months because the ) months are already preparation for cultivation.
5 5 5 5 5 5 5 5 5
S. And accordin& to you, in a yearIs time, you "orked only for at least * months in 6da. -#DA and -#3*M,
is that correctP
A. ;es.
S. And durin& this time that you are "orkin& in your riceland you "ill a&ree "ith me that you do not
kno" "hether the laborers of this 6da. -#DA and 6ad -#3*M are really "orkin& because you are
devotin& your time in your riceland, is that correctP
A. I kne" because the place of their "ork is <ust near my house, it is alon& the "ay.
S. 6o" about "hen the canes are already tall, can you actually see the "orkers in 6da. -#DA and -#3*M
"hen you are busy at your ricelandP
A. ;es, because they have to pass in my house.
S. Is there no other passa&e in that hacienda e5cept that road in front of your houseP
A. ;es.
S. Are you sure about thatP
Pa&e #+ of #$%
A. ;es, I am sure.M))N
A/4,I0 TA1AK
S. +o you kno" "hat is the "ork of the petitioner durin& the time "hen you "ere to&ether "orkin& in
the .eldP
A. >e "ere "orkin& to&ether, like cuttin& and loadin& canes, hoein&, "eedin&, applyin& fertili:ers,
di&&in& canals and plo"in&.
S. +urin& your employment in the said hacienda "here "ere you residin&P
A. There inside the hacienda.
S. >hat about the petitionerP
A. The same.
S. 6o" far is your house from the house of the petitionerP
A. About )A arms#len&th.
S. 6o" far is 6da. -#DA from 6da. -#3*.
A. It is very near it is divided by the road.
S. >hat road are you referrin& toP
A. 6i&h"ay road from -aran&ay -uenavista to ,a 7ran<a.
S. +urin& your employment "ill you please inform the Commission the frequency of "ork of the late
I&nacio TanaP
A. ( "eeks a month, % days a "eek, 3) months a year.
S. >hy is it that you are in a position to inform the Commission about the period of employment of
I&nacio TanaP
A. -ecause "e "ere to&ether "orkin&.M)$N
It is indubitable, therefore, that Tana "orked continuously for Ayalde, not only as RaraorC on RpakyawC
basis, but as a re&ular farmhand, doin& backbreakin& <obs for AyaldeIs business. There is no shred of
evidence to sho" that Tana "as only a seasonal "orker, much less a mi&rant "orker. All "itnesses, includin&
Ayalde herself, testi.ed that Tana and his family resided in the plantation. If he "as a mere RpakyawC "orker
or independent contractor, then there "ould be no reason for Ayalde to allo" them to live inside her property
for free. The only lo&ical e5planation is that he "as "orkin& for most part of the year e5clusively for Ayalde, in
return for "hich the latter &ratuitously allo"ed Tana and his family to reside in her property.
The Court of Appeals, in .ndin& for Ayalde, relied on the claimantIs and her "itnessesI admission that
her husband "as hired as an RaraorC on RpakyawC basis, but it failed to appreciate the rest of their
testimonies. 8ust because he "as, for short periods of time, hired on RpakyawC basis does not necessarily
mean that he "as not employed to do other tasks for the remainder of the year. 4ven Ayalde admitted that
Tana did other <obs "hen he "as not hired to plo". Consequently, the conclusion culled from their
testimonies to the e=ect that Tana "as mainly and solely an RaraorC "as at best a selective appreciation of
portions of the entire evidence. It "as the !ocial !ecurity Commission that took into consideration all the
documentary and testimonial evidence on record.
Pa&e ## of #$%
!econdly, Ayalde made much ado of her claim that Tana could not be her employee because she
e5ercised no control over his "ork hours and method of performin& his task as Raraor.C It is also an admitted
fact that Tana, 8r. used his o"n carabao and tools. Thus, she contends that, applyin& the Rcontrol test,C Tana
"as not an employee but an independent contractor.
A closer scrutiny of the records, ho"ever, reveals that "hile Ayalde herself may not have directly
imposed on Tana the manner and methods to follo" in performin& his tasks, she did e5ercise control throu&h
her overseer.
-e that as it may, the po"er of control refers merely to the e5istence of the po"er. It is not essential for
the employer to actually supervise the performance of duties of the employeeL it is su?cient that the former
has a ri&ht to "ield the po"er.M)(N Certainly, Ayalde, on her o"n or throu&h her overseer, "ielded the po"er
to hire or dismiss, to check on the "ork, be it in pro&ress or quality, of the laborers. As the o"nerJlessee of
the plantations, she possessed the po"er to control everyone "orkin& therein and everythin& takin& place
therein.
8urisprudence provides other equally important considerations "hich support the conclusion that Tana
"as not an independent contractor. 'irst, Tana cannot be said to be en&a&ed in a distinct occupation or
business. 6is carabao and plo" may be useful in his livelihood, but he is not independently en&a&ed in the
business of farmin& or plo"in&. !econd, he had been "orkin& e5clusively for Ayalde for ei&hteen F32G years
prior to his demise. Third, there is no dispute that Ayalde "as in the business of &ro"in& su&arcane in the
t"o plantations for commercial purposes. There is also no question that plo"in& or preparin& the soil for
plantin& is a ma<or part of the re&ular business of Ayalde.
nder the circumstances, the relationship bet"een Ayalde and Tana has more of the attributes of
employer#employee than that of an independent contractor hired to perform a speci.c pro<ect. In the case
of (y )e* +en% &. "nternational La,or,M)*N "e cited our lon&#standin& rulin& in $unripe 'oconut #rouct- 'o.
&. 'ourt o. "nu-trial Relation-, to "itK
R>hen a "orker possesses some attributes of an employee and others of an independent contractor, "hich
make him fall "ithin an intermediate area, he may be classi.ed under the cate&ory of an employee "hen the
economic facts of the relations make it more nearly one of employment than one of independent business
enterprise "ith respect to the ends sou&ht to be accomplished.C Fnderscorin& 0ursGM)%N
>e .nd the above#quoted rulin& to be applicable in the case of Tana. There is preponderance of
evidence to support the conclusion that he "as an employee rather than an independent contractor.
The Court of Appeals also erred "hen it ruled, on the alternative, that if ever Tana "as an employee, he
"as still ineli&ible for compulsory covera&e because he "as not paid any re&ular daily "a&e and he did not
"ork for an uninterrupted period of at least si5 months in a year in accordance "ith !ection 2F<G FIG of the
!ocial !ecurity ,a". There is substantial testimonial evidence to prove that Tana "as paid a daily "a&e, and
he "orked continuously for most part of the year, even "hile he "as also occasionally called on to plo" the
soil on a RpakyawC basis. As a farm laborer "ho has "orked e5clusively for Ayalde for ei&hteen F32G years,
Tana should be entitled to compulsory covera&e under the !ocial !ecurity ,a", "hether his service "as
continuous or broken.
Mar&arita Tana alle&ed that !!! premiums "ere deducted from TanaIs salary, testifyin&, thusK
S. >ere there deductions from the salaries of your husband "hile he "as employed "ith the respondent
from 3H%3 to 3HDHP
A. ;es, there "ere deductions but I do not kno" because they "ere the ones deductin& it.
S. >hy do you kno" that his salaries "ere deducted for !!! premiumsP
A. -ecause Antero Ma&hari asked me and my husband to si&n !!! papers and he told us that they "ill
take care of everythin&.
S. 6o" much "ere the deductions every paydayP
Pa&e #5 of #$%
A. I do not kno" ho" much because our daily "a&e "as only P(.AA.M)DN
A&aton ,iba"as, also testi.edK
S. Mr. >itness, in your 3*#day "a&es do you notice any deductions from itP
A. There "ere deductions and "e "ere informed that it "as for !!!.
S. Mr. >itness, since "hen "ere there deductions from your salariesP
A. !ince 3H%3.
S. p to "henP
A. p to 3HDH.
S. Mr. >itness, are you a member of the !!!P
A. 1o.
S. 6o" about petitioner, if you kno"P
A. 1o, also.
S. >hat happened to the deductions did you not ask your employerP
A. >e asked but "e "ere ans"ered that "e "ere bein& remitted for our !!!.
S. +id you not verifyP
A. 1o, because I <ust relied on their statement.M)2N
Ayalde failed to counter these positive assertions. 4ven on the assumption that there "ere no
deductions, the fact remains that Tana "as and should have been covered under the !ocial !ecurity ,a". The
circumstances of his employment place him outside the ambit of the e5ception provided in !ection 2F<G of
/epublic Act 1o. 3%33, as amended by !ection ( of /.A. )%*2.
:HEREFORE, in vie" of all the fore&oin&, the +ecision of the Court of Appeals in C.A.#7./. !P 1o. 3%()D
and the /esolution dated 8une 3(, 3HH3 are hereby /494/!4+ and !4T A!I+4. The /esolution of the !ocial
!ecurity Commission in !!C Case 1o. 22*3 is /4I1!TAT4+.
1o costs.
SO ORDERED.
7./. 1o. 3)3AA( 8anuary )2, 3HH2
ROMEO LA0ATIC, petitioner,
vs.
NATIONAL LA&OR RELATIONS COMMISSION, CITYLAND DE7ELOPMENT CORPORATION, STEPHEN
RO;AS, <ESUS 0O, 0RACE LIUSON, and ANDRE: LIUSON, respondents.
SC RULED IN FA7OR OF NLRC, ET AL
ROMERO, J.:
Petitioner seeks, in this petition for certiorari under /ule %*, the reversal of the resolution of the 1ational
,abor /elations Commission dated May 3), 3HH*, a?rmin& the 'ebruary 3D, 3HH(, decision of ,abor Arbiter
/icardo C. 1ora .ndin& that petitioner had been validly dismissed by private respondent Cityland
Pa&e #1 of #$%
+evelopment Corporation Fhereafter referred to as CitylandG and that petitioner "as not entitled to separation
pay, premium pay and overtime pay.
The facts of the case are as follo"sK
Petitioner /omeo ,a&atic "as employed in May 3H2% by Cityland, .rst as a probationary sales a&ent, and
later on as a marketin& specialist. 6e "as tasked "ith solicitin& sales for the company, "ith the
correspondin& duties of acceptin& call#ins, referrals, and makin& client calls and cold calls. Cold calls refer to
the practice of prospectin& for clients throu&h the telephone directory. Cityland, believin& that the same is an
e=ective and cost#e?cient method of .ndin& clients, requires all its marketin& specialists to make cold calls.
The number of cold calls depends on the sales &enerated by eachK more sales mean less cold calls. ,ike"ise,
in order to assess cold calls made by the sales sta=, as "ell as to determine the results thereof, Cityland
requires the submission of daily pro&ress reports on the same.
0n 0ctober )), 3HH3, Cityland issued a "ritten reprimand to petitioner for his failure to submit cold call
reports for !eptember 3A, 0ctober 3 and 3A, 3HH3. This not"ithstandin&, petitioner a&ain failed to submit
cold call reports for !eptember ), *, 2, 3A, 33, 3), 3*, 3D, 32, 3H, )A, )), and )2, as "ell as for 0ctober %, 2,
H, 3A, 3), 3$ and 3(, 3HH). Petitioner "as required to e5plain his inaction, "ith a "arnin& that further non#
compliance "ould result in his termination from the company. In a reply dated 0ctober 32, 3HH), petitioner
claimed that the same "as an honest omission brou&ht about by his concentration on other aspects of his
<ob. Cityland found said e5cuse inadequate and, on 1ovember H, 3HH), suspended him for three days, "ith a
similar "arnin&.
1ot"ithstandin& the aforesaid suspension and "arnin&, petitioner a&ain failed to submit cold call reports for
'ebruary *, %, 2, 3A and 3), 3HH$. 6e "as verbally reminded to submit the same and "as even &iven up to
'ebruary 3D, 3HH$ to do so. Instead of complyin& "ith said directive, petitioner, on 'ebruary 3%, 3HH$, "rote a
note, BT0 64,, >IT6 C0,+ CA,,!W >60 CA/4!PB and e5hibited the same to his co#employees. To "orsen
matters, he left the same lyin& on his desk "here everyone could see it.
0n 'ebruary )$, 3HH$, petitioner received a memorandum requirin& him to e5plain "hy Cityland should not
make &ood its previous "arnin& for his failure to submit cold call reports, as "ell as for issuin& the "ritten
statement aforementioned. 0n 'ebruary )(, 3HH$, he sent a letter#reply alle&in& that his failure to submit
cold call reports should trot be deemed as &ross insubordination. 6e denied any kno"led&e of the dama&in&
statement, BT0 64,, >IT6 C0,+ CA,,!WB
'indin& petitioner &uilty of &ross insubordination, Cityland served a notice of dismissal upon him on 'ebruary
)%, 3HH$. A&&rieved by such dismissal, petitioner .led a complaint a&ainst Cityland for ille&al dismissal,
ille&al deduction, underpayment, overtime and rest day pay, dama&es and attorney's fees. The labor arbiter
dismissed the petition for lack of merit. 0n appeal, the same "as a?rmed by the 1,/CL hence the present
recourse.
Petitioner raises the follo"in& iss"es! :HETHER OR NOT LA0ATIC IS ILLE0ALLY DISMISSED FROM
:OR= &Y CITY LAND> No.
3. >64T64/ 0/ 10T /4!P01+41T 1,/C 7/A94,; A-!4+ IT! +I!C/4TI01
31 10T 'I1+I17 T6AT P4TITI014/ >A! I,,47A,,; +I!MI!!4+L
). >64T64/ 0/ 10T /4!P01+41T 1,/C 7/A94,; A-!4+ IT! +I!C/4TI01 I1
/,I17 T6AT P4TITI014/ I! 10T 41TIT,4+ T0 !A,A/; +I''4/41TIA,!,
-ACX>A74!, !4PA/ATI01 PA;, 094/TIM4 PA;, /4!T +A; PA;, 1PAI+
C0MMI!!I01!, M0/A, A1+ 4Y4MP,A/; +AMA74! A1+ ATT0/14;'! '44!.
The petition lacks merit.
To constitute a valid dismissal from employment, t"o requisites must be met, namelyK F3G the employee must
be a=orded due process, and F)G the dismissal must be for a valid cause. # In the case at bar, petitioner
contends that his termination "as ille&al on both substantive and procedural aspects. It is his submission that
the failure to submit a fe" cold calls does not qualify as "illful disobedience, as, in his e5perience, cold calls
are one of the least e=ective means of solicitin& sales. 6e thus asserts that a couple of cold call reports need
not be accorded such tremendous si&ni.cance as to "arrant his dismissal for failure to submit them on time.
These ar&uments are specious. Petitioner loses si&ht of the fact that BFeG5cept as provided for, or limited by,
special la"s, an employer is free to re&ulate, accordin& to his discretion and <ud&ment, all aspects of
employment.B 5 4mployers may, thus, make reasonable rules and re&ulations for the &overnment of their
employees, and "hen employees, "ith kno"led&e of an established rule, enter the service, the rule becomes
a part of the contract of employment. 1 It is also &enerally reco&ni:ed that company policies and re&ulations,
unless sho"n to be &rossly oppressive or contrary to la", are &enerally valid and bindin& on the parties and
must be complied "ith. 4 BCorollarily, an employee may be validly dismissed for violation of a reasonable
company rule or re&ulation adopted for the conduct of the company business. An employer cannot rationally
Pa&e #4 of #$%
be e5pected to retain the employment of a person "hose . . . lack of re&ard for his employer's rules . . . has
so plainly and completely been bared.B % Petitioner's continued infraction of company policy requirin& cold
call reports, as evidenced by the )2 instances of non#submission of aforesaid reports, <usti.es his dismissal.
6e cannot be allo"ed to arro&ate unto himself the privile&e of settin& company policy on the e=ectivity of
solicitation methods. To do so "ould be to sanction oppression and the self#destruction of the employer.
Moreover, petitioner made it "orse for himself "hen he "rote the statement, BT0 64,, >IT6 C0,+ CA,,!W
>60 CA/4!PB >hen required to e5plain, he merely denied ally kno"led&e of the same. Cityland, on the other
hand, submitted the a?davits of his co#employees attestin& to his authorship of the same. Petitioner's only
defense is denial. The rule, ho"ever, is that denial, if unsubstantiated by clear and convincin& evidence, is
ne&ative and self#servin& evidence "hich has no "ei&ht in la". ) More tellin&, petitioner, "hile makin& much
capital out of his lack of opportunity to confront the a?ants, never, in all of his pleadin&s, cate&orically
denied "ritin& the same. 6e only denied kno"led&e of the alle&ation that he issued such a statement.
RULIN0! -ased on the fore&oin&, "e .nd petitioner &uilty of "illful disobedience. >illful disobedience
requires the concurrence of at least t"o requisitesK the employee's assailed conduct must have been "illful or
intentional, the "illfulness bein& characteri:ed by a "ron&ful and perverse attitudeL and the order violated
must have been reasonable, la"ful, made kno"n to the employee and must pertain to the duties "hich he
had been en&a&ed to dischar&e. $
Petitioner's failure to comply "ith Cityland's policy of requirin& cold call reports is clearly "illful, &iven the )2
instances of his failure to do so, despite a previous reprimand and suspension. More than that, his "ritten
statement sho"s his open de.ance and disobedience to la"ful rules and re&ulations of the company.
,ike"ise, said company policy of requirin& cold calls and the concomitant reports thereon is clearly
reasonable and la"ful, su?ciently kno"n to petitioner, and in connection "ith the duties "hich he had been
en&a&ed to dischar&e. There is, thus, <ust cause for his dismissal.
0n the procedural aspect, petitioner claims that he "as denied due process. >ell settled is the ictu/ that
the t"in requirements of notice and hearin& constitute the elements of due process in the dismissal of
employees. Thus, the employer must furnish the employee "ith t"o "ritten notices before the termination of
employment can be e=ected. The .rst apprises the employee of the particular acts or omissions for "hich his
dismissal is sou&htL the second informs him of the employer's decision to dismiss him. (
In the case at bar, petitioner "as noti.ed of the char&es a&ainst him in a memorandum dated 'ebruary 3H,
3HH$, "hich he received on 'ebruary )$, 3HH$. 6e submitted a letter#reply thereto on 'ebruary )(, 3HH$,
"herein he asked that his failure to submit cold call reports be not interpreted as &ross insubordination. , 6e
"as &iven notice of his termination on 'ebruary )%, 3HH$. This chronolo&y of events clearly sho" that
petitioner "as served "ith the required "ritten notices.
1onetheless, petitioner contends that he has not been &iven the bene.t of an e=ective hearin&. 6e alle&es
that he "as not adequately informed of the results of the investi&ation conducted by the company, nor "as
he able to confront the a?ants "ho attested to his "ritin& the statement, BT0 64,, >IT6 C0,+ CA,,!WB
>hile "e have held that in dismissin& employees, the employee must be a=orded ample opportunity to be
heard, Bample opportunityB connotin& every kind of assistance that mana&ement must a=ord the employee
to enable him to prepare adequately for his defense, #+ it is also true that the requirement of a hearin& is
complied "ith as lon& as there "as an opportunity to be heard, and not necessarily that an actual hearin& be
conducted. ## Petitioner had an opportunity to be heard as he submitted a letter#reply to the char&e. 6e,
ho"ever, adduced no other evidence on his behalf. In fact, he admitted his failure to submit cold call reports,
prayin& that the same be not considered as &ross insubordination. As held by this Court in +ernaro &-.
1,/C, #5 there is no necessity for a formal hearin& "here an employee admits responsibility for an alle&ed
misconduct. As to the "ritten statement, BT0 64,, >IT6 C0,+ CA,,!W,B petitioner merely denied kno"led&e
of the same. 6e failed to submit controvertin& evidence thereon althou&h the memorandum of 'ebruary 3H,
3HH$, clearly char&ed that he had sho"n said statement to several sales personnel. +enials are "eak forms
of defenses, particularly "hen they are not substantiated by clear and convincin& evidence. 7iven the
fore&oin&, "e hold that petitioner's constitutional ri&ht to due process has not been violated.
As re&ards the second issue, petitioner contends that he is entitled to amounts ille&ally deducted from his
commissions, to unpaid overtime, rest day and holiday premiums, to moral and e5emplary dama&es, as "ell
as attorney's fees and costs.
Petitioner anchors his claim for ille&al deductions of commissions on Cityland's formula for determinin&
commissions, &i0K
C0MMI!!I01! Z Credits 4arned FC4G less CM,ATI94 147ATI94
FC1G less AM01T! /4C4I94+ FA/G
Z FC4 # C1G # A/ "here C4 Z Monthly !ales 9olume 5
Commission /ate FC/G
Pa&e #% of #$%
A/ Z Monthly CompensationJ.D*
C/ Z (.*[
nder said formula, an increase in salary "ould entail an increase in A/, thus diminishin& the amount of
commissions that petitioner "ould receive. Petitioner construes the same as violative of the non#diminution of
bene.ts clause embodied in the "a&e orders applicable to petitioner. Inasmuch as Cityland has paid
petitioner commissions based on a hi&her A/ each time there has been a "a&e increase, the di=erence
bet"een the ori&inal A/ and the subsequent A/s have been vie"ed by petitioner as ille&al deductions, to "itK
>a&e
0rder
+ate of
4=ectivity
Amount of
Increase
Correspondin&
Increase in
Suota FA/G
+uration p
To )J)%JH$
Total
/A %%(A 3J3J22 P)%*.D* P $*$.$$ Y %) mos. P ) 3,HA%.(%
/A %D)D DJ3J2H D2A.D* 3,A(A.AA Y (( mos. (*,D%A.AA
1C/ A3 33J3JHA D2*.D* 3,A(%.%D Y )2 mos. )H,$A%.D%
1C/ A3#A 7rand Total P H%,HD$.)) #1
Petitioner even &oes as far as to claim that "ith the use of Cityland's formula, he is indebted to the company
in the amount of P3,(3A.AA, illustrated as follo"sK
Petitioner' s -asic !alary Z P (,)$A.AA
Z (,)$A.AAJ.D*
A./. Z *,%(A.AA
Petitioner's -asic !alary E A/ Z P 3,(3A.AA
>hile it is true that an increase in salary "ould cause an increase in A/, "ith the same bein& deducted from
credits earned, thus lessenin& his commissions, the fact remains that petitioner still receives his basic salary
"ithout deductions. Petitioner's ar&ument that he is indebted to respondent by P3,(3A.AA is fallacious as his
basic salary remains the same and he continues to receive the same, re&ardless of his collections. The failure
to attain a C4 equivalent to the A/ of P*,%(A.AA only means that the di=erence "ould be credited to his C1
for the ne5t month. Clearly, the purpose of the same is to encoura&e sales personnel to accelerate their sales
in order for them to earn commissions.
Additionally, there is no la" "hich requires employers to pay commissions, and "hen they do so, as stated in
the letter#opinion of the +epartment of ,abor and 4mployment dated 'ebruary 3H, 3HH$, Bthere is no la"
"hich prescribes a method for computin& commissions. The determination of the amount of commissions is
the result of collective bar&ainin& ne&otiations, individual employment contracts or established employer
practice.B #4 !ince the formula for the computation of commissions "as presented to and accepted by
petitioner, such prescribed formula is in order. As to the alle&ation that said formula diminishes the bene.ts
bein& received by petitioner "henever there is a "a&e increase, it must be noted that his commissions are
not meant to be in a .5ed amount. In fact, there "as no assurance that he "ould receive any commission at
all. 1on#diminution of bene.ts, as applied here, merely means that the company may not remove
the pri&ile%e of sales personnel to earn a commission, not that they are entitled to a .5ed amount thereof.
>ith respect to petitioner's claims for overtime pay, rest day pay and holiday premiums, Cityland maintains
that !aturday and !unday call#ins "ere voluntary activities on the part of sales personnel "ho "anted to
reali:e more sales and thereby earn more commissions. It is their contention that sales personnel "ere
clamorin& for the Bprivile&eB to attend !aturday and !unday call#ins, as "ell as to entertain "alk#in clients at
pro<ect sites durin& "eekends, that Cityland had to sta&&er the schedule of sales employees to &ive everyone
a chance to do so. -ut simultaneously, Cityland claims that the same "ere optional because call#ins and "alk#
ins "ere not scheduled every "eekend. If there really "ere a clamor on the part of sales sta= to BvoluntarilyB
"ork on "eekends, so much so that Cityland needed to schedule them, ho" come no call#ins or "alk#ins "ere
scheduled on some "eekendsP
Pa&e #) of #$%
In addition to the above, the labor arbiter and the 1,/C sanctioned respondent's practice of o=settin& rest
day or holiday "ork "ith equivalent time on re&ular "orkdays on the &round that the same is authori:ed by
+epartment 0rder )3, !eries of 3HHA. As correctly pointed out by petitioner, said +.0. "as misapplied in this
case. The +.0. involves the shortenin& of the "ork"eek from si5 days to .ve days but "ith prolon&ed hours
on those .ve days. nder this scheme, non#payment of overtime premiums "as allo"ed in e5chan&e for
lon&er "eekends for employees. In the instant case, petitioner's "ork"eek "as never compressed. Instead,
he claims payment for "ork over and above his normal * 3J) days of "ork in a "eek. Applyin& by analo&y the
principle that overtime cannot be o=set by undertime, to allo" o=#settin& "ould pre<udice the "orker. 6e
"ould be deprived of the additional pay for the rest day "ork he has rendered and "hich is utili:ed to o=set
his equivalent time o= on re&ular "orkdays. To allo" Cityland to do so "ould be to circumvent the la" on
payment of premiums for rest day and holiday "ork.
1ot"ithstandin& the fore&oin& discussion, petitioner failed to sho" his entitlement to overtime and rest day
pay due, to the lack of su?cient evidence as to the number of days and hours "hen he rendered overtime
and rest day "ork. 4ntitlement to overtime pay must .rst be established by proof that said overtime "ork
"as actually performed, before an employee may avail of said bene.t. #% To support his alle&ations,
petitioner submitted in evidence minutes of meetin&s "herein he "as assi&ned to "ork on "eekends and
holidays at Cityland's housin& pro<ects. !u?ce it to say that said minutes do not prove that petitioner actually
"orked on said dates. It is a basic rule in evidence that each party must prove his a?rmative
alle&ations. #) This petitioner failed to do. 6e e5plains his failure to submit more concrete evidence as bein&
due to the decision rendered by the labor arbiter "ithout resolvin& his motion for the production and
inspection of documents in the control of Cityland. Petitioner conveniently for&ets that on 8anuary )D, 3HH(,
he a&reed to submit the case for decision based on the records available to the labor arbiter. This amounted
to an abandonment of above#said motion, "hich "as then pendin& resolution.
,astly, "ith the .ndin& that petitioner's dismissal "as for a <ust and valid cause, his claims for moral and
e5emplary dama&es, as "ell as attorney's fees, must fail.
>64/4'0/4, premises considered, the assailed /esolution is A''I/M4+ and this petition is hereby +I!MI!!4+
for lack of merit. Costs a&ainst petitioner.
!0 0/+4/4+.
0.R. No. #1+,1% Ma? ##, 5+++
ALLAN 7ILLAR, DANILO INDITA, ARTURO MANIMTIM, 0ERSON DATALIO, 0ERRY 7ILLARAL&O,
ALFONSO PIPINO, NOEL AN0AY and E;E@UIEL MANIMTIM, petitioners,
vs.
NATIONAL LA&OR RELATIONS COMMISSION and HI*TECH MANUFACTURIN0
CORPORATION, respondents.
SC RULED IN FA7OR OF PETITIONERS.
&ELLOSILLO, J.!
A,,A1 9I,,A/, +A1I,0 I1+ITA, A/T/0 MA1IMTIM, 74/!01 +ATA,I0, 74//; 9I,,A/A,-0, A,'01!0 PIPI10,
104, A17A; and 4Y4SI4, MA1IMTIM, in this petition for certiorari, assail for havin& been rendered "ith
&rave abuse of discretion the $A May 3HHD +ecision of the 1ational ,abor /elations Commission F1,/CG
vacatin& and settin& aside the +ecision of the ,abor Arbiter, as "ell as its $3 8uly 3HHD /esolution denyin&
reconsideration. 3
6I#T4C6 MA1'ACT/I17 C0/P0/ATI01 F6I#T4C6G, a corporation duly or&ani:ed and e5istin& under
Philippine la"s, is en&a&ed in the business of manufacturin& cartons for commercial purposes. 0n di=erent
dates, 6I#T4C6 hired petitioners to perform various <obs for the company such as slitter machine operator,
inkman, silk screen printer, truck helper, rubber dye setter, forklift operator and stitchin& machine operator.
!ometime in March 3HH( petitioners, "ho "ere members of the 'ederation of 'ree >orkers nion, .led before
the +epartment of ,abor a petition for certi.cation election amon& the rank#and#.le employees of 6I#T4C6.
The petition "as &ranted and a certi.cation election "as conducted inside the company premises on $3 8uly
3HH(. 6o"ever, petitioners lost in the election as the 6I#T4C6 employees voted for B1o nion.B
0n 3 Au&ust 3HH( and the succeedin& days thereafter, petitioners failed to report for "ork. They alle&ed that
they "ere barred from enterin& the premises of 6I#T4C6L hence, they immediately .led before the ,abor
Arbiter separate complaints for ille&al dismissal and labor standards claims a&ainst 6I#T4C6, 6erman T. 7o,
o"ner, and Carmen -elano, &eneral mana&er.
Petitioners claimed that they "ere summarily dismissed from employment by the mana&ement of 6I#T4C6 in
retaliation for or&ani:in& a labor union in the "ork premises as "ell as in .lin& the petition for certi.cation
election before the +epartment of ,abor. They further averred that they "ere paid daily "a&es ran&in& from
P23.AA to P3(*.AA "hich "ere belo" the minimum .5ed by la" and that they "ere required to "ork si5 F%G
Pa&e #$ of #$%
days a "eek from 2 o'clock in the mornin& to D o'clock in the evenin& "ithout bein& paid for the overtime.
1either "ere they paid their service incentive leave pay and 3$th month pay.
Petitioners ori&inally numbered t"enty#three F)$G but .fteen F3*G of them desisted in the course of the
proceedin&s thus leavin& only the ei&ht F2G petitioners "ho pursued their cause to the end.)
0n the other hand, 6I#T4C6 denied havin& dismissed petitioners. It contended that petitioners "ere probably
stun& by their defeat in the certi.cation election such that they refused to "ork thereafterL that the 6I#T4C6
mana&ement called their attention concernin& their unauthori:ed absences "ithout leave but petitioners
continued "ith their leave en /a--e"ith the sole intention of cripplin& the company operationsL and, that
petitioners could return to their <obs at 6I#T4C6 any time at their discretion. In support of these alle&ations,
private respondent presented in evidence the a1a&it-$ of employees "ho initially <oined petitioners in .lin&
their complaints but later desisted from pursuin& their claims. The pertinent portions of the a?davits
uniformly read E
). That I hereby state that I "as not dismissed by the company or its o?cials, the truth of the
matter bein& that I did not report for "ork anymore after the certi.cation election on 8uly $3,
3HH(, "hen our nion lost in the said electionL that I "anted to resi&n from the company, as I
am hereby resi&nin& voluntarily from my <ob "ith 6I#T4C6 MA1'ACT/I17 C0/P0/ATI01L
$. That it is not like"ise true that I "as underpaid, or that I "as paid salary belo" the
minimum .5ed by la"L that I "as receivin& my daily salary in accordance "ith la"L and that I
received all the bene.ts due me as employee like holiday pay, service incentive leave and
3$th month pay for 3HH( that I have no claims "hatsoever a&ainst the company or its o?cials
in connection "ith or arisin& from my employment "ith the company, and that the complaint I
.led a&ainst the company "as due to misunderstandin& and misconception of "hat I
perceived I am entitled toL that no" I reali:e that I have nothin& or I do not have any valid
complaint or claim a&ainst the 6I#T4C6 MA1'ACT/I17 . . . .
They further submitted the hand"ritten notes of petitioners Arturo Manimtim and 45equiel Manimtim
addressed to the mana&ement of 6I#T4C6. The letter of Arturo Manimtim, the contents of "hich "ere
substantially the same as those of 45equiel Manimtim, read E
Ako po si Mr. Arturo Manimtim ay kusan& loob na pumunta at lumapit sa pamunuan upan&
humin&i nan& anuman& .nancial assistance o tulon& na inyon& maibibi&ay sa akin lalun&#lalo
na po para sa akin& pamilya, at kabilan& na rin po an& akin& tu"iran& pa&#amin sa
kasalanan& amin& &ina"a laban sa mana&ement na kami po an& na&dulot n& malakin&
kasiraan at per"isyo sa inyon& kumpanya noon& nakaraan dahil sa amin& &ina"an& pa&ti&il
sa amin& trabaho n& sabay#sabay n& "alan& paalam o pahintulot sa mana&ement at na&in&
sanhi n& malakin& pa&kalu&i n& kumpanya.
Ako po ay kusan& loob na humihin&i n& inyon& kapata"aran sa pa&kakataon& ito bilan&
inyon& datin& man&&a&a"a at sa ta&al po rin n& akin& serbisyo sa inyon& kumpanya na
sana'y malu&od po ninyon& pa&bi&yan an& akin& kahilin&an.
Ako po ay humihin&i n& kapata"aran sa mana&ement sa amin& malin& pamamaraan o
pa&turin& sa mana&ement.
An& inyon& lin&kod,
F!&d.G Arturo Manimtim
0n 3* Au&ust 3HH% a consolidated decision "as rendered by ,abor Arbiter 4merson C. Tumanon in favor of
petitioners orderin& 6I#T4C6 to reinstate petitioners to their former positions "ithout loss of seniority ri&hts
and "ith full back "a&es, and to pay their mandated monetary bene.ts computed as follo"s E
1AM4 -J>A74! JPA;M41T 3$T6 MP !I,P
A.9I,,A/ P3AA,A%).A* P)(,A)%.AA P),AA).3A P3,2**.AA
+. I1+ITA 3AA,A%).A* 3),H3$.AA 3,AD%.A* %D*.AA
7. +ATA,I0 3AA,A%).A* 3A,D$(.AA 2H*.AA %D*.AA
7. 9I,,A/A,-0 3AA,A%).AA 3%,3%$.AA 3,$(D.$* 3,2**.AA
A. PIPI10 3AA,A%).A* *)A.AA ($A.AA ),3(*.AA
A. MA1IMTIM 3AA,A%).A* *,H$A.HA (H*.HA 3,2**.AA
1. A17A; 33*,(*%.)* H((.AA D2.%* 3,2**.AA
Pa&e #( of #$%
4. MA1IMTIM 3)),AH3.%* *,H$2.AA (H(.HA 3,2**.AA
0n appeal by 6I#T4C6, the 1,/C in its +ecision of $A May 3HHD vacated and set aside the ,abor Arbiter's
+ecision and ordered petitioners to report back to "ork, or if no lon&er feasible, directed 6I#T4C6 to pay
petitioners their separation bene.ts. The 1,/C ruled E
>e have pored FoverG the records and "e .nd no proof to support the Mlabor arbiter'sN
contention that soon after the union to "hich complainants belon& lost in the certi.cation
election, said complainants "ere summarily dismissed "ithout even the bene.t of due
process. There "as no record that the complainants "ere terminated from their employment.
>hat is very revealin& is that the day after they lost in the certi.cation election, they refused
to report to "ork for no <usti.able reason "hich makes us believe that they voluntarily
resi&ned . . . . the .ndin& of the ,abor Arbiter that the mere fact that they FcomplainantsG .led
the complaint for ille&al dismissal ne&ates a notion of abandonment is so speculative and
con<ectural to be sustained. The .lin& of their complaint for ille&al dismissal indicates that it
"as nothin& but an attempt on their part to &ive verisimilitude to their desire to &et even "ith
respondents.
NLRC deision! In vie" of all the fore&oin&, the .ndin& of the ,abor Arbiter for ille&al
dismissal a&ainst respondents, the a"ard of back"a&es in favor of complainants is "ithout
any factual or le&al basis. 6o"ever, complainants in their o"n free "ill and volition may
return to "ork "ith respondents "ho are directed to accept them "ithout loss of seniority
ri&hts and bene.ts but "ithout back"a&es based on the principle of a fair day's "ork for a fair
day's pay . . . . the alle&ation of complainants that they "ere underpaid "ithout statin& their
respective speci.c basic pay and the basis of their claim that they "ere underpaid cannot be
&iven credence. Mere alle&ations "ithout supportin& proofs are not evidence in themselves.
Their motion for reconsideration havin& been denied by the 1,/C in its /esolution dated $3 8uly 3HHD,
petitioners are no" before us imputin& &rave abuse of discretion to the 1,/CK FaG in rulin& that petitioners
voluntarily resi&ned from their <obs and "ere not ille&ally dismissedL FbG in refusin& to correctly apply the la"
and <urisprudence relative to burden of proof in termination cases and money claims of "orkers,
abandonment of "ork and o=ers made by a party in the course of liti&ationL and, FcG in rulin& that petitioners
did not state their respective speci.c basic pay and the basis of their claim that they "ere underpaid.
The pivota. iss"es to be resolved areK 2r-t, "hether petitioners deliberately and un<usti.ably abandoned
their employment, or "ere ille&ally dismissed by the mana&ement of 6I#T4C6L and -econ, "hether
petitioners are entitled to back "a&es and other monetary bene.ts.
The .rst issue involves a question of fact. It is "ell#settled that factual .ndin&s of qua-i-3uicial a&encies such
as the 1,/C are &enerally accorded not only respect but, at times, even .nality. 6o"ever, the rule is not
absolute and admits of certain "ell#reco&ni:ed e5ceptions. Thus, "hen the .ndin&s of fact of the 1,/C are
not supported by substantial evidence,( capricious or arbitrary, and directly at variance "ith those of the
,abor Arbiter,* this Court may make an independent evaluation of the facts of the case.
RULIN0! >e .nd su?cient cause to deviate from the .ndin&s of the 1,/C. It is clear from the records that
sometime in Au&ust 3HH(, immediately after petitioners supposedly Brefused to "orkB havin& lost earlier in
the certi.cation election, several complaints for ille&al dismissal a&ainst 6I#T4C6 "ere .led by petitioners.
These are su?cient proofs that they "ere never &uilty of leavin& their <obs. The concept of abandonment of
"ork is inconsistent "ith the immediate .lin& of complaints for ille&al dismissal. An employee "ho took steps
to protest his layo= could not by any lo&ic be said to have abandoned his "ork.%
Abandonment is a matter of intention and cannot li&htly be presumed from certain equivocal acts. To
constitute abandonment, there must be clear proof of deliberate and un<usti.ed intent to sever the employer#
employee relationship.DMere absence of the employee is not su?cient. The burden of proof to sho" a
deliberate and un<usti.ed refusal of an employee to resume his employment "ithout any intention of
returnin& rests on the employer.2
6I#T4C6 failed to dischar&e its burden. >e .nd its evidence E consistin& mainly of the a1a&it of employees
and the hand"ritten notes of Arturo Manimtim and 45equiel Manimtim E not enou&h to establish that
petitioners indeed deliberately and un<usti.ably abandoned their <obs. The statements of the employees in
these documents, readily ackno"led&in& their &uilt and absolutely e5oneratin& their employer from any
liability, "ere ri&idly and uniformly stated, and appeared too &ood to be true. >e are not una"are of the
schemes employed by mana&ement to e5tract favorable statements from their employees and entice them to
desist from pursuin& their claims in e5chan&e for some .nancial considerations or promise of immediate
employment or at some future time.
The hand"ritten letters of Arturo Manimtim and 45equiel Manimtim spoke of their .nancial pli&ht. >ithout
"ork they found it di?cult to kno" ho" their basic needs could be met. They are likely to be family men,
Pa&e #, of #$%
horri.ed by the thou&ht that they could not even provide su?ciently for their youn& ones. It is precisely this
situation that must have compelled them to surrender to 6I#T4C6 and seek .nancial assistance.
1either do "e subscribe to 6I#T4C6's ar&ument that petitioners "ere hi&hly skilled "orkers, and that to
abruptly terminate their services "ould have a debilitatin& e=ect on the company. In this country, labor
supply far e5ceeds the demand. !ooner or later, equally skilled "orkers "ould be linin& up to .ll the <ob
vacancies. 6I#T4C6 apparently adopted a rather unsound business policy in terminatin& petitioners'
employment, preferrin& to bear the immediate and inconsequential losses in pro.t "hich, it hoped, "ould
prove to be temporary and minimal in the lon& run, as compared to the lon&#term company losses that "ould
result if they complied "ith union demands. nfortunately, they miscalculated its repercussions.
6I#T4C6 ne5t avers that it had e5pressed "illin&ness to reinstate petitioners to their former positions in the
company, but the latter adamantly refused. !u?ce it to say that such refusal is understandable and should
not be taken a&ainst petitioners. ;ieldin& to the company o=er "ould deprive them of back "a&es to "hich
they are entitled thus e=ectively ne&atin& their cause.
>e conclude that petitioners did not abandon their <obs but "ere ille&ally dismissed therefrom by private
respondent. As a consequence, they are entitled to reinstatement "ith full back "a&es, undiminished by
earnin&s else"here, to be computed from their ille&al dismissal to their actual reinstatement.H
0n the second issue, the 1,/C held that petitioners' claims for underpayment of "a&es, 3$th month pay and
service incentive leave pay are "ithout basis.
>e disa&ree. 4ir-t, petitioners e5ecuted a J!"N5 644"(67"5 3A specifyin& their daily "a&es, positions and
periods of employment, "hich "as made the basis of the ,abor Arbiter's computation of the monetary
a"ards. $econ, all that the 1,/C needed to do "as to refer to the prevailin& minimum "a&e to ascertain the
correctness of petitioners' claims. 5*ir, and most importantly, the burden of provin& payment of monetary
claims rests on the employer. 33 In Ji/ene0 &. National La,or Relation- 'o//i--ion 3) "e held E
As a &eneral rule, one "ho pleads payment has the burden of provin& it. 4ven "here the
plainti= must alle&e non#payment, the &eneral rule is that the burden rests on the defendant
to prove payment, rather than on the plainti= to prove non#payment. The debtor has the
burden of sho"in& "ith le&al certainty that the obli&ation has been dischar&ed "ith payment.
The reason for the rule is that the pertinent personnel .les, payrolls, records, remittances and other similar
documents E "hich "ill sho" that overtime, di=erentials, service incentive leave and other claims of "orkers
have been paid E are not in the possession of the "orker but in the custody and absolute control of the
employer. Thus, in choosin& not to present evidence to prove that it had paid all the monetary claims of
petitioners, 6I#T4C6 failed once a&ain to dischar&e the onu- pro,ani. Consequently, "e have no choice but
to a"ard those claims to petitioners.
'inally, "e note that the hand"ritten letters and a?davits e5ecuted by Arturo Manimtim and 45equiel
Manimtim partake of the nature of quitclaims. 1evertheless, a deed of release or quitclaim cannot bar
employees from demandin& bene.ts to "hich they are le&ally entitled, or stop them from contestin& the
le&ality of their dismissal. The acceptance of these bene.ts does not amount to an estoppel. 3 6o"ever, it is
but <ust that the amounts received by Arturo and 45equiel Manimtim as consideration for the quitclaims be
deducted from their respective monetary a"ards.
>64/4'0/4, the petition is 7/A1T4+. The assailed +ecision dated $A May 3HHD and /esolution dated $3 8uly
3HHD of the 1ational ,abor /elations Commission are !4T A!I+4, and the ,abor Arbiter's +ecision of 3*
Au&ust 3HH% is /4I1!TAT4+. Private respondent is directed to reinstate petitioners to their former positions
"ithout loss of seniority ri&hts and "ith full back "a&es, as "ell as to pay their monetary bene.ts in
accordance "ith the computation made by ,abor Arbiter 4merson C. Tumanon in his +ecision of 3* Au&ust
3HH%. 6o"ever, insofar as Arturo Manimtim and 45equiel Manimtim are concerned, this case is remanded to
the ,abor Arbiter for purposes of determinin& the amounts they received as consideration for their quitclaims
and thereafter deductin& these amounts from their monetary a"ards. 1o costs.
!0 0/+4/4+.
0.R. No. L*#1+, <".? 5), #,4(
THE SHELL COMPANY OF PHILIPPINE ISLANDS, LIMITED, recurrente,
vs.
NATIONAL LA&OR UNION, recurrida.
$re-. Ro--, $elp*, 'arra-co-o y Jana en repre-entacion e la recurrente.
$re-. #a%uia y 7illanue&a en repre-entacion e la recurria.
&RIONES, J.!
Pa&e 5+ of #$%
Actuando sobre una peticion de la entidad obrera llamada B1ational ,abor nion,B la Corte de /elaciones
Industriales ha dictado una decision en la que, entre otras cosas, se obli&a a la .rma petrolera BThe !hell
Company of Philippine Islands, ,imitedB a pa&ar a sus obreros que traba<an de noche Fdesde que se pone el
sol hasta que se levanta al dia si&uienteG una compensacion adicional de *A[ sobre sus salarios re&ulares si
traba<asen de dia. Parece que la comania tiene necesidad del servicio nocturno de un determinado numero de
obreros, pues los aviones procedentes del e5tran<ero suelen aterri:ar y despe&arse de noche, siendo por esto
necesario el que se ha&an faenas de noche para el suministro de &asolina y lubricantes, y para otros
menesteres. ,a compania petrolera se ha e5cepcionado contra dicha decision de ahi el presente recurso
de certiorari para que la revoquemos.
,a compania recurrente ale&a y ar&uye que no solo no e5iste nin&una disposicion le&al que faculte a la Corte
de /elaciones Industriales para ordenar el pa&o de compensacion adicional a obreros que traba<an de noche,
sino que, por el contrario, la ley del Common"ealth 1o. ((( e5ime al patrono de seme<ante obli&acion toda
ve: que en dicha ley se proveen los casos en que es compulsorio el pa&o de BovertimeB Fcompensacion
adicionalG, y entre tales casos no .&ura el traba<o de noche.
Por su parte, la union obrera recurrida sostiene que la facultad que se discute forma parte de los poderes
amplios y efectivos que la ley del Common"ealth 1o. 3A$ E la carta or&anica del Tribunal de /elaciones
Industriales E otor&a a dicho tribunalL y que la ley 1o. ((( del Common"ealth que se invoca no tiene
nin&una aplication al presente caso, pues la misma es de alcance for:osamente limitado, re.riendose
particular y e5clusivamente a la <ornada ma5ima de traba<o contidiano permitida en los establecimientos
industriales E la <ornada de 2 horas.
1uestra conclusion es que la union obrera recurrida tiene la ra:on de su parte. Para una clara y cabal
elucidacion de los puntos discutidos, estmamos conveniente, aun a ries&o de alar&ar esta ponencia,
transcribir lasdisposiciones le&ales pertinentes que son los articulos 3, ( y 3$ de la ley del Common"ealth
1o. 3A$. 6elas aquiK
!4CTI01 3. 5*e Ju%e8 *i- appoint/ent, quali2cation-, co/pen-ation, tenure. E There is hereby
created a Court of Industrial /elations, "hich shall have <urisdiction over the entire Philippines, to
consider, investi&ate, decide, and settle any question, matter, controversy or dispute arisin& bet"een,
andJor a=ectin&, employers and employees or laborers, and landlords and tenants or farm#laborers,
and re&ulate the relation bet"een them, sub<ect to, and in accordance "ith, the provisions of this Act.
The Court shall keep a record of all its proceedin&s and shall be presided over by a 8ud&e to be
appointed by the President of the Philippines "ith the consent of the Commission on Appointments of
the 1ational Assembly. The 8ud&e of the Court shall hold o?ce durin& &ood behavior until he reaches
the a&e of seventy years, or becomes incapacitated to dischar&e the duties of his o?ce. 6is
quali.cations shall be the same as those provided in the Constitution for members of the !upreme
Court and he shall receive an annual compensation of ten thousand pesos and shall be entitled to
travelin& e5penses and per diems "hen performin& o?cial duties outside of the City of Manila. The
+epartment of 8ustice shall have e5ecutive supervision over the Court.
!4C. (. $trike- an lockout-. E The Court shall take co&ni:ance for purpose of prevention, arbitration,
decision and settlement, of any industrial or a&ricultural dispute causin& or likely to cause a strike or
lockout, arisin& form di=erences as re&ards "a&es, shares or compensation, hours of labor or
conditions of tenancy or employment, bet"een employers and employees or laborers and bet"een
landlords and tenants or farm#laborers, provided that the number of employees, laborers or tenants or
farm#laborers involved e5ceeds thirty, and such industrial or a&ricultural dispute is submitted to the
Court by the !ecretary of ,abor, or by any or both of the parties to the controversy and certi.ed by
the !ecretary of ,abor as e5istin& and proper to be dealt "ith by the Court for the sake of public
interest. In all such cases, the !ecretary of ,abor or the party or parties submittin& the disputes, shall
clearly and speci.cally state in "ritin& the questions to be decided. pon the submission of such a
controversy or question by the !ecretary of ,abor, his intervention therein as authori:ed by la", shall
cease.
The Court shall, before hearin& the dispute and in the course of such hearin&, endeavor to reconcile
the parties and induce them to settle the dispute by amicable a&reement. If any a&reement as to the
"hole or any part of the dispute is arrived at by the parties, a memorandum of its terms shall be
made in "ritin&, si&ned and ackno"led&ed by the parties thereto before the 8ud&e of the Court or any
o?cial actin& in his behalf and authori:ed to administer oaths or ackno"led&ments, or, before a
notary public. The memorandum shall be .led in the o?ce of the Clerk of the Court, and, unless
other"ise ordered by the Court, shall, as bet"een the parties to the a&reement, have the same e=ect
as, and be deemed to be, a decision or a"ard.
!4C. 3$. '*aracter o. t*e awar. E In makin& an a"ard, order or decision, under the provisions of
section four of this Act, the Court shall not be restricted to the speci.c relief claimed or demands
made by the parties to the industrial or a&ricultural dispute, but may include in the a"ard, order or
Pa&e 5# of #$%
decision any matter or determination "hich my be deemed necessary or e5pedient for the purpose of
settin& the dispute or of preventin& further industrial or a&ricultural disputes.
/esulta evidente de las disposiciones transcritas lo si&uienteK FaG que cuando sur&e una disputa entre el
principal y el empleado u obrero, v&r. sobre cuestion de salarios, la Corte de /elaciones Industriales tiene
<urisdiccion en todo el territorio de 'ilipinas para considerar, investi&ar y resolver dicha disputa, .<ando los
salarios que estime <ustos y ra:onablesL FbG que para los efectos de prevencion, arbitra<e, decision y arre&lo,
el mismo Tribunal de /elaciones Industriales tien i&ualmente <urisdiccion para conocer de cualquier disputa E
industrial o a&ricola E resultante de cualesquier diferencias respecto de los salarios, participaciones o
compensaciones, horas de traba<o, condiciones del empleo o de la aparceria entre los patronos y los
empleados u obreros y entre los propietarios y los terratenientes u obreros a&ricolas previo el cumplimiento
de ciertos requisitos y condiciones, cuando se viere que dicha disputa ocasiona o puede ocasionar una
huel&aL FcG que en el e<ercicio de sus facultades arriba especi.cadas, el Tribunal de /elaciones Industriales no
queda limitado, al decidir la disputa, a conceder el remedio o remedios solicitados por las partes en la
controversia, sino que puede incluir en la orden or decision cualquier materia o determinacion para el
proposito de arre&lar la disputa o de prevenir ulteriores controversias industriales o a&ricolas.
4n el caso nos ocupa e5iste indudablemente una dispunta industrial. Mientras la empresa, la compania !hell,
no esta dispuesta a pa&ar a sus obreros de noche mayores salarios que los obreros de ida, la B1ational,abor
nionB, a la cual estan a.liados los traba<adoresde la !hell, reclama otro tipo de salarios para el servicio
nocturno E un *A[ mas. 4n esto consiste la disputa, el liti&io industrial. Ahora bienK \que ha hecho la Corte
de /elaciones Industriales, despues de sometido el conOicto a su <urisdiccionP Pues precisamente lo que
manda la citada ley 1o. 3A$ del Common"ealth, carta or&anica de su creacion y funcionamiento, a saberK
considerar, investi&ar y en<uiciar la disputa, resolviedola despues en el sentido en que la ha resuelto, es decir,
remunerando el traba<o de noche con un *A[ mas de los salarios de dia. ; esto es perfectamente le&al tanto
dentro del alcance del articulo 3 de la referida ley 1o. 3A$ que faculta a la Corte de /elaciones Industriales
para decidir cualquier disputa sobre salarios y compensaciones en la forma que estime ra:onable y
conveniente, como dentro del marco del articulo ( de la misma ley que autori:a a dicho tribunal para
en<uiciar y decidir cualquier pleito o controversia industrial o a&ricola determine el estallido de una huel&a o
tienda a causarla. Mas todaviaK lo hecho por el Trbunal de /elaciones Industriales en el presente caso es
asimismo le&al dentro del marco del articulo 3$ de la misma ley 1o. 3A$, articulo que, como queda visto, no
solo faculta a dicho tribunal a conceder el remedio que recabanlas partes, sino inclusive a ir mas alla, esto es,
a otor&ar remedios no e5presamente solicitados, siempre que los mismos se encamienen a resolver de una
ve: la disputa o a prevenir el estallido de ulteriores disputas o huel&as.
4s evidente que con estos amplios poderes el 4stadose ha propuesto equipar al Tribunal de /elaciones
Industriales hasta el ma5imum posible de utilidad y e.cacia, haciendo del mismo no una simple a&encia
academica, sino verdaderamente activa, dinamica y e.ciente E en una palabra, la maquinaria o.cial por
e5celencia en la formidable y espinosa tarea de resolver los conOictos industriales, ya&ricolas de cierta clase,
previniendo y evitando de esta manera esos paros y huel&as que tanto aOi&en y danan no solo a las
empresas y a los obreros, sino, en &eneral, a toda la comunidad. 4n su opinion concurrente dictada en el caso
autoritativo de An& Tibay contra Tribunal de /elaciones Industriales3 F/.7. 1o. (%(H%G, el Ma&istado ,aurel ha
e5presado muy acertadamente la idea fundamental que subraya la creacion de dicho tribunal, con el
si&uiente pronunciamientoK
In Common"ealth Act 1o. 3A$, and by it, our &overnment no lon&er performs the role of mere
mediator or intervenor but that of -upre/e ar,iter. F,as cursivas son nuestras.G.
,a recurrente ar&uye, sin embar&o, que si bien es verdad que en caso de disputa el Tribunal de relaciiones
Industriales tiene, en virtud de su ley or&anica, el poder de .<ar los salarios, tal poder no es absoluto, sino
que esta su<eto a ciertas restricciones y cortapi:as, provistas en la ley comunmente conocida por ley sobre la
<ornada de ocho horas, la ley del Common"ealth 1o. (((, cuyos articulos pertinentes se transacriben
inte&ramente a continuacionK
!4CTI01 3. The le&al "orkin& day for any person employed by another shall be of not more than
ei&ht hours daily. >hen the "ork is not continuous, the time durin& "hich the laborer is not "orkin&
and can leave his "orkin& place and can rest completely shall not be counted.
!4C. $. >ork may be performed beyond ei&ht hours a day in case of actual or impendin& emer&encies
caused by serious accidents, .re, Oood, typhoon, earthquake, epidemic, or other disaster or calamity
in order to prevent loss to life and property or imminent dan&er to public safetyL or in case ur&ent
"ork to be performed on the machines, equipment, or installations in order to avoid a serious loss
"hich the employer "ould other"ise su=er, or some other <ust cause of a similar natureL but in all
such cases the laborers and employees shall be entitled to receive compensation for the overtime
"ork performed at the same rate as their re&ular "a&es or salary, plus at least t"enty#.ve per
centu/ additional.
Pa&e 55 of #$%
In case of national emer&ency the &overnment is empo"ered to establish rules and re&ulations for
the operation of the plants and factories and to determine the "a&es to be paid the laborers.
!4C. (. 1o person, .rm, or corporation, business establishment or place or center of labor shall
compel an employee or laborer to "ork durin& !undays and le&al holidays, unless he is paid an
additional sum of at least t"enty#.ve per centu/ of his re&ular remunerationK #ro&ie *owe&er, That
this prohibition shall not apply to public utilities performin& some public service such as supplyin&
&as, electricity, po"er, "ater, or providin& means of transportation or communication.
Como quiera E ar&umentanlos abo&ados de la recurrente E que en estos articulos se especi.can los casos
en que se autori:a el pa&o de compensacion e5tra o adicional y son solo, a saberK FaG en caso de BovertimeB o
traba<o en e5ceso de las horas re&ulares por ra:ones imperiosasde ur&encia con motivo de al&un desastre o
accidente, o para evitar perdidas o repararlasL FbG en caso de traba<o por los domin&os y .estasL FcG en caso
de emer&encia, y nada hay que se re.era al traba<o de nocheL lue&o la orden de que se trata es ile&al, pues
no esta autori:ada por la ley. BIn the absence E recalcan los abo&ados de la recurrente E le&islation
authori:in& the payment of e5tra compensation for "ork done at ni&ht, the Court of Industrial /elations ha no
po"er or authority to order the petitioner company to pay e5tra compensation for "ork done by its laborers
at ni&ht. 9:pre--io uniu- e-t e:clu-io alteriu-. >here, as inthe case at bar, statute e5pressly speci.es the
cases "here payment of e5tra compensation may be demanded, e5tra compensation may be allo"ed in
those cases only, and in no others. The provisions of the Common"ealth Act 1o. ((( cannot be enlar&ed by
implication or other"ise. 9:pre--u/ .acit ce--are tacitu/.
,a ar&umentacion es erronea. ,a ,ey 1o. ((( no es aplicable al presente caso, siendo evidente que la misma
tiene un ob<eto especi.co, a saberK FaG .<ar en 2 horas la <ornada ma5ima de traba<oL FbG senalar ciertos casos
e5cepcionales en que se puede autori:ar el traba<o fuera de dicha <ornadaL FcG proveer un sobresueldo, que
no debe ser menor de )*[ del salario re&ular, para el BovertimeB o traba<o en e5ceso de las 2 horas.
4n el caso de Manila 4lectric, solicitante#apelante, contra The Public tities 4mployees' Association,) apelada,
,#3)A% F(* 0=. 7a:., 3D%AG, esta Corte ha declarado que la facultad conferida por el articulo 3 de la ley del
Common"ealth 1o. 3A$ al Tribunal de relaciones Industriales para en<uciar y decidir pleitos y controversias
industriales entre el capital y el traba<o, que incluye la de .<ar salarios y compnsaciones de empleados y
obreros, ha quedado restrin&ida por el articulo ( de la ley Common"ealth 1o. (((, que al mismo tiempo que
limita a un )*[ del salario o compensacion re&ular del obrero el minimum de la compensacion adicional que
el tribunal puede conceder por traba<os en los +omin&os y .estas o.ciales, e5ime del pa&o de dicha
compensacion adicional a las entidades de utilidad publica que prestan al&un servicio publico, como las que
suministran &as, electricidad, fuer:a mortri:, a&ua, o proveen medios de transporte o communicacion. Tal
restriccion viene a ser una e5cepcion de la facultad &eneral del tribunal para .<ar, en casos de disputa, los
salarios y compensaciones que deben pa&ar los patronos a los empleados y obrerosL y como quiera que dicho
articulo ( se re.ere solamente a salario o compensacion por traba<os durante los dias de +omin&o y .estas
o.ciales, es obvio que no puede referirse a salario o compensacion adicional por traba<os fuera de la<ornada
de ocho horas que &eneralmente se reali:an desde primeras horas de la manana a ultimas horas de la tarde,
pues una cosa es traba<ar en dias de +omin&o y .estas o.ciales, y otra cosa bien distinta es traba<ar de
noche of fuera de la <ornada de ocho horas en dias laborables. Aplicando la ma5ima le&al Be:pre--io uniu-
e-t e:clu-io alteriu-,B se puede sostener, sin temor de equivocarse, que una ley que provee una e5cepcion
especi.ca a sus disposiciones &enerales, como la compensacion adicional por traba<os en dias de +omin&o y
.estas o.ciales, e5cluye cualquiera otra, como la compensacion adicional por traba<os de noche en dias
laborables.BAnother case in "hich this ma5im may almost invariably by follo"ed is that of statute "hich
makes certain speci.c e5ceptions to its &eneral provisions. 6ere "emay safely assume that all other
e5ceptions "ere intended to be e5cluded.B F>abash /. Co.vs. nited !tates, 3D2 'ed., *, 3A3 C. C. A. 3$$L
Cella Commision Co. vs. -ohlin&er, 3(D 'ed., (3HL D2 C. C. A. (%DL Xunkalman vs. 7ibson, 3D3 Ind., *A$L 2(
1.4. H2*L 6erin& vs. Clement, 3$$ App. +iv., )H$L 33D 1.;., !upp. D(D.G.
4l traba<o denoche que la compania !hell e5i&e de sus obreros no es talmente un BovertimeB, en el sentido en
que se emplea esta palabra en la ,e 1o. (((, sino que es una <ornada co/pleta de traba<o, tambien de 2
horasK solo que, en ve: de reali:arse de dia, se hace de noche. +icho en otras palabras, el traba<o de noche
de que aqui se trata no es solamente une5ceso, prolon&acion u BovertimeB del traba<o re&ular de dia, sino
que es otro tipo de traba<o, absolutamente independiente de la <ornada diurna. Por eso hay dos turnosK el
turno de obreros que traba<an de diaL y el turno de los que traba<an de noche. Asi que no es e5trano que el
le&islador no haya incluido este tipo de traba<o entre los casos de BovertimeB senalados en la referida ley 1o.
(((.
,a cuestion que, a nuestro <uicio, se debe determinar es si entre las facultades &enerales de la Corte de
/elaciones Industriales que estan admitidas sin dipusta, esta la de considerar la <ornada de noche como una
<ornada co/pleta de traba<oL la de estimarla como /a- %ra&o-a que la <ornada de diaL y consi&uientemente,
la de proveer y ordenar que se remunere con un *A[ mas de los salarios re&ulares diurnos. 1uestra
contestacion es a.rmativaK todo esto se halla comprendido entre los poderes &enerales de la Corte de
Pa&e 51 of #$%
/elaciones Industriales. !i este tribunal tiene, en casos de disputa, el poder de .<ar los salarios que estime
<ustos y ra:onables para el traba<o de dia, no hay ra:on por que no ha de tener el mismo poder con respecto
a los salarios de nocheL es tan traba<o lo uno como lo otro. ; con respecto ala apreciacion de que el traba<o de
noche es mas pesado y oneroso que el de dia y, por tanto, merece mayor remuneracion, tampoco hay
motivospara revocarla o alterarla. 1o hay ar&umento posible contra el hecho universal de que el traba<o
re&ular, normal y ordinario es el de dia, y que el traba<o de noche es muy e5ceptional y <usti.cado solo por
ciertos motivos imperativamente inevitables. Por al&o la humanidad ha traba<adosiempre de dia.
/a:ones de hi&iene, de medicina, de moral, de cultura, de sociolo&ia, establecen de consuno que el traba<o
de nocho tiene muchos inconvenientes, y cuando no hay mas remedio que hacerlo es solo <usto que se
remunero me<or que de ordinario para resarcir hasa cierto punto al obrero de tales inconvenientes. 4s
indudable que el traba<o de noche no solo a la lar&a afecta a la salud del traba<ador, sino que le priva a este
de ciertas cosas que hacen relativamente a&radable la vida, como, v&r., un reposo completo e ininterrumpido
y ciertos ratos de sola:, ocio o e5pansion espiritual y cultural que podria tener al terminar el traba<o por la
tarde y durante las primeras horas de la noche. !e dice que el obrero puede descansar de dia despues de
haber traba<ado toda la nocheL pero puede acaso el reposo de dia dar al cuerpo aquel tonico y aquel efecto
reparador completo que solo puede proporcionar el reposo natural de nocheP !e dice tambien que al&unos
pre.eren traba<ar de noche ba<o nuestro clima abrasador, evitando asi el calor del dia. Mucho tememos, sin
embar&o, que esto sea me<or hablado que praticado. Creemos que desde tiempo inmemorial la re&la
universal es que el hombre trab<a de noche mas por necesidad irremediable que por placentera conveniencia.
A la opinion vul&ar, universal, hay que sumar la opinionpericial, el criterio especialista. ,a opinion de los
tratadistas y e5pertos milita decididamente en favor de la tesis de que el traba<o de noche es mas duro y
oneroso que el traba<o de dia, considerandose por esto con marcada repu&nancia y compeliendo
consi&uientemente a las &erencias capitalisticas a establecer una e-cala /a- alta e -alario- co/o incenti&o
a lo- o,rero- para aceptarlo. !e podrian citar virias autoridades, pero para no e5tender demasiado esta
ponencia optamos por transcriber solamente al&unas, a saberK
. . . Then, it must be remembered that it is distinctly unphysiolo&ical to turn the ni&ht into day and
deprive the body of the bene.cial e=ects of sunshine. The human or&anism revolts a&ainst this
procedure. Added to arti.cial li&htin& are reversed and unnatural times of eatin&, restin&, and
sleepin&. Much of the inferiority of ni&ht"ork can doubtless be traced to the failure of the "orkers to
secure proper rest and sleep, by day. -ecause of inability or the lack of opportunity to sleep,
ni&ht"orkers often spend their days in performin& domestic duties, <oinin& the family in the midday
meal, 'tinkerin& about the place', "atchin& the baseball &ame, attendin& the theater or takin& a ride
in the car. It is not stran&e that ni&ht"orkers tend to be less e?cient than day"orkers and lose more
time. . . FThe Mana&ement of ,abor /elations, by >atkins @ +odd, pa&e *)(.G.
1i&ht"ork. E 1i&ht"ork has &ained a measure of prominence in the modern industrial system in
connection "ith continuous industries, that is, industries in "hich the nature of the processes makes it
necessary to keep machinery and equipment in constant operation. 4ven in continuous industries the
tendency is de.nitely in the direction of '0/ shifts of % hours each, "ith provision for an automatic
chan&e of shift for all "orkers at stated intervals. !ome discussion has taken place "ith re&ard to the
len&ths of the period any "orkers should be allo"ed to remain on the ni&ht shift. A "eekly chan&e of
shifts is common, specially "here three or four shifts are in operationL in other cases the chan&e is
made fortni&htly or monthlyL in still other instances, no alternation is provided for, the "orkers
remainin& on day E or ni&ht"ork permanently, e5cept "here temporary chan&es are made for
individual convenience.
There is sharp di=erence of opinion concernin& the relative merits of these systems. Advocates of the
"eekly chan&e of shifts contend that the strain of ni&ht"ork and the di?culty of &ettin& adequate
sleep durin& the day make it un"ise for "orkers to remain on theB&raveyardB shift for more than a
"eek at a time. 0pponents ur&e that repeated chan&es make it more di?cult to settle do"n to either
kind of shift and that after the .rst "eek ni&ht"ork becomes less tryin& "hile the ability to sleep by
day increases. >orkers themselves react in various "ays to the di=erent systems. This much,
ho"ever, is certainK 'e" persons react favorably to ni&ht"ork, "hether the shift be continuous or
alternatin&. 0utside of continuous industries, ni&ht"ork can scarcely be <usti.ed, and, even in these,
it presents serious disadvanta&es "hich must be reco&ni:ed in planin& for industrial e?ciency,
stabili:ation of the "orkin& force, the promotion of industrial &ood#"ill, and the conservation of the
health and vitality of the "orkers.
1i&ht"ork cannot be re&arded as desirable, either from the point of vie" of the employer or of the
"a&e earner. It is uneconomical unless overhead costs are unusually heavy. 'requently the scale of
"a&es is hi&her as an inducement to employees to accept employment on the ni&ht shift, and the
rate of production is &enerally lo"er. FMana&ement of ,abor /elations, by >atkins @ +odd, pp. *))#
*)(L emphasis ours.G
Pa&e 54 of #$%
. . . The lack of sunli&ht tends to produce anemia and tuberculosis and to predispose to other ills.
1i&ht"ork brin&s increased liability to eyestrain and accident. !erious moral dan&ers also are likely to
result from the necessity of travelin& the streets alone at ni&ht, and from the interference "ith normal
home life. 'rom an economic point of vie", moreover, the investi&ations sho"ed that ni&ht"ork "as
unpro.table, bein& inferior to day "ork both in quality and in quantity. >herever it had been
abolished, in the lon& run the e?ciency both of the mana&ement and of the "orkers "as raised.
'urthermore, it "as found that ni&ht"ork la"s are a valuable aid in enforcin& acts .5in& the
ma5imum period of employment. FPrinciples of ,abor ,e&islation, by Commons and Andre"s, (th
/evised 4dition, p. 3().G
!pecial re&ulation of ni&ht"ork for adult men is a comparatively recent development. !ome 4uropean
countries have adopted la"s placin& special limitations on hours of ni&ht"ork for men, and others
prohibit such "ork e5cept in continuous processes. FPrinciples of ,abor le&islation, (th /evised 4dition
by Common @ Andre"s, p. 3(D.G
1i&ht"ork has almost invariably been looked upon "ith disfavor by students of the problem because
of the e5cessive strain involved, especially for "omen and youn& persons, the lar&e amount of lost
time consequent upon e5haustion of the "orkers, the additional strain and responsibility upon the
e5ecutive sta=, the tendency of e5cessively fati&ued "orkers to Bkeep &oin&B on arti.cial stimulants,
the &eneral curtailment of time for rest, leisure, and cultural improvement, and the fact that ni&ht
"orkers, althou&h precluded to an e5tent from the activities of day life, do attempt to enter into these
activities, "ith resultant impairment of physical "ell#bein&. It is not contended, of course, that
ni&ht"ork could be abolished in the continuous#process industries, but it is possible to put such
industries upon a three# or four#shifts basis, and to prohibit ni&ht"ork for "omen and children.
F,abor's Pro&ress and Problems, 9ol. I, p. (%(, by Professors Millis and Mont&omery.G
1i&ht"ork. E Civili:ed peoples are be&innin& to reco&ni:e the fact that e5cept in cases of necessity or
in periods of &reat emer&ency, ni&ht"ork is socially undesirable. nder our modern industrial system,
ho"ever, ni&ht"ork has &reatly aided the production of commodities, and has o=ered a si&ni.cant
method of cuttin& do"n the ever#increasin& overhead costs of industry. This result has led employers
to believe that such "ork is necessary and pro.table. 6ere a&ain one meets a conOict of economic
and social interests. nder these circumstances it is necessary to discover "hether ni&ht"ork has
deleterious e=ects upon the health of laborers and tends to reduce the ultimate supply of e?cient
labor. If it can proved that ni&ht"ork a=ects adversely both the quality and quantity of productive
labor, its discontinuance "ill undoubtedly be sanctioned by employers. 'rom a social point of vie",
even a relatively hi&h de&ree of e?ciency in ni&ht operations must be forfeited if it is purchased "ith
rapid e5haustion of the health and ener&y of the "orkers. 'rom an economic point of vie", ni&ht"ork
may be necessary if the employer is to meet the demand for his product, or if he is to maintain his
market in the face of increasin& competition or mountin& variable production costs.
Industrial e5perience has sho"n that the possession of e5tra#ordinary physical stren&th and self#
control facilitates the reversal of the ordinary routine of day "ork and ni&ht rest, "ith the little or no
unfavorable e=ect on health and e?ciency. nusual vitality and self#control, ho"ever, are not
common possessions. It has been found that the most serious obstacle to a reversal of the routine is
the lack of self#discipline. Many ni&ht "orkers enter into the numerous activities of day life that
preclude sleep, and continue to attempt to do their "ork at ni&ht. 4vidence &athered by the -ritish
6ealth of Munition >orkers' Committee places permanent ni&ht "orkers, "hether <ud&ed on the basis
of output or loss of time, in a very unfavorable positions as compared "ith day "orkers.
!ystems of ni&ht"ork di=er. There is the continuous system, in "hich employees labor by ni&ht and
do not attend the establishment at all by day, and the discontinuous system, in "hich the "orkers
chan&e to the day turn at re&ular intervals, usually every other "eek. There are, of course, minor
variations in these systems, dependin& upon the nature of the industry and the "ishes of
mana&ement. !uch bodies as the -ritish 6ealth Munition >orkers' Committee have &iven us valuable
conclusions concernin& the e=ect of ni&ht"ork. Continuous ni&ht"ork is de.nitely less productive
than the discontinuous system. The output of the continuous day shift does not make up for this loss
in production.
There is, moreover, a marked di=erence bet"een the rates of output of ni&ht and day shifts on the
discontinuous plan. In each case investi&ated the inferiority of ni&ht labor "as de.nitely established.
This inferiority is evidently the result of the ni&ht "orker's failure to secure proper amounts of sleep
and rest durin& the day. The system of continuous shifts, especially for "omen, is re&arded by all
investi&ators as undesirable. >omen on continuous ni&ht"ork are likely to perform domestic duties,
and this added strain undoubtedly accounts for the poorer results of their industrial activities. The
tendency to devote to amusement and other thin&s the time that should be spent in rest and sleep is
certainly as common amon& men as amon& "omen "orkers and accounts lar&ely for the loss of
Pa&e 5% of #$%
e?ciency and time on the part of both se5es in ni&ht"ork.
The case a&ainst ni&ht"ork, then, may be said to rest upon several &rounds. In the .rst place, there
are the remotely in<urious e=ects of permanent ni&ht"ork manifested in the later years of the
"orker's life. 0f more immediate importance to the avera&e "orker is the disarran&ement of his social
life, includin& the recreational activities of his leisure hours and the ordinary associations of normal
family relations. 'rom an economic point of vie", ni&ht"ork is to be discoura&ed because of its
adverse e=ect upon e?ciency and output. A moral ar&ument a&ainst ni&ht"ork in the case of "omen
is that the ni&ht shift forces the "orkers to &o to and from the factory in darkness. /ecent e5periences
of industrial nations have added much to the evidence a&ainst the continuation of ni&ht"ork, e5cept
in e5traordinary circumstances and unavoidable emer&encies. The immediate prohibition of ni&ht"ork
for all laborers is hardly practicableL its discontinuance in the case of "omen employees is
unquestionably desirable. 'The ni&ht "as made for rest and sleep and not for "ork' is a common
sayin& amon& "a&e#earnin& people, and many of them dream of an industrial order in "hich there
"ill be no ni&ht shift. F,abor Problems, $rd 4dition, pp. $)*#$)2, by >atkins @ +odd.G.
4n meritos de lo e5puesto, se denie&a el recurso de certiorari interpuesto y se con.rma la sentencia del
Tribunal +e /eclaciones Industriales, con costas a car&o de a recurrente. Asi se ordena.
#ara-, #re-. "nterino, 4eria, #a,lo, #er.ecto, +en%0on, #ailla an 5ua-on, ;;., estan conformes.
7./. 1o. ,#3)A% 0ctober $A, 3H(D
THE MANILA ELECTRIC COMPANY, petitioner,
vs.
THE PU&LIC UTILITIES EMPLOYEESA ASSOCIATION, respondent.
Ro--, $elp*, 'arra-co-o an Jana .or petitioner.
4erinan 9. ;arco- .or re-ponent.
9ulo%io R. Leru/ a- a/icu- curriae.
SC RULED IN FA7OR OF THE MANILA ELECTRIC COMPANY
Iss"e! :9et9er or not P"3.i Uti.ities perBor2inC p"3.i an 3e o2pe..ed to pa? additiona.
re2"neration to DorEersFe2p.o?ees Bor DorE done d"rinC S"nda?s and 9o.ida?s> No. &? virt"e oB
Setion 4, Co22onDea.t9 At No. 444
FERIA, J.:
This is an appeal by certiorari under /ule (( of the /ules of Court interposed by the petitioner Manila 4lectric
Company a&ainst the decision of 8uly 3*, 3H(% of the Court of Industrial /elations, "hich reads as follo"sK
Althou&h the practice of the company, accordin& to the manifestations of counsel for said company,
has been to &rant one day vacation"ith pay to every "orkin&man "ho had "orked for seven
consecutivedays includin& !undays, the Court considers <usvti.ed the oppositionpresented by the
"orkin&men to the e=ect that they need !undays andholidays for the observance of their reli&ion and
for rest. The Court,therefore, orders the respondent company to pay *A per cent increasefor overtime
"ork done on ordinary days and *A per cent increase for "ork done durin& !undays and le&al
holidays irrespective of the numberof days they "ork durin& the "eek.
The appellant contends that the said decision of the Court of Industrial/elations is a&ainst the provision of
section (, Common"ealth Act 1o. (((, "hich reads as follo"sK
1o person, .rm, or corporation, business establishment or place or center of labor shall compel an
employee or laborer to "ork durin& !undays and le&al holidays, unless he is paid an additionalsum of
at least t"enty#.ve per centum of his re&ular remunerationK #ro&ie, *owe&er, Thast this prohibition
shall not apply to publicutilities performin& some public service such as supplyin& &as,electricity,
po"er, "ater, or providin& means of transportationor communication.
After a careful consideration of the issue involved in this appeal, "e are of the opinion and so hold that the
decision of the Court of Industrial /elations is erroneous od contrary to the clear and e5press provision of the
above quoted provisions. The po"er of theCourt to settle industrial disputes bet"een capital and labor, "hich
include the .5in& of "a&es of employees or laborers, &ranted by the &eneral provisions of section 3 of
Common"ealth Act 1o. 3A$, has beenrestricted by the above quoted special provisions of Common"ealth
Act1o. (((, in the sense that public utilities supplyin& electricity,&as, po"er, "ater, or providin& means of
transportation or communication may compel their employees or laborers to "ork durin&!undays and le&al
holidays "ithout payin& them an additional compensation of not less than )* per cent of their re&ular
remuneration on said days.
!ince the provisions of the above quoted section (, are plain and unambi&uous and convey a clear and
Pa&e 5) of #$%
de.nite meanin&, there is no need of resortin& to the rules of statutory interpretation orconstruction in order
to determine the intention of the ,e&islature.!aid section 3 consists of t"o partsK the .rst, "hich is the
enactmentclause, prohibits a person, .rm or corporation, business establishment,or place or center of labor
from compellin& an employee or laborer to"ork durin& !undays and le&al holidays, unless the former pays
thelatter an additional sum of at least t"enty .ve per centum of his re&ular remunerationL and the second
part, "hich is an e5ception,e5empts public utilities performin& some public service, such assupplyin& &as,
electricity, po"er, "ater or providin& means oftransportation or communication, from the prohibition
establishedin the enactment clause. As the appellant is a public utility that supplies the electricity and
provides means of transportation to the public, it is evident that the appellant is e5empt from the
quali.edprohibition established in the enactment clause, and may compel its employees or laborers to "ork
durin& !undays and le&al holidays "ithout payin& them said e5tra compensation.
To hold that the e5ception or second part of section (, Common"ealthAct 1o. (((, only e5empts public
utilities mentioned therein from the prohibition to compel employees or laborers to "ork durin& !undaysand
le&al holidays, but not from the obli&ation to pay them an e5traor additional compensation for compellin&
them to "ork durin& thosedays, is to make the e5ception meanin&less or a superOuity, thatis, an e5ception to
a &eneral rule that does not e5ist, because theprohibition in the enactment clause is not an absolute
prohibitionto compel a laborer or employee to "ork durin& !undays and le&al holidays. The prohibition to
compel a laborer or employee to "orkdurin& those days is quali.ed by the clause Bunless he is paid
anadditional sum of at least t"enty .ve per centum of his re&ular remuneration,B "hich is inseparable from
the prohibition "hichthey qualify and of "hich they are a part and parcel. The secondportion of section 3 is in
reality an e5ception and not a pro&i-oalthou&h it is introduced by the "ord BprovidedBL and it is elementalthat
an e5ception takes out of an enactment somethin& "hich "ouldother"ise be part of the sub<ect matter of it.
To construe section (, Common"ealth Act 1o. (((, as e5emptin& public utilities, like the appellant, from the
obli&ation to pay the additional remuneration required by said section ( should they compel their employees
or laborers to "ork on !undays and le&alholidays, "ould not make such e5ception a class le&islation, violative
of the constitutional &uaranty of equal protectionof the la"s Fsection 3 M3N Art. III of our ConstitutionG. 'or itis
a "ell#settled rule in constitutional la" that a le&islation "hich a=ects "ith equal force all persons of the
same class and notthose of another, is not a class le&islation and does not infrin&esaid constitutional
&uaranty of equal protection of the la"s, if thedivision into classes is not arbitrary and is based on
di=erences"hich are apparent and reasonable. FMa&onn &-. Illinois Trust !avin&s -ank, 3DA 1. !., )2$, )H(L
!tate &-. 7arbroski, 333 Io"a, (H%L *% ,. /. A., *DA.G And it is evident that the division made by section (, of
Common"ealth Act 1o. (((, of persons, .rms, and corporations into t"o classesK one composed of public
utilities performin& somepublic service such as supplyin& &as, electricity, po"er, "ater orprovidin& means of
transportationL and another composed of persons,.rms, and corporations "hich are not public utilities and do
notperform said public service , is not arbitrary and is based ondi=erences "hich are apparent and
reasonable.
The division is not arbitrary, and the basis thereof is reasonable. Public utilities e5empted from the prohibition
set forth in the enactment clause of section (, Common"ealth Act 1o. (((, are required to perform a
continuous service includin& !undays andle&al holidays to the public, since the public &ood so demands,and
are not allo"ed to collect an e5tra char&e for services performed on those daysL "hile the others are not
required to do so and are free to operate or not their shops, business, or industries on !undays and le&al
holidays. If they operate andcompel their laborers to "ork on those days it is but <ust andnatural that they
should pay an e5tra compensation to them, because it is to be presumed that they can make money or
business by operatin& on those days even if they have to pay such e5tra remuneration. It "ould be unfair for
the la" to compel publicutilities like the appellant to pay an additional or e5tra compensation to laborers
"hom they have to compel to "ork durin&!undays and le&al holidays, in order to perform a continuous
service to the public. To require public utilities performin&service to do so, "ould be tantamount to penali:e
them forperformin& public service durin& said days in compliance "iththe requirement of the la" and public
interest.
The conclusion on "hich the dissentin& opinion is based, "hich is alsosubstantially the basis of the resolution
of the lo"er court, is that BAs to them Mreferrin& to public utilities like the petitionerN section( of
Common"ealth Act 1o. ((( may be considered as not havin& been enacted at all. . . . Therefore, "hen there
is a labor dispute as in the present case, and the dispute is submitted to the Court of Industrial /elations for
decision or settlement, the court is free to provide"hat it may deem <ust and more bene.cial to the interested
parties,and that freedom to settle and decide the case certainly includesthe po"er to &rant additional
compensation to "orkers "ho "ork on!undays and holidays. The &eneral po"er &ranted by section 3, (,
and3$ of Common"ealth Act 1o. 3A$, are not a=ected in any "ay or senseby section ( of Common"ealth Act
1o. (((.B
This conclusion .nds no support in la", reason or lo&ic. It is a "ell settled rule of statutory construction
adopted by courts of last resort in the !tates that if one statute enacts some thin& in &eneral terms,and
after"ards another statute is passed on the same sub<ect, "hichalthou&h e5pressed in a?rmative lan&ua&e
Pa&e 5$ of #$%
introduces special conditions or restrictions, the subsequent statute "ill usually be considered asrepealin& by
implication the former re&ardin& the matter covered by the subsequent actL and more specially so "hen the
latter act is e5pressed in ne&ative terms , as "here for e5ample it prohibits a certain thin& for bein& done, or
"here it declares that a &iven act shall be performed in a certain manner and not other"ise. F$ee -lack on
Interpretation of ,a"s, )d ed., p. $*(, and !utherland, !tatutory Construction, $d ed., 9ol. 3, section 3H)),
and cases therein cited.G
In accordance "ith this rule, the provision of Common"ealth Act 1o. 3A$ "hich confers upon the Court of
Industrial /elations po"er to settle dispute bet"een employers and employees in &eneral, includin& those
relatin& to compulsion of laborers to "ork on !undays and le&alholidays and additional compensation for
those "orkin& on those days,should be considered as impliedly repealed by section ( of Act 1o. (((,"hich
limits or restricts the minimum of the additional compensationand speci.es the persons, .rms or corporation
"ho may be requered to pay said compensation. That is, that the Court of Industrial /elations may, under the
provision of said section (, order a person, .rm orcorporation or business establishment or place or center of
labor "hocompel an employee or laborer to "ork on !undays and le&al holidays,to pay him an additional
compensation of at least )* per centum of his re&ular remunerationL but said court can not require public
utilities performin& public service mentioned therein to pay saide5tra compensation to laborers and
employees required by them to"ork on !undays and le&al holidays, because the necessity of publicservice so
requires.la"phil.net
It is evident that the principal purpose of the ,e&islature in enactin&said section (, is not only to restrict the
&eneral po"er of the Court of Industrial /elations &ranted by Act 1o. 3A$, to .5 the minimumadditional
compensation "hich an employer may be required to pay a laborer compelled to "ork on those days, but
principally to e5emptpublic utilities a=ected "ith public interest, from the payment ofsuch additional
compensation. If it "ere the intention of the la"makersin enactin& section ( of the Act 1o. ((( to .5 the limit
of the minimum of additional compensation of laborers "orkin& on those days, "ithoute5emptin& the public
utilities, that is, leavin& intact the &eneral po"er of the court to require the public utilities to pay said
additional compensation, the la" "ould have only provided, in substance, that allemployers are prohibited
from compellin& their laborers to "ork on!undays and le&al holidays "ithout payin& them an additional
compensationof not less than *A per cent of their re&ular remuneration.
That the intention of the ,e&islature is to e5empt the public utilitiesunder consideration from the prohibition
set forth in the enactmentclause of section (, Act 1o. (((, is supported by the provision ofsection 3H of Act
1o. 3A$. As amended this section provides Bthat wit* e:ception o. e/ployer- en%a%e in t*e operation o.
pu,lic -er&ice- orin t*e ,u-ine-- couple wit* a pu,lic intere-t, employers "ill notbe allo"ed to en&a&e the
services of the strike breakers "ithin .fteendays after the declaration of the strikeL "hich sho"s a contrario
-en-u that public utilities performin& public services are permitted to en&a&e the services of strike breakers
"ithin .fteen days, that is,immediately upon the declaration of the strike. The same public interest, the
reason of the e5ception in the above quoted provision, underlies the e5ception provided in section (, of Act
1o. (((.
Therefore, the rulin& of the Court of Industrial /elations quoted in the .rst part of this decision appealed from,
bein& contrary to la", is set aside. !o ordered.
#ara-, #a,lo, <ilao, +en%0on, +rione-, #ailla, an 5ua-on, JJ., concur.
7./. 1o. 3((%%( March 3*, )AA(
ASIAN TRANSMISSION CORPORATION, petitioner,
vs.
T9e Hon. COURT OF APPEALS, T9irteent9 Division, HON. FROILAN M. &ACUN0AN as 7o."ntar?
Ar3itrator, =ISHIN A. LAL:ANI, Union, Union representative to t9e Pane. Ar3itratorsG &ISI0 N0
ASIAN TRANSMISSION LA&OR UNION '&ATLU-G HON. &IEN7ENIDO T. LA0UESMA in 9is apait? as
Seretar? oB La3or and E2p.o?2entG and DIRECTOR CHITA 0. CILINDRO in 9er apait? as
Diretor oB &"rea" oB :orEinC Conditions,respondents.
SC RULED IN FA7OR OF RESPONDENTS
+ 4 C I ! I 0 1
CARPIO*MORALES, J.:
Petitioner, Asian Transmission Corporation, seeks via petition for certiorari under /ule %* of the 3HH* /ules of
Civil Procedure the nulli.cation of the March )2, )AAA +ecision3 of the Court of Appeals denyin& its petition to
annul 3G the March 33, 3HH$ B45planatory -ulletinB) of the +epartment of ,abor and 4mployment F+0,4G
entitled B>orkersI 4ntitlement to 6oliday Pay on April H, 3HH$, Ara" n& Xa&itin&an and 7ood 'ridayB, "hich
bulletin the +0,4 reproduced on 8anuary )$, 3HH2, )G the 8uly $3, 3HH2 +ecision$ of the Panel of 9oluntary
Arbitrators rulin& that the said e5planatory bulletin applied as "ell to April H, 3HH2, and $G the !eptember 32,
Pa&e 5( of #$%
3HH2( /esolution of the Panel of 9oluntary Arbitration denyin& its Motion for /econsideration.
The follo"in& facts, as found by the Court of Appeals, are undisputedK
The +epartment of ,abor and 4mployment F+0,4G, throu&h ndersecretary Cresenciano -. Tra<ano, issued an
45planatory -ulletin dated March 33, 3HH$ "herein it clari.ed, inter alia, that employees are entitled to )AA[
of their basic "a&e on April H, 3HH$, "hether un"orked, "hichM,N apart from bein& 7ood 'riday Mand,
t9ereBore, a .eCa. 9o.ida?N, is also6raw n% )a%itin%an MD9i9 is a.so a .eCa. 9o.ida?N. The bulletin readsK
B0n the correct payment of holiday compensation on April H, 3HH$ "hich apart from bein& 7ood 'riday is
also 6raw n% )a%itin%an, i.e., tDo reC".ar 9o.ida?s Ba..inC on t9e sa2e da?, this +epartment is of the
vie" that the covered employees are entitled to at least t"o hundred percent F)AA[G of their basic "a&e
even if said holiday is un"orked. The .rst 3AA[ represents the payment of holiday pay on April H, 3HH$ as
7ood 'riday and the second 3AA[ is the payment of holiday pay for the same date as Ara" n& Xa&itin&an.
!aid bulletin "as reproduced on 8anuary )$, 3HH2, "hen April H, 3HH2 "as both Maundy Thursday and 6raw
n% )a%itin%an 5 5 5 5
+espite the e5planatory bulletin, petitioner MAsian Transmission CorporationN opted to pay its dai.? paid
employees only 3AA[ of their basic pay on April H, 3HH2. /espondent -isi& n& Asian Transmission ,abor
nion F-AT,G protested.
In accordance "ith !tep % of the &rievance procedure of the Collective -ar&ainin& A&reement FC-AG e5istin&
bet"een petitioner and -AT,, the controversy "as submitted for voluntary arbitration. 5 5 5 5 0n 8uly $3,
3HH2, the 0?ce of the 9oluntary Arbitrator rendered a decision directin& petitioner to pay its covered
employees B)AA[ and not <ust 3AA[ of their re&ular daily "a&es for the un"orked April H, 3HH2 "hich covers
t"o re&ular holidays, namely, 6raw n% )a%iti%nan and Maundy Thursday.B F4mphasis and underscorin&
suppliedG
!ub<ect of interpretation in the case at bar is Article H( of the ,abor Code "hich readsK
A/T. H(. RiC9t to 9o.ida? pa?. * FaG 4very "orker shall be paid his re&ular daily "a&e durin& re&ular
holidays, e5cept in retail and service establishments re&ularly employin& less than ten F3AG "orkersL
FbG The employer may require an employee to "ork on any holiday but such employee shall be paid a
compensation equivalent to t"ice his re&ular rateL and
FcG As used in this Article, BholidayB includesK 1e" ;earIs +ay, Maundy Thursday, 7ood 'riday, the
ninth of April, the .rst of May, the t"elfth of 8une, the fourth of 8uly, the thirtieth of 1ovember, the
t"enty#.fth and thirtieth of +ecember and the day desi&nated by la" for holdin& a &eneral election,
"hich "as amended by 45ecutive 0rder 1o. )A$ issued on 8une $A, 3H2D, such that the re&ular holidays are
no"K
3. 1e" ;earIs +ay 8anuary 3
). Maundy Thursday Movable +ate
$. 7ood 'riday Movable +ate
(. Ara" n& Xa&itin&an April H F-ataan and Corre&idor +ayG
*. ,abor +ay May 3
%. Independence +ay 8une 3)
D. 1ational 6eroes +ay ,ast !unday of Au&ust
2. -onifacio +ay 1ovember $A
H. Christmas +ay +ecember )*
3A. /i:al +ay +ecember $A
In decidin& in favor of the -isi& n& Asian Transmission ,abor nion F-AT,G, the 9oluntary Arbitrator held that
Article H( of the ,abor Code provides for holiday pay for every re&ular holiday, the computation of "hich is
determined by a le&al formula "hich is not chan&ed by the fact that there are t"o holidays fallin& on one day,
like on April H, 3HH2 "hen it "as6raw n% )a%itin%an and at the same time "as Maundy ThursdayL and that
that the la", as amended, enumerates ten re&ular holidays for every year should not be interpreted as
authori:in& a reduction to nine the number of paid re&ular holidays B<ust because April H FAra" n& Xa&itin&anG
in certain years, like 3HH$ and 3HH2, is also 6oly 'riday or Maundy Thursday.B
In the assailed decision, the Court of Appeals upheld the .ndin&s of the 9oluntary Arbitrator, holdin& that the
Collective -ar&ainin& A&reement FC-AG bet"een petitioner and -AT,, the la" &overnin& the relations
Pa&e 5, of #$%
bet"een them, clearly reco&ni:es their intent to consider 6raw n% )a%itin%an and Maundy Thursday, on
"hatever date they may fall in any calendar year, as paid le&al holidays durin& the e=ectivity of the C-A and
that BMtNhere is no condition, quali.cation or e5ception for any variance from the clear intent that all holidays
shall be compensated.B*
The Court of Appeals further held that Bin the absence of an e5plicit provision in la" "hich provides for MaN
reduction of holiday pay if t"o holidays happen to fall on the same day, any doubt in the interpretation and
implementation of the ,abor Code provisions on holiday pay must be resolved in favor of labor.B
-y the present petition, petitioners raise the follo"in& issuesK
I
>64T64/ 0/ 10T T64 /4!P01+41T C0/T 0' APP4A,! C0MMITT4+ 7/A94 A-!4 0'
+I!C/4TI01 I1 4//0140!,; I1T4/P/4TI17 T64 T4/M! 0' T64 C0,,4CTI94 -A/7AI1I17
A7/44M41T -4T>441 T64 PA/TI4! A1+ !-!TITTI17 IT! 0>1 8+7M41T I1 P,AC4 0' T64
A7/44M41T! MA+4 -; T64 PA/TI4! T64M!4,94!
II
+I!C/4TI01 I1 60,+I17 T6AT A1; +0-T! A-0T T64 9A,I+IT; 0' T64 P0,ICI4! 411CIAT4+
I1 T64 4YP,A1AT0/; -,,4TI1 >A! ,AI+ T0 /4!T -; T64 /4I!!A1C4 0' T64 !AI+
4YP,A1AT0/; -,,4TI1
III
+I!C/4TI01 I1 P60,+I17 T64 9A,I+IT; 0' T64 4YP,A1AT0/; -,,4TI1 4941 >6I,4
A+MITTI17 T6AT T64 !AI+ -,,4IT1 >A! 10T A1 4YAMP,4 0' A 8+ICIA,, SA!I#8+ICIA,, 0/
014 0' T64 /,4! A1+ /47,ATI01! T6AT M+epartment of ,abor and 4mploymentN +0,4 MA;
P/0M,7AT4
I9
>64T64/ 0/ 10T T64 !4C/4TA/; 0' T64 +4PA/TM41T 0' ,A-0/ A1+ 4MP,0;M41T F+0,4G
-; I!!I17 4YP,A1AT0/; -,,4TI1 +AT4+ MA/C6 33, 3HH$, I1 T64 7I!4 0' P/09I+I17
7I+4,I14! 01 A/T. H( 0' T64 ,A-0/ C0+4, C0MMITT4+ 7/A94 A-!4 0' +I!C/4TI01, A! IT
,47I!,AT4+ A1+ I1T4/P/4T4+ ,47A, P/09I!I01! I1 !C6 A MA114/ A! T0 C/4AT4
0-,I7ATI01! >64/4 1014 A/4 I1T41+4+ -; T64 ,A>
9
+I!C/4TI01 I1 !!TAI1I17 T64 !4C/4TA/; 0' T64 +4PA/TM41T 0' ,A-0/ I1 /4IT4/ATI17 IT!
4YP,A1AT0/; -,,4TI1 +AT4+ MA/C6 33, 3HH$ A1+ I1 0/+4/I17 T6AT T64 !AM4 P0,IC;
0-TAI14+ '0/ AP/I, H, 3HH2 +4!PIT4 T64 /,I17! 0' T64 !P/4M4 C0/T T0 T64 C01T/A/;
9I
>64T64/ 0/ 10T /4!P01+41T!I ACT! >I,, +4P/I94 P4TITI014/ 0' P/0P4/T; >IT60T +4
P/0C4!! -; T64 B4YP,A1AT0/; -,,4TI1B A! >4,, A! 4SA, P/0T4CTI01 0' ,A>!
The petition is devoid of merit.
At the outset, it bears notin& that instead of assailin& the Court of Appeals +ecision by petition for revie"
on certiorariunder /ule (* of the 3HHD /ules of Civil Procedure, petitioner lod&ed the present petition for
certiorari under /ule %*.
M!Nince the Court of Appeals had <urisdiction over the petition under /ule %*, any alle&ed errors committed by
it in the e5ercise of its <urisdiction "ould be errors of <ud&ment "hich are revie"able by timely appeal and not
by a special civil action of certiorari. If the a&&rieved party fails to do so "ithin the re&lementary period, and
Pa&e 1+ of #$%
the decision accordin&ly becomes .nal and e5ecutory, he cannot avail himself of the "rit of certiorari, his
predicament bein& the e=ect of his deliberate inaction.
The appeal from a .nal disposition of the Court of Appeals is a petition for revie" under /ule (* and not a
special civil action under /ule %* of the /ules of Court, no" /ule (* and /ule %*, respectively, of the 3HHD
/ules of Civil Procedure. /ule (* is clear that the decisions, .nal orders or resolutions of the Court of Appeals
in any case, i.e., re&ardless of the nature of the action or proceedin& involved, may be appealed to this Court
by .lin& a petition for revie", "hich "ould be but a continuation of the appellate process over the ori&inal
case. nder /ule (* the re&lementary period to appeal is .fteen F3*G days from notice of <ud&ment or denial
of motion for reconsideration.
5 5 5
'or the "rit of certiorari under /ule %* of the /ules of Court to issue, a petitioner must sho" that he has no
plain, speedy and adequate remedy in the ordinary course of la" a&ainst its perceived &rievance. A remedy is
considered Bplain, speedy and adequateB if it "ill promptly relieve the petitioner from the in<urious e=ects of
the <ud&ment and the acts of the lo"er court or a&ency. In this case, appeal "as not only available but also a
speedy and adequate remedy.%
The records of the case sho" that follo"in& petitionerIs receipt on Au&ust 32, )AAA of a copy of the Au&ust
3A, )AAA /esolution of the Court of Appeals denyin& its Motion for /econsideration, it .led the present
petition for certiorari on !eptember 3*, )AAA, at "hich time the Court of Appeals decision had become .nal
and e5ecutory, the 3*#day period to appeal it under /ule (* havin& e5pired.
Technicality aside, this Court .nds no &round to disturb the assailed decision.
RULIN0! 6oliday pay is a le&islated bene.t enacted as part of the Constitutional imperative that the !tate
shall a=ord protection to labor.D Its purpose is not merely Bto prevent diminution of the monthly income of the
"orkers on account of "ork interruptions. In other "ords, althou&h the "orker is forced to take a rest, he
earns "hat he should earn, that is, his holiday pay.B2 It is also intended to enable the "orker to participate in
the national celebrations held durin& the days identi.ed as "ith &reat historical and cultural si&ni.cance.
Independence +ay F8une 3)G, 6raw n% )a%itin%an FApril HG, 1ational 6eroes +ay Flast !unday of Au&ustG,
-onifacio +ay F1ovember $AG and /i:al +ay F+ecember $AG "ere declared national holidays to a=ord 'ilipinos
"ith a recurrin& opportunity to commemorate the heroism of the 'ilipino people, promote national identity,
and deepen the spirit of patriotism. ,abor +ay FMay 3G is a day traditionally reserved to celebrate the
contributions of the "orkin& class to the development of the nation, "hile the reli&ious holidays desi&nated in
45ecutive 0rder 1o. )A$ allo" the "orker to celebrate his faith "ith his family.
As reOected above, Art. H( of the ,abor Code, as amended, a=ords a "orker the en<oyment of ten paid
re&ular holidays.HThe provision is mandatory,3A re&ardless of "hether an employee is paid on a monthly or
daily basis.33 nlike a bonus, "hich is a mana&ement prero&ative,3) holiday pay is a statutory bene.t
demandable under the la". !ince a "orker is entitled to the en<oyment of ten paid re&ular holidays, the fact
that t"o holidays fall on the same date should not operate to reduce to nine the ten holiday pay bene.ts a
"orker is entitled to receive.
It is elementary, under the rules of statutory construction, that "hen the lan&ua&e of the la" is clear and
unequivocal, the la" must be taken to mean e5actly "hat it says.3$ In the case at bar, there is nothin& in the
la" "hich provides or indicates that the entitlement to ten days of holiday pay shall be reduced to nine "hen
t"o holidays fall on the same day.
PetitionerIs assertion that =ellin%ton &. 5ra3ano3( has BoverruledB the +0,4 March 33, 3HH$ 45planatory
-ulletin does not lie. In =ellin%ton, the issue "as "hether 2ont9.?#paid employees are entitled to an
additional dayIs pay if a holiday falls on a !unday. This Court, in ans"erin& the issue in the ne&ative,
observed that in .5in& the monthly salary of its employees, =ellin%ton took into account Bevery "orkin& day
of the year includin& the holidays speci.ed by la" and e5cludin& only !unday.B In the instant case, t9e iss"e
is "hether dai.?#paid employees are entitled to be paid for t"o re&ular holidays "hich fall on the same
day.3*
In any event, Art. ( of the ,abor Code provides that all doubts in the implementation and interpretation of its
provisions, includin& its implementin& rules and re&ulations, shall be resolved in favor of labor. 'or the
"orkin& manIs "elfare should be the primordial and paramount consideration.3%
Moreover, !ec. 33, /ule I9, -ook III of the 0mnibus /ules to Implement the ,abor Code provides that B1othin&
in the la" or the rules shall <ustify an employer in "ithdra"in& or reducin& any bene.ts, supplements or
payments for un"orked re&ular holidays as provided in e5istin& individual or collective a&reement or
employer practice or policy.B3D
'rom the pertinent provisions of the C-A entered into by the parties, petitioner had obli&ated itself to pay for
Pa&e 1# of #$%
the le&al holidays as required by la". Thus, the 3HHD#3HH2 C-A incorporates the follo"in& provisionK
ARTICLE ;I7
PAID LE0AL HOLIDAYS
The follo"in& le&al holidays shall be paid by the C0MPA1; as required by la"K
3. 1e" ;earIs +ay F8anuary 3stG
). 6oly Thursday FmoveableG
$. 7ood 'riday FmoveableG
(. Ara" n& Xa&itin&an FApril HthG
*. ,abor +ay FMay 3stG
%. Independence +ay F8une 3)thG
D. -onifacio +ay M1ovember $AN
2. Christmas +ay F+ecember )*thG
H. /i:al +ay F+ecember $AthG
3A. 7eneral 4lection desi&nated by la", if declared public non#"orkin& holiday
33. 1ational 6eroes +ay F,ast !unday of Au&ustG
0nly an employee "ho "orks on the day immediately precedin& or after a re&ular holiday shall be entitled to
the holiday pay.
A paid le&al holiday occurrin& durin& the scheduled vacation leave "ill result in holiday payment in addition
to normal vacation pay but "ill not entitle the employee to another vacation leave.
nder similar circumstances, the C0MPA1; "ill &ive a dayIs "a&e for 1ovember 3st and +ecember $3st
"henever declared a holiday. >hen required to "ork on said days, the employee "ill be paid accordin& to Art.
9I, !ec. $- hereof.32
:HEREFORE, the petition is hereby +I!MI!!4+.
!0 0/+4/4+
7./. 1o. ,#%*(2) +ecember 3, 3H2D
<OSE RIHAL COLLE0E, petitioner,
vs.
NATIONAL LA&OR RELATIONS COMMISSION AND NATIONAL ALLIANCE OF TEACHERSFOFFICE
:OR=ERS,respondents.
SC RULED PARTIALLY IN FA7OR OF <OSE RIHAL COLLE0E! Not to pa? on reC".ar 9o.ida?s 3"t to
pa? on speia. 9o.ida?s
PARAS, J.:
This is a petition for certiorari "ith prayer for the issuance of a "rit of preliminary in<unction, seekin& the
annulment of the decision of the 1ational ,abor /elations Commission I in 1,/C Case 1o. /-#I9 )$A$D#D2
FCase 1o. /(#3#3A23#D3G entitled B1ational Alliance of Teachers and 0?ce >orkers and 8uan 4. 4stacio, 8aime
Medina, et al. vs. 8ose /i:al Colle&eB modifyin& the decision of the ,abor Arbiter as follo"sK
>64/4'0/4, in vie" of the fore&oin& considerations, the decision appealed from is
M0+I'I4+, in the sense that teachin& personnel paid by the hour are hereby declared to be
entitled to holiday pay.
!0 0/+4/4+.
The factual back&round of this case "hich is undisputed is as follo"sK
Petitioner is a non#stock, non#pro.t educational institution duly or&ani:ed and e5istin& under the la"s of the
Philippines. It has three &roups of employees cate&ori:ed as follo"sK FaG personnel on monthly basis, "ho
receive their monthly salary uniformly throu&hout the year, irrespective of the actual number of "orkin& days
in a month "ithout deduction for holidaysL FbG personnel on daily basis "ho are paid on actual days "orked
and they receive un"orked holiday pay and FcG colle&iate faculty "ho are paid on the basis of student
contract hour. -efore the start of the semester they si&n contracts "ith the colle&e undertakin& to meet their
classes as per schedule.
Pa&e 15 of #$%
nable to receive their correspondin& holiday pay, as claimed, from 3HD* to 3HDD, private respondent
1ational Alliance of Teachers and 0?ce >orkers F1AT0>G in behalf of the faculty and personnel of 8ose /i:al
Colle&e .led "ith the Ministry of ,abor a complaint a&ainst the colle&e for said alle&ed non#payment of
holiday pay, docketed as Case 1o. /A(#3A#23#D). +ue to the failure of the parties to settle their di=erences on
conciliation, the case "as certi.ed for compulsory arbitration "here it "as docketed as /-#I9#)$A$D#D2 F/ollo,
pp. 3**#3*%G.
After the parties had submitted their respective position papers, the ,abor Arbiter II rendered a decision on
'ebruary *, 3HDH, the dispositive portion of "hich readsK
>64/4'0/4, <ud&ment is hereby rendered as follo"sK
3. The faculty and personnel of the respondent 8ose /i:al Colle&e "ho are paid their salary by
the month uniformly in a school year, irrespective of the number of "orkin& days in a month,
"ithout deduction for holidays, are presumed to be already paid the 3A paid le&al holidays
and are no lon&er entitled to separate payment for the said re&ular holidaysL
). The personnel of the respondent 8ose /i:al Colle&e "ho are paid their "a&es daily are
entitled to be paid the 3A un"orked re&ular holidays accordin& to the pertinent provisions of
the /ules and /e&ulations Implementin& the ,abor CodeL
$. Colle&iate faculty of the respondent 8ose /i:al Colle&e "ho by contract are paid
compensation per student contract hour are not entitled to un"orked re&ular holiday pay
considerin& that these re&ular holidays have been e5cluded in the pro&rammin& of the
student contact hours. F/ollo. pp. )%#)DG
0n appeal, respondent 1ational ,abor /elations Commission in a decision promul&ated on 8une ), 3H2),
modi.ed the decision appealed from, in the sense that teachin& personnel paid by the hour are declared to
be entitled to holiday pay F/ollo. p. $$G.
6ence, this petition.
The so.e iss"e in this case is "hether or not the school faculty "ho accordin& to their contracts are paid per
lecture hour are entitled to un"orked holiday pay.
,abor Arbiter 8ulio Andres, 8r. found that faculty and personnel employed by petitioner "ho are paid their
salaries monthly, are uniformly paid throu&hout the school year re&ardless of "orkin& days, hence their
holiday pay are included therein "hile the daily paid employees are renumerated for "ork performed durin&
holidays per a?davit of petitioner's treasurer F/ollo, pp. D)#D$G.
There appears to be no problem therefore as to the .rst t"o classes or cate&ories of petitioner's "orkers.
The problem, ho"ever, lies "ith its faculty members, "ho are paid on an hourly basis, for "hile the ,abor
Arbiter sustains the vie" that said instructors and professors are not entitled to holiday pay, his decision "as
modi.ed by the 1ational ,abor /elations Commission holdin& the contrary. 0ther"ise stated, on appeal the
1,/C ruled that teachin& personnel paid by the hour are declared to be entitled to holiday pay.
Petitioner maintains the position amon& others, that it is not covered by -ook 9 of the ,abor Code on ,abor
/elations considerin& that it is a non# pro.t institution and that its hourly paid faculty members are paid on a
BcontractB basis because they are required to hold classes for a particular number of hours. In the
pro&rammin& of these student contract hours, le&al holidays are e5cluded and labelled in the schedule as Bno
class day. B 0n the other hand, if a re&ular "eek day is declared a holiday, the school calendar is e5tended to
compensate for that day. Thus petitioner ar&ues that the advent of any of the le&al holidays "ithin the
semester "ill not a=ect the faculty's salary because this day is not included in their schedule "hile the
calendar is e5tended to compensate for special holidays. Thus the pro&rammed number of lecture hours is
not diminished F/ollo, pp. 3*D# 3*2G.
The !olicitor 7eneral on the other hand, ar&ues that under Article H( of the ,abor Code FP.+. 1o. (() as
amendedG, holiday pay applies to all employees e5cept those in retail and service establishments. To deprive
therefore employees paid at an hourly rate of un"orked holiday pay is contrary to the policy considerations
underlyin& such presidential enactment, and its precursor, the -lue !unday ,a" F/epublic Act 1o. H(%G apart
from the constitutional mandate to &rant &reater ri&hts to labor FConstitution, Article II, !ection HG. F/eno, pp.
D%#DDG.
In addition, respondent 1ational ,abor /elations Commission in its decision promul&ated on 8une ), 3H2),
ruled that the purpose of a holiday pay is obviousL that is to prevent diminution of the monthly income of the
"orkers on account of "ork interruptions. In other "ords, althou&h the "orker is forced to take a rest, he
earns "hat he should earn. That is his holiday pay. It is no e5cuse therefore that the school calendar is
e5tended "henever holidays occur, because such happens only in cases of special holidays F/ollo, p. $)G.
Pa&e 11 of #$%
!ub<ect holiday pay is provided for in the ,abor Code FPresidential +ecree 1o. ((), as amendedG, "hich readsK
Art. H(. /i&ht to holiday pay E FaG 4very "orker shall be paid his re&ular daily "a&e durin&
re&ular holidays, e5cept in retail and service establishments re&ularly employin& less than ten
F3AG "orkersL
FbG The employer may require an employee to "ork on any holiday but such employee shall
be paid a compensation equivalent to t"ice his re&ular rateL ... B
and in the Implementin& /ules and /e&ulations, /ule I9, -ook III, "hich readsK
!4C. 2. <oliay pay o. certain e/ployee-. E FaG Private school teachers, includin& faculty
members of colle&es and universities, may not be paid for the re&ular holidays durin&
semestral vacations. They shall, ho"ever, be paid for the re&ular holidays durin& Christmas
vacations. ...
nder the fore&oin& provisions, apparently, the petitioner, althou&h a non#pro.t institution is under obli&ation
to &ive pay even on unworke re&ular holidays to hourly paid faculty members sub<ect to the terms and
conditions provided for therein.
>e believe that the aforementioned implementin& rule is not <usti.ed by the provisions of the la" "hich after
all is silent "ith respect to faculty members paid by the hour "ho because of their teachin& contracts are
obli&ed to "ork and consent to be paid only for "ork actually done Fe5cept "hen an emer&ency or a
fortuitous event or a national need calls for the declaration of special holidaysG. Re%ular holidays speci.ed as
such by la" are kno"n to both school and faculty members as no class daysLB certainly the latter do not
e5pect payment for said un"orked days, and this "as clearly in their minds "hen they entered into the
teachin& contracts.
0n the other hand, both the la" and the Implementin& /ules &overnin& holiday pay are silent as to payment
on !pecial Public 6olidays.
RULIN0! It is readily apparent that the declared purpose of the holiday pay "hich is the prevention of
diminution of the monthly income of the employees on account of "ork interruptions is defeated "hen a
re&ular class day is cancelled on account of a special public holiday and class hours are held on another
"orkin& day to make up for time lost in the school calendar. 0ther"ise stated, the faculty member, althou&h
forced to take a rest, does not earn "hat he should earn on that day. -e it noted that "hen a special public
holiday is declared, the faculty member paid by the hour is deprived of e5pected income, and it does not
matter that the school calendar is e5tended in vie" of the days or hours lost, for their income that could be
earned from other sources is lost durin& the e5tended days. !imilarly, "hen classes are called o= or
shortened on account of typhoons, Ooods, rallies, and the like, these faculty members must like"ise be paid,
"hether or not e5tensions are ordered.
Petitioner alle&es that it "as deprived of due process as it "as not noti.ed of the appeal made to the 1,/C
a&ainst the decision of the labor arbiter.
The Court has already set forth "hat is no" kno"n as the Bcardinal primaryB requirements of due process in
administrative proceedin&s, to "itK BF3G the ri&ht to a hearin& "hich includes the ri&ht to present one's case
and submit evidence in support thereofL F)G the tribunal must consider the evidence presentedL F$G the
decision must have somethin& to support itselfL F(G the evidence must be substantial, and substantial
evidence means such evidence as a reasonable mind mi&ht accept as adequate to support a conclusionL F*G
the decision must be based on the evidence presented at the hearin&, or at least contained in the record and
disclosed to the parties a=ectedL F%G the tribunal or body of any of its <ud&es must act on its or his o"n
independent consideration of the la" and facts of the controversy, and not simply accept the vie"s of a
subordinateL FDG the board or body should in all controversial questions, render its decisions in such manner
that the parties to the proceedin& can kno" the various issues involved, and the reason for the decision
rendered. B F+oruelo vs. Commission on 4lections, 3$$ !C/A $2) M3H2(NG.
The records sho" petitioner 8/C "as amply heard and represented in the instant proceedin&s. It submitted its
position paper before the ,abor Arbiter and the 1,/C and even .led a motion for reconsideration of the
decision of the latter, as "ell as an Br&ent Motion for 6earin& 4n -ancB F/ollo, p. 3D*G. Thus, petitioner's
claim of lack of due process is unfounded.
P/4MI!4! C01!I+4/4+, the decision of respondent 1ational ,abor /elations Commission is hereby set aside,
and a ne" one is hereby /41+4/4+K
FaG e:e/ptin% petitioner from payin& hourly paid faculty members their pay for re&ular holidays, "hether the
same be durin& the re%ular semesters of the school year or durin& semestral, Christmas, or 6oly >eek
vacationsL
FbG but orderin& petitioner to pay said faculty members their re&ular hourly rate on days declared as special
Pa&e 14 of #$%
holidays or for some reason classes are called o= or shortened for the hours they are supposed to have
tau&ht, "hether e5tensions of class days be ordered or notL in case of e5tensions said faculty members shall
like"ise be paid their hourly rates should they teach durin& said e5tensions.
!0 0/+4/4+.
7./. 1o. DH)** 8anuary )A, 3HH)
UNION OF FILIPRO EMPLOYEES 'UFE-, petitioner,
vs.
&ENI0NO 7I7AR, <R., NATIONAL LA&OR RELATIONS COMMISSION and NESTLJ PHILIPPINES, INC.
'Bor2er.? FILIPRO, INC.-, respondents.
Jo-e '. 9-pina- .or petitioner.
$i%uion Reyna, ;ontecillo > !n%-iako .or pri&ate re-ponent.

0UTIERREH, <R., J.:
This labor dispute stems from the e5clusion of sales personnel from the holiday pay a"ard and the chan&e of
the divisor in the computation of bene.ts from )*3 to )%3 days.
0n 1ovember 2, 3H2*, respondent 'ilipro, Inc. Fno" 1estle Philippines, Inc.G .led "ith the 1ational ,abor
/elations Commission F1,/CG a petition for declaratory relief seekin& a rulin& on its ri&hts and obli&ations
respectin& claims of its monthly paid employees for holiday pay in the li&ht of the Court's decision
in '*artere +ank 9/ployee- 6--ociation &.!ple F3$2 !C/A )D$ M3H2*NG.
-oth 'ilipro and the nion of 'ilipino 4mployees F'4G a&reed to submit the case for voluntary arbitration and
appointed respondent -eni&no 9ivar, 8r. as voluntary arbitrator.
0n 8anuary ), 3H2A, Arbitrator 9ivar rendered a decision directin& 'ilipro toK
pay its monthly paid employees holiday pay pursuant to Article H( of the Code, sub<ect only to
the e5clusions and limitations speci.ed in Article 2) and such other le&al restrictions as are
provided for in the Code. FRollo,
p. $3G
'ilipro .led a motion for clari.cation seekin& F3G the limitation of the a"ard to three years, F)G the e5clusion of
salesmen, sales representatives, truck drivers, merchandisers and medical representatives Fhereinafter
referred to as sales personnelG from the a"ard of the holiday pay, and F$G deduction from the holiday pay
a"ard of overpayment for overtime, ni&ht di=erential, vacation and sick leave bene.ts due to the use of )*3
divisor. FRollo, pp. 3$2#3(*G
Petitioner '4 ans"ered that the a"ard should be made e=ective from the date of e=ectivity of the ,abor
Code, that their sales personnel are not .eld personnel and are therefore entitled to holiday pay, and that the
use of )*3 as divisor is an established employee bene.t "hich cannot be diminished.
0n 8anuary 3(, 3H2%, the respondent arbitrator issued an order declarin& that the e=ectivity of the holiday
pay a"ard shall retroact to 1ovember 3, 3HD(, the date of e=ectivity of the ,abor Code. 6e ad<ud&ed,
ho"ever, that the company's sales personnel are .eld personnel and, as such, are not entitled to holiday pay.
6e like"ise ruled that "ith the &rant of 3A days' holiday pay, the divisor should be chan&ed from )*3 to )%3
and ordered the reimbursement of overpayment for overtime, ni&ht di=erential, vacation and sick leave pay
due to the use of )*3 days as divisor.
-oth 1estle and '4 .led their respective motions for partial reconsideration. /espondent Arbitrator treated
the t"o motions as appeals and for"arded the case to the 1,/C "hich issued a resolution dated May )*,
3H2D remandin& the case to the respondent arbitrator on the &round that it has no <urisdiction to revie"
decisions in voluntary arbitration cases pursuant to Article )%$ of the ,abor Code as amended by !ection 3A,
-atas Pambansa -l&. 3$A and as implemented by !ection * of the rules implementin& -.P. -l&. 3$A.
6o"ever, in a letter dated 8uly %, 3H2D, the respondent arbitrator refused to take co&ni:ance of the case
reasonin& that he had no more <urisdiction to continue as arbitrator because he had resi&ned from service
e=ective May 3, 3H2%.
6ence, this petition.
The petitioner union raises the follo"in& iss"es!
3G >hether or not 1estle's sales personnel are entitled to holiday payL and
)G >hether or not, concomitant "ith the a"ard of holiday pay, the divisor should be chan&ed from )*3 to )%3
Pa&e 1% of #$%
days and "hether or not the previous use of )*3 as divisor resulted in overpayment for overtime, ni&ht
di=erential, vacation and sick leave pay.
The petitioner insists that respondent's sales personnel are not .eld personnel under Article 2) of the ,abor
Code. The respondent company controverts this assertion.
nder Article 2), .eld personnel are not entitled to holiday pay. !aid article de.nes .eld personnel as Bnon#
a&ritultural employees "ho re&ularly perform their duties a"ay from the principal place of business or branch
o?ce of the employer and "hose actual hours of "ork in the .eld cannot be determined "ith reasonable
certainty.B
The controversy centers on the interpretation of the clause B"hose actual hours of "ork in the .eld cannot be
determined "ith reasonable certainty.B
It is undisputed that these sales personnel start their .eld "ork at 2KAA a.m. after havin& reported to the
o?ce and come back to the o?ce at (KAA p.m. or (K$A p.m. if they are Makati#based.
The petitioner maintains that the period bet"een 2KAA a.m. to (KAA or (K$A p.m. comprises the sales
personnel's "orkin& hours "hich can be determined "ith reasonable certainty.
The Court does not a&ree. The la" requires that the actual hours of "ork in the .eld be reasonably
ascertained. The company has no "ay of determinin& "hether or not these sales personnel, even if they
report to the o?ce before 2KAA a.m. prior to .eld "ork and come back at (K$A p.m, really spend the hours in
bet"een in actual .eld "ork.
>e concur "ith the follo"in& disquisition by the respondent arbitratorK
RULIN0! The requirement for the salesmen and other similarly situated employees to report
for "ork at the o?ce at 2KAA a.m. and return at (KAA or (K$A p.m. is not "ithin the realm of
"ork in the .eld as de.ned in the Code but an e5ercise of purely mana&ement prero&ative of
providin& administrative control over such personnel. This does not in any manner provide a
reasonable level of determination on the actual .eld "ork of the employees "hich can be
reasonably ascertained. The theoretical analysis that salesmen and other similarly#situated
"orkers re&ularly report for "ork at 2KAA a.m. and return to their home station at (KAA or (K$A
p.m., creatin& the assumption that their .eld "ork is supervised, is surface pro<ection. Actual
.eld "ork be&ins after 2KAA a.m., "hen the sales personnel follo" their .eld itinerary, and
ends immediately before (KAA or (K$A p.m. "hen they report back to their o?ce. The period
bet"een 2KAA a.m. and (KAA or (K$A p.m. comprises their hours of "ork in the .eld, the e5tent
or scope and result of "hich are sub<ect to their individual capacity and industry and "hich
Bcannot be determined "ith reasonable certainty.B This is the reason "hy e=ective supervision
over .eld "ork of salesmen and medical representatives, truck drivers and merchandisers is
practically a physical impossibility. Consequently, they are e5cluded from the ten holidays
"ith pay a"ard. FRollo, pp. $%#$DG
Moreover, the requirement that Bactual hours of "ork in the .eld cannot be determined "ith reasonable
certaintyB must be read in con<unction "ith /ule I9, -ook III of the Implementin& /ules "hich providesK
/ule I9 6olidays "ith Pay
!ec. 3. Covera&e E This rule shall apply to all employees e5ceptK
555 555 555
FeG 'ield personnel and other employees w*o-e ti/e an per.or/ance i- un-uper&i-e ,y t*e
e/ployer . . . F4mphasis suppliedG
>hile contendin& that such rule added another element not found in the la" FRollo, p. 3$G, the petitioner
nevertheless attempted to sho" that its a=ected members are not covered by the abovementioned rule. The
petitioner asserts that the company's sales personnel are strictly supervised as sho"n by the !0+
F!upervisor of the +ayG schedule and the company circular dated March 3*, 3H2( FAnne5es ) and $, Rollo, pp.
*$#**G.
Contrary to the contention of the petitioner, the Court .nds that the aforementioned rule did not add another
element to the ,abor Code de.nition of .eld personnel. The clause B"hose time and performance is
unsupervised by the employerB did not amplify but merely interpreted and e5pounded the clause B"hose
actual hours of "ork in the .eld cannot be determined "ith reasonable certainty.B The former clause is still
"ithin the scope and purvie" of Article 2) "hich de.nes .eld personnel . 6ence, in decidin& "hether or not an
employee's actual "orkin& hours in the .eld can be determined "ith reasonable certainty, query must be
made as to "hether or not such employee's time and performance is constantly supervised by the employer.
The !0+ schedule adverted to by the petitioner does not in the least si&nify that these sales personnel's time
Pa&e 1) of #$%
and performance are supervised. The purpose of this schedule is merely to ensure that the sales personnel
are out of the o?ce not later than 2KAA a.m. and are back in the o?ce not earlier than (KAA p.m.
,ike"ise, the Court fails to see ho" the company can monitor the number of actual hours spent in .eld "ork
by an employee throu&h the imposition of sanctions on absenteeism contained in the company circular of
March 3*, 3H2(.
The petitioner claims that the fact that these sales personnel are &iven incentive bonus every quarter based
on their performance is proof that their actual hours of "ork in the .eld can be determined "ith reasonable
certainty.
The Court thinks other"ise.
The criteria for &rantin& incentive bonus areK F3G attainin& or e5ceedin& sales volume based on sales tar&etL
F)G &ood collection performanceL F$G proper compliance "ith &ood market hy&ieneL F(G &ood merchandisin&
"orkL F*G minimal market returnsL and F%G proper truck maintenance. FRollo, p. 3HAG.
The above criteria indicate that these sales personnel are &iven incentive bonuses precisely because of the
di?culty in measurin& their actual hours of .eld "ork. These employees are evaluated by the result of their
"ork and not by the actual hours of .eld "ork "hich are hardly susceptible to determination.
In $an ;i%uel +rewery, "nc. &. (e/ocratic La,or !r%ani0ation F2 !C/A %3$ M3H%$NG, the Court had occasion to
discuss the nature of the <ob of a salesman. Citin& the case of Jewel 5ea 'o. &. =illia/-, C.C.A. 0kla., 332 '. )d
)A), the Court statedK
The reasons for e5cludin& an outside salesman are fairly apparent. !uch a salesman, to a
&reater e5tent, "orks individually. There are no restrictions respectin& the time he shall "ork
and he can earn as much or as little, "ithin the ran&e of his ability, as his ambition dictates. In
lieu of overtime he ordinarily receives commissions as e5tra compensation. 6e "orks a"ay
from his employer's place of business, is not sub<ect to the personal supervision of his
employer, and his employer has no "ay of kno"in& the number of hours he "orks per day.
>hile in that case the issue "as "hether or not salesmen "ere entitled to overtime pay, the same rationale
for their e5clusion as .eld personnel from holiday pay bene.ts also applies.
The petitioner union also assails the respondent arbitrator's rulin& that, concomitant "ith the a"ard of
holiday pay, the divisor should be chan&ed from )*3 to )%3 days to include the additional 3A holidays and the
employees should reimburse the amounts overpaid by 'ilipro due to the use of )*3 days' divisor.
Arbitrator 9ivar's rationale for his decision is as follo"sK
. . . The ne" doctrinal policy established "hich ordered payment of ten holidays certainly adds
to or accelerates the basis of conversion and computation by ten days. >ith the inclusion of
ten holidays as paid days, the divisor is no lon&er )*3 but )%3 or )%) if election day is
counted. This is indeed an e5tremely di?cult le&al question of interpretation "hich accounts
for "hat is claimed as fallin& "ithin the concept of B-olutio ine,ti.B
>hen the claim of the nion for payment of ten holidays "as &ranted, there "as a
consequent need to abandon that )*3 divisor. To maintain it "ould create an impossible
situation "here the employees "ould bene.t "ith additional ten days "ith pay but "ould
simultaneously en<oy hi&her bene.ts by discardin& the same ten days for purposes of
computin& overtime and ni&ht time services and considerin& sick and vacation leave credits.
Therefore, reimbursement of such overpayment "ith the use of )*3 as divisor arises
concomitant "ith the a"ard of ten holidays "ith pay. FRollo, p. $(G
The divisor assumes an important role in determinin& "hether or not holiday pay is already included in the
monthly paid employee's salary and in the computation of his daily rate. This is the thrust of our
pronouncement in '*artere +ank 9/ployee- 6--ociation &. !ple F-upraG. In that case, >e heldK
It is ar&ued that even "ithout the presumption found in the rules and in the policy instruction,
the company practice indicates that the monthly salaries of the employees are so computed
as to include the holiday pay provided by la". The petitioner contends other"ise.
0ne stron& ar&ument in favor of the petitioner's stand is the fact that the Chartered -ank, in
computin& overtime compensation for its employees, employs a BdivisorB of )*3 days. The
)*3 "orkin& days divisor is the result of subtractin& all !aturdays, !undays and the ten F3AG
le&al holidays from the total number of calendar days in a year. If the employees are already
paid for all non#"orkin& days, the divisor should be $%* and not )*3.
In the petitioner's case, its computation of daily ratio since !eptember 3, 3H2A, is as follo"sK
Pa&e 1$ of #$%
monthly rate 5 3) months
EEEEEEEEEEE
)*3 days
'ollo"in& the criterion laid do"n in the '*artere +ank case, the use of )*3 days' divisor by respondent
'ilipro indicates that holiday pay is not yet included in the employee's salary, other"ise the divisor should
have been )%3.
It must be stressed that the daily rate, assumin& there are no intervenin& salary increases, is a constant
.&ure for the purpose of computin& overtime and ni&ht di=erential pay and commutation of sick and vacation
leave credits. 1ecessarily, the daily rate should also be the same basis for computin& the 3A unpaid holidays.
The respondent arbitrator's order to chan&e the divisor from )*3 to )%3 days "ould result in a lo"er daily
rate "hich is violative of the prohibition on non#diminution of bene.ts found in Article 3AA of the ,abor Code.
To maintain the same daily rate if the divisor is ad<usted to )%3 days, then the dividend, "hich represents the
employee's annual salary, should correspondin&ly be increased to incorporate the holiday pay. To illustrate, if
prior to the &rant of holiday pay, the employee's annual salary is P)*,3AA, then dividin& such .&ure by )*3
days, his daily rate is P3AA.AA After the payment of 3A days' holiday pay, his annual salary already includes
holiday pay and totals P)%,3AA FP)*,3AA ] 3,AAAG. +ividin& this by )%3 days, the daily rate is still P3AA.AA.
There is thus no merit in respondent 1estle's claim of overpayment of overtime and ni&ht di=erential pay and
sick and vacation leave bene.ts, the computation of "hich are all based on the daily rate, since the daily rate
is still the same before and after the &rant of holiday pay.
/espondent 1estle's invocation of -olutio ine,iti, or payment by mistake, due to its use of )*3 days as
divisor must fail in li&ht of the ,abor Code mandate that Ball doubts in the implementation and interpretation
of this Code, includin& its implementin& rules and re&ulations, shall be resolved in favor of labor.B FArticle (G.
Moreover, prior to !eptember 3, 3H2A, "hen the company "as on a %#day "orkin& schedule, the divisor used
by the company "as $A$, indicatin& that the 3A holidays "ere like"ise not paid. >hen 'ilipro shifted to a *#
day "orkin& schebule on !eptember 3, 3H2A, it had the chance to rectify its error, if ever there "as one but
did not do so. It is no" too late to alle&e payment by mistake.
1estle also questions the voluntary arbitrator's rulin& that holiday pay should be computed from 1ovember 3,
3HD(. This rulin& "as not questioned by the petitioner union as obviously said decision "as favorable to it.
Technically, therefore, respondent 1estle should have .led a separate petition raisin& the issue of e=ectivity
of the holiday pay a"ard. This Court has ruled that an appellee "ho is not an appellant may assi&n errors in
his brief "here his purpose is to maintain the <ud&ment on other &rounds, but he cannot seek modi.cation or
reversal of the <ud&ment or a?rmative relief unless he has also appealed. F'ranco v. Intermediate Appellate
Court, 3D2 !C/A $$3 M3H2HN, citin& ,a Campana 'ood Products, Inc. v. Philippine Commercial and Industrial
-ank, 3() !C/A $H( M3H2%NG. 1evertheless, in order to fully settle the issues so that the e5ecution of the
Court's decision in this case may not be needlessly delayed by another petition, the Court resolved to take up
the matter of e=ectivity of the holiday pay a"ard raised by 1estle.
1estle insists that the reckonin& period for the application of the holiday pay a"ard is 3H2* "hen
the '*artere +ankdecision, promul&ated on Au&ust )2, 3H2*, became .nal and e5ecutory, and not from the
date of e=ectivity of the ,abor Code. Althou&h the Court does not entirely a&ree "ith 1estle, "e .nd its claim
meritorious.
In "n-ular +ank o. 6-ia an 6/erica 9/ployee-? @nion A"+669@B &. "ncion%, 3$) !C/A %%$ M3H2(N, hereinafter
referred to as the I-AA case, the Court declared that !ection ), /ule I9, -ook III of the implementin& rules and
Policy Instruction 1o. H, issued by the then !ecretary of ,abor on 'ebruary 3%, 3HD% and April )$, 3HD%,
respectively, and "hich e5cluded monthly paid employees from holiday pay bene.ts, are null and void. The
Court therein reasoned that, in the &uise of clarifyin& the ,abor Code's provisions on holiday pay, the
aforementioned implementin& rule and policy instruction amended them by enlar&in& the scope of their
e5clusion. The '*artere +ank case reiterated the above rulin& and added the BdivisorB test.
6o"ever, prior to their bein& declared null and void, the implementin& rule and policy instruction en<oyed the
presumption of validity and hence, 1estle's non#payment of the holiday bene.t up to the promul&ation of the
I-AA case on 0ctober )$, 3H2( "as in compliance "ith these presumably valid rule and policy instruction.
In the case of (e 6%,ayani &. #*ilippine National +ank, $2 !C/A ()H M3HD3N, the Court discussed the e=ect to
be &iven to a le&islative or e5ecutive act subsequently declared invalidK
555 555 555
. . . It does not admit of doubt that prior to the declaration of nullity such challen&ed
le&islative or e5ecutive act must have been in force and had to be complied "ith. This is so as
until after the <udiciary, in an appropriate case, declares its invalidity, it is entitled to
Pa&e 1( of #$%
obedience and respect. Parties may have acted under it and may have chan&ed their
positions. >hat could be more .ttin& than that in a subsequent liti&ation re&ard be had to
"hat has been done "hile such le&islative or e5ecutive act "as in operation and presumed to
be valid in all respects. It is no" accepted as a doctrine that prior to its bein& nulli.ed, its
e5istence as a fact must be reckoned "ith. This is merely to reOect a"areness that precisely
because the <udiciary is the &overnment or&an "hich has the .nal say on "hether or not a
le&islative or e5ecutive measure is valid, a period of time may have elapsed before it can
e5ercise the po"er of <udicial revie" that may lead to a declaration of nullity. It "ould be to
deprive the la" of its quality of fairness and <ustice then, if there be no reco&nition of "hat
had transpired prior to such ad<udication.
In the lan&ua&e of an American !upreme Court decisionK BThe actual e5istence of a statute,
prior to such a determination of MunconstitutionalityN, is an operative fact and may have
consequences "hich cannot <ustly be i&nored. The past cannot al"ays be erased by a ne"
<udicial declaration. The e=ect of the subsequent rulin& as to invalidity may have to be
considered in various aspects, E "ith respect to particular relations, individual and corporate,
and particular conduct, private and o?cial.B FChicot County +raina&e +ist. v. -a5ter !tates
-ank, $A2 ! $D3, $D( M3H(ANG. This lan&ua&e has been quoted "ith approval in a resolution
in6raneta &. <ill FH$ Phil. 3AA) M3H*)NG and the decision in ;anila ;otor 'o., "nc. &. 4lore- FHH
Phil. D$2 M3H*%NG. An even more recent instance is the opinion of 8ustice âldivar speakin& for
the Court in 4ernane0 &. 'uer&a an 'o. F)3 !C/A 3AH* M3H%DN. FAt pp. ($(#($*G
The Boperative factB doctrine reali:es that in declarin& a la" or rule null and void, undue harshness and
resultin& unfairness must be avoided. It is no" almost the end of 3HH3. To require various companies to reach
back to 3HD* now and nullify acts done in &ood faith is unduly harsh. 3H2( is a fairer reckonin& period under
the facts of this case.
Applyin& the aforementioned doctrine to the case at bar, it is not far#fetched that 1estle, relyin& on the
implicit validity of the implementin& rule and policy instruction before this Court nulli.ed them, and thinkin&
that it "as not obli&ed to &ive holiday pay bene.ts to its monthly paid employees, may have been moved to
&rant other concessions to its employees, especially in the collective bar&ainin& a&reement. This possibility is
bolstered by the fact that respondent 1estle's employees are amon& the hi&hest paid in the industry. >ith
this consideration, it "ould be unfair to impose additional burdens on 1estle "hen the non#payment of the
holiday bene.ts up to 3H2( "as not in any "ay attributed to 1estle's fault.
The Court thereby resolves that the &rant of holiday pay be e=ective, not from the date of promul&ation of
the Chartered -ank case nor from the date of e=ectivity of the ,abor Code, but from 0ctober )$, 3H2(, the
date of promul&ation of theI-AA case.
>64/4'0/4, the order of the voluntary arbitrator in hereby M0+I'I4+. The divisor to be used in computin&
holiday pay shall be )*3 days. The holiday pay as above directed shall be computed from 0ctober )$, 3H2(.
In all other respects, the order of the respondent arbitrator is hereby A''I/M4+.
!0 0/+4/4+.
7./. 1o. 332)2H +ecember 3$, 3HHH
TRANS*ASIA PHILS. EMPLOYEES ASSOCIATION 'TAPEA- and ARNEL 0AL7EH, petitioners,
vs.
NATIONAL LA&OR RELATIONS COMMISSION, TRANS*ASIA 'PHILS.- and ERNESTO S. DE
CASTRO,respondents.
SC RULED IN FA7OR OF RESPONDENTS :ITH MODIFICATIONS ON NLRC DECISION
=APUNAN, J.:
This petition for certiorari under /ule %* of the /ules of Court seeks to reverse and set aside the /esolutions,
dated )$ 1ovember 3HH$ and 3$ !eptember 3HH( of the 1ational ,abor /elations Commission FB1,/CBG
"hich dismissed petitioners' appeal from the adverse decision of the labor arbiter and denied petitioners'
motion for reconsideration, respectively.
The antecedents of this case are as follo"sK
0n D 8uly 3H22, Trans#Asia Philippines 4mployees Association FTAP4AG, the duly#reco&ni:ed collective
bar&ainin& a&ent of the monthly#paid rank#and#.le employees of Trans#Asia FPhils.G, entered into a Collective
-ar&ainin& A&reement FBC-ABG "ith their employer. The C-A, "hich "as to be e=ective from 3 April 3H22 up
to $3 March 3HH3, provided for, amon& others, the payment of holiday pay "ith a stipulation that if an
employee is permitted to "ork on a le&al holiday, the said employee "ill receive a salary equivalent to )AA[
Pa&e 1, of #$%
of the re&ular daily "a&e plus a %A[ premium pay.
+espite the conclusion of the C-A, ho"ever, an issue "as still left unresolved "ith re&ard to the claim of
TAP4A for payment of holiday pay coverin& the period from 8anuary of 3H2* up to +ecember of 3H2D. Thus,
the parties under"ent preventive mediation meetin&s "ith a representative from the 1ational Mediation and
Conciliation -oard in order to settle their disa&reement on this particular issue. !ince the parties "ere not
able to arrive at an amicable settlement despite the conciliation meetin&s, TAP4A, led by its President,
petitioner Arnie 7alve:, .led a complaint before the labor arbiter, on 32 Au&ust 3H22, for the payment of their
holiday pay in arrears. 0n 32 !eptember 3H22, petitioners amended their complaint to include the payment
of holiday pay for the duration of the recently concluded C-A Ffrom 3H22 to 3HH3G, unfair labor practice,
dama&es and attorney's fees.
In their Position Paper, petitioners contended that their claim for holiday pay in arrears is based on the non#
inclusion of the same in their monthly pay. In this re&ard, petitioners cited certain circumstances "hich,
accordin& to them, "ould support their claim for past due holiday pay. 'irst, petitioners presented Trans#Asia's
4mployees' Manual "hich requires, as a pre#condition for the payment of holiday pay, that the employee
should have "orked or "as on authori:ed leave "ith pay on the day immediately precedin& the le&al holiday.
Petitioners ar&ued that Bif the intention Mof Trans#AsiaN "as not to pay holiday pay in addition to the
employee's monthly pay, then there "ould be no need to impose or specify the pre#condition for the
payment.B # !econd, petitioners pro=ered as evidence their appointment papers "hich do not contain any
stipulation on the inclusion of holiday pay in their monthly salary. Accordin& to petitioners, the absence of
such stipulation is an indication that the mandated holiday pay is not incorporated in the monthly salary.
Third, petitioners noted the inclusion of a provision in the C-A for the payment of an amount equivalent to
)AA[ of the re&ular daily "a&e plus %A[ premium pay to employees "ho are permitted to "ork on a re&ular
holiday. Petitioners claimed that this very &enerous provision "as the remedy availed of by Trans#Asia to allo"
its employees to recoup the holiday pay in arrears and, as such, is a tacit admission of the non#payment of
the same durin& the period prior to the current C-A.
'inally, petitioners cited the current C-A provision "hich obli&ates Trans#Asia to &ive holiday pay. Petitioners
asserted that this provision is an ackno"led&ment by Trans#Asia of its failure to pay the same in the past
since, if it "as already &ivin& holiday pay prior to the C-A, there "as no need to stipulate on the said
obli&ation in the current C-A.
>ith re&ard to the claim for the payment of holiday pay for the duration of the C-A, the accusation of unfair
labor practice and the claim for dama&es and attorney's fees, petitioners asserted that Trans#Asia is &uilty of
bad faith in ne&otiatin& and e5ecutin& the current C-A since, after it reco&ni:ed the ri&ht of the employees to
receive holiday pay, Trans#Asia alle&edly refused to honor the C-A provision on the same.
In response to petitioner's contentions, Trans#Asia refuted the same in -eriati/. >ith re&ard to the pre#
condition for the payment of holiday pay stated in the 4mployees' Manual and the absence of a stipulation on
holiday pay in the employees' appointment papers, Trans#Asia asserted that the above circumstances are not
indicative of its non#payment of holiday pay since it has al"ays honored the labor la" provisions on holiday
pay by incorporatin& the same in the payment of the monthly salaries of its employees. In support of this
claim, Trans#Asia pointed out that it has lon& been the standin& practice of the company to use the divisor of
B)2%B days in computin& for its employees' overtime pay and daily rate deductions for absences. Trans#Asia
e5plained that this divisor is arrived at throu&h the follo"in& formulaK
*) 5 ((
EEEE Z )2% days
2
>hereK *) Z number of "eeks in a year
(( Z number of "ork hours per "eek
2 Z number of "ork hours per day
Trans#Asia further clari.ed that the B)2%B days divisor already takes into account the ten F3AG re&ular
holidays in a year since it only subtracts from the $%* calendar days the un"orked and unpaid *)
!undays and )% !aturdays Femployees are required to "ork half#day durin& !aturdaysG. Trans#Asia
claimed that if the ten F3AG re&ular holidays "ere not included in the computation of their employees'
monthly salary, the divisor "hich they "ould have used "ould only be )DD days "hich is arrived at by
subtractin& *) !undays, )% !aturdays and the 3A le&al holidays from $%* calendar days. 'urthermore,
Trans#Asia e5plained that the B)2%B days divisor is based on /epublic Act 1o. %%(A, 5 "herein the
divisor of )%) days Fcomposed of the )*) "orkin& days and the 3A le&al holidaysG is used in
computin& for the monthly rate of "orkers "ho do not "ork and are not considered paid on !aturdays
and !undays or rest days. Accordin& to Trans#Asia, if the additional )% "orkin& !aturdays in a year is
Pa&e 4+ of #$%
factored#in to the divisor provided by /epublic Act 1o. %%(A, the resultin& divisor "ould be B)2%B
days.
0n petitioners' contention "ith re&ard to the C-A provision on the alle&edly &enerous holiday pay rate of
)%A[, Trans#Asia e5plained that this holiday pay rate "as included in the C-A in order to comply "ith !ection
(, /ule I9, -ook III of the 0mnibus /ules Implementin& the ,abor Code. The aforesaid provision readsK
!ec. (. 'o/pen-ation .or *oliay work. E Any employee "ho is permitted or su=ered to "ork
on any re&ular holiday, not e5ceedin& ei&ht F2G hours, shall be paid at least t"o hundred
percent F)AA[G of his re&ular daily "a&e. If the holiday falls on the scheduled rest day of the
employee, he shall be entitled to an additional premium pay of at least $A[ of his re&ular
holiday rate of )AA[ based on his re&ular "a&e rate.
0n the contention that Trans#Asia's acquiescence to the inclusion of a holiday pay provision in the C-A is an
admission of non#payment of the same in the past, Trans#Asia reiterated that it is simply a reco&nition of the
mandate of the ,abor Code that employees are entitled to holiday pay. It clari.ed that the company's .rm
belief in the payment of holiday pay to employees led it to a&ree to the inclusion of the holiday pay provision
in the C-A.
>ith re&ard to the accusation of unfair labor practice because of Trans#Asia's act of alle&edly bar&ainin& in
bad faith and refusal to &ive holiday pay in accordance "ith the C-A, Trans#Asia e5plained that "hat
petitioners "ould like the company to do is to &ive double holiday pay since, as previously stated, the
company has already included the same in its employees monthly salary and, yet, petitioners "ant it to pay a
second set of holiday pay.
0n 3$ 'ebruary 3H2H, the labor arbiter rendered a decision dismissin& the complaint, to "itK
After considerin& closely the ar&uments of the parties in support of their respective claims
and defenses, this -ranch upholds a di=erent vie" from that espoused by the complainants.
8ust like in the Chartered -ank Case F,#((D3DG, Au&ust )2, 3H2*, 3$2 !C/A )D$, "hich is cited
by the complainants in their Position Paper, there appears to be no clear a&reement bet"een
the parties in the instant case, "hether verbal or in "ritin&, that the monthly salary of the
employees included the mandated holiday pay. In the absence of such a&reement, the
!upreme Court in said Chartered -ank Case took into consideration e5istin& practices in the
bank in resolvin& the issue, such as employment by the bank of a divisor of )*3 days "hich is
the result of subtractin& all !aturdays, !undays and the ten F3AG le&al holidays from the total
number of calendar days in a year. 'urther, the Court took note of the fact that the bank used
conOictin& or di=erent divisors in computin& salary#related bene.ts as "ell as the employees'
absence from "ork. In the case at bar, not only did the C-A bet"een the complainants and
respondents herein provides F-icG that the ten F3AG le&al holidays are reco&ni:ed by the
Company as full holiday "ith pay. >hat is more, there can be no doubt that since 3HDD up to
the e5ecution of the C-A, the Trans#Asia, unlike that obtainin& in the Chartered -ank Case,
never used conOictin& or di=erent divisors but consistently employed the divisor of )2% days,
"hich as earlier pointed out, "as arrived at by subtractin& only the un"orked *) !undays and
the )% half#day#"orked !aturdays from the total number of days in a year. The consistency in
the established practice of the Trans#Asia, "hich incidentally is not disputed by complainants,
did not &ive rise to any doubt "hich could have been resolved in favor of complainants.
-esides, the respondents unlike the respondent bank in the '*artere +ank 9/ployee-
6--ociation &-.<on. +la- 4. !ple, et al. F-upraG citin& also the case of "+669@ &-. <on. 6/ao
"ncion% F3$) !C/A %%$G "hich case have F-icG invalidated !ection ), /ule I9, -ook III of the
Implementin& /ules of the ,abor Code and Policy Instruction 1o. H, have never relied on the
said invalidated rule and Policy Instruction.
The complainants' ar&uments and <u5tapositions in claimin& that they "ere denied payment
of their holiday pay paled in the face of the prevailin& company practices and circumstances
abovestated.
Also, for the reasons adverted to above, the complainants char&e of unfair labor practice
claimin& that respondents in bad faith refused to comply "ith their contractual obli&ation
under the C-A by not payin& the complainants' holiday pay, must fail. !ince respondents have
nothin& more to pay by "ay of le&al holiday pay as it has already been included in their
monthly salaries, the provision in the C-A relative to holiday pay is <ust but a reco&nition of
the complainants ri&ht to payment of le&al holiday pay as mandated by the ,abor Code.
>64/4'0/4, all the fore&oin& premises bein& considered, <ud&ment is hereby rendered
dismissin& the complaint for lack of merit.
Pa&e 4# of #$%
!0 0/+4/4+. 1
Petitioners appealed to the 1ational ,abor /elations Commission. In its /esolution, dated )$ 1ovember 3HH$,
the 1,/C dismissed the appeal and a?rmed the decision of the labor arbiter, to "itK
>e .nd no co&ent reason to chan&e or disturb the decision appealed from, the same bein&
substantially supported by the facts and evidence on record. BIt is a "ell#settled rule that
.ndin&s of facts of administrative bodies, if based on substantial evidence are controllin& on
the revie"in& authority.B FPlanters Products, Inc. vs. 1,/C, 7./. 1o. D2*)( @ D2D$H, 8anuary
)A, 3H2HL 3%H !C/A $)2G.
>e .nd no abuse of discretion andJor error in the assailed decision.
>64/4'0/4, the appeal are F-icG hereby +I!MI!!4+ for lack of merit and the decision
appealed from is A''I/M4+.
!0 0/+4/4+. 4
Petitioners' motion for reconsideration "as, like"ise, denied by the 1,/C in its /esolution, dated 3$
!eptember 3HH(.
Petitioners are no" before us faultin& the 1,/C "ith the follo"in& assi&nment of errorsK
I
P-,IC /4!P01+41T ACT4+ >IT6 7/A94 A-!4 0' +I!C/4TI01 I1 P60,+I17 T64 ,A-0/
A/-IT4/'! +4CI!I01 +4!PIT4 T64 ,ACX 0' !-!TA1TIA, 49I+41C4 T0 !PP0/T IT
II
I1 P60,+I17 T64 ,A-0/ A/-IT4/'! +4CI!I01 +4!PIT4 T64 ,ACX 0' !-!TA1TIA,
49I+41C4 T0 !PP0/T IT, P-,IC /4!P01+41T 1,/C 9I0,AT4+ T64 C01!TITTI01A, A1+
,47A, MA1+AT4 T0 /4!0,94 A,, +0-T! I1 !0CIA, ,47I!,ATI01 I1 'A90/ 0' ,A-0/. %
Petitioners, in furtherance of their .rst assi&nment of error, assert that the 1,/C Bblatantly and unashamedly
disre&ardedB the numerous evidence in support of their claim and relied merely on the sole evidence
presented by Trans#Asia, the B)2%B days divisor, in dismissin& their appeal and, in so doin&, is &uilty of &rave
abuse of discretion. )
>e do not a&ree.
RULIN0! Trans#Asia's inclusion of holiday pay in petitioners' monthly salary is clearly established by its
consistent use of the divisor of B)2%B days in the computation of its employees' bene.ts and deductions. The
use by Trans#Asia of the B)2%B days divisor "as never disputed by petitioners. A simple application of
mathematics "ould reveal that the ten F3AG le&al holidays in a year are already accounted for "ith the use of
the said divisor. As e5plained by Trans#Asia, if one is to deduct the un"orked *) !undays and )% !aturdays
Fderived by dividin& *) !aturdays in half since petitioners are required to "ork half#day on !aturdaysG from
the $%* calendar days in a year, the resultin& divisor "ould be )2% days Fshould actually be )2D daysG. !ince
the ten F3AG le&al holidays "ere never included in subtractin& the un"orked and unpaid days in a calendar
year, the only lo&ical conclusion "ould be that the payment for holiday pay is already incorporated into the
said divisor. Thus, "hen vie"ed a&ainst this very convincin& piece of evidence, the ar&uments put for"ard by
petitioners to support their claim of non#payment of holiday pay, i.e., the pre#condition stated in the
4mployees' Manual for entitlement to holiday pay, the absence of a stipulation in the employees'
appointment papers for the inclusion of holiday pay in their monthly salary, the stipulation in the C-A
reco&ni:in& the entitlement of the petitioners to holiday pay "ith a concomitant provision for the &rantin& of
an Balle&edlyB very &enerous holiday pay rate, "ould appear to be merely inferences and suppositions "hich,
in the apropos "ords of the labor arbiter, Bpaled in the face of the prevailin& company practices and
circumstances abovestated.B
6ence, it is on account of the convincin& and le&ally sound ar&uments and evidence of Trans#Asia that the
labor arbiter rendered a decision adverse to petitioners. Ackno"led&in& that the decision of the labor arbiter
"as based on substantial evidence, the 1,/C a?rmed the former's disposition. It is also "ith this
ackno"led&ment that the Court a?rms the questioned resolutions of the 1,/C. As aptly put by the !olicitor
7eneral, citin& $un-et 7iew 'ono/iniu/ 'orporation &-. NLR', $ B.ndin&s of fact of administrative bodies
should not be disturbed in the absence of &rave abuse of discretion or unless the .ndin&s are not supported
by substantial evidence.B ( In this re&ard, the !olicitor 7eneral observedK BAs said above, public respondent
acted on the basis of substantial evidence, hence, &rave abuse of discretion is ruled out.B ,
6o"ever, petitioners insist that the a&reement of Trans#Asia in the C-A to &ive a &enerous )%A[ holiday pay
rate to employees "ho "ork on a holiday is conclusive proof that the monthly pay of petitioners does not
include holiday pay. #+Petitioners cite as basis the case of '*artere +ank 9/ployee- 6--ociation
Pa&e 45 of #$%
&-. !ple, ## "hich readsK
Any remainin& doubts "hich may arise from the conOictin& or di=erent divisors used in the
computation of overtime pay and employees' absences are resolved by the manner in "hich
"ork actually rendered on holidays is paid. Thus, "henever monthly paid employees "ork on
a holiday, they are &iven an additional 3AA[ base pay on top of a premium pay of *A[. If the
employees' monthly pay already includes their salaries for holidays, they should be paid only
premium pay but not both base pay and premium pay. #5
>e are not convinced. The cited case cannot be relied upon by petitioners since the facts obtainin& in the
Chartered -ank case are very di=erent from those in the present case. In the Chartered -ank case, the bank
used di=erent divisors in computin& for its employees bene.ts and deductions. 'or computin& overtime
compensation, the bank used )*3 days as its divisor. 0n the other hand, for computin& deductions due to
absences, the bank used $%* days as divisor. +ue to this confusin& situation, the Court declared that there
e5isted a doubt as to "hether holiday pay is already incorporated in the employees' monthly salary. !ince
doubts should be resolved in favor of labor, the Court in the Chartered -ank case ruled in favor of the
employees and further stated that its conclusion is forti.ed by the manner in "hich the employees are
remunerated for "ork rendered on holidays. In the present case, ho"ever, there is no confusion "ith re&ard
to the divisor used by Trans#Asia in computin& for petitioners' bene.ts and deductions. Trans#Asia consistently
used a B)2%B days divisor for all its computations.
1evertheless, petitioners' cause is not entirely lost. The Court notes that there is a need to ad<ust the divisor
used by Trans#Asia to )2D days, instead of only )2% days, in order to properly account for the entirety of
re&ular holidays and special days in a year as prescribed by 45ecutive 0rder 1o. )A$ #1 in relation to !ection
% of the /ules Implementin& /epublic Act %D)D. #4
!ec. 3 of 45ecutive 0rder 1o. )A$ providesK
!ec. 3. nless other"ise modi.ed by la", order or proclamation, the follo"in& re&ular holidays
and special days shall be observed in the countryK
A. /e&ular 6olidays
1e" ;ear's +ay E 8anuary 3
Maundy Thursday E Movable +ate
7ood 'riday E Movable +ate
Ara" n& Xa&itin&an E April H
F-ataan and Corre&idor +ayG
,abor +ay E May 3
Independence +ay E 8une 3)
1ational 6eroes +ay E ,ast !unday of Au&ust
-onifacio +ay E 1ovember $A
Christmas +ay E +ecember )*
/i:al +ay E +ecember $A
-. 1ation"ide !pecial +ays
All !aints +ay E 1ovember 3
,ast +ay of the ;ear E +ecember $3
0n the other hand, !ection % of the Implementin& /ules and /e&ulations of /epublic Act 1o. %D)D providesK
!ec. %. $u%%e-te 4or/ula in (eter/inin% t*e 9qui&alent ;ont*ly $tatutory ;ini/u/ =a%e
Rate-. E >ithout pre<udice from e5istin& company practices, a&reements or policies, the
follo"in& formulas may be used as &uides in determinin& the equivalent monthly statutory
minimum "a&e ratesK
555 555 555
dG 'or those "ho do not "ork and are not considered paid on !aturdays and !undays or rest
daysK
4quivalent Monthly Z Avera&e +aily >a&e /ate 5 )%) days
Pa&e 41 of #$%
/ate F4M/G 3)
>here )%) days Z
)*A days E 0rdinary "orkin& days
3A days E /e&ular holidays
) days E !pecial days FIf considered paidL if actually
"orked, this is equivalent to ).% daysG
EEEE
)%) days E Total equivalent number of days
-ased on the above, the proper divisor that should be used for a situation "herein the employees do not "ork
and are not considered paid on !aturdays and !undays or rest days is )%) days. In the present case, since
the employees of Trans#Asia are required to "ork half#day on !aturdays, )% days should be added to the
divisor of )%) days, thus, resultin& to )22 days. 6o"ever, due to the fact that the rest days of petitioners fall
on a !unday, the number of un"orked but paid le&al holidays should be reduced to nine FHG, instead of ten
F3AG, since one le&al holiday under 4.0. 1o. )A$ al"ays falls on the last !unday of Au&ust, 1ational 6eroes
+ay. Thus, the divisor that should be used in the present case should be )2D days.
6o"ever, the Court notes that if the divisor is increased to )2D days, the resultin& daily rate for purposes of
overtime pay, holiday pay and conversions of accumulated leaves "ould be diminished. To illustrate, if an
employee receives P2,AAA.AA as his monthly salary, his daily rate "ould be P$$(.(H, computed as follo"sK
P2,AAA.AA 5 3) months
EEEEEEEEEE Z P$$(.(HJday
)2D days
>hereas if the divisor used is only )2% days, the employee's daily rate "ould be P$$*.%%, computed
as follo"sK
P2,AAA.AA 5 3) months
EEEEEEEEEE Z P$$*.%%Jday
)2% days
Clearly, this muddled situation "ould be violative of the proscription on the non#diminution of bene.ts
under !ection 3AA of the ,abor Code. 0n the other hand, the use of the divisor of )2D days "ould be
to the advanta&e of petitioners if it is used for purposes of computin& for deductions due to the
employee's absences. In vie" of this situation, the Court rules that the ad<usted divisor of )2D days
should only be used by Trans#Asia for computations "hich "ould be advanta&eous to petitioners, i.e.,
deductions for absences, and not for computations "hich "ould diminish the e5istin& bene.ts of the
employees, i.e., overtime pay, holiday pay and leave conversions.
'or their second assi&nment of error, petitioners ar&ue that, since they provided the 1,/C "ith
Bover"helmin& proofB of their claim a&ainst Trans#Asia, the least that the 1,/C could have done "as to
declare that there e5isted an ambi&uity "ith re&ard to Trans#Asia's payment of holiday pay. Petitioners then
posits that if the 1,/C had only done so, this ambi&uity "ould have been resolved in their favor because of
the constitutional mandate to resolve doubts in favor of labor.
>e are not persuaded. As previously stated, the decision of the labor arbiter and the resolutions of the 1,/C
"ere based on substantial evidence and, as such, no ambi&uity or doubt e5ists "hich could be resolved in
petitioners' favor.
>64/4'0/4, premises considered, the /esolutions of the 1,/C, dated )$ 1ovember 3HH$ and 3$ !eptember
3HH(, are hereby A''I/M4+ "ith the M0+I'ICATI01 that Trans#Asia is hereby ordered to ad<ust its divisor to
)2D days and pay the resultin& holiday pay in arrears brou&ht about by this ad<ustment startin& from $A 8une
3H2D, the date of e=ectivity of 4.0. 1o. )A$.
!0 0/+4/4+.
7./. 1o. 3)$22) 1ovember 3%, 3HH2
<OE ASHLEY A00A, 7ICTORINO MA=IM=IM, EDIL&ERTO E7AN0ELISTA, &ENHUR SANTOS,
RICHMOND CASTILLO, ROMEO A7ILA, SE0UNDO 0UADEH, <R., OSCAR MALOLOY*ON, RICARDO
&ELDA, RUEL TONACAO, ROMULO DILAP*DILAP, <OSE SER0IO FRANCO, REYNALDO 7ILLAR,
ROMULO DELA CRUH, CAMILO CAI0, NICOLAS URSUA, MARTIN &AKEH, <R., MARIO SOSA and
Pa&e 44 of #$%
:OODY PADILLA, petitioners,
vs.
NATIONAL LA&OR RELATIONS COMMISSION, SUPPLY OILFIELD SER7ICES, INC. and UNDERSEAS
DRILLIN0, INC., respondents.

PUNO, J.:
Private respondent !upply 0il.eld !ervices, Inc. F!0!G hired petitioners to "ork on board !4+C0J-P (D3, a
drillship o"ned and operated by private respondent nderseas +rillin&, Inc. F+IG.
The employment contracts ran for one year "ith petitioners en<oyin& t"o months' o= "ith pay for every t"o
months' duty. The contracts also provided that for service of 3) hours a day, D days a "eek in a t"o#shift )(#
hour operation, petitioners "ould receive a .5ed monthly compensation coverin& Bbasic rate, allo"ances,
privile&es, travel allo"ances and bene.ts &ranted by la" durin& and after employment "ith the company.B
In a complaint .led "ith the Philippine 0verseas 4mployment Administration FP04AG, petitioners claimed that
private respondents failed to pay them overtime pay, holiday pay, rest day pay, 3$th month pay and ni&ht
shift di=erential. They like"ise alle&ed that private respondents did not comply "ith the mandatory insurance
requirement of the rules &overnin& overseas employment. They further averred that "hile private
respondents made them use passports for overseas contract "orkers "henever they departed for, and
returned from, overseas employment, they "ere also instructed to use seaman's books upon reachin& port for
transfer to, and "hile aboard, the oilri&. Petitioners opined that this practice entitled them to the bene.ts
&ranted by la" to both land#based "orkers and seamen.
In their Ans"er and Position Paper, private respondents denied liability. They said that the bene.ts referred to
in the employment contracts already included overtime pay, holiday pay, termination pay and 3$th month
pay. They like"ise denied that petitioners "ere entitled to ni&ht shift di=erential since no proof "as submitted
to sho" that any of them, at any time, had actually "orked from 3AKAA p.m. to %KAA a.m. In addition, private
respondents belied petitioners' claim that they did not comply "ith the mandatory insurance requirement.
They alle&ed that petitioners "ere insured "ith -lue Cross FAsia#Paci.cG Insurance, ,td. a&ainst death and
permanent disability. ,astly, private respondents contended that petitioners, as o=shore oilri&&ers, had
nothin& to do "ith mannin& a vessel or sea navi&ation. 6ence, petitioners "ere merely land#based "orkers,
not seamen.
0n 8uly ), 3HH), the P04A dismissed petitioners' complaint for lack of merit. # Petitioners appealed to the
1ational ,abor /elations Commission F'irst +ivisionG. They submitted the follo"in& principal issues for
resolutionK F3G "hether or not the lumpsum mode of payment of monthly salary is le&alL F)G "hether or not
there "ere underpayments of their salaryL F$G "hether the days#o= pay should be considered as part of their
salaries or should be re&arded as vacation leave pay or bonus separate therefromL and F(G "hether or not
respondents substantially complied "ith the insurance requirement under P04A rules.
pon the other hand, private respondents informed the 1,/C that the P04A had already dismissed the claims
for underpayment of labor bene.ts and lack of insurance covera&e in the consolidated cases docketed as
P04A Case 1o. H3#3)#3$(2 and P04A Case 1o. H)#A3#AA33 .led by fourteen of the nineteen petitioners, and
that the dismissal "as a?rmed on appeal by its !econd +ivision. The decision has become .nal.
0n 1ovember )D, 3HH*, the respondent 1,/C promul&ated the
+ecision 5 assailed herein, dismissin& petitioners' appeal. It reiterated the decision in P04A Case 1o. H3#3)#
3$(2 and P04A Case 1o. H)#A3#AA33, &i0.K
Perusin& the unrefuted copy of the P04A decision attached as Anne5 B3B to respondents'
/eply dated Au&ust 3(, 3HH*, it appears that in <ustifyin& his decision, the Administrator heldK
'rom the fore&oin& factual backdrop, the issues for resolution in the instant
case areK
3. >hether or not complainants had been underpaid of their
compensationL and
). >hether or not complainants are amply covered by
insurance.
Anent the .rst issue, "e .nd in the ne&ative. After comparison of the
!ummary of Claims of the Complainants and Table ) of the /espondents
FAvera&e Monthly !alary of Complainants vs. !tatutorily Mandated -asic
!alary and -ene.tsG, "e arrived at the conclusion that the alle&ed
underpayments represent the di=erence bet"een the amounts under Column
4 FActual Pay on -oardG and the amounts under Column + Ftotal of basic salary
Pa&e 4% of #$%
] overtime pay @ premium pay ] 3$th month pay @ vacation payG. To
illustrate, "e take the case of complainant A&&a "ho has a basic salary of
!_HAA, overtimeJpremium pay of !_HD$.D3 and 3$th monthJvacation pay of
!_3*A totallin& !_),A)$.D3. The latter amount represents the statutorily
mandated basic salary and bene.ts of complainant A&&a. 6e received his
actual pay on board in the sum of !_3,*AA. Thus, !_),A)$.D3 minus
!_3,*AA equals !_*)$.D3. The latter amount is "hat no" complainant A&&a
claims as underpayment and for a period of t"o months, his total claim is
!_3,A(D.().
>e note that in arrivin& at the alle&ed underpayment, complainant A&&a
totally disre&arded his day#o= pay or pay "hile on leave under Column ' in the
amount of !_D*A. Thus, "ith his pay on board of !_3,*AA plus his day#o=
pay of !_D*A, complainant A&&a received an avera&e monthly salary of
!_),)*A "hich is a bit hi&her than his statutorily mandated salary and
bene.t of !_),A)D.D3 in the amount of !_))).)H. The aforesaid formula
applies to all the complainants. Thus, "e see no case of underpayment at bar.
The claim for underpayments of the complainants is premised on their "ron&
interpretation of the salary memoranda issued to them individually "herein
they insist that vacation leave pay and days#o= pay are additional frin&e
bene.ts "hich should not a=ect payment of items 3 to * therein and to "hich
"e disa&ree.
The vacation leave pay is di=erent from Bdays#o= pay.B Complainants' vacation
pay is accounted under Column C denominated as 3$th month pay but also for
a vacation pay of one month "hich is clearly indicated by the prescribed
formula, i.e. B-asic !alary FAG 5 .3%D. The product over a period of t"elve
months results in t"o months basic pay as FA.3%D 5 3) Z ).AA(G. The t"o
months therefore corresponds to the 3$th month pay and the one month
vacation leave pay. It is therefore erroneous for complainants to contend that
the vacation leave pay is a distinct bene.t "hen in truth and in fact the same
has been duly considered in the computation of their statutorily mandated
compensation under the column of 3$th month pay.
>hile the days#o= pay constitutes complainants' salary in the same "ay as
their lumpsum pay "hile on board the oil ri&, therefore complainants should
not compare the amounts under column + FTotal of A ] - ] CG "ith the
amounts under Column 4 FActual Pay "hile on -oardG only but "ith the
amounts under column B4B and B'B Fpay "hile on board or days#o= payG "hich
sum is listed under column 7 FAvera&e Monthly !alary over a 3)#Month
PeriodG. The days#o= pay is paid to the complainants even thou&h they are not
"orkin& and should therefore be considered in the computation of their total
compensation.
555 555 555
>ith respect to the second issue, "e rule in the a?rmative. The evidence on
record sho"s that complainants "ere provided "ith insurance covera&e
superior to that mandated by la". Complainants are insured under t"o -lue
Cross Insurance Policies, i.e. the +isability Income Insurance FPolicy 1o.
I+AA3)2, 7P#A3G and a >orld"ide 45ecutive 6ealth Plan FPolicy 1o. >AA$$)$
7PD#A3G. nder the disability income insurance, should the employee &et sick
or in<ured, he is entitled to a monthly indemnity of !_)AA. >hile under the
>orld"ide 45ecutive 6ealth Plan, the bene.ts to "hich the insured "orkers
are entitled are enumerated in the Table of Insured -ene.ts. The Personal
Accident Plan -ene.ts to "hich the complainants are entitled are as follo"sK
-414'IT! P4/
P4/!01
3. +eath !_3*,AAA
). Permanent total !_3*,AAA
loss of si&ht of
both eyes
Pa&e 4) of #$%
$. Permanent total loss of si&ht of !_D,*AA
one eye
(. ,oss of t"o limbs !_3*,AAA
*. ,oss of one limb !_D,*AA
%. Permanent total !_3*,AAA
loss of si&ht of
one eye and loss
of one limb
D. Permanent total !_3*,AAA
disablement
Fother than loss of
si&ht of one eye or
both eyes or loss
of limbG
9erily, the bene.ts provided therein are far &reater than mandated by la"
"hich is P*A,AAA.AA for death due to accident.
In an appeal dated 'ebruary )%, 3HH$, the complainants questioned the aforesaid decision.
They, ho"ever, limited their appeal to claims for additional vacation pay and insurance
covera&e.
555 555 555
FIGt then follo"s that to the e5tent that the P04A has concluded that there is Bno case of
underpayment at bar,B the same has to be bindin&ly observed by us &i--a-&i- complainants'
submitted issue in their draft decision of BF)G "hether or not there had been underpayments
as claimed by appellants under the provisions of P+ (().B
Moreover, on 8une 3$, 3HH*, the !econd +ivision of this Commission dismissed complainants'
appeal Bfor lack of merit.B At the end of its e5tended resolution, the Commission concluded
that the complainants failed Bto sho" in a satisfactory manner the facts upon "hichB they
based their claims.
555 555 555
This thus disposes the third and fourth issues advanced by complainants for our resolution in
their earlier mentioned draft resolution.
555 555 555
4ven the .rst issue submitted to us for our resolution F"hich, in their draft resolution, has
been de.ned by complainants as B"hether or not the lumpsum mode of payment of
appellants' monthly salary is le&alBG "as, for all le&al intents and purposes, already resolved in
that other case for inherently submitted for the resolution of the P04A and the !econd
+ivision of this Commission in that other case "as the question of "hether or not the B.5ed
salaryB mode of payment stipulated in the parties' contract "as valid. The P04A Administrator
could not have concluded that B"e see no case of underpayment at barB if, in his opinion, the
parties' B.5ed salaryB mode of compensation "as ille&al, a"are that such declaration of nullity
"as precisely the end#&oal of complainants' complaint.
!imilarly, the 1,/C !econd +ivision "ould not have dismissed complainants' appeal if it "ere
of the vie", as ar&ued by complainants, that respondent !0!' lumpsum mode of payment "as
ille&al.
Indeed, our resolvin& said .rst issue ane" "ould amount to a duplicitous e5ercise of appellate
<urisdiction. 1
0n 8anuary 3D, 3HH%, petitioners .led a motion for reconsideration. In an 0rder 4 dated 8anuary $A, 3HH%, the
respondent 1,/C denied petitioners' motion.
6ence, this petition for certiorari % raisin& the follo"in& issuesK
Pa&e 4$ of #$%
I
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>e a?rm.
RULIN0! Anent the .rst issue, petitioners contend that the lumpsum mode of payment of salaries is ille&al,
citin& Articles * and % of the 1e" Civil Code, Articles 2%, 2D, HA, H$ and H( of P+ (() and -ook 9, /ule II,
!ection )FaG of the 3HH3 P04A /ules.
>e do not a&ree. As correctly observed by the respondents, none of the aforemetioned la"s and rules
Pa&e 4( of #$%
prohibit the sub<ect payment scheme. The cited articles of the 1e" Civil Code merely provide that
a&reements in violation of la" or public policy cannot be entered into and have le&al e=ect. The cited
provisions of P+ (() simply declare that ni&ht shift di=erential and additional remuneration for overtime, rest
day, !unday and holiday "ork shall be computed on the basis of the employee's re&ular "a&e. In like fashion,
the 3HH3 P04A /ules merely require employers to &uarantee payment of "a&es and overtime pay. Thus,
petitioners' stance is bereft of any le&al support.
Anent the second and third issues, petitioners alle&e that their .5ed monthly salaries represented only their
basic salaries and did not include overtime pay, holiday pay, 3$th month pay and ni&ht shift di=erential. In
P04A Case 1o. H3#3)#3$(2 and P04A Case 1o. H)#A3#AA33, the Administrator found and ruled that
petitioners "ere not underpaid and that their .5ed monthly compensation already comprised their basic
salary, ni&ht shift di=erential, overtime pay, holiday pay and 3$th month pay. Petitioners did not appeal this
rulin&. In this li&ht, respondent 1,/C correctly heldK
>ith !ection 3, /ule 9, -ook 9II of the P04A /ules dated May $3, 3HH3 Fissued pursuant to
4.0. )(DG providin& that BF+Gecisions andJor a"ards of the Administration shall be .nal and
e5ecutory unless appealed to the 1ational ,abor /elations Commission F1,/CG by any or both
parties,B it then follo"s that to the e5tent that the P04A has concluded that there is Bno case
of underpayment at bar,B the same has to be bindin&ly observed by us &i--a-&i- complainants'
submitted issue in their draft decision of BF)G "hether or not there had been underpayments
as claimed by appellants under the provisions of P.+. ((). $
The fourth issue deserves scant consideration. The matter of orderin& the 1,/C to compel the P04A to set up
standard employment contract and &uidin& rates for oilri& "orkers is beyond the <urisdiction of this Court.
>ith respect to the .fth issue, "e .nd petitioners' char&e that private respondents failed to provide them "ith
life and personal accident insurance &roundless. The P04A and the 1,/C have found that private respondents
insured petitioners "ith -lue Cross FAsia#Paci.cG Insurance, ,td. under t"o policies "hich even provide for
covera&e superior to that mandated by the rules. -efore this Court, ho"ever, petitioners assail these
insurance policies as they "ere alle&edly issued by a forei&n insurance company not licensed to do business
in the Philippines. The contention is raised for the .rst time and cannot be considered. (
In re&ard to the si5th issue, the evidence sho"s that petitioners are land#based "orkers and hence, not
entitled to bene.ts appertainin& to sea#based "orkers. Petitioners have nothin& to do "ith mannin& vessels
or "ith sea navi&ation. Their use of a seaman's book does not detract from the fact that they are truly land#
based employees. Petitioners' plea that "e suspend !0!' license for makin& them use t"o F)G passports is
o=#line. A&ain, they never prayed for this relief before the P04A and the 1,/C. This Court is the improper
venue for the belated plea.
'inally, the claims for attorney's fees and dama&es of the petitioners have no basis as private respondents
did not act in bad faith or "ith malice.
I1 9I4> >64/40', the decision of the 1,/C dated 1ovember )D, 3HH* is A''I/M4+. 1o costs.
!0 0/+4/4+.
7./. 1o. 33(%H2 8uly $, 3HH*
:ELLIN0TON IN7ESTMENT AND MANUFACTURIN0 CORPORATION, petitioner,
vs.
CRESENCIANO &. TRA<ANO, Under*Seretar? oB La3or and E2p.o?2ent, ELMER A&ADILLA, and 14
ot9ers,respondents.

NAR7ASA, C.J.:
The basic iss"e raised by petitioner in this case is, as its counsel puts it, B"hether or not a monthly#paid
employee, receivin& a .5ed monthly compensation, is entitled to an additional pay aside from his usual
holiday pay, "henever a re&ular holiday falls on a !unday.B
The case arose from a routine inspection conducted by a ,abor 4nforcement 0?cer on Au&ust %, 3HH3 of the
>ellin&ton 'lour Mills, an establishment o"ned and operated by petitioner >ellin&ton Investment and
Manufacturin& Corporation Fhereafter, simply >ellin&tonG. The o?cer thereafter dre" up a report, a copy of
"hich "as Be5plained to and received byB >ellin&ton's personnel mana&er, in "hich he set forth his .ndin& of
BFnGon#payment of re&ular holidays fallin& on a !unday for monthly#paid employees.B #
>ellin&ton sou&ht reconsideration of the ,abor Inspector's report, by letter dated Au&ust 3A, 3HH3. It ar&ued
that Bthe monthly salary of the company's monthly#salaried employees already includes holiday pay for all
re&ular holidays . . . Fand henceG there is no le&al basis for the .ndin& of alle&ed non#payment of re&ular
Pa&e 4, of #$%
holidays fallin& on a !unday.B 5 It e5pounded on this thesis in a position paper subsequently submitted to the
/e&ional +irector, assertin& that it pays its monthly#paid employees a .5ed monthly compensation Bu-in% t*e
C14 .actor w*ic* unenia,ly co&er- an alreay inclue- pay/ent .or all t*e workin% ay- in a /ont* a- well
a- all t*e 1D unworke re%ular *oliay- wit*in a year.B 1
>ellin&ton's ar&uments failed to persuade the /e&ional +irector "ho, in an 0rder issued on 8uly )2, 3HH),
ruled that B"hen a re&ular holiday falls on a !unday, an e5tra or additional "orkin& day is created and the
employer has the obli&ation to pay the employees for the e5tra day e5cept the last !unday of Au&ust since
the payment for the said holiday is already included in the $3( factor,B and accordin&ly directed >ellin&ton to
pay its employees compensation correspondin& to four F(G e5tra "orkin& days. 4
>ellin&ton timely .led a motion for reconsideration of this 0rder of Au&ust 3A, 3HH), pointin& out that it "as
in e=ect bein& compelled to Bshell out an additional pay for an alle&ed e5tra "orkin& dayB despite its
complete payment of all compensation la"fully due its "orkers, usin& the $3( factor. % Its motion "as treated
as an appeal and "as acted on by respondent ndersecretary. -y 0rder dated !eptember )), the latter
a?rmed the challen&ed order of the /e&ional +irector, holdin& that Bthe divisor bein& used by the respondent
F>ellin&tonG does not reliably reOect the actual "orkin& days in a year, B and consequently commanded
>ellin&ton to pay its employees the Bsi5 additional "orkin& days resultin& from re&ular holidays fallin& on
!undays in 3H22, 3H2H and 3HHA.B ) A&ain, >ellin&ton moved for reconsideration, $ and a&ain "as
rebu=ed. (
>ellin&ton then instituted the special civil action of certiorari at bar in an attempt to nullify the orders above
mentioned. -y /esolution dated 8uly (, 3HH(, this Court authori:ed the issuance of a temporary restrainin&
order en<oinin& the respondents from enforcin& the questioned orders. ,
4very "orker should, accordin& to the ,abor Code, #+ Bbe paid his re&ular daily "a&e urin% re%ular *oliay-,
e5cept in retail and service establishments re&ularly employin& less than ten F3AG "orkersLB this, of course,
even if the "orker does no "ork on these holidays. The re&ular holidays includeK B1e" ;ear's +ay, Maundy
Thursday, 7ood 'riday, the ninth of April, the .rst of May, the t"elfth of 8une, the fourth of 8uly, the thirtieth of
1ovember, the t"enty#.fth of +ecember, and the day desi&nated by la" for holdin& a &eneral election For
national referendum or plebisciteG. ##
Particularly as re&ards employees B"ho are uniformly paid by the month, Bthe monthly minimum "a&e shall
not be less than the statutory minimum "a&e multiplied by $%* days divided by t"elve.B #5 This monthly
salary shall serve as compensation Bfor all days in the month "hether "orked or not,B and Birrespective of the
number of "orkin& days therein.B #1In other "ords, "hether the month is of thirty F$AG or thirty#one F$3G
days' duration, or t"enty#ei&ht F)2G or t"enty#nine F)HG Fas in 'ebruaryG, the employee is entitled to receive
the entire monthly salary. !o, too, in the event of the declaration of any special holiday, or any fortuitous
cause precludin& "ork on any particular day or days Fsuch as transportation strikes, riots, or typhoons or
other natural calamitiesG, the employee is entitled to the salary for the entire month and the employer has no
ri&ht to deduct the proportionate amount correspondin& to the days "hen no "ork "as done. The monthly
compensation is evidently intended precisely to avoid computations and ad<ustments resultin& from the
contin&encies <ust mentioned "hich are routinely made in the case of "orkers paid on daily basis.
RULIN0! In >ellin&ton's case, there seems to be no question that at the time of the inspection conducted by
the ,abor 4nforcement 0?cer on Au&ust %, 3HH3, it "as and had been payin& its employees Ba salary of not
less than the statutory or established minimum "a&e,B and that the monthly salary thus paid "as Bnot . . .
less than the statutory minimum "a&e multiplied by $%* days divided by t"elve,B -upra. There is, in other
"ords, no issue that to this e5tent, >ellin&ton complied "ith the minimum norm laid do"n by la".
Apparently the monthly salary "as .5ed by >ellin&ton to provide for compensation for every "orkin& day of
the year includin& the holidays speci.ed by la" E and e5cludin& only !undays. In .5in& the salary,
>ellin&ton used "hat it calls the BC14 .actorLB that is to say, it simply deducted *3 !undays from the $%*
days normally comprisin& a year and used the di=erence, $3(, as basis for determinin& the monthly salary.
The monthly salary thus .5ed actually covers payment for $3( days of the year, incluin% re%ular an -pecial
*oliay-, a- well a- ay- w*en no work i- one ,y rea-on o. .ortuitou- cau-e, a- a,o&e -peci2e, or cau-e-
not attri,uta,le to t*e e/ployee-.
The ,abor 0?cer "ho conducted the routine inspection of >ellin&ton discovered that in certain years, t"o or
three re&ular holidays had fallen on !undays. 6e reasoned that this had precluded the en<oyment by the
employees of a non#"orkin& day, and the employees had consequently had to "ork an additional day for that
month. This ratiocination received the approval of his /e&ional +irector "ho opined #4 that B"hen a re&ular
holiday falls on a !unday, an e5tra or additional "orkin& day is created and the employer has the obli&ation
to pay its employees for the e5tra day e5cept the last !unday of Au&ust since the payment for the said
holiday is already included in the $3( factor.B #%
This in&enuous theory "as adopted and further e5plained by respondent ,abor ndersecretary, to "hom the
matter "as appealed, as follo"sK #)
Pa&e %+ of #$%
. . . -y usin& said F$3(G factor, the respondent F>ellin&tonG assumes that all the re&ular
holidays fell on ordinary days and never on a !unday. Thus, the respondent failed to consider
the circumstance that "henever a re&ular holiday coincides "ith a !unday, an additional
"orkin& day is created and left unpaid. In other "ords, "hile the said divisor may be utili:ed
as proof evidencin& payment of $A) "orkin& days, ) special days and the ten re&ular holidays
in a calendar year, the same does not cover or include payment of additional "orkin& days
created as a result of some re&ular holidays fallin& on !undays.
6e pointed out that in 3H22 there "as Ban increase of three F$G "orkin& days resultin& from re&ular holidays
fallin& on !undaysLB hence >ellin&ton Bshould pay for $3D days, instead of $3( days.B -y the same process of
ratiocination, respondent ndersecretary theori:ed that there should be additional payment by >ellin&ton to
its monthly#paid employees for Ban increment of three F$G "orkin& daysB for 3H2H and a&ain, for 3HHA. >hat
he is sayin& is that in those years, >ellin&ton should have used the B$3D factor,B not the B$3( factor.B
The theory loses si&ht of the fact that the monthly salary in >ellin&ton E "hich is based on the so#called
B$3( factorB E accounts for all $%* days of a yearL i.e., >ellin&ton's B$3( factorB leaves no day unaccounted
forL it is payin& for all the days of a year "ith the e5ception only of *3 !undays.
The respondents' theory "ould make each of the years in question F3H22, 3H2H, 3HHAG, a year of $%2 days.
Pursuant to this theory, no employer optin& to pay his employees by the month "ould have any de.nite basis
to determine the number of days in a year for "hich compensation should be &iven to his "ork force. 6e
"ould have to ascertain the number of times le&al holidays "ould fall on !undays in all the years of the
e5pected or e5trapolated lifetime of his business. Alternatively, he "ould be compelled to make ad<ustments
in his employees' monthly salaries every year, dependin& on the number of times that a le&al holiday fell on a
!unday.
There is no provision of la" requirin& any employer to make such ad<ustments in the monthly salary rate set
by him to take account of le&al holidays fallin& on !undays in a &iven year, or, contrary to the le&al provisions
bearin& on the point, other"ise to reckon a year at more than $%* days. As earlier mentioned, "hat the la"
requires of employers optin& to pay by the month is to assure that Bthe monthly minimum "a&e shall not be
less than the statutory minimum "a&e multiplied by $%* days divided by t"elve,B #$ and to pay that salary
Bfor all days in the month "hether "orked or not,B and Birrespective of the number of "orkin& days
therein.B #( That salary is due and payable re&ardless of the declaration of any special holiday in the entire
country or a particular place therein, or any fortuitous cause precludin& "ork on any particular day or days
Fsuch as transportation strikes, riots, or typhoons or other natural calamitiesG, or cause not imputable to the
"orker. And as also earlier pointed out, the le&al provisions &overnin& monthly compensation are evidently
intended precisely to avoid re#computations and alterations in salary on account of the contin&encies <ust
mentioned, "hich, by the "ay, are routinely made bet"een employer and employees "hen the "a&es are
paid on daily basis.
The public respondents ar&ue that their challen&ed conclusions and dispositions may be <usti.ed by !ection
), /ule Y, -ook III of the Implementin& /ules, &ivin& the /e&ional +irector po"er E #,
. . . to order and administer Fin cases "here employer#employee relations still e5istG, after due
notice and hearin&, compliance "ith the labor standards provisions of the Code and the other
labor le&islations based on the .ndin&s of their /e&ulations 0?cers or Industrial !afety
4n&ineers F,abor !tandard and >elfare 0?cersG and made in the course of inspection, and to
issue "rits of e5ecution to the appropriate authority for the enforcement of his order, in line
"ith the provisions of Article 3)2 in relation to Articles )2H and )HA of the ,abor Code, as
amended. . . .
The respondents be& the question. Their ar&ument assumes that there are some Blabor standards provisions
of the Code and the other labor le&islationsB imposin& on employers the obli&ation to &ive additional
compensation to their monthly#paid employees in the event that a le&al holiday should fall on a !unday in a
particular month E "ith "hich compliance may be commanded by the /e&ional +irector E "hen the
e5istence of said provisions is precisely the matter to be established.
In promul&atin& the orders complained of the public respondents have attempted to le&islate, or interpret
le&al provisions in such a manner as to create obli&ations "here none are intended. They have acted "ithout
authority, or at the very least, "ith &rave abuse of their discretion. Their acts must be nulli.ed and set aside.
>64/4'0/4, the orders complained of, namelyK that of the respondent ndersecretary dated !eptember )),
3HH$, and that of the /e&ional +irector dated 8uly $A, 3HH), are 1,,I'I4+ A1+ !4T A!I+4, and the
proceedin& a&ainst petitioner +I!MI!!4+.
!0 0/+4/4+.
7./. 1o. H()$D 'ebruary )%, 3HHD
Pa&e %# of #$%
&UILDIN0 CARE CORPORATION, petitioner,
vs.
NATIONAL LA&OR RELATIONS COMMISSION, FIRST DI7ISION, and RO0ELIO RODIL, respondents.

PAN0ANI&AN, J.:
In dismissin& this petition, the Court reiterates the "ell#entrenched doctrines that F3G a motion for
reconsideration, as a rule, is an indispensable precondition to the .lin& of a petition for certiorari, and F)G
.ndin&s of facts of the 1ational ,abor /elations Commission F1,/CG, a?rmin& those of the ,abor Arbiter, are
bindin& upon the !upreme Court.
This petition for certiorari under /ule %* of the /ules of Court seeks to annul the +ecision # promul&ated on
May H, 3HHA, of the 'irst +ivision 5 of public respondent in 1,/C Case 1o. 1C/#AA#A(#A3%A*#22 "hich
a?rmed the decision of ,abor Arbiter Suintin C. Mendo:a. The dispositive portion of the a?rmed decision of
the ,abor Arbiter readsK 1
>64/4'0/4, decision is hereby rendered for the complainant declarin& his suspension and
dismissal ille&al and orderin& the respondent to reinstate him plus back"a&es from time his
F-icG dismissal at the ad<usted rate under /.A. %%(A and retainin& "hatever seniority ri&hts in
the <ob he has F-icG plus his le&al holidays pay of P3,3D2.AA and di=erential pay of P$%H.(A
and attorney's fees of not more than ten F3A[G of the total a"ard.
5*e 4act-
The facts found by public respondent are as follo"sK 4
Complainant Fherein private respondentG alle&ed that his "a&es, 3$th month pay and service
incentive leave pay "ere unpaidL that he "as not paid for "ork rendered durin& le&al
holidaysL that on 'ebruary 33, 3H22, he "as suspended for one "eek by his supervisor, 6.
!ilvestre, for no apparent reasonL that the suspension "as ille&al because of the absence of
<ust cause and respondent's Fherein petitionerG non#compliance "ith the requirements of due
processL that thereafter, he "as not &iven any assi&nment, despite repeated follo"#ups,
summari:ed as follo"sK
(ate #er-on 6pproac*e Re-ult
)#3H#22 !upervisor 6. !ilvestre /equired
complainant to
return FonG )#)A#22
)#)A#22 '4-TC >orked for one pay
Fshould be dayGL no
time card @ pay
)#)$#22 Mr. Adriatico /eferred to
!ilvestre not &iven
"ork
)#)$#22 Mr. -arbosa, '4-TC Told to &o homeL
promiseFdG to talk to
!ilvestre
)#)(#22 6. !ilvestreJMr. Adriatico !coldedL not &iven
"ork
)#)%#22 !upervisor Ms. Carol Told to return the
follo"in& day
)#)D#22 !upervisors 1ot &iven "ork
!ilvestreJMs. Carol
)#)H#22 !ilvestre 1ot &iven "ork
$#A(#22 !upervisors !ilvestre, 1o results
9iray, Melanie
$#)$#22 !ilvestre 1o results
$#)*#22 Ms. Mali& Promised to ask
supervisors "hat
Pa&e %5 of #$%
happened
$#)2 @ )H#22 Ms. Mali& Told supervisors
not around
(#A(#22 Ms. Mali& Informed he "ould
no lon&er be &iven
>ork.
/espondent contended that complainant "as paid his "a&es and holiday pay in accordance
"ith la"L that it "as unable to comply "ith /.A. %%(A immediately because of its client's delay
in approvin& the ad<usted contract ratesL that it "as ready to pay complainant P$%H.(A
representin& salary di=erentials from +ecember 3(, 3H2D to 'ebruary 33, 3H22L that on
'ebruary H, 3H22, '4-TC complained that complainant's area of responsibility "as improperly
cleanedL that complainant "as t"ice instructed to report to respondent's ni&ht shift
supervisor, but on both times, he failed to do soL that because of such de.ance, he "as
verbally "arned that drastic disciplinary action "ould be taken a&ainst him should he persist
in failin& to report as directedL that on 'ebruary 33, 3H22, the assistant supervisor erroneously
noted on the lo&book that complainant "as bein& suspendedL that the suspension "as not
carried out as complainant "as allo"ed to "ork the follo"in& day, as sho"n by his daily time
recordL that he "as advised to report to respondent's o?ce the follo"in& dayL that, instead,
complainant took a lon& absence "ithout leave startin& on 'ebruary 3), 3H22L that he sho"ed
up at respondent's o?ce only on March )2, 3H22L that he "as required to submit a "ritten
e5planation of his lon& absence "ithout leave, frequent absences in the post and
deterioratin& performanceL that complainant "rote that he failed to report because his
supervisor suspended him for no apparent reasonL that he "as told that an investi&ation of his
alle&ed suspension "ould be conducted and, in vie" of the forthcomin& non#"orkin& holidays,
advised to report on April (, 3H22L that, in the meantime, respondent's supervisor reported
that '4-TC had indicated that it "ould no lon&er accept complainantL that complainant "as
advised of '4-TC's decision on April (, 3H22L that for humanitarian reasons, complainant "as
advised that he "as &oin& to be temporarily assi&ned as reliever at respondent's o?ce "hile
there "as no available post in its other clientsL that complainant requested for a "eek#lon&
leave, alle&edly because he had to brin& his family to Sue:on ProvinceL that complainant
a&ain failed to report for "ork on April 32, 3H22L that he "as sent a letter advisin& him to
report to respondent's o?ceL that he never "ent back to respondent's o?ceL but instead, .led
the instant case.
Complainant maintained that he did his "ork properlyL that he "as absent from 8anuary 32#))
F3H22G because he "as sick, and he duly advised respondent of his sicknessL that he "as
absent from 'ebruary 3#2 F3H22G because he had to take care of his "ife "ho "as sick, as
sho"n by her medical certi.cateL that he "as absent a&ain for one "eek startin& 'ebruary 3),
3H22 because he "as ille&ally suspendedL that thereafter, he "as never &iven another
assi&nment, contrary to respondent's untruthful avermentsL that he "as denied due process
of la" by respondentL that respondent may have sent him a letter after April (, 3H22, but it
"as too late because he had already instituted the instant case.
/espondent submitted the a?davits of >endel 9iray, 6ernani !ilvestre and 7ermel 9illamor,
its over#all !upervisor and <anitor, respectively, statin& that instead of implementin& the
suspension, complainant "as transferred from the ni&ht shift to the day shiftL that
complainant requested to be returned to the ni&ht shift, but his request "as not &rantedL that
he "as &iven a chance to "ork at respondent's o?ce, but he failed to report there as
instructed. FCitations omittedG.
6ence, on April 3H, 3H22, private respondent .led "ith the Arbitration -ranch of the 1,/C a complaint for
ille&al dismissal, underpayment and non#payment of le&al holiday pay a&ainst petitioner. At the initial
hearin&, private respondent "as o=ered reinstatement, but he insisted on bein& paid his back"a&es because
of his alle&ed un<usti.ed dismissal. Petitioner did not a&ree. Thus, after the parties submitted their respective
position papers and other documentary evidence, the ,abor Arbiter issued a decision in favor of private
respondent. %
5*e "--ue
Petitioner raises a sin&le issue in its petition, to "itK )
>ith all due respects to the 6on. 1ational ,abor /elations Commission, 'irst +ivision,
petitioner submits that in a?rmin& the decision of the 6on. ,abor Arbiter and FinG dismissin&
petitioner's appeal, public respondent committed &rave abuse of discretion and acted
arbitrarily and capriciously as the questioned F+ecisionG is contrary to la" and evidence.
Pa&e %1 of #$%
Petitioner alle&es that the labor arbiter relied only on complainant's a?davit. Public respondent failed to
consider that the ,abor Arbiter &ave very little or no probative value to evidence adduced by petitioner, both
documentary and testimonial. Petitioner further claims that both public respondent and the ,abor Arbiter
missed the antecedent and most important issue of "hether or not private respondent had really been
dismissed by petitioner. $ Accordin& to petitioner, the employer is tasked "ith the burden of provin& <ust
cause for dismissal but Bt*e pri/ary ,uren o. pro&in% t*e .act o. i-/i--al it-el. re-t- upon t*e co/plainin%
e/ployee.B (
Petitioner states that even if it is assumed that private respondent "as dismissed, there "ere <ust causes for
the termination of his service, , the conduct of private respondent "as inconsistent "ith proper
subordination. #+
Petitioner alle&es too that private respondent failed to prove that he had not been paid amounts
correspondin& to the le&al holidaysL and there bein& no merit to private respondent's complaint, attorney's
fees should not be a"arded either. ##
Public respondent in a?rmin& the decision of the labor arbiter reasoned as follo"sK #5
Contrary to respondent's Fherein petitionerG ar&ument on appeal, the burden of proof in
dismissal cases is borne by the employer, "ho has to prove the e5istence of a <ust cause
FAsphalt @ Cement Pavers, Inc. vs. ,eo&ardo, 8r., 3%) !C/A $3)G. This is even more true if, like
the respondent, the employer puts up the defense of abandonment. The rule is that the
defense of abandonment should be proved FPenaOor vs. 1,/C, 3)A !C/A %2L Polymedic
7eneral 6ospital vs. 1,/C, 3$( !C/A ()AG.
>e have perused the entire records, and >e are inclined to conclude that respondent's theory
of abandonment has not been su?ciently proven.
Complainant's Fherein private respondentG claim that he "as suspended for no apparent
reason for one "eek is borne out by the lo&book entry for 'ebruary 33, 3H22 and by his letter#
e5planation dated March )2, 3H22. It should also be noted that complainant stood pat on this
claim throu&hout the entire proceedin&s.
0n the other hand, respondent, in its position paper .led on 8uly 3$, 3H22, simply contended
that complainant failed, "ithout prior leave, to report for "ork despite respondent's repeated
instructions. In the a?davits submitted on !eptember )3, 3H22, three of respondent's
employees averred that complainant "as transferred to the day shift and he quit his <ob
because he "as a&ainst such transfer. This is an entirely ne" t"ist "hich did not appear in the
memoranda and lo&book entries earlier submitted by respondent, nor even in its position
paper. 'or this reason, said averment appears to be an after#thou&ht, "hich cannot be &iven
much "ei&ht.
555 555 555
'inally, >e .nd no compellin& reason to disturb the a"ard of holiday pay amountin& to
P3,3D2.AA and salary di=erentials amountin& to P$%H.(A. If respondent had really paid
complainant holiday pay, it could easily have presented its payrolls, "hich constitute the best
proof of payment. These are necessarily in the possession of respondent, so complainant
cannot be blamed for their non#production. Moreover, respondent admitted its failure to
comply "ith the "a&e increase mandated by /.A. %%(A. FCitations omittedG.
5*e 'ourt?- Rulin%
The contention of petitioner is "ithout merit. >e totally support the +ecision of the 1ational ,abor /elations
Commission.
At the outset, "e note that the petition su=ers from a procedural defect that "arrants its outri&ht dismissal.
Petitioner prematurely acted. It did not .le a motion for reconsideration "ith public respondent before
availin& of the special civil action of certiorari. This premature action constitutes a fatal in.rmity as ruled in a
catena of cases, most recently in the case of "nterorient ;ariti/e 9nterpri-e-, "nc., et al., &-. National La,or
Relation- 'o//i--ion, et al. #1 in this "iseK
. . .The unquestioned rule in this <urisdiction is that certiorari "ill lie only if there is no appeal
or any other plain, speedy and adequate remedy in the ordinary course of la" a&ainst the
acts of public respondent. In the instant case, the plain and adequate remedy e5pressly
provided by the la" "as a motion for reconsideration of the assailed decision, based on
palpable or patent errors, to be made under oath and .led "ithin ten F3AG calendar days from
receipt of the questioned decision.
FTGhe .lin& of such a motion is intended to a=ord public respondent an opportunity to correct
Pa&e %4 of #$%
any actual or fancied error attributed to it by "ay of a re#e5amination of the le&al and factual
aspects of the case. Petitioner's inaction or ne&li&ence under the circumstances is tantamount
to a deprivation of the ri&ht and opportunity of the respondent Commission to cleanse itself of
an error un"ittin&ly committed or to vindicate itself of an act unfairly imputed. . . .
. . . And for failure to avail of the correct remedy e5pressly provided by la", petitioner has
permitted the sub<ect /esolution to become .nal and e5ecutory after the lapse of the ten day
period "ithin "hich to .le such motion for reconsideration.
0n the merits, petitioner "ants this Court to determine if private respondent "as really dismissed. This is a
question of fact "hich cannot be raised in a petition for certiorari under /ule %*.
It should be noted, in the .rst place, that the instant petition is a special civil action
for certiorari under /ule %* of the /evised /ules of Court. An e5traordinary remedy, its use is
available only and restrictively in truly e5ceptional cases E those "herein the action of an
inferior court, board or o?cer performin& <udicial or quasi#<udicial acts is challen&ed for bein&
"holly void on &rounds of <urisdiction. The sole o?ce of the "rit ofcertiorari is the correction
of errors of <urisdiction includin& the commission of &rave abuse of discretion amountin& to
lack or e5cess of <urisdiction. It does not include correction of public respondent 1,/C's
evaluation of the evidence and factual .ndin&s based thereon, "hich are &enerally accorded
not only &reat respect but even .nality. #4
The recitation of facts evidently sho"s that public respondent did not rely only on the evidence presented by
private respondent. All the evidence presented for or a&ainst the position of private respondent have been
duly considered in arrivin& at its conclusion.
-oth the ,abor Arbiter and the respondent 1,/C &ave credence to the evidence of the private
respondent that he "as ille&ally dismissed. >e are not free to tamper "ith their calibration of
the "ei&ht of evidence in the absence of a clear sho"in& that it is arbitrary and bereft of any
rational basis. #%
Indeed if petitioner "anted to prove its payment of holiday pays and salary di=erentials, it could have easily
presented proofs of such monetary bene.ts. -ut it did not. It had failed to comply "ith the mandate of the
la". As public respondent ruled, the burden of proof in this re&ard belon&s to the employer not to the
employee.
>e also sustain the a"ard of attorney's fees. BIt is settled that in action- .or reco&ery o. wa%e- or w*ere an
e/ployee wa- .orce to liti%ate an incur e:pen-e- to protect *i- ri%*t- an intere-t, *e i- entitle to an
awar o. attorney?- .ee-.B #)
>64/4'0/4, premises considered, the Petition is +I!MI!!4+ and the assailed +ecision is A''I/M4+. +ouble
costs a&ainst petitioner.
!0 0/+4/4+.
7./. 1os. 2$$2A#23 1ovember 3*, 3H2H
MA=ATI HA&ERDASHERY, INC., <OR0E LEDESMA and CECILIO 0. INOCENCIO, petitioners,
vs.
NATIONAL LA&OR RELATIONS COMMISSION, CEFERINA <. DIOSANA 'La3or Ar3iter, Depart2ent oB
La3or and E2p.o?2ent, Nationa. Capita. ReCion-, SANDI0AN N0 MAN00A0A:AN0 PILIPINO
'SANDI0AN-*TUCP and its 2e23ers, <ACINTO 0ARCIANO, ALFREDO C. &ASCO, 7ICTORIO Y.
LAURETO, ESTER NAR7AEH, EU0ENIO L. RO&LES, &ELEN N. 7ISTA, ALE<ANDRO A. ESTRA&O,
7E7ENCIO TIRO, CASIMIRO HAPATA, 0LORIA ESTRA&O, LEONORA MENDOHA, MACARIA 0. DIMPAS,
MERILYN A. 7IRAY, LILY OPINA, <ANET SAN0DAN0, <OSEFINA ALCOCE&A and MARIA
AN0ELES, respondents.
Lee-/a, $aluo > 6--ociate- .or petitioner-.
#a,lo $. +ernaro .or pri&ate re-ponent-.

FERNAN, C.J.:
This petition for certiorari involvin& t"o separate cases .led by private respondents a&ainst herein petitioners
assails the decision of respondent 1ational ,abor /elations Commission in 1,/C CA!4 1o. D#)%A$#2( entitled
B!andi&an 1& Man&&a&a"an& Pilipino F!A1+I7A1G#TCP etc., et al. v. Makati 6aberdashery andJor Toppers
Makati, et al.B and 1,/C CA!4 1o. )#()2#2* entitled B!andi&an 1& Man&&a&a"an& Pilipino F!A1+I7A1G#TCP
etc., et al. v. Toppers Makati, et al.B, a?rmin& the decision of the ,abor Arbiter "ho <ointly heard and decided
aforesaid cases, .ndin&K FaG petitioners &uilty of ille&al dismissal and orderin& them to reinstate the dismissed
Pa&e %% of #$%
"orkers and FbG the e5istence of employer#employee relationship and &rantin& respondent "orkers by reason
thereof their various monetary claims.
The undisputed facts are as follo"sK
Individual complainants, private respondents herein, have been "orkin& for petitioner Makati 6aberdashery,
Inc. as tailors, seamstress, se"ers, basters FmanlililipG and BplantsadorasB. They are paid on a piece#rate basis
e5cept Maria An&eles and ,eonila !era.na "ho are paid on a monthly basis. In addition to their piece#rate,
they are &iven a daily allo"ance of three FP $.AAG pesos provided they report for "ork before HK$A a.m.
everyday.
Private respondents are required to "ork from or before HK$A a.m. up to %KAA or DKAA p.m. from Monday to
!aturday and durin& peak periods even on !undays and holidays.
0n 8uly )A, 3H2(, the !andi&an n& Man&&a&a"an& Pilipino, a labor or&ani:ation of the respondent "orkers,
.led a complaint docketed as 1,/C 1C/ Case 1o. D#)%A$#2( for FaG underpayment of the basic "a&eL FbG
underpayment of livin& allo"anceL FcG non#payment of overtime "orkL FdG non#payment of holiday payL FeG
non#payment of service incentive payL FfG 3$th month payL and F&G bene.ts provided for under >a&e 0rders
1os. 3, ), $, ( and *. #
+urin& the pendency of 1,/C 1C/ Case 1o. D#)%A$#2(, private respondent +ioscoro Pelobello left "ith
!alvador /ivera, a salesman of petitioner 6aberdashery, an open packa&e "hich "as discovered to contain a
B<usiB baron& ta&alo&. >hen confronted, Pelobello replied that the same "as ordered by respondent Casimiro
âpata for his customer. âpata alle&edly admitted that he copied the desi&n of petitioner 6aberdashery. -ut
in the afternoon, "hen a&ain questioned about said baron&, Pelobello and âpata denied o"nership of the
same. Consequently a memorandum "as issued to each of them to e5plain on or before 'ebruary (, 3H2*
"hy no action should be taken a&ainst them for acceptin& a <ob order "hich is pre<udicial and in direct
competition "ith the business of the company. 5 -oth respondents alle&edly did not submit their e5planation
and did not report for "ork. 1 6ence, they "ere dismissed by petitioners on 'ebruary (, 3H2*. They
countered by .lin& a complaint for ille&al dismissal docketed as 1,/C 1C/ Case 1o. )#()2#2* on 'ebruary *,
3H2*. 4
0n 8une 3A, 3H2%, ,abor Arbiter Ceferina 8. +iosana rendered <ud&ment, the dispositive portion of "hich
readsK
>64/4'0/4, <ud&ment is hereby rendered in 1,/C 1C/ Case 1o. )#()2#2* .ndin&
respondents &uilty of ille&al dismissal and orderin& them to reinstate +ioscoro Pelobello and
Casimiro âpata to their respective or similar positions "ithout loss of seniority ri&hts, "ith
full back"a&es from 8uly (, 3H2* up to actual reinstatement. The char&e of unfair labor
practice is dismissed for lack of merit.
In 1,/C 1C/ Case 1o. D#)%A$A#2(, the complainants' claims for underpayment re violation of
the minimum "a&e la" is hereby ordered dismissed for lack of merit.
/espondents are hereby found to have violated the decrees on the cost of livin& allo"ance,
service incentive leave pay and the 3$th Month Pay. In vie" thereof, the economic analyst of
the Commission is directed to compute the monetary a"ards due each complainant based on
the available records of the respondents retroactive as of three years prior to the .lin& of the
instant case.
!0 0/+4/4+. %
'rom the fore&oin& decision, petitioners appealed to the 1,/C. The latter on March $A, 3H22 a?rmed said
decision but limited the back"a&es a"arded the +ioscoro Pelobello and Casimiro âpata to only one F3G
year. )
After their motion for reconsideration "as denied, petitioners .led the instant petition raisin& the follo"in&
issuesK
I
T64 !-84CT +4CI!I01! 4//0140!,; C01C,+4+ T6AT A1 4MP,0;4/#4MP,0;44 /4,ATI01!6IP 4YI!T!
-4T>441 P4TITI014/ 6A-4/+A!64/; A1+ /4!P01+41T! >0/X4/!.
II
T64 !-84CT +4CI!I01! 4//0140!,; C01C,+4+ T6AT /4!P01+41T! >0/X4/! A/4 41TIT,4+ T0
M014TA/; C,AIM! +4!PIT4 T64 'I1+I17 T6AT T64; A/4 10T 41TIT,4+ T0 MI1IMM >A74.
III
T64 !-84CT +4CI!I01! 4//0140!,; C01C,+4+ T6AT /4!P01+41T! P4,0-4,,0 A1+ ÂPATA >4/4
Pa&e %) of #$%
I,,47A,,; +I!MI!!4+. $
The .rst issue "hich is the pivotal issue in this case is resolved in favor of private respondents. >e have
repeatedly held in countless decisions that the test of employer#employee relationship is four#foldK F3G the
selection and en&a&ement of the employeeL F)G the payment of "a&esL F$G the po"er of dismissalL and F(G the
po"er to control the employee's conduct. It is the so called Bcontrol testB that is the most important
element. ( This simply means the determination of "hether the employer controls or has reserved the ri&ht
to control the employee not only as to the result of the "ork but also as to the means and method by "hich
the same is to be accomplished. ,
The facts at bar indubitably reveal that the most important requisite of control is present. As &leaned from the
operations of petitioner, "hen a customer enters into a contract "ith the haberdashery or its proprietor, the
latter directs an employee "ho may be a tailor, pattern maker, se"er or BplantsadoraB to take the customer's
measurements, and to se" the pants, coat or shirt as speci.ed by the customer. !upervision is actively
manifested in all these aspects E the manner and quality of cuttin&, se"in& and ironin&.
'urthermore, the presence of control is immediately evident in this memorandum issued by Assistant
Mana&er Cecilio -. Inocencio, 8r. dated May $A, 3H23 addressed to Topper's Makati Tailors "hich reads in partK
(. 4=ective immediately, ne" procedures shall be follo"edK
A. 5o .ollow in-truction an orer- .ro/ t*e uner-i%ne /o&er 9alderama, /uben +elos /eyes
and 0fel -autista. 0ther than this person FsicG must ask permission to the above mentioned
before &ivin& orders or instructions to the tailors.
-. +e.ore acceptin% t*e 3o, orer- tailor- /u-t c*eck t*e /aterial-, 3o, orer-, ue ate- an
ot*er t*in%- to ma5imi:e the e?ciency of our production. The materials should be checked
FsicG if it is matched FsicG "ith the sample, to&ether "ith the number of the <ob order.
C. 4=ective immediately all <ob orders must be .nished one day before the due date. This can
be done by proper schedulin& of <ob order and if you "ill cooperate "ith your supervisors. If
you have many due dates for certain day, advise /uben or 0fel at once so that they can make
necessary ad<ustment on due dates.
+. Alteration#-efore acceptin& alteration person attendin& on customs FsicG must ask .rst or
must advise the tailors re&ardin& the due dates so that "e can eliminate "hat "e call '-itin'.
4. If there is any problem re&ardin& supervisors or co#tailor inside our shop, consult "ith me at
once settle the problem. 'i&htin& inside the shop is strictly prohibited. Any tailor violatin& this
memorandum "ill be sub<ect to disciplinary action.
'or strict compliance. #+
'rom this memorandum alone, it is evident that petitioner has reserved the ri&ht to control its employees not
only as to the result but also the means and methods by "hich the same are to be accomplished. That private
respondents are re&ular employees is further proven by the fact that they have to report for "ork re&ularly
from HK$A a.m. to %KAA or DKAA p.m. and are paid an additional allo"ance of P $.AA daily if they report for "ork
before HK$A a.m. and "hich is forfeited "hen they arrive at or after HK$A a.m. ##
!ince private respondents are re&ular employees, necessarily the ar&ument that they are independent
contractors must fail. As established in the precedin& para&raphs, private respondents did not e5ercise
independence in their o"n methods, but on the contrary "ere sub<ect to the control of petitioners from the
be&innin& of their tasks to their completion. nlike independent contractors "ho &enerally rely on their o"n
resources, the equipment, tools, accessories, and paraphernalia used by private respondents are supplied
and o"ned by petitioners. Private respondents are totally dependent on petitioners in all these aspects.
Comin& no" to the second issue, there is no dispute that private respondents are entitled to the Minimum
>a&e as mandated by !ection )F&G of ,etter of Instruction 1o. 2)H, /ules Implementin& Presidential +ecree
1o. 3%3( and reiterated in !ection $FfG, /ules Implementin& Presidential +ecree 3D3$ "hich e5plicitly states
that, BAll employees paid by the result shall receive not less than the applicable ne" minimum "a&e rates for
ei&ht F2G hours "ork a day, e5cept "here a payment by result rate has been established by the !ecretary of
,abor. ...B #5 1o such rate has been established in this case.
-ut all these not"ithstandin&, the question as to "hether or not there is in fact an underpayment of minimum
"a&es to private respondents has already been resolved in the decision of the ,abor Arbiter "here he statedK
B6ence, for lack of su?cient evidence to support the claims of the complainants for alle&ed violation of the
minimum "a&e, their claims for underpayment re violation of the Minimum >a&e ,a" under >a&e 0rders
1os. 3, ), $, (, and * must perforce fall.B #1
The records sho" that private respondents did not appeal the above rulin& of the ,abor Arbiter to the 1,/CL
Pa&e %$ of #$%
neither did they .le any petition raisin& that issue in the !upreme Court. Accordin&ly, insofar as this case is
concerned, that issue has been laid to rest. As to private respondents, the <ud&ment may be said to have
attained .nality. 'or it is a "ell#settled rule in this <urisdiction that Ban appellee "ho has not himself appealed
cannot obtain from the appellate court#, any a?rmative relief other than the ones &ranted in the decision of
the court belo". B #4
As a consequence of their status as re&ular employees of the petitioners, they can claim cost of livin&
allo"ance. This is apparent from the provision de.nin& the employees entitled to said allo"ance, thusK B... All
"orkers in the private sector, re&ardless of their position, desi&nation or status, and irrespective of the
method by "hich their "a&es are paid. B #%
Private respondents are also entitled to claim their 3$th Month Pay under !ection $FeG of the /ules and
/e&ulations Implementin& P.+. 1o. 2*3 "hich providesK
!ection $. 4mployers covered. E The +ecree shall apply to all employers e5cept toK
555 555 555
FeG 4mployers of those "ho are paid on purely commission, boundary, or task basis, and those
"ho are paid a .5ed amount for performin& a speci.c "ork, irrespective of the time consumed
in the performance thereof,e:cept w*ere t*e worker- are pai on piece-rate ,a-i- in w*ic*
ca-e t*e e/ployer -*all ,e co&ere ,y t*i- i--uance in-o.ar a- -uc* worker- are
concerne. F4mphasis supplied.G
0n the other hand, "hile private respondents are entitled to Minimum >a&e, C0,A and 3$th Month Pay, they
are not entitled to service incentive leave pay because as piece#rate "orkers bein& paid at a .5ed amount for
performin& "ork irrespective of time consumed in the performance thereof, they fall under one of the
e5ceptions stated in !ection 3FdG, /ule 9, Implementin& /e&ulations, -ook III, ,abor Code. 'or the same
reason private respondents cannot also claim holiday pay F!ection 3FeG, /ule I9, Implementin& /e&ulations,
-ook III, ,abor CodeG.
>ith respect to the last issue, it is apparent that public respondents have misread the evidence, for it does
sho" that a violation of the employer's rules has been committed and the evidence of such trans&ression, the
copied baron& ta&alo&, "as in the possession of Pelobello "ho pointed to âpata as the o"ner. >hen required
by their employer to e5plain in a memorandum issued to each of them, they not only failed to do so but
instead "ent on A>0, Fabsence "ithout o?cial leaveG, "aited for the period to e5plain to e5pire and for
petitioner to dismiss them. They thereafter .led an action for ille&al dismissal on the far#fetched &round that
they "ere dismissed because of union activities. Assumin& that such acts do not constitute abandonment of
their <obs as insisted by private respondents, their blatant disre&ard of their employer's memorandum is
undoubtedly an open de.ance to the la"ful orders of the latter, a <usti.able &round for termination of
employment by the employer e5pressly provided for in Article )2$FaG of the ,abor Code as "ell as a clear
indication of &uilt for the commission of acts inimical to the interests of the employer, another <usti.able
&round for dismissal under the same Article of the ,abor Code, para&raph FcG. >ell established in our
<urisprudence is the ri&ht of an employer to dismiss an employee "hose continuance in the service is inimical
to the employer's interest. #)
In fact the ,abor Arbiter himself to "hom the e5planation of private respondents "as submitted &ave no
credence to their version and found their e5cuses that said baron& ta&alo& "as the one they &ot from the
embroiderer for the Assistant Mana&er "ho "as investi&atin& them, unbelievable.
nder the circumstances, it is evident that there is no ille&al dismissal of said employees. Thus, >e have
ruled thatK
1o employer may rationally be e5pected to continue in employment a person "hose lack of
morals, respect and loyalty to his employer, re&ard for his employer's rules, and appreciation
of the di&nity and responsibility of his o?ce, has so plainly and completely been bared.
That there should be concern, sympathy, and solicitude for the ri&hts and "elfare of the
"orkin& class, is meet and proper. That in controversies bet"een a laborer and his master,
doubts reasonably arisin& from the evidence, or in the interpretation of a&reements and
"ritin&s should be resolved in the former's favor, is not an unreasonable or unfair rule. -ut
that disre&ard of the employer's o"n ri&hts and interests can be <usti.ed by that concern and
solicitude is un<ust and unacceptable. F!tanford Microsystems, Inc. v. 1,/C, 3*D !C/A (3(#
(3* M3H22N G.
The la" is protectin& the ri&hts of the laborer authori:es neither oppression nor self#destruction of the
employer. #$ More importantly, "hile the Constitution is committed to the policy of social <ustice and the
protection of the "orkin& class, it should not be supposed that every labor dispute "ill automatically be
decided in favor of labor. #(
Pa&e %( of #$%
'inally, it has been established that the ri&ht to dismiss or other"ise impose discriplinary sanctions upon an
employee for <ust and valid cause, pertains in the .rst place to the employer, as "ell as the authority to
determine the e5istence of said cause in accordance "ith the norms of due process. #,
There is no evidence that the employer violated said norms. 0n the contrary, private respondents "ho
vi&orously insist on the e5istence of employer#employee relationship, because of the supervision and control
of their employer over them, "ere the very ones "ho e5hibited their lack of respect and re&ard for their
employer's rules.
nder the fore&oin& facts, it is evident that petitioner 6aberdashery had valid &rounds to terminate the
services of private respondents.
>64/4'0/4, the decision of the 1ational ,abor /elations Commission dated March $A, 3H22 and that of the
,abor Arbiter dated 8une 3A, 3H2% are hereby modi.ed. The complaint .led by Pelobello and âpata for ille&al
dismissal docketed as 1,/C 1C/ Case 1o. )#()2#2* is dismissed for lack of factual and le&al bases. A"ard of
service incentive leave pay to private respondents is deleted.
!0 0/+4/4+.
7./. 1o. 3))(%2 !eptember $, 3HH2
SENTINEL SECURITY A0ENCY, INC., petitioner,
vs.
NATIONAL LA&OR RELATIONS COMMISSION, ADRIANO CA&ANO, <R., 7ERONICO C. HAM&O,
HELCIAS ARROYO, RUSTICO ANDOY, and MA;IMO ORTIH, respondents.
0.R. No. #55$#) Septe23er 1, #,,(
PHILIPPINE AMERICAN LIFE INSURANCE COMPANY, petitioner,
vs.
NATIONAL LA&OR RELATIONS COMMISSION, 7ERONICO HAM&O, HELCIAS ARROYO, ADRIANO
CA&ANO, MA;IMO ORTIH, and RUSTICO ANDOY, respondents.

PAN0ANI&AN, J.:
The transfer of an employee involves a lateral movement "ithin the business or operation of the employer,
"ithout demotion in rank, diminution of bene.ts or, "orse, suspension of employment even if temporary. The
recall and transfer security &uards require reassi&nment to another post and are not equivalent to their
placement on BOoatin& status.B 0=#detailin& security &uards for a reasonable period of si5 months is <usti.ed
only in bona .de cases of suspension of operation, business or undertakin&.
5*e 'a-e
This is the rationale used by the Court in dismissin& the t"o consolidated petitions for certiorari before us,
seekin& the reversal of the +ecision dated Au&ust )*, 3HH*, and the /esolution dated 0ctober )(, 3HH*, both
promul&ated by the 1ational ,abor /elations Commission # in 1,/C Case 1o. 9#A$3D#H( F/A- 9II#A3#AAHD#H(,
/A- 9II#A)#A3D$#H(, and /A- 9II#A3#A3$$#H(G.
In the action for ille&al dismissal and payment of salary di=erential, service incentive leave pay and
separation pay .led by private respondents, ,abor Arbiter +ominador A. Almirante rendered a +ecision , I1
'A90/ 0' /4!P01+41T! "hich disposedK 5
>64/4'0/4, premises consideredM,N <ud&ment is hereby rendered orderin& . . . !entinel
!ecurity A&ency, Inc. <ointly and severally "ith . . . Philamlife, Cebu -ranch, to pay
complainants the total amount of MsNi5ty MtNhousand MoNne MhNundred MtN"elve MpNesos and
*AJ3AA FP%A,33).*AG in the concept of 3$th month pay and service incentive leave bene.ts as
computed by our ,abor Arbitration Associate "hose computation is hereto attached and
formin& part hereof. 1
0n appeal, the 1,/C modi.ed the labor arbiter's +ecision. The dispositive portion of the 1,/C
+ecision 4 readsK
>64/4'0/4, the assailed +ecision is hereby M0+I'I4+ in so far as the a"ard of 3$th month
pay for the previous years "hich is hereby e5cluded. 'urther, . . . !entinel !ecurity A&ency,
Inc. is hereby 0/+4/4+ to pay complainants separation pay at the rate of 3J) month pay for
every year of service and for both . . . Philippine American ,ife Insurance, Inc. and !entinel
!ecurity A&ency, Inc. andJor +aniel I"ay to pay to the McomplainantsN <ointly and severally
their back"a&es from 8anuary 3%, 3HH( to 8anuary 3*, 3HH* and the correspondin& 3$th
month pay for the said year. The monetary a"ards hereby &ranted are broken do"n as follo"s
Pa&e %, of #$%
Minto separation pay, back "a&es, 3$th month pay and service incentive leave payNK
555 555 555 %
The challen&ed /esolution denied reconsideration Bfor lack of merit.B )
5*e 4act-
The undisputed factual backdrop is narrated by /espondent Commission as follo"sK $
FACTS! The complainants "ere employees of !entinel M!ecurity A&ency, Inc., hereafter
referred to as Bthe A&encyBN since March 3, 3H%% in the case of 9eronico âmboL 0ctober )D,
3HD* in the case of 6elcias ArroyoL !eptember )A, 3H2* in the case of Adriano CabanoL
'ebruary 3, 3HHA in the case of Ma5imo 0rti:L and 1ovember 3, 3H%D in the case of /ustico
Andoy. They "ere assi&ned to render &uard duty at the premises of MPhilippine American ,ife
Insurance CompanyN at 8ones Avenue, Cebu City. 0n +ecember 3%, 3HH$ Philippine American
,ife Insurance Company MBthe Client,B for brevityN, throu&h Carlos +e Pano, 8r., sent notice to
all concerned that the MA&encyN "as a&ain a"arded the contract of MsNecurity MsNervices
to&ether "ith a request to replace all the security &uards in the company's o?ces at the cities
of Cebu, -acolod, Ca&ayan de 0ro, +ipolo& and Ili&an. In compliance there"ith, Mthe A&encyN
issued on 8anuary 3), 3HH(, a /elief and Transfer 0rder replacin& the complainants as &uards
Mof the ClientN and for them to be re#assi&ned MtoN other clients e=ective 8anuary 3%, 3HH(. As
ordered, the complainants reported but "ere never &iven ne" assi&nments but instead they
"ere told in the vernacular, B&ui#ilisan mo kay m&a ti&ulan& naman moB "hich "hen
translated means, Byou "ere replaceMdN because you are already old.B Precisely, the
complainants lost no time but .led the sub<ect ille&al dismissal cases on 8anuary 32, 8anuary
)% and 'ebruary (, 3HH( and prayed for payment of separation pay and other labor standard
bene.ts.
MThe Client and the A&encyN maintained there "as no dismissal on the part of the
complainants, constructive or other"ise, as they "ere protected by the contract of security
services "hich allo"s the recall of security &uards from their assi&ned posts at the "ill of
either party. It also advanced that the complainants prematurely .led the sub<ect cases
"ithout &ivin& the MA&encyN a chance to &ive them some assi&nments.
0n the part of Mthe ClientN, it averred further that there M"asN no employer#employee
relationship bet"een it and the complainants as the latter "ere merely assi&ned to its Cebu
-ranch under a <ob contractL that Mthe A&encyN haMdN its o"n separate corporate personality
apart from that of Mthe ClientN. -esides, it pointed out that the functions of the complainants in
providin& security services to Mthe Client'sN property M"ereN not necessary and desirable to the
usual business or trade of Mthe ClientN, as it could still operate and en&a&e in its life insurance
business "ithout the security &uards. In .ne, Mthe ClientN maintains that the complainants
have no cause of action a&ainst it.
Rulin% o. Re-ponent 'o//i--ion
/espondent Commission ruled that the complainants "ere constructively dismissed, as Bthe recall of the
complainants from their lon& time postMsN at Mthe premises of the ClientN "ithout any &ood reason is a scheme
to <ustify or camouOa&e ille&al dismissal.
It ruled that $uper-tar $ecurity 6%ency, "nc. &-. National La,or Relation- 'o//i--ion ( 6? #ri/e $ecurity
$er&ice-, "nc. &-. National La,or Relation- 'o//i--ion , "ere not applicable to the case at bar. In the former,
the security &uard "as placed on temporary Bo=#detailB due to his poor performance and lack of elementary
courtesy and tact, and to the cost#cuttin& pro&ram of the a&ency. In the latter, the relief of the security &uard
"as due to his sleepin& "hile on duty and his repeated refusal to resume "ork despite notice.
In the present case, the complainants "ere told by the A&ency that they lost their assi&nment at the Client's
premises because they "ere already old, and not because they had committed any infraction or irre&ularity.
The 1,/C applied /A D%(3, #+ "hich &ives retirement bene.ts of one#half month pay per year of service to
retirable employees &i0.K
. . . As stated earlier . . ., the complainants "ere in the service of Mthe ClientN for nearly t"enty
F)AG years in the cases of 6elcias Arroyo and for more than t"enty F)AG years in the cases of
9eronico âmbo and /ustico Andoy, "hich lon& years of service MappearN on record to be
unblemished. The complainants "ere then confronted "ith an impendin& sudden loss of
earnin&s for "hile the order of Mthe A&encyN to Bimmediately report for reassi&nmentB
momentarily &ave them hope, there "as in fact no immediate reinstatement. >hile it could
have been prudent for the complainants to "ait, they "ere set unstable and "ere actually
threatened by the statement of the personnel in char&e of Mthe A&encyN that they "ere
Pa&e )+ of #$%
already old, that "as "hy they "ere replaced.
A&ainst these &larin& facts is the ne" /etirement ,a", /.A. D%(3 "hich took e=ect on 8anuary
D, 3HH$ &ivin& retirement bene.ts of 3J) month pay per year of service to an employee upon
reachin& retirement a&e to be paid by the employer, in this case at quite a si:eable amount
and in not so lon& due time as some of the complainants "ere described as already old.
As complainants "ere ille&ally dismissed, the 1,/C ruled that they "ere entitled to the t"in remedies of back
"a&es for one F3G year from the time of their dismissal on 8anuary 3*, 3HH(, payable by both the Client and
the A&ency, and separation pay of one#half month pay for every year of service payable only by the A&ency.
/einstatement "as not &ranted due to the resultin& antipathy and resentment amon& the complainants, the
A&ency and the Client.
6ence, this petition. ##
5*e "--ue-
In their memoranda, the A&ency poses this questionK #5
. . . M>hether . . . !entinel is &uillty of ille&al dismissalM,N
0n the other hand, the Client raises the follo"in& issuesK #1
ISSUES! >hether . . . Mthe complainantsN "ere ille&ally dismissed by their employer, !entinel
!ecurity A&ency, Inc., and in holdin& petitioner to be equally liable therefor.
>hether . . . petitioner is <ointly and severally liable "ith !entinel !ecurity A&ency, Inc., in the
latter's payment of back"a&es, 3$th month pay and service incentive leave pay to its
employees . . . .
In sum, the resolution of these consolidated petitions hin&es on F3G "hether the complainants "ere ille&ally
dismissed, and F)G "hether the Client is <ointly and severally liable for their thirteenth#month and service
incentive leave pays.
5*e 'ourt?- Rulin%
The petition is partly meritorious.
4ir-t "--ueK
"lle%al (i-/i--al
The private respondents' transfer, accordin& to /espondent Commission, "as e=ected to circumvent the
mandate of /epublic Act D%(3 F1e" /etirement ,a"G, "hich by then had already taken e=ect, in vie" of the
fact that the complainants had "orked for both the Client and the A&ency for 3A to )A years and "ere
nearin& retirement a&e. >ith this premise, the 1,/C concluded that the &uards "ere ille&ally dismissed. The
complainants add that the .ndin&s of the Commission match the remarks of the personnel mana&er of the
A&ency, 'eliciano MarticionL that is, that they "ere bein& replaced because they "ere already old. They insist
that their service records are unblemishedL hence, they could not have been dismissed by reason of any <ust
cause.
>e a&ree that the security &uards "ere ille&ally dismissed, but not for the reasons &iven by the public
respondent. The aforecited contentions of the 1,/C are speculative and unsupported by the evidence on
record. As the solicitor &eneral said in his Manifestation in ,ieu of Comment, the relief and transfer order "as
akin to placin& private respondents on temporary Bo=#detail.B
-ein& sidelined temporarily is a standard stipulation in employment contracts, as the availability of
assi&nment for security &uards is primarily dependent on the contracts entered into by the a&ency "ith third
parties. Most contracts for security services, as in this case, stipulate that the client may request the
replacement of the &uards assi&ned to it. In security a&ency parlance, bein& placed Bo= detailB or on
BOoatin&B status means B"aitin& to be posted.B #4 This circumstance is not equivalent to dismissal, so lon& as
such status does not continue beyond a reasonable time. #%
In the case at bar, the relief and transfer order per -e did not sever the employment relationship bet"een the
complainants and the A&ency. Thus, despite the fact that complainants "ere no lon&er assi&ned to the Client,
Article )2D of the ,abor Code, as amended by /A D%(3, still binds the A&ency to provide them E upon their
reachin& the retirement a&e of si5ty to si5ty#.ve years E retirement pay or "hatever else "as established in
the collective bar&ainin& a&reement or in any other applicable employment contract. 0n the other hand, the
Client is not liable to the complainants for their retirement pay because of the absence of an employer#
employee relationship bet"een them.
6o"ever, the A&ency claims that the complainants, after bein& placed o=#detail, abandoned their employ.
The solicitor &eneral, sidin& "ith the A&ency and the labor arbiter, contends that "hile abandonment of
Pa&e )# of #$%
employment is inconsistent "ith the .lin& of a complaint for ille&al dismissal, such rule is not applicable
B"here Mthe complainantN e5pressly re<ects this relief and asks for separation pay instead.B
The Court disa&rees. Abandonment, as a <ust and valid cause for termination, requires a deliberate and
un<usti.ed refusal of an employee to resume his "ork, coupled "ith a clear absence of any intention of
returnin& to his or her "ork. #) That complainants, did not pray for reinstatement is not su?cient proof of
abandonment. A stron& indication of the intention of complainants to resume "ork is their alle&ation that on
several dates they reported to the A&ency for reassi&nment, but "ere not &iven any. In fact, the contention of
complainant is that the A&ency constructively dismissed them. Abandonment has recently been ruled to be
incompatible "ith constructive dismissal. >e, thus, rule that complainants did not abandon their <obs. #$
>e "ill no" demonstrate "hy "e believe complainants "ere ille&ally dismissed.
In several cases, the Court has reco&ni:ed the prero&ative of mana&ement to transfer an employee from one
o?ce to another "ithin the same business establishment, as the e5i&ency of the business my
require, provided that the said transfer does nor result in a demotion in rank or a diminution in salary,
bene.ts and other privile&es of the employeeL #( or is not unreasonable, inconvenient or pre<udicial to the
latterL #, or is not used as a subterfu&e by the employer to rid himself of an undesirable "orker. 5+
A transfer means a movement F3G from one position to another of equivalent rank, level or salary, "ithout a
break in the serviceL 5# and F)G from one o?ce to another "ithin the same business establishment. 55 It is
distin&uished from a promotion in the sense that it involves a lateral chan&e as opposed to a scalar
ascent. 51
In this case, transfer of the complainants implied more than a relief from duty to &ive them time to rest E a
mere Bchan&in& of the &uards. B/ather, their transfer connoted a reshuìn& or e5chan&e of their posts, or
their reassi&nment to other posts, such that no security &uard "ould be "ithout an assi&nment.
6o"ever, this le&ally reco&ni:ed concept of transfer "as not implemented. The A&ency hired ne" security
&uards to replace the complainants, resultin& in a lack of posts to "hich the complainants could have been
reassi&ned. Thus, it refused to reassi&n Complainant Andoy "hen he reported for duty on 'ebruary ), ( and D,
3HH(L and merely told the other complainants on various dates from 8anuary )* to )D, 3HH( that they "ere
already too old to be posted any"here.
The A&ency no" e5plains that since, under the la", the A&ency is &iven a period of not more than si5 months
to retain the complainants on Ooatin& status, the complaint for ille&al dismissal is premature. This contention
is incorrect.
A Ooatin& status requires the dire e5i&ency of the employer's bona .de suspension of operation, business or
undertakin&. In security services, this happens "hen the clients that do not rene" their contracts "ith a
security a&ency are more than those that do and the ne" ones that the a&ency &ets. 6o"ever, in the case at
bar, the A&ency "as a"arded a ne" contract by the Client. There "as no surplus of security &uards over
available assi&nments. If there "ere, it "as because the A&ency hired ne" security &uards. Thus, there "as
no suspension of operation, business or undertakin&, bona .de or not, that "ould have <usti.ed placin& the
complainants o=#detail and makin& them "ait for a period of si5 months. If indeed they "ere merely
transferred, there "ould have been no need to make them "ait for si5 months.
The only lo&ical conclusion from the fore&oin& discussion is that the A&ency ille&ally dismissed the
complainants. 6ence, as a necessary consequence, the complainants are entitled to reinstatement and back
"a&es. 54 6o"ever, reinstatement is no lon&er feasible in this case. The A&ency cannot reassi&n them to the
Client, as the former has recruited ne" security &uardsL the complainants, on the other hand, refuse to
accept other assi&nment. 9erily, complainants do not pray for reinstatementL in fact they refused to be
reinstated. !uch refusal is indicative of strained relations. 5% Thus, separation pay is a"arded in lieu of
reinstatement. 5)
$econ "--ueK
'lient?- Lia,ility
The Client did not, as it could not, ille&ally dismiss the complainants. Thus, it should not be held liable for
separation pay and back "a&es. -ut even if the Client is not. responsible for the ille&al dismissal of the
complainants, it is <ointly and severally liable "ith the A&ency for the complainants' service incentive leave
pay. In /ose"ood Processin&, Inc. vs. 1ational ,abor /elations Commission, 5$ the Court e5plained that,
not"ithstandin& the service contract bet"een the client and the security a&ency, the t"o are solidarily liable
for the proper "a&es prescribed by the ,abor Code, pursuant to Articles 3A%, 3AD and 3AH thereof, "hich "e
quote hereunderK
Art. 3A%. Contractor or subcontractor. E >henever an employer enters into a contract "ith
another person for the performance of the formerM'sN "ork, the employees of the contractor
and of the latterM'sN subcontractor, if any, shall be paid in accordance "ith the provisions of
Pa&e )5 of #$%
this Code.
In the event that the contractor or subcontractor fails to pay the "a&es of his employees in
accordance "ith this Code, the employer shall be <ointly and severally liable "ith his
contractor or subcontractor to such employees to the e5tent of the "ork performed under the
contract, in the same manner and e5tent that he is liable to employees directly employed by
him.
The !ecretary of ,abor may, by appropriate re&ulations, restrict or prohibit the contractin& out
of labor to protect the ri&hts of "orkers established under this Code. In so prohibitin& or
restrictin&, he may make appropriate distinctions bet"een labor#only contractin& and <ob
contractin& as "ell as di=erentiations "ithin these types of contractin& and determine "ho
amon& the parties involved shall be considered the employer for purposes of this Code, to
prevent any violation or circumvention of any provision of this Code.
. . . In such cases Mlabor#only contractin&N, the person or intermediary shall be considered
merely as an a&ent of the employer "ho shall be responsible to the "orkers in the same
manner and e5tent as if the latter "ere directly employed by him.
Art. 3AD. Indirect employer. E The provisions of the immediately precedin& Article shall
like"ise apply to any person, partnership, association or corporation "hich, not bein& an
employer, contracts "ith an independent contractor for the performance of any "ork, task,
<ob or pro<ect.
Art. 3AH. !olidary liability. E The provisions of e5istin& la"s to the contrary not"ithstandin&,
every employer or indirect employer shall be held responsible "ith his contractor or
subcontractor for any violation of any provision of this Code.
'or purposes of determinin& the e5tent of their civil liability under this Chapter, they shall be
considered as direct employers.
nder these provisions, the indirect employer, "ho is the Client in the case at bar, is <ointly and severally
liable "ith the contractor for the "orkers' "a&es, in the same manner and e5tent that it is liable to its direct
employees. This liability of the Client covers the payment of the service incentive leave pay of the
complainants durin& the time they "ere posted at the Cebu branch of the Client. As service had been
rendered, the liability accrued, even if the complainants "ere eventually transferred or reassi&ned.
The service incentive leave is e5pressly &ranted by these pertinent provisions of the ,abor CodeK
Art. H*. /i&ht to service incentive leave. E FaG 4very employee "ho has rendered at least one
year of service shall be entitled to a yearly service incentive leave of .ve days "ith pay.
FbG This provision shall not apply to those "ho are already en<oyin& the bene.t
herein provided, those en<oyin& vacation leave "ith pay of at least .ve days and those
employed in establishments re&ularly employin& less than ten employees or in
establishments e5empted from &rantin& this bene.t by the !ecretary of ,abor after
considerin& the viability or .nancial condition of such establishment.
FcG The &rant of bene.t in e5cess of that provided herein shall not be made a sub<ect of
arbitration or any court MorN administrative action.
nder the Implementin& /ules and /e&ulations of the ,abor Code, an unused service incentive leave is
commutable to its money equivalent, &i0.K
!ec. *. Treatment of bene.t. E The service incentive leave shall be commutable to its money
equivalent if not used or e5hausted at the end of the year.
The a"ard of the thirteenth#month pay is deleted in vie" of the evidence presented by the A&ency, provin&
that such claim has already been paid to the complainants. 0bviously then, the a"ard of such bene.t in the
dispositive portion of the assailed +ecision is merely an oversi&ht, considerin& that /espondent Commission
itself deleted it from the main body of the said +ecision.
>64/4'0/4, the petition is +I!MI!!4+ and the assailed +ecision and /esolution are hereby A''I/M4+, but
the a"ard of the thirteenth#month pay is +4,4T4+. Costs a&ainst petitioners.
!0 0/+4/4+.
7./. 1o. 3*%$%D May 3%, )AA*
AUTO &US TRANSPORT SYSTEMS, INC., petitioner,
vs.
ANTONIO &AUTISTA, respondent.
Pa&e )1 of #$%
+ 4 C I ! I 0 1
CHICO*NAHARIO, J.!
-efore s is a Petition for /evie" on 'ertiorari assailin& the +ecision3 and /esolution) of the Court of Appeals
a?rmin& the +ecision$ of the 1ational ,abor /elations Commission F1,/CG. The 1,/C rulin& modi.ed the
+ecision of the ,abor Arbiter F.ndin& respondent entitled to the a"ard of 3$th month pay and service
incentive leave payG by deletin& the a"ard of 3$th month pay to respondent.
THE FACTS
!ince )( May 3HH*, respondent Antonio -autista has been employed by petitioner Auto -us Transport
!ystems, Inc. FAutobusG, as driver#conductor "ith travel routes Manila#Tu&ue&arao via -a&uio, -a&uio#
Tu&ue&arao via Manila and Manila#Tabuk via -a&uio. /espondent "as paid on commission basis, seven
percent FD[G of the total &ross income per travel, on a t"ice a month basis.
0n A$ 8anuary )AAA, "hile respondent "as drivin& Autobus 1o. 33( alon& !ta. 'e, 1ueva 9i:caya, the bus he
"as drivin& accidentally bumped the rear portion of Autobus 1o. 3)(, as the latter vehicle suddenly stopped
at a sharp curve "ithout &ivin& any "arnin&.
/espondent averred that the accident happened because he "as compelled by the mana&ement to &o back
to /o5as, Isabela, althou&h he had not slept for almost t"enty#four F)(G hours, as he had <ust arrived in
Manila from /o5as, Isabela. /espondent further alle&ed that he "as not allo"ed to "ork until he fully paid the
amount of PD*,**3.*A, representin& thirty percent F$A[G of the cost of repair of the dama&ed buses and that
despite respondentIs pleas for reconsideration, the same "as i&nored by mana&ement. After a month,
mana&ement sent him a letter of termination.
Thus, on A) 'ebruary )AAA, respondent instituted a Complaint for Ille&al +ismissal "ith Money Claims for
nonpayment of 3$th month pay and service incentive leave pay a&ainst Autobus.
Petitioner, on the other hand, maintained that respondentIs employment "as replete "ith o=enses involvin&
reckless imprudence, &ross ne&li&ence, and dishonesty. To support its claim, petitioner presented copies of
letters, memos, irre&ularity reports, and "arrants of arrest pertainin& to several incidents "herein respondent
"as involved.
'urthermore, petitioner avers that in the e5ercise of its mana&ement prero&ative, respondentIs employment
"as terminated only after the latter "as provided "ith an opportunity to e5plain his side re&ardin& the
accident on A$ 8anuary )AAA.
0n )H !eptember )AAA, based on the pleadin&s and supportin& evidence presented by the parties, ,abor
Arbiter Monroe C. Tabin&an promul&ated a +ecision,( the dispositive portion of "hich readsK
>64/4'0/4, all premises considered, it is hereby found that the complaint for Ille&al +ismissal has
no le& to stand on. It is hereby ordered +I!MI!!4+, as it is hereby +I!MI!!4+.
6o"ever, still based on the above#discussed premises, the respondent must pay to the complainant
the follo"in&K
a. his 3$th month pay from the date of his hirin& to the date of his dismissal, presently
computed at PD2,33D.2DL
b. his service incentive leave pay for all the years he had been in service "ith the respondent,
presently computed at P3$,D22.A*.
All other claims of both complainant and respondent are hereby dismissed for lack of merit.*
1ot satis.ed "ith the decision of the ,abor Arbiter, petitioner appealed the decision to the 1,/C "hich
rendered its decision on )2 !eptember )AA3, the decretal portion of "hich readsK
MTNhe /ules and /e&ulations Implementin& Presidential +ecree 1o. 2*3, particularly !ec. $ providesK
B!ection $. 4mployers covered. V The +ecree shall apply to all employers e5cept toK
555 555 555
eG employers of those "ho are paid on purely commission, boundary, or task basis,
performin& a speci.c "ork, irrespective of the time consumed in the performance thereof.
555.B
/ecords sho" that complainant, in his position paper, admitted that he "as paid on a commission
basis.
In vie" of the fore&oin&, "e deem it <ust and equitable to modify the assailed +ecision by deletin& the
Pa&e )4 of #$%
a"ard of 3$thmonth pay to the complainant.
T
>64/4'0/4, the +ecision dated )H !eptember )AAA is M0+I'I4+ by deletin& the a"ard of
3$th month pay. The other .ndin&s are A''I/M4+.%
In other "ords, the a"ard of service incentive leave pay "as maintained. Petitioner thus sou&ht a
reconsideration of this aspect, "hich "as subsequently denied in a /esolution by the 1,/C dated $3 0ctober
)AA3.
+ispleased "ith only the partial &rant of its appeal to the 1,/C, petitioner sou&ht the revie" of said decision
"ith the Court of Appeals "hich "as subsequently denied by the appellate court in a +ecision dated A% May
)AA), the dispositive portion of "hich readsK
>64/4'0/4, premises considered, the #etition is +I!MI!!4+ for lack of meritL and the
assailed (eci-ion of respondent Commission in 1,/C 1C/ CA 1o. A)%*2(#)AAA is hereby A''I/M4+ in
toto. 1o costs.D
6ence, the instant petition.
ISSUES
3. >hether or not respondent is entitled to service incentive leaveL
). >hether or not the three F$G#year prescriptive period provided under Article )H3 of the ,abor Code, as
amended, is applicable to respondentIs claim of service incentive leave pay.
RULIN0 OF THE COURT
The disposition of the .rst issue revolves around the proper interpretation of Article H* of the ,abor Code &i--
E-&i- !ection 3F+G, /ule 9, -ook III of the Implementin& /ules and /e&ulations of the ,abor Code "hich
providesK
Art. 95. /I76T T0 !4/9IC4 I1C41TI94 ,4A94
FaG 4very employee "ho has rendered at least one year of service shall be entitled to a yearly
service incentive leave of .ve days "ith pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTIN !. Covera&e. V This rule shall apply to all employees e5ceptK
T
FdG 'ield personnel and other employees "hose performance is unsupervised by the employer
includin& those "ho are en&a&ed on task or contract basis, purely commission basis, or those
"ho are paid in a .5ed amount for performin& "ork irrespective of the time consumed in the
performance thereofL . . .
A careful perusal of said provisions of la" "ill result in the conclusion that the &rant of service incentive leave
has been delimited by the Implementin& /ules and /e&ulations of the ,abor Code to apply only to those
employees not e5plicitly e5cluded by !ection 3 of /ule 9. Accordin& to the Implementin& /ules, !ervice
Incentive ,eave shall not apply to employees classi.ed as B.eld personnel.B The phrase Bother employees
"hose performance is unsupervised by the employerB must not be understood as a separate classi.cation of
employees to "hich service incentive leave shall not be &ranted. /ather, it serves as an ampli.cation of the
interpretation of the de.nition of .eld personnel under the ,abor Code as those B"hose actual hours of "ork
in the .eld cannot be determined "ith reasonable certainty.B2
The same is true "ith respect to the phrase Bt*o-e w*o are en%a%e on ta-k or contract ,a-i-, purely
co//i--ion ,a-i-.F!aid phrase should be related "ith B.eld personnel,B applyin& the rule on e3u-e/
%eneri- that &eneral and unlimited terms are restrained and limited by the particular terms that they
follo".H 6ence, employees en&a&ed on task or contract basis or paid on purely commission basis are not
automatically e5empted from the &rant of service incentive leave, unless, they fall under the classi.cation of
.eld personnel.
Therefore, petitionerIs contention that respondent is not entitled to the &rant of service incentive leave <ust
because he "as paid on purely commission basis is misplaced. >hat must be ascertained in order to resolve
the issue of propriety of the &rant of service incentive leave to respondent is "hether or not he is a .eld
personnel.
Accordin& to Article 2) of the ,abor Code, B.eld personnelB shall refer to non#a&ricultural employees "ho
re&ularly perform their duties a"ay from the principal place of business or branch o?ce of the employer and
Pa&e )% of #$%
"hose actual hours of "ork in the .eld cannot be determined "ith reasonable certainty. This de.nition is
further elaborated in the +ureau o. =orkin% 'onition- A+='B, 6&i-ory !pinion to #*ilippine 5ec*nical-
'lerical 'o//ercial 9/ployee- 6--ociation3A "hich states thatK
As a &eneral rule, M.eld personnelN are those "hose performance of their <obJservice is not supervised
by the employer or his representative, the "orkplace bein& a"ay from the principal o?ce and "hose
hours and days of "ork cannot be determined "ith reasonable certaintyL hence, they are paid speci.c
amount for renderin& speci.c service or performin& speci.c "ork. ". require to ,e at -peci2c place-
at -peci2c ti/e-, e/ployee- incluin% ri&er- cannot ,e -ai to ,e 2el per-onnel e-pite t*e .act
t*at t*ey are per.or/in% work away .ro/ t*e principal o1ce o. t*e e/ployee. M4mphasis oursN
To this discussion by the ->C, the petitioner di=ers and postulates that under said advisory opinion, no
employee "ould ever be considered a .eld personnel because every employer, in one "ay or another,
e5ercises control over his employees. Petitioner further ar&ues that the only criterion that should be
considered is the nature of "ork of the employee in that, if the employeeIs <ob requires that he "orks a"ay
from the principal o?ce like that of a messen&er or a bus driver, then he is inevitably a .eld personnel.
>e are not persuaded. At this point, it is necessary to stress that the de.nition of a B.eld personnelB is not
merely concerned "ith the location "here the employee re&ularly performs his duties but also "ith the fact
that the employeeIs performance is unsupervised by the employer. As discussed above, .eld personnel are
those "ho re&ularly perform their duties a"ay from the principal place of business of the employer an
w*o-e actual *our- o. work in t*e 2el cannot ,e eter/ine wit* rea-ona,le certainty. Thus, in order to
conclude "hether an employee is a .eld employee, it is also necessary to ascertain if actual hours of "ork in
the .eld can be determined "ith reasonable certainty by the employer. In so doin&, an inquiry must be made
as to "hether or not the employeeIs time and performance are constantly supervised by the employer.
As observed by the ,abor Arbiter and concurred in by the Court of AppealsK
It is of <udicial notice that alon& the routes that are plied by these bus companies, there are its
inspectors assi&ned at strate&ic places "ho board the bus and inspect the passen&ers, the punched
tickets, and the conductorIs reports. There is also the mandatory once#a#"eek car barn or shop day,
"here the bus is re&ularly checked as to its mechanical, electrical, and hydraulic aspects, "hether or
not there are problems thereon as reported by the driver andJor conductor. They too, must be at
speci.c place as MsicN speci.ed time, as they &enerally observe prompt departure and arrival from
their point of ori&in to their point of destination. In each and every depot, there is al"ays the
+ispatcher "hose function is precisely to see to it that the bus and its cre" leave the premises at
speci.c times and arrive at the estimated proper time. These, are present in the case at bar. The
driver, the complainant herein, "as therefore under constant supervision "hile in the performance of
this "ork. 6e cannot be considered a .eld personnel.33
>e a&ree in the above disquisition. Therefore, as correctly concluded by the appellate court, respondent is
not a .eld personnel but a re&ular employee "ho performs tasks usually necessary and desirable to the usual
trade of petitionerIs business. Accordin&ly, respondent is entitled to the &rant of service incentive leave.
The question no" that must be addressed is up to "hat amount of service incentive leave pay respondent is
entitled to.
The response to this query inevitably leads us to the correlative issue of "hether or not the three F$G#year
prescriptive period under Article )H3 of the ,abor Code is applicable to respondentIs claim of service
incentive leave pay.
Article )H3 of the ,abor Code states that all money claims arisin& from employer#employee relationship shall
be .led "ithin three F$G years from the time the cause of action accruedL other"ise, they shall be forever
barred.
In the application of this section of the ,abor Code, the pivotal question to be ans"ered is "hen does the
cause of action for money claims accrue in order to determine the reckonin& date of the three#year
prescriptive period.
It is settled <urisprudence that a cause of action has three elements, to "it, F3G a ri&ht in favor of the plainti=
by "hatever means and under "hatever la" it arises or is createdL F)G an obli&ation on the part of the named
defendant to respect or not to violate such ri&htL and F$G an act or omission on the part of such defendant
violative of the ri&ht of the plainti= or constitutin& a breach of the obli&ation of the defendant to the
plainti=.3)
To properly construe Article )H3 of the ,abor Code, it is essential to ascertain the time "hen the third element
of a cause of action transpired. !tated di=erently, in the computation of the three#year prescriptive period, a
determination must be made as to the period "hen the act constitutin& a violation of the "orkersI ri&ht to the
bene.ts bein& claimed "as committed. 'or if the cause of action accrued more than three F$G years before
Pa&e )) of #$%
the .lin& of the money claim, said cause of action has already prescribed in accordance "ith Article )H3.3$
Consequently, in cases of nonpayment of allo"ances and other monetary bene.ts, if it is established that the
bene.ts bein& claimed have been "ithheld from the employee for a period lon&er than three F$G years, the
amount pertainin& to the period beyond the three#year prescriptive period is therefore barred by prescription.
The amount that can only be demanded by the a&&rieved employee shall be limited to the amount of the
bene.ts "ithheld "ithin three F$G years before the .lin& of the complaint.3(
It is essential at this point, ho"ever, to reco&ni:e that the service incentive leave is a curious animal in
relation to other bene.ts &ranted by the la" to every employee. In the case of service incentive leave, the
employee may choose to either use his leave credits or commute it to its monetary equivalent if not
e5hausted at the end of the year.3* 'urthermore, if the employee entitled to service incentive leave does not
use or commute the same, he is entitled upon his resi&nation or separation from "ork to the commutation of
his accrued service incentive leave. As enunciated by the Court in 4ernane0 &. NLR'K3%
The clear policy of the ,abor Code is to &rant service incentive leave pay to "orkers in all
establishments, sub<ect to a fe" e5ceptions. !ection ), /ule 9, -ook III of the Implementin& /ules and
/e&ulations provides that BMeNvery employee "ho has rendered at least one year of service shall be
entitled to a yearly service incentive leave of .ve days "ith pay.B !ervice incentive leave is a ri&ht
"hich accrues to every employee "ho has served B"ithin 3) months, "hether continuous or broken
reckoned from the date the employee started "orkin&, includin& authori:ed absences and paid
re&ular holidays unless the "orkin& days in the establishment as a matter of practice or policy, or that
provided in the employment contracts, is less than 3) months, in "hich case said period shall be
considered as one year.B It is also Fco//uta,le to it- /oney equi&alent i. not u-e or e:*au-te at
t*e en o. t*e year.F "n ot*er wor-, an e/ployee w*o *a- -er&e .or one year i- entitle to it. <e
/ay u-e it a- lea&e ay- or *e /ay collect it- /onetary &alue. To limit the a"ard to three years, as
the solicitor &eneral recommends, is to unduly restrict such ri&ht.3D MItalics suppliedN
Correspondin&ly, it can be conscientiously deduced that the cause of action of an entitled employee to claim
his service incentive leave pay accrues from the moment the employer refuses to remunerate its monetary
equivalent if the employee did not make use of said leave credits but instead chose to avail of its
commutation. Accordin&ly, if the employee "ishes to accumulate his leave credits and opts for its
commutation upon his resi&nation or separation from employment, his cause of action to claim the "hole
amount of his accumulated service incentive leave shall arise "hen the employer fails to pay such amount at
the time of his resi&nation or separation from employment.
Applyin& Article )H3 of the ,abor Code in li&ht of this peculiarity of the service incentive leave, "e can
conclude that the three F$G#year prescriptive period commences, not at the end of the year "hen the
employee becomes entitled to the commutation of his service incentive leave, but from the time "hen the
employer refuses to pay its monetary equivalent after demand of commutation or upon termination of the
employeeIs services, as the case may be.
The above construal of Art. )H3, &i--E-&i- the rules on service incentive leave, is in keepin& "ith the
rudimentary principle that in the implementation and interpretation of the provisions of the ,abor Code and
its implementin& re&ulations, the "orkin&manIs "elfare should be the primordial and paramount
consideration.32 The policy is to e5tend the applicability of the decree to a &reater number of employees "ho
can avail of the bene.ts under the la", "hich is in consonance "ith the avo"ed policy of the !tate to &ive
ma5imum aid and protection to labor.3H
In the case at bar, respondent had not made use of his service incentive leave nor demanded for its
commutation until his employment "as terminated by petitioner. 1either did petitioner compensate his
accumulated service incentive leave pay at the time of his dismissal. It "as only upon his .lin& of a complaint
for ille&al dismissal, one month from the time of his dismissal, that respondent demanded from his former
employer commutation of his accumulated leave credits. 6is cause of action to claim the payment of his
accumulated service incentive leave thus accrued from the time "hen his employer dismissed him and failed
to pay his accumulated leave credits.
Therefore, the prescriptive period "ith respect to his claim for service incentive leave pay only commenced
from the time the employer failed to compensate his accumulated service incentive leave pay at the time of
his dismissal. !ince respondent had .led his money claim after only one month from the time of his dismissal,
necessarily, his money claim "as .led "ithin the prescriptive period provided for by Article )H3 of the ,abor
Code.
:HEREFORE, premises considered, the instant petition is hereby +41I4+. The assailed +ecision of the Court
of Appeals in CA#7./. !P. 1o. %2$H* is hereby A''I/M4+. 1o Costs.
SO ORDERED.
7./. 1o. 3(%*$A 8anuary 3D, )AA*
Pa&e )$ of #$%
PEDRO CHA7EH, petitioner,
vs.
NATIONAL LA&OR RELATIONS COMMISSION, SUPREME PAC=A0IN0, INC. and AL7IN LEE, P.ant
ManaCer,re-ponent-.
+ 4 C I ! I 0 1
CALLE<O, SR., J.:
-efore the Court is the petition for revie" on certiorari of the /esolution3 dated +ecember 3*, )AAA of the
Court of Appeals FCAG reversin& its +ecision dated April )2, )AAA in CA#7./. !P 1o. *)(2*. The assailed
resolution reinstated the +ecision dated 8uly 3A, 3HH2 of the 1ational ,abor /elations Commission F1,/CG,
dismissin& the complaint for ille&al dismissal .led by herein petitioner Pedro Chave:. The said 1,/C decision
similarly reversed its earlier +ecision dated 8anuary )D, 3HH2 "hich, a?rmin& that of the ,abor Arbiter, ruled
that the petitioner had been ille&ally dismissed by respondents !upreme Packa&in&, Inc. and Mr. Alvin ,ee.
The case stemmed from the follo"in& factsK
The respondent company, !upreme Packa&in&, Inc., is in the business of manufacturin& cartons and other
packa&in& materials for e5port and distribution. It en&a&ed the services of the petitioner, Pedro Chave:, as
truck driver on 0ctober )*, 3H2(. As such, the petitioner "as tasked to deliver the respondent companyIs
products from its factory in Mariveles, -ataan, to its various customers, mostly in Metro Manila. The
respondent company furnished the petitioner "ith a truck. Most of the petitionerIs delivery trips "ere made
at ni&httime, commencin& at %KAA p.m. from Mariveles, and returnin& thereto in the afternoon t"o or three
days after. The deliveries "ere made in accordance "ith the routin& slips issued by respondent company
indicatin& the order, time and ur&ency of delivery. Initially, the petitioner "as paid the sum ofP$*A.AA per trip.
This "as later ad<usted to P(2A.AA per trip and, at the time of his alle&ed dismissal, the petitioner "as
receivin& PHAA.AA per trip.
!ometime in 3HH), the petitioner e5pressed to respondent Alvin ,ee, respondent companyIs plant mana&er,
his Fthe petitionerIsG desire to avail himself of the bene.ts that the re&ular employees "ere receivin& such as
overtime pay, ni&htshift di=erential pay, and 3$th month pay, amon& others. Althou&h he promised to e5tend
these bene.ts to the petitioner, respondent ,ee failed to actually do so.
0n 'ebruary )A, 3HH*, the petitioner .led a complaint for re&ulari:ation "ith the /e&ional Arbitration -ranch
1o. III of the 1,/C in !an 'ernando, Pampan&a. -efore the case could be heard, respondent company
terminated the services of the petitioner. Consequently, on May )*, 3HH*, the petitioner .led an amended
complaint a&ainst the respondents for ille&al dismissal, unfair labor practice and non#payment of overtime
pay, ni&htshift di=erential pay, 3$th month pay, amon& others. The case "as docketed as 1,/C Case 1o.
/A-#III#A)#%323#H*.
The respondents, for their part, denied the e5istence of an employer#employee relationship bet"een the
respondent company and the petitioner. They averred that the petitioner "as an independent contractor as
evidenced by the contract of service "hich he and the respondent company entered into. The said contract
provided as follo"sK
That the Principal Mreferrin& to !upreme Packa&in&, Inc.N, by these presents, a&rees to hire and the Contractor
Mreferrin& to Pedro Chave:N, by nature of their speciali:ed line or service <obs, accepts the services to be
rendered to the Principal, under the follo"in& terms and covenants heretofore mentionedK
3. That the inland transport deliveryJhaulin& activities to be performed by the contractor to the
principal, shall only cover travel route from Mariveles to Metro Manila. 0ther"ise, any chan&e to this
travel route shall be sub<ect to further a&reement by the parties concerned.
). That the payment to be made by the Principal for any haulin& or delivery transport services fully
rendered by the Contractor shall be on a per trip basis dependin& on the si:e or classi.cation of the
truck bein& used in the transport service, to "itK
aG If the haulin& or delivery service shall require a truck of si5 "heeler, the payment on a per
trip basis from Mariveles to Metro Manila shall be T6/44 61+/4+ P4!0! FP$AA.AAG and
4''4CTI94 +ecember 3*, 3H2(.
bG If the haulin& or delivery service require a truck of ten "heeler, the payment on a per trip
basis, follo"in& the same route mentioned, shall be T6/44 61+/4+ 'I'T; FP$*A.AAG Pesos
and 4=ective +ecember 3*, 3H2(.
$. That for the amount involved, the Contractor "ill be to MsicN provide for MsicN at least t"o F)G
helpersL
(. The Contractor shall e5ercise direct control and shall be responsible to the Principal for the cost of
Pa&e )( of #$%
any dama&e to, loss of any &oods, car&oes, .nished products or the like, "hile the same are in transit,
or due to reckless MsicN of its men utili:ed for the purpose above mentionedL
*. That the Contractor shall have absolute control and disciplinary po"er over its men "orkin& for him
sub<ect to this a&reement, and that the Contractor shall hold the Principal free and harmless from any
liability or claim that may arise by virtue of the ContractorIs non#compliance to the e5istin& provisions
of the Minimum >a&e ,a", the 4mployees Compensation Act, the !ocial !ecurity !ystem Act, or any
other such la" or decree that may hereafter be enacted, it bein& clearly understood that any truck
drivers, helpers or men "orkin& "ith and for the Contractor, are not employees "ho "ill be
indemni.ed by the Principal for any such claim, includin& dama&es incurred in connection there"ithL
%. This contract shall take e=ect immediately upon the si&nin& by the parties, sub<ect to rene"al on a
year#to#year basis.)
This contract of service "as dated +ecember 3), 3H2(. It "as subsequently rene"ed t"ice, on 8uly 3A, 3H2H
and !eptember )2, 3HH). 45cept for the rates to be paid to the petitioner, the terms of the contracts "ere
substantially the same. The relationship of the respondent company and the petitioner "as alle&edly
&overned by this contract of service.
The respondents insisted that the petitioner had the sole control over the means and methods by "hich his
"ork "as accomplished. 6e paid the "a&es of his helpers and e5ercised control over them. As such, the
petitioner "as not entitled to re&ulari:ation because he "as not an employee of the respondent company.
The respondents, like"ise, maintained that they did not dismiss the petitioner. /ather, the severance of his
contractual relation "ith the respondent company "as due to his violation of the terms and conditions of their
contract. The petitioner alle&edly failed to observe the minimum de&ree of dili&ence in the proper
maintenance of the truck he "as usin&, thereby e5posin& respondent company to unnecessary si&ni.cant
e5penses of overhaulin& the said truck.
After the parties had .led their respective pleadin&s, the ,abor Arbiter rendered the +ecision dated 'ebruary
$, 3HHD, .ndin& the respondents &uilty of ille&al dismissal. The ,abor Arbiter declared that the petitioner "as
a re&ular employee of the respondent company as he "as performin& a service that "as necessary and
desirable to the latterIs business. Moreover, it "as noted that the petitioner had dischar&ed his duties as
truck driver for the respondent company for a continuous and uninterrupted period of more than ten years.
The contract of service invoked by the respondents "as declared null and void as it constituted a
circumvention of the constitutional provision a=ordin& full protection to labor and security of tenure. The
,abor Arbiter found that the petitionerIs dismissal "as anchored on his insistent demand to be re&ulari:ed.
6ence, for lack of a valid and <ust cause therefor and for their failure to observe the due process
requirements, the respondents "ere found &uilty of ille&al dismissal. The dispositive portion of the ,abor
ArbiterIs decision statesK
>64/4'0/4, in the li&ht of the fore&oin&, <ud&ment is hereby rendered declarin& respondent !P/4M4
PACXA7I17, I1C. andJor M/. A,9I1 ,44, Plant Mana&er, "ith business address at -4P^, Mariveles, -ataan
&uilty of ille&al dismissal, orderin& said respondent to pay complainant his separation pay equivalent to one
F3G month pay per year of service based on the avera&e monthly pay of P3A,2AA.AA in lieu of reinstatement
as his reinstatement back to "ork "ill not do any &ood bet"een the parties as the employment relationship
has already become strained and full back"a&es from the time his compensation "as "ithheld on 'ebruary
)$, 3HH* up to 8anuary $3, 3HHD Fcut#o= dateG until compliance, other"ise, his back"a&es shall continue to
run. Also to pay complainant his 3$th month pay, ni&ht shift di=erential pay and service incentive leave pay
hereunder computed as follo"sK
aG -ack"a&es TTTTTTT.. P)(2,(AA.AA
bG !eparation Pay TTTT.T... P3(A,(AA.AA
cG 3$th month pay TTTT.TTP 3A,2AA.AA
dG !ervice Incentive ,eave Pay .. ),A(A.AA
T0TA, P(A3,%(A.AA
/espondent is also ordered to pay ten F3A[G of the amount due the complainant as attorneyIs fees.
!0 0/+4/4+.$
The respondents seasonably interposed an appeal "ith the 1,/C. 6o"ever, the appeal "as dismissed by the
1,/C in its +ecision( dated 8anuary )D, 3HH2, as it a?rmed in toto the decision of the ,abor Arbiter. In the
said decision, the 1,/C characteri:ed the contract of service bet"een the respondent company and the
petitioner as a BschemeB that "as resorted to by the respondents "ho, takin& advanta&e of the petitionerIs
unfamiliarity "ith the 4n&lish lan&ua&e andJor le&al niceties, "anted to evade the e=ects and implications of
Pa&e ), of #$%
his becomin& a re&ulari:ed employee.*
The respondents sou&ht reconsideration of the 8anuary )D, 3HH2 +ecision of the 1,/C. Actin& thereon, the
1,/C rendered another +ecision% dated 8uly 3A, 3HH2, reversin& its earlier decision and, this time, holdin&
that no employer#employee relationship e5isted bet"een the respondent company and the petitioner. In
reconsiderin& its earlier decision, the 1,/C stated that the respondents did not e5ercise control over the
means and methods by "hich the petitioner accomplished his delivery services. It upheld the validity of the
contract of service as it pointed out that said contract "as silent as to the time by "hich the petitioner "as to
make the deliveries and that the petitioner could hire his o"n helpers "hose "a&es "ould be paid from his
o"n account. These factors indicated that the petitioner "as an independent contractor, not an employee of
the respondent company.
The 1,/C ruled that the contract of service "as not intended to circumvent Article )2A of the ,abor Code on
the re&ulari:ation of employees. !aid contract, includin& the .5ed period of employment contained therein,
havin& been kno"in&ly and voluntarily entered into by the parties thereto "as declared valid citin& +rent
$c*ool, "nc. &. Ga/ora.D The 1,/C, thus, dismissed the petitionerIs complaint for ille&al dismissal.
The petitioner sou&ht reconsideration of the 8uly 3A, 3HH2 +ecision but it "as denied by the 1,/C in its
/esolution dated !eptember D, 3HH2. 6e then .led "ith this Court a petition for certiorari, "hich "as referred
to the CA follo"in& the rulin& in$t. ;artin 4uneral <o/e &. NLR' .2
The appellate court rendered the +ecision dated April )2, )AAA, reversin& the 8uly 3A, 3HH2 +ecision of the
1,/C and reinstatin& the decision of the ,abor Arbiter. In the said decision, the CA ruled that the petitioner
"as a re&ular employee of the respondent company because as its truck driver, he performed a service that
"as indispensable to the latterIs business. 'urther, he had been the respondent companyIs truck driver for
ten continuous years. The CA also reasoned that the petitioner could not be considered an independent
contractor since he had no substantial capital in the form of tools and machinery. In fact, the truck that he
drove belon&ed to the respondent company. The CA also observed that the routin& slips that the respondent
company issued to the petitioner sho"ed that it e5ercised control over the latter. The routin& slips indicated
the chronolo&ical order and priority of delivery, the ur&ency of certain deliveries and the time "hen the &oods
"ere to be delivered to the customers.
The CA, like"ise, disbelieved the respondentsI claim that the petitioner abandoned his <ob notin& that he <ust
.led a complaint for re&ulari:ation. This actuation of the petitioner ne&ated the respondentsI alle&ation that
he abandoned his <ob. The CA held that the respondents failed to dischar&e their burden to sho" that the
petitionerIs dismissal "as for a valid and <ust cause. Accordin&ly, the respondents "ere declared &uilty of
ille&al dismissal and the decision of the ,abor Arbiter "as reinstated.
In its April )2, )AAA +ecision, the CA denounced the contract of service bet"een the respondent company
and the petitioner in this "iseK
In summation, "e rule that "ith the proliferation of contracts seekin& to prevent "orkers from attainin& the
status of re&ular employment, it is but necessary for the courts to scrutini:e "ith e5treme caution their
le&ality and <ustness. >here from the circumstances it is apparent that a contract has been entered into to
preclude acquisition of tenurial security by the employee, they should be struck do"n and disre&arded as
contrary to public policy and morals. In this case, the Bcontract of serviceB is <ust another attempt to e5ploit
the un"ittin& employee and deprive him of the protection of the ,abor Code by makin& it appear that the
stipulations of the parties "ere &overned by the Civil Code as in ordinary transactions.H
6o"ever, on motion for reconsideration by the respondents, the CA made a complete turn around as it
rendered the assailed /esolution dated +ecember 3*, )AAA upholdin& the contract of service bet"een the
petitioner and the respondent company. In reconsiderin& its decision, the CA e5plained that the e5tent of
control e5ercised by the respondents over the petitioner "as only "ith respect to the result but not to the
means and methods used by him. The CA cited the follo"in& circumstancesK F3G the respondents had no say
on ho" the &oods "ere to be delivered to the customersL F)G the petitioner had the ri&ht to employ "orkers
"ho "ould be under his direct controlL and F$G the petitioner had no "orkin& time.
The fact that the petitioner had been "ith the respondent company for more than ten years "as, accordin& to
the CA, of no moment because his status "as determined not by the len&th of service but by the contract of
service. This contract, not bein& contrary to morals, &ood customs, public order or public policy, should be
&iven the force and e=ect of la" as bet"een the respondent company and the petitioner. Consequently, the
CA reinstated the 8uly 3A, 3HH2 +ecision of the 1,/C dismissin& the petitionerIs complaint for ille&al
dismissal.
6ence, the recourse to this Court by the petitioner. 6e assails the +ecember 3*, )AAA /esolution of the
appellate court alle&in& thatK
FAG
Pa&e $+ of #$%
T64 C0/T 0' APP4A,! C0MMITT4+ A 7/A94 A-!4 0' +I!C/4TI01 AM01TI17 T0 4YC4!!
0' 8/I!+ICTI01 I1 7I9I17 M0/4 C01!I+4/ATI01 T0 T64 BC01T/ACT 0' !4/9IC4B 41T4/4+
I1T0 -; P4TITI014/ A1+ P/I9AT4 /4!P01+41T T6A1 A/TIC,4 )2A 0' T64 ,A-0/ C0+4 0' T64
P6I,IPPI14! >6IC6 CAT470/ICA,,; +4'I14! A /47,A/ 4MP,0;M41T 10T>IT6!TA1+I17 A1;
>/ITT41 A7/44M41T T0 T64 C01T/A/; A1+ /47A/+,4!! 0' T64 0/A, A7/44M41T 0' T64
PA/TI4!L
F-G
T64 C0/T 0' APP4A,! C0MMITT4+ A 7/A94 A-!4 0' +I!C/4TI01 AM01TI17 T0 4YC4!!
0' 8/I!+ICTI01 I1 /494/!I17 IT! 0>1 'I1+I17! T6AT P4TITI014/ I! A /47,A/ 4MP,0;44
A1+ I1 60,+I17 T6AT T64/4 4YI!T4+ 10 4MP,0;4/#4MP,0;44 /4,ATI01!6IP -4T>441
P/I9AT4 /4!P01+41T A1+ P4TITI014/ I1 A! MC6 A! T64 BC01T/0, T4!TB >6IC6 I!
C01!I+4/4+ T64 M0!T 4!!41TIA, C/IT4/I01 I1 +4T4/MI1I17 T64 4YI!T41C4 0' !AI+
/4,ATI01!6IP I! 10T P/4!41T.3A
The threshold issue that needs to be resolved is "hether there e5isted an employer#employee relationship
bet"een the respondent company and the petitioner. >e rule in the a?rmative.
The elements to determine the e5istence of an employment relationship areK F3G the selection and
en&a&ement of the employeeL F)G the payment of "a&esL F$G the po"er of dismissalL and F(G the employerIs
po"er to control the employeeIs conduct.33 The most important element is the employerIs control of the
employeeIs conduct, not only as to the result of the "ork to be done, but also as to the means and methods
to accomplish it.3) All the four elements are present in this case.
'irst. ndeniably, it "as the respondents "ho en&a&ed the services of the petitioner "ithout the intervention
of a third party.
!econd. >a&es are de.ned as Bremuneration or earnin&s, ho"ever desi&nated, capable of bein& e5pressed in
terms of money, "hether .5ed or ascertained on a time, task, piece or commission basis, or other method of
calculatin& the same, "hich is payable by an employer to an employee under a "ritten or un"ritten contract
of employment for "ork done or to be done, or for service rendered or to be rendered.B 3$ That the petitioner
"as paid on a per trip basis is not si&ni.cant. This is merely a method of computin& compensation and not a
basis for determinin& the e5istence or absence of employer#employee relationship. 0ne may be paid on the
basis of results or time e5pended on the "ork, and may or may not acquire an employment status, dependin&
on "hether the elements of an employer#employee relationship are present or not.3( In this case, it cannot
be &ainsaid that the petitioner received compensation from the respondent company for the services that he
rendered to the latter.
Moreover, under the /ules Implementin& the ,abor Code, every employer is required to pay his employees by
means of payroll.3* The payroll should sho", amon& other thin&s, the employeeIs rate of pay, deductions
made, and the amount actually paid to the employee. Interestin&ly, the respondents did not present the
payroll to support their claim that the petitioner "as not their employee, raisin& speculations "hether this
omission proves that its presentation "ould be adverse to their case.3%
Third. The respondentsI po"er to dismiss the petitioner "as inherent in the fact that they en&a&ed the
services of the petitioner as truck driver. They e5ercised this po"er by terminatin& the petitionerIs services
albeit in the &uise of Bseverance of contractual relationB due alle&edly to the latterIs breach of his contractual
obli&ation.
'ourth. As earlier opined, of the four elements of the employer#employee relationship, the Bcontrol testB is the
most important. Compared to an employee, an independent contractor is one "ho carries on a distinct and
independent business and undertakes to perform the <ob, "ork, or service on its o"n account and under its
o"n responsibility accordin& to its o"n manner and method, free from the control and direction of the
principal in all matters connected "ith the performance of the "ork e5cept as to the results thereof. 3D 6ence,
"hile an independent contractor en<oys independence and freedom from the control and supervision of his
principal, an employee is sub<ect to the employerIs po"er to control the means and methods by "hich the
employeeIs "ork is to be performed and accomplished.32
Althou&h the respondents denied that they e5ercised control over the manner and methods by "hich the
petitioner accomplished his "ork, a careful revie" of the records sho"s that the latter performed his "ork as
truck driver under the respondentsI supervision and control. Their ri&ht of control "as manifested by the
follo"in& attendant circumstancesK
3. The truck driven by the petitioner belon&ed to respondent companyL
). There "as an e5press instruction from the respondents that the truck shall be used e5clusively to
Pa&e $# of #$%
deliver respondent companyIs &oodsL 3H
$. /espondents directed the petitioner, after completion of each delivery, to park the truck in either of
t"o speci.c places only, to "itK at its o?ce in Metro Manila at )$)A 0smeUa !treet, Makati City or at
-4P^, Mariveles, -ataanL)A and
(. /espondents determined ho", "here and "hen the petitioner "ould perform his task by issuin& to
him &ate passes and routin& slips. )3
a. The routin& slips indicated on the column /4MA/X!, the chronolo&ical order and priority of
delivery such as 3st drop, )nd drop, $rd drop, etc. This meant that the petitioner had to
deliver the same accordin& to the order of priority indicated therein.
b. The routin& slips, like"ise, sho"ed "hether the &oods "ere to be delivered ur&ently or not
by the "ord /!6 printed thereon.
c. The routin& slips also indicated the e5act time as to "hen the &oods "ere to be delivered to
the customers as, for e5ample, the "ords Btomorro" mornin&B "as "ritten on slip no. )DD%.
These circumstances, to the CourtIs mind, prove that the respondents e5ercised control over the means and
methods by "hich the petitioner accomplished his "ork as truck driver of the respondent company. 0n the
other hand, the Court is hard put to believe the respondentsI alle&ation that the petitioner "as an
independent contractor en&a&ed in providin& delivery or haulin& services "hen he did not even o"n the truck
used for such services. 4vidently, he did not possess substantial capitali:ation or investment in the form of
tools, machinery and "ork premises. Moreover, the petitioner performed the delivery services e5clusively for
the respondent company for a continuous and uninterrupted period of ten years.
The contract of service to the contrary not"ithstandin&, the factual circumstances earlier discussed
indubitably establish the e5istence of an employer#employee relationship bet"een the respondent company
and the petitioner. It bears stressin& that the e5istence of an employer#employee relationship cannot be
ne&ated by e5pressly repudiatin& it in a contract and providin& therein that the employee is an independent
contractor "hen, as in this case, the facts clearly sho" other"ise. Indeed, the employment status of a person
is de.ned and prescribed by la" and not by "hat the parties say it should be.))
6avin& established that there e5isted an employer#employee relationship bet"een the respondent company
and the petitioner, the Court shall no" determine "hether the respondents validly dismissed the petitioner.
As a rule, the employer bears the burden to prove that the dismissal "as for a valid and <ust cause. )$ In this
case, the respondents failed to prove any such cause for the petitionerIs dismissal. They insinuated that the
petitioner abandoned his <ob. To constitute abandonment, these t"o factors must concurK F3G the failure to
report for "ork or absence "ithout valid or <usti.able reasonL and F)G a clear intention to sever employer#
employee relationship.)( 0bviously, the petitioner did not intend to sever his relationship "ith the
respondent company for at the time that he alle&edly abandoned his <ob, the petitioner <ust .led a complaint
for re&ulari:ation, "hich "as forth"ith amended to one for ille&al dismissal. A char&e of abandonment is
totally inconsistent "ith the immediate .lin& of a complaint for ille&al dismissal, more so "hen it includes a
prayer for reinstatement.)*
1either can the respondentsI claim that the petitioner "as &uilty of &ross ne&li&ence in the proper
maintenance of the truck constitute a valid and <ust cause for his dismissal. 7ross ne&li&ence implies a "ant
or absence of or failure to e5ercise sli&ht care or dili&ence, or the entire absence of care. It evinces a
thou&htless disre&ard of consequences "ithout e5ertin& any e=ort to avoid them.)% The ne&li&ence, to
"arrant removal from service, should not merely be %ro-- but also*a,itual.)D The sin&le and isolated act of
the petitionerIs ne&li&ence in the proper maintenance of the truck alle&ed by the respondents does not
amount to B&ross and habitual ne&lectB "arrantin& his dismissal.
The Court a&rees "ith the follo"in& .ndin&s and conclusion of the ,abor ArbiterK
T As a&ainst the &ratuitous alle&ation of the respondent that complainant "as not dismissed from the service
but due to complainantIs breach of their contractual relation, i.e., his violation of the terms and conditions of
the contract, "e are very much inclined to believe complainantIs story that his dismissal from the service "as
anchored on his insistent demand that he be considered a re&ular employee. -ecause complainant in his
ri&ht senses "ill not <ust abandon for that reason alone his "ork especially so that it is only his <ob "here he
depends chieOy his e5istence and support for his family if he "as not a&&rieved by the respondent "hen he
"as told that his services as driver "ill be terminated on 'ebruary )$, 3HH*.)2
Thus, the lack of a valid and <ust cause in terminatin& the services of the petitioner renders his dismissal
ille&al. nder Article )DH of the ,abor Code, an employee "ho is un<ustly dismissed is entitled to
reinstatement, "ithout loss of seniority ri&hts and other privile&es, and to the payment of full back"a&es,
inclusive of allo"ances, and other bene.ts or their monetary equivalent, computed from the time his
Pa&e $5 of #$%
compensation "as "ithheld from him up to the time of his actual reinstatement.)H 6o"ever, as found by the
,abor Arbiter, the circumstances obtainin& in this case do not "arrant the petitionerIs reinstatement. A more
equitable disposition, as held by the ,abor Arbiter, "ould be an a"ard of separation pay equivalent to one
month for every year of service from the time of his ille&al dismissal up to the .nality of this <ud&ment in
addition to his full back"a&es, allo"ances and other bene.ts.
:HEREFORE, the instant petition is 7/A1T4+. The /esolution dated +ecember 3*, )AAA of the Court of
Appeals reversin& its +ecision dated April )2, )AAA in CA#7./. !P 1o. *)(2* is /494/!4+ and !4T A!I+4. The
+ecision dated 'ebruary $, 3HHD of the ,abor Arbiter in 1,/C Case 1o. /A-#III#A)#%323#*, .ndin& the
respondents &uilty of ille&ally terminatin& the employment of petitioner Pedro Chave:, is /4I1!TAT4+.
!0 0/+4/4+.
7./. 1o. 3*D%$( May 3%, )AA*
MAYON HOTEL L RESTAURANT, PACITA O. PO andFor <OSEFA PO LAM, petitioners,
vs.
ROLANDO ADANA, CHONA &UMALAY, RO0ER &URCE, EDUARDO ALAMARES, AMADO ALAMARES,
ED0ARDO TORREFRANCA, LOURDES CAMI0LA, TEODORO LAURENARIA, :ENEFREDO LO7ERES,
LUIS 0UADES, AMADO MACANDO0, PATERNO LLARENA, 0RE0ORIO NICERIO, <OSE ATRACTI7O,
MI0UEL TORREFRANCA, and SANTOS &ROKOLA, respondents.
+ 4 C I ! I 0 1
PUNO, J.!
This is a petition for certiorari to reverse and set aside the +ecision issued by the Court of Appeals FCAG3 in
CA#7./. !P 1o. %2%(), entitled B/olando Adana, >enefredo ,overes, et. al. vs. 1ational ,abor /elations
Commission F1,/CG, Mayon 6otel @ /estaurantJPacita 0. Po, et al.,B and the /esolution) denyin& petitioners'
motion for reconsideration. The assailed CA decision reversed the 1,/C +ecision "hich had dismissed all of
respondents' complaints,$ and reinstated the 8oint +ecision of the ,abor Arbiter( "hich ruled that
respondents "ere ille&ally dismissed and entitled to their money claims.
The facts, culled from the records, are as follo"sK*
Petitioner Mayon 6otel @ /estaurant is a sin&le proprietor business re&istered in the name of petitioner Pacita
0. Po,%"hose mother, petitioner 8osefa Po ,am, mana&es the establishment.D The hotel and restaurant
employed about si5teen F3%G employees.
/ecords sho" that on various dates startin& in 3H23, petitioner hotel and restaurant hired the follo"in&
people, all respondents in this case, "ith the follo"in& <obsK2
3. >enefredo ,overes Accountant and 0?cer#in#char&e
). Paterno ,larena 'ront +esk Clerk
$. 7re&orio 1icerio !upervisory >aiter
(. Amado Macando& /oomboy
*. ,uis 7uades tilityJMaintenance >orker
%. !antos -roUola /oomboy
D. Teodoro ,aurenaria >aiter
2. 4duardo Alamares /oomboyJ>aiter
H. ,ourdes Cami&la Cashier
3A. Chona -umalay Cashier
Pa&e $1 of #$%
33. 8ose Atractivo Technician
3). Amado Alamares +ish"asher and Xitchen 6elper
3$. /o&er -urce Cook
3(. /olando Adana >aiter
3*. Mi&uel Torrefranca Cook
3%. 4d&ardo Torrefranca Cook
+ue to the e5piration and non#rene"al of the lease contract for the rented space occupied by the said hotel
and restaurant at /i:al !treet, the hotel operations of the business "ere suspended on March $3, 3HHD. H The
operation of the restaurant "as continued in its ne" location at 4li:ondo !treet, ,e&a:pi City, "hile "aitin&
for the construction of a ne" Mayon 6otel @ /estaurant at PeUaranda !treet, ,e&a:pi City. 3A 0nly nine FHG of
the si5teen F3%G employees continued "orkin& in the Mayon /estaurant at its ne" site.33
0n various dates of April and May 3HHD, the 3% employees .led complaints for underpayment of "a&es and
other money claims a&ainst petitioners, as follo"sK3)
>enefredo ,overes, ,uis 7uades, Amado Macando& and 8ose Atractivo for ille&al dismissal,
underpayment of "a&es, nonpayment of holiday and rest day payL service incentive leave pay F!I,PG
and claims for separation pay plus dama&esL
Paterno ,larena and 7re&orio 1icerio for ille&al dismissal "ith claims for underpayment of "a&esL
nonpayment of cost of livin& allo"ance FC0,AG and overtime payL premium pay for holiday and rest
dayL !I,PL ni&htshift di=erential pay and separation pay plus dama&esL
Mi&uel Torrefranca, Chona -umalay and ,ourdes Cami&la for underpayment of "a&esL nonpayment of
holiday and rest day pay and !I,PL
/olando Adana, /o&er -urce and Amado Alamares for underpayment of "a&esL nonpayment of C0,A,
overtime, holiday, rest day, !I,P and ni&htshift di=erential payL
4duardo Alamares for underpayment of "a&es, nonpayment of holiday, rest day and !I,P and ni&ht
shift di=erential payL
!antos -roUola for ille&al dismissal, underpayment of "a&es, overtime pay, rest day pay, holiday pay,
!I,P, and dama&esL3$ and
Teodoro ,aurenaria for underpayment of "a&esL nonpayment of C0,A and overtime payL premium
pay for holiday and rest day, and !I,P.
0n 8uly 3(, )AAA, 45ecutive ,abor Arbiter 7elacio ,. /ivera, 8r. rendered a 8oint +ecision in favor of the
employees. The ,abor Arbiter a"arded substantially all of respondents' money claims, and held that
respondents ,overes, Macando& and ,larena "ere entitled to separation pay, "hile respondents 7uades,
1icerio and Alamares "ere entitled to their retirement pay. The ,abor Arbiter also held that based on the
evidence presented, 8osefa Po ,am is the o"nerJproprietor of Mayon 6otel @ /estaurant and the proper
respondent in these cases.
0n appeal to the 1,/C, the decision of the ,abor Arbiter "as reversed, and all the complaints "ere dismissed.
/espondents .led a motion for reconsideration "ith the 1,/C and "hen this "as denied, they .led a petition
for certiorari"ith the CA "hich rendered the no" assailed decision.
After their motion for reconsideration "as denied, petitioners no" come to this Court, seekin& the reversal of
the CA decision on the follo"in& &roundsK
I. The 6onorable Court of Appeals erred in reversin& the decision of the 1ational ,abor /elations
Commission F!econd +ivisionG by holdin& that the .ndin&s of fact of the 1,/C "ere not supported by
substantial evidence despite ample and su?cient evidence sho"in& that the 1,/C decision is indeed
supported by substantial evidenceL
II. The 6onorable Court of Appeals erred in upholdin& the <oint decision of the labor arbiter "hich
ruled that private respondents "ere ille&ally dismissed from their employment, despite the fact that
Pa&e $4 of #$%
the reason "hy private respondents "ere out of "ork "as not due to the fault of petitioners but to
causes beyond the control of petitioners.
III. The 6onorable Court of Appeals erred in upholdin& the a"ard of monetary bene.ts by the labor
arbiter in his <oint decision in favor of the private respondent!, includin& the a"ard of dama&es to si5
F%G of the private respondents, despite the fact that the private respondents have not proven by
substantial evidence their entitlement thereto and especially the fact that they "ere not ille&ally
dismissed by the petitioners.
I9. The 6onorable Court of Appeals erred in holdin& that Pacita 0n& Po is the o"ner of the business
establishment, petitioner Mayon 6otel and /estaurant, thus disre&ardin& the certi.cate of re&istration
of the business establishment I!!4+ by the local &overnment, "hich is a public document, and the
unquali.ed admissions of complainants#private respondents.3(
In essence, the petition calls for a revie" of the Bo..oDinC iss"es!
3. >as it correct for petitioner 8osefa Po ,am to be held liable as the o"ner of petitioner Mayon 6otel
@ /estaurant, and the proper respondent in this caseP
). >ere respondents ,overes, 7uades, Macando&, Atractivo, ,larena and 1icerio ille&ally dismissedP
$. Are respondents entitled to their money claims due to underpayment of "a&es, and nonpayment of
holiday pay, rest day premium, !I,P, C0,A, overtime pay, and ni&ht shift di=erential payP
It is petitioners' contention that the above issues have already been threshed out su?ciently and de.nitively
by the 1,/C. They therefore assail the CA's reversal of the 1,/C decision, claimin& that based on the rulin&
in Casti..o v. NLRC,3* it isnon -equitur that the CA should re#e5amine the factual .ndin&s of both the 1,/C
and the ,abor Arbiter, especially as in this case the 1,/C's .ndin&s are alle&edly supported by substantial
evidence.
>e do not a&ree.
There is no denyin& that it is "ithin the 1,/C's competence, as an appellate a&ency revie"in& decisions of
,abor Arbiters, to disa&ree "ith and set aside the latter's .ndin&s.3% -ut it stands to reason that the 1,/C
should state an acceptable cause therefore, other"ise it "ould be a "himsical, capricious, oppressive,
illo&ical, unreasonable e5ercise of quasi#<udicial prero&ative, sub<ect to invalidation by the e5traordinary "rit
of certiorari.3D And "hen the factual .ndin&s of the ,abor Arbiter and the 1,/C are diametrically opposed
and this disparity of .ndin&s is called into question, there is, necessarily, a re#e5amination of the factual
.ndin&s to ascertain "hich opinion should be sustained.32 As ruled inAs"nion v. NLRC,3H
Althou&h, it is a le&al tenet that factual .ndin&s of administrative bodies are entitled to &reat "ei&ht
and respect, "e are constrained to take a second look at the facts before us because of the diversity
in the opinions of the ,abor Arbiter and the 1,/C. A disharmony bet"een the factual .ndin&s of the
,abor Arbiter and those of the 1,/C opens the door to a revie" thereof by this Court.)A
The CA, therefore, did not err in revie"in& the records to determine "hich opinion "as supported by
substantial evidence.
Moreover, it is e5plicit in Casti..o v. NLRC )3 that factual .ndin&s of administrative bodies like the 1,/C are
a?rmed on.? iB t9e? are s"pported 3? s"3stantia. evidene t9at is 2aniBest in t9e deision and on
t9e reords. As stated in Casti..oK
MANbuse of discretion does not necessarily follo" from a reversal by the 1,/C of a decision of a ,abor
Arbiter. Mere variance in evidentiary assessment bet"een the 1,/C and the ,abor Arbiter does not
automatically call for a full revie" of the facts by this Court. The 1,/C's decision, so lon& as it is not
bereft of substantial support from the records, deserves respect from this Court. As a rule, the ori&inal
and e5clusive <urisdiction to revie" a decision or resolution of respondent 1,/C in a petition
for certiorari under /ule %* of the /ules of Court does not include a correction of its evaluation of the
evidence but is con.ned to issues of <urisdiction or &rave abuse of discretion. Thus, the 1,/C's factual
.ndin&s, if supported by substantial evidence, are entitled to &reat respect and even .nality, unless
petitioner is able to sho" that it simply and arbitrarily disre&arded the evidence before it or had
misappreciated the evidence to such an e5tent as to compel a contrary conclusion if such evidence
had been properly appreciated. Fcitations omittedG))
After careful revie", "e .nd that the reversal of the 1,/C's decision "as in order precisely because it "as not
supported by substantial evidence.
#. ODners9ip 3? <oseBa Po La2
The ,abor Arbiter ruled that as re&ards the claims of the employees, petitioner 8osefa Po ,am is, in fact, the
o"ner of Mayon 6otel @ /estaurant. Althou&h the 1,/C reversed this decision, the CA, on revie", a&reed "ith
Pa&e $% of #$%
the ,abor Arbiter that not"ithstandin& the certi.cate of re&istration in the name of Pacita Po, it is 8osefa Po
,am "ho is the o"nerJproprietor of Mayon 6otel @ /estaurant, and the proper respondent in the complaints
.led by the employees. The CA decision states in partK
M+espiteN the e5istence of the Certi.cate of /e&istration in the name of Pacita Po, "e cannot fault the
labor arbiter in rulin& that 8osefa Po ,am is the o"ner of the sub<ect hotel and restaurant. There "ere
conOictin& documents submitted by 8osefa herself. !he "as ordered to submit additional documents
to clearly establish o"nership of the hotel and restaurant, considerin& the testimonies &iven by the
MrespondentsN and the non#appearance and failure to submit her o"n position paper by Pacita Po. -ut
8osefa did not comply "ith the directive of the ,abor Arbiter. The rulin& of the !upreme Court in
Metropolitan -ank and Trust Company v. Court of Appeals applies to 8osefa Po ,am "hich is stated in
this "iseK
>hen the evidence tends to prove a material fact "hich imposes a liability on a party, and he
has it in his po"er to produce evidence "hich from its very nature must overthro" the case
made a&ainst him if it is not founded on fact, and he refuses to produce such evidence, the
presumption arises that the evidenceM,N if produced, "ould operate to his pre<udice, and
support the case of his adversary.
'urthermore, in rulin& that 8osefa Po ,am is the real o"ner of the hotel and restaurant, the labor
arbiter relied also on the testimonies of the "itnesses, durin& the hearin& of the instant case. >hen
the conclusions of the labor arbiter are su?ciently corroborated by evidence on record, the same
should be respected by appellate tribunals, since he is in a better position to assess and evaluate the
credibility of the contendin& parties.)$ Fcitations omittedG
Petitioners insist that it "as error for the ,abor Arbiter and the CA to have ruled that petitioner 8osefa Po ,am
is the o"ner of Mayon 6otel @ /estaurant. They alle&e that the documents they submitted to the ,abor
Arbiter su?ciently and clearly establish the fact of o"nership by petitioner Pacita Po, and not her mother,
petitioner 8osefa Po ,am. They contend that petitioner 8osefa Po ,am's participation "as limited to merely FaG
bein& the overseerL FbG receivin& the month#to#month andJor year#to#year .nancial reports prepared and
submitted by respondent ,overesL and FcG visitation of the premises.)(They also put emphasis on the
admission of the respondents in their position paper submitted to the ,abor Arbiter, identifyin& petitioner
8osefa Po ,am as the mana&er, and Pacita Po as the o"ner.)* This, they claim, is a <udicial admission and is
bindin& on respondents. They protest the reliance the ,abor Arbiter and the CA placed on their failure to
submit additional documents to clearly establish o"nership of the hotel and restaurant, claimin& that there
"as no need for petitioner 8osefa Po ,am to submit additional documents considerin& that the Certi.cate of
/e&istration is the best and primary evidence of o"nership.
>e disa&ree "ith petitioners. >e have scrutini:ed the records and .nd the claim that petitioner 8osefa Po ,am
is merely the overseer is not borne out by the evidence.
First. It is si&ni.cant that only 8osefa Po ,am appeared in the proceedin&s "ith the ,abor Arbiter. +espite
receipt of the ,abor Arbiter's notice and summons, other notices and 0rders, petitioner Pacita Po failed to
appear in any of the proceedin&s "ith the ,abor Arbiter in these cases, nor .le her position paper. )% It "as
only on appeal "ith the 1,/C that Pacita Po si&ned the pleadin&s.)D The apathy sho"n by petitioner Pacita Po
is contrary to human e5perience as one "ould think that the o"ner of an establishment "ould naturally be
concerned "hen all her employees .le complaints a&ainst her.
Seond. The records of the case belie petitioner 8osefa Po ,am's claim that she is merely an overseer. The
.ndin&s of the ,abor Arbiter on this question "ere based on credible, competent and substantial evidence.
>e a&ain quote the 8oint +ecision on this matterK
Mayon 6otel and /estaurant is a Mbusiness nameN of an enterprise. >hile MpetitionerN 8osefa Po ,am
claims that it is her dau&hter, Pacita Po, "ho o"ns the hotel and restaurant "hen the latter purchased
the same from one Palanos in 3H23, 8osefa failed to submit the document of sale from said Palanos to
Pacita as alle&edly the sale "as only verbal althou&h the license to operate said hotel and restaurant
is in the name of Pacita "hich, despite our 0rder to 8osefa to present the same, she failed to comply
Fp. $2, tsn. Au&ust 3$, 3HH2G. >hile several documentary evidences "ere submitted by 8osefa "herein
Pacita "as named therein as o"ner of the hotel and restaurant Fpp. %(, %*, %D to %HL vol. I, rolloGM,N
there "ere documentary evidences also that "ere submitted by 8osefa sho"in& her o"nership of said
enterprise Fpp. (%2 to (%HL vol. II, rolloG. >hile 8osefa e5plained her participation and interest in the
business as merely to help and assist her dau&hter as the hotel and restaurant "as near the former's
store, the testimonies of MrespondentsN and 8osefa as "ell as her demeanor durin& the trial in these
cases proves FsicG that 8osefa Po ,am o"ns Mayon 6otel and /estaurant. M/espondentsN testi.ed that
it "as 8osefa "ho e5ercises all the acts and manifestation of o"nership of the hotel and restaurant
like transferrin& employees from the 7reat"all Palace /estaurant "hich she and her husband /oy Po
,am previously o"nedL it is 8osefa to "hom the employees submits FsicG reports, dra"s money for
Pa&e $) of #$%
payment of payables and for marketin&, attendin& FsicG to ,abor Inspectors durin& ocular inspections.
45cept for documents "hereby Pacita Po appears as the o"ner of Mayon 6otel and /estaurant,
nothin& in the record sho"s any circumstance or manifestation that Pacita Po is the o"ner of Mayon
6otel and /estaurant. The least that can be said is that it is absurd for a person to purchase a hotel
and restaurant in the very heart of the City of ,e&a:pi verbally. Assumin& this to be true, "hen
MpetitionersN, particularly 8osefa, "as directed to submit evidence as to the o"nership of Pacita of the
hotel and restaurant, considerin& the testimonies of MrespondentsN, the former should MhaveN
submitted the lease contract bet"een the o"ner of the buildin& "here Mayon 6otel and /estaurant
"as located at /i:al !t., ,e&a:pi City and Pacita Po to clearly establish o"nership by the latter of said
enterprise. 8osefa failed. >e are not surprised "hy some employers employ schemes to mislead s in
order to evade liabilities. >e therefore consider and hold 8osefa Po ,am as the o"nerJproprietor of
Mayon 6otel and /estaurant and the proper respondent in these cases.)2
Petitioners' reliance on the rules of evidence, i.e., the certi.cate of re&istration bein& the best proof of
o"nership, is misplaced. 1ot"ithstandin& the certi.cate of re&istration, doubts "ere cast as to the true
nature of petitioner 8osefa Po ,am's involvement in the enterprise, and the ,abor Arbiter had the authority to
resolve this issue. It "as therefore "ithin his <urisdiction to require the additional documents to ascertain "ho
"as the real o"ner of petitioner Mayon 6otel @ /estaurant.
Article ))3 of the ,abor Code is clearK technical rules are not bindin&, and the application of technical rules of
procedure may be rela5ed in labor cases to serve the demand of substantial <ustice.)H The rule of evidence
prevailin& in court of la" or equity shall not be controllin& in labor cases and it is the spirit and intention of
the ,abor Code that the ,abor Arbiter shall use every and all reasonable means to ascertain the facts in each
case speedily and ob<ectively and "ithout re&ard to technicalities of la" or procedure, all in the interest of
due process.$A ,abor la"s mandate the speedy administration of <ustice, "ith least attention to technicalities
but "ithout sacri.cin& the fundamental requisites of due process.$3
!imilarly, the fact that the respondents' complaints contained no alle&ation that petitioner 8osefa Po ,am is
the o"ner is of no moment. To apply the concept of <udicial admissions to respondents E "ho are but lo"ly
employees # "ould be to e5act compliance "ith technicalities of la" that is contrary to the demands of
substantial <ustice. Moreover, the issue of o"nership "as an issue that arose only durin& the course of the
proceedin&s "ith the ,abor Arbiter, as an incident of determinin& respondents' claims, and "as "ell "ithin his
<urisdiction.$)
Petitioners "ere also not denied due process, as they "ere &iven su?cient opportunity to be heard on the
issue of o"nership.$$ The essence of due process in administrative proceedin&s is simply an opportunity to
e5plain one's side or an opportunity to seek reconsideration of the action or rulin& complained of.$( And
there is nothin& in the records "hich "ould su&&est that petitioners had absolute lack of opportunity to be
heard.$* 0bviously, the choice not to present evidence "as made by petitioners themselves.$%
-ut more si&ni.cantly, "e sustain the ,abor Arbiter and the CA because even "hen the case "as on appeal
"ith the 1,/C, nothin& "as submitted to ne&ate the ,abor Arbiter's .ndin& that Pacita Po is not the real
o"ner of the sub<ect hotel and restaurant. Indeed, no such evidence "as submitted in the proceedin&s "ith
the CA nor "ith this Court. Considerin& that petitioners vehemently deny o"nership by petitioner 8osefa Po
,am, it is most tellin& that they continue to "ithhold evidence "hich "ould shed more li&ht on this issue. >e
therefore a&ree "ith the CA that the failure to submit could only mean that if produced, it "ould have been
adverse to petitioners' case.$D
Thus, "e .nd that there is substantial evidence to rule that petitioner 8osefa Po ,am is the o"ner of petitioner
Mayon 6otel @ /estaurant.
5. I..eCa. Dis2issa.! .ai2 Bor separation pa?
0f the si5teen employees, only the follo"in& .led a case for ille&al dismissalK respondents ,overes, ,larena,
1icerio, Macando&, 7uades, Atractivo and -roUola.$2
The ,abor Arbiter found that there "as ille&al dismissal, and &ranted separation pay to respondents ,overes,
Macando& and ,larena. As respondents 7uades, 1icerio and Alamares "ere already DH, %% and %* years old
respectively at the time of the dismissal, the ,abor Arbiter &ranted retirement bene.ts pursuant to Article )2D
of the ,abor Code as amended.$HThe ,abor Arbiter ruled that respondent Atractivo "as not entitled to
separation pay because he had been transferred to "ork in the restaurant operations in 4li:ondo !treet, but
a"arded him dama&es. /espondents ,overes, ,larena, 1icerio, Macando& and 7uades "ere also a"arded
dama&es.(A
The 1,/C reversed the ,abor Arbiter, .ndin& that Bno clear act of termination is attendant in the case at barB
and that respondents Bdid not submit any evidence to that e=ect, but the .ndin& and conclusion of the ,abor
Arbiter MareN merely based on his o"n surmises and con<ectures.B(3 In turn, the 1,/C "as reversed by the
CA.
Pa&e $$ of #$%
It is petitioners contention that the CA should have sustained the 1,/C .ndin& that none of the above#named
respondents "ere ille&ally dismissed, or entitled to separation or retirement pay. Accordin& to petitioners,
even the ,abor Arbiter and the CA admit that "hen the ille&al dismissal case "as .led by respondents on
April 3HHD, they had as yet no cause of action. Petitioners therefore conclude that the .lin& by respondents of
the ille&al dismissal case "as premature and should have been dismissed outri&ht by the ,abor
Arbiter.() Petitioners also claim that since the validity of respondents' dismissal is a factual question, it is not
for the revie"in& court to "ei&h the conOictin& evidence.($
>e do not a&ree. >hether respondents are sti.. DorEinC for petitioners is a factual question. And the
records are unequivocal that since April 3HHD, "hen petitioner Mayon 6otel @ /estaurant suspended its hotel
operations and transferred its restaurant operations in 4li:ondo !treet, respondents ,overes, Macando&,
,larena, 7uades and 1icerio have not been permitted to "ork for petitioners. /espondent Alamares, on the
other hand, "as also laid#o= "hen the 4li:ondo !treet operations closed, as "ere all the other respondents.
!ince then, respondents have not been permitted to "ork nor recalled, even after the construction of the ne"
premises at PeUaranda !treet and the reopenin& of the hotel operations "ith the restaurant in this ne" site.
As stated by the 8oint +ecision of the ,abor Arbiter on 8uly )AAA, or more than three F$G years after the
complaint "as .ledK((
M'Nrom the records, more than si5 months had lapsed "ithout MpetitionerN havin& resumed operation
of the hotel. After more than one year from the temporary closure of Mayon 6otel and the temporary
transfer to another site of Mayon /estaurant, the buildin& "hich MpetitionerN 8osefa alle&eMdN "MhNere
the hotel and restaurant "ill be transferred has been .nally constructed and the same is operated as
a hotel "ith bar and restaurant nevertheless, none of MrespondentsN herein "ho "ere employed at
Mayon 6otel and /estaurant "hich "as also closed on April $A, 3HH2 "asJ"ere recalled by MpetitionerN
to continue their services...
Parenthetically, the ,abor Arbiter did not &rant separation pay to the other respondents as they had not .led
an amended complaint to question the cessation of their employment after the closure of Mayon 6otel @
/estaurant on March $3, 3HHD.(*
The above factual .ndin& of the ,abor Arbiter "as never refuted by petitioners in their appeal "ith the 1,/C.
It confounds us, therefore, ho" the 1,/C could have so cavalierly treated this uncontroverted factual .ndin&
by rulin& that respondents have not introduced any evidence to sho" that they "ere ille&ally dismissed, and
that the ,abor Arbiter's .ndin& "as based on con<ecture.(% It "as a serious error that the 1,/C did not
inquire as to the .eCa.it? of the cessation of employment. Article )2% of the ,abor Code is clear E there is
termination of employment "hen an other"ise ,ona 2esuspension of "ork e5ceeds si5 F%G months.(D The
cessation of employment for more than si5 months "as patent and the employer has the burden of provin&
that the termination "as for a <ust or authori:ed cause.(2
Moreover, "e are not impressed by any of petitioners' attempts to e5culpate themselves from the char&es.
'irst, in the proceedin&s "ith the ,abor Arbiter, they claimed that it could not be ille&al dismissal because the
lay#o= "as merely temporary Fand due to the e5piration of the lease contract over the old premises of the
hotelG. They speiMa..? invoked Article )2% of the ,abor Code to ar&ue that the claim for separation pay
"as premature and "ithout le&al and factual basis.(H Then, because the ,abor Arbiter had ruled that there
"as already ille&al dismissal "hen the lay#o= had e5ceeded the si5#month period provided for in Article )2%,
petitioners raise this novel ar&ument, to "itK
It is the .rm but respectful submission of petitioners that reliance on Article )2% of the ,abor Code is
misplaced, considerin& that the reason "hy private respondents "ere out of "ork "as not due to the
fault of petitioners. The failure of petitioners to reinstate the private respondents to their former
positions should not like"ise be attributable to said petitioners as the private respondents did not
submit any evidence to prove their alle&ed ille&al dismissal. The petitioners cannot discern "hy they
should be made liable to the private respondents for their failure to be reinstated considerin& that the
fact that they "ere out of "ork "as not due to the fault of petitioners but due to circumstances
beyond the control of petitioners, "hich are the termination and non#rene"al of the lease contract
over the sub<ect premises. Private respondents, ho"ever, ar&ue in their Comment that petitioners
themselves sou&ht the application of Article )2% of the ,abor Code in their case in their Position Paper
.led before the ,abor Arbiter. In refutation, petitioners humbly submit that even if they invoke Article
)2% of the ,abor Code, still the fact remains, and this bears stress and emphasis, that the temporary
suspension of the operations of the establishment arisin& from the non#rene"al of the lease contract
did not result in the termination of employment of private respondents and, therefore, the petitioners
cannot be faulted if said private respondents "ere out of "ork, and consequently, they are not
entitled to their money claims a&ainst the petitioners.*A
It is confoundin& ho" petitioners have fashioned their ar&uments. After havin& admitted, in e=ect, that
respondents have been laid#o= since April 3HHD, they "ould have this Court e5cuse their refusal to reinstate
respondents or &rant them separation pay because these same respondents purportedly have not proven the
Pa&e $( of #$%
ille&ality of their dismissal.
Petitioners' ar&uments reOect their lack of candor and the blatant attempt to use technicalities to muddle the
issues and defeat the la"ful claims of their employees. First, petitioners admit that sine Apri. #,,$, "hen
hotel operations "ere suspended due to the termination of the lease of the old premises, respondents
,overes, Macando&, ,larena, 1icerio and 7uades 9ave not 3een per2itted to DorE. !econd, even aBter
siN 2ont9s of "hat should have been <ust a temporary lay#o=, the same respondents "ere sti.. not
rea..ed to DorE. As a matter of fact, the ,abor Arbiter even found that as of the time "hen he rendered his
8oint +ecision on 8uly )AAA E or more than three F$G years after the supposed Btemporary lay#o=,B t9e
e2p.o?2ent oB a.. oB t9e respondents Dit9 petitioners 9ad eased, not"ithstandin& that the ne"
premises had been completed and the same operated as a hotel "ith bar and restaurant. This is
clearly dis2issa. E or the permanent severance or complete separation of the "orker from the service on
the initiative of the employer re&ardless of the reasons therefor.*3
0n this point, "e note that the ,abor Arbiter and the CA are in accord that at the time of the .lin& of the
complaint, respondents had no cause of action to .le the case for ille&al dismissal. Accordin& to the CA and
the ,abor Arbiter, the lay#o= of the respondents "as merely temporary, pendin& construction of the ne"
buildin& at PeUaranda !treet.*)
>hile the .os"re of the hotel operations in April of 3HHD may have been temporary, "e hold that the
evidence on record belie any claim of petitioners that the .a?*oO of respondents on that same date "as
merely temporary. 0n the contrary, "e .nd substantial evidence that petitioners intended the termination to
be permanent. First, respondents ,overes, Macando&, ,larena, 7uades, 1icerio and Alamares .led the
complaint for ille&al dismissal i22ediate.? aBter the closure of the hotel operations in /i:al !treet,
not"ithstandin& the alle&ed temporary nature of the closure of the hotel operations, and petitioners'
alle&ations that the employees assi&ned to the hotel operations kne" about this beforehand. Seond, in their
position paper submitted to the ,abor Arbiter, petitioners invoked Article )2% of the ,abor Code to assert that
the employer#employee relationship "as merely suspended, and therefore the claim for separation pay "as
premature and "ithout le&al or factual basis.*$ &"t t9e? 2ade no 2ention oB an? intent to rea.. t9ese
respondents to DorE "pon o2p.etion oB t9e neD pre2ises. T9ird, the various pleadin&s on record
sho" that petitioners held respondents, particularly ,overes, as responsible for mismana&ement of the
establishment and for abuse of trust and con.dence. Petitioner 8osefa Po ,am's a?davit on 8uly )3, 3HH2, for
e5ample, squarely blamed respondents, speci.cally ,overes, -umalay and Cami&la, for abusin& her leniency
and causin& petitioner Mayon 6otel @ /estaurant to sustain Bcontinuous losses until it is closed.B !he then
asserts that respondents Bare not entitled to separation pay for they "ere not terminated and if ever the
business ceased to operate it "as because of losses.B*( A&ain, petitioners make the same alle&ation in their
memorandum on appeal "ith the 1,/C, "here they alle&ed that three F$G years prior to the e5piration of the
lease in 3HHD, the operation of the 6otel had been sustainin& consistent losses, and these "ere solely
attributed to respondents, but most especially due to ,overes's mismana&ement and abuse of petitioners'
trust and con.dence.** 4ven the petition .led in this court made reference to the separation of the
respondents due to Bsevere .nancial losses and reverses,B a&ain imputin& it to respondents'
mismana&ement.*% The vehemence of petitioners' accusation of mismana&ement a&ainst respondents,
especially a&ainst ,overes, is inconsistent "ith the desire to recall them to "ork. Fo"rt9, petitioners'
memorandum on appeal also averred that the case "as .led Bnot because of the business bein& operated by
them or that they "ere supposedly not receivin& bene.ts from the ,abor Code "hich is true, but because of
the fact that t9e so"re oB t9eir .ive.i9ood, D9et9er .eCa. or i22ora., Das stopped on Mar9 1#,
#,,$, "hen the o"ner of the buildin& terminated the ,ease Contract.B*D 'ifth, petitioners had inconsistencies
in their pleadin&s F"ith the 1,/C, CA and "ith this CourtG in referrin& to the closure,*2 i.e., in the petition .led
"ith this court, they assert that there is no ille&al dismissal because there "as Bonly a temporary cessation or
suspension of operations of the hotel and restaurant due to circumstances beyond the control of petitioners,
and that is, the non#rene"al of the lease contract...B*H And yet, in the same petition, they also assert thatK FaG
the separation of respondents "as due to severe .nancial losses and reverses leadin& to t9e .os"re oB t9e
3"sinessL and FbG petitioner Pacita Po 9ad to .ose s9op and "as bankrupt and has no liquidity to put up
her o"n buildin& to house Mayon 6otel @ /estaurant.%A SiNt9, and .nally, the uncontroverted .ndin& of the
,abor Arbiter that petitioners terminated all the other respondents, by not employin& them "hen the 6otel
and /estaurant transferred to its ne" site on PeUaranda !treet.%3 Indeed, in this same memorandum,
petitioners referred to all respondents as Bformer employees of Mayon 6otel @ /estaurant.B%)
These factors may be inconclusive individually, but "hen taken to&ether, they lead us to conclude that
petitioners really intended to dismiss all respondents and merely used the termination of the lease Fon /i:al
!treet premisesG as a means by "hich they could terminate their employees.
Moreover, even assumin& ar%ueno that the cessation of employment on April 3HHD "as merely temporary,
it 3ea2edismissal by operation of la" "hen petitioners failed to reinstate respondents after the lapse of si5
F%G months, pursuant to Article )2% of the ,abor Code.
Pa&e $, of #$%
>e are not impressed by petitioners' claim that severe business losses <usti.ed their failure to reinstate
respondents. The evidence to prove this fact is inconclusive. -ut more important, serious business losses do
not e5cuse the employer from complyin& "ith the clearance or report required under Article )2$ of the ,abor
Code and its implementin& rules before terminatin& the employment of its "orkers.%$ In the absence of
<ustifyin& circumstances, the failure of petitioners to observe the procedural requirements set out under
Article )2(, taints their actuations "ith bad faith, especially since they claimed that they have been
e5periencin& losses in the three years before 3HHD. To say the least, if it "ere true that the lay#o= "as
temporary but then serious business losses prevented the reinstatement of respondents, then petitioners
should have complied "ith the requirements of "ritten notice. The requirement of la" mandatin& the &ivin&
of notices "as intended not only to enable the employees to look for another employment and therefore ease
the impact of the loss of their <obs and the correspondin& income, but more importantly, to &ive the
+epartment of ,abor and 4mployment F+0,4G the opportunity to ascertain the verity of the alle&ed
authori:ed cause of termination.%(
And even assumin& that the closure "as due to a reason beyond the control of the employer, it still has to
accord its employees some relief in the form of severance pay.%*
>hile "e reco&ni:e the ri&ht of the employer to terminate the services of an employee for a <ust or
authori:ed cause, the dismissal of employees must be made "ithin the parameters of la" and pursuant to
the tenets of fair play.%% And in termination disputes, the burden of proof is al"ays on the employer to prove
that the dismissal "as for a <ust or authori:ed cause.%D >here there is no sho"in& of a clear, valid and le&al
cause for termination of employment, the la" considers the case a matter of ille&al dismissal.%2
nder these circumstances, the a"ard of dama&es "as proper. As a rule, moral dama&es are recoverable
"here the dismissal of the employee "as attended by bad faith or fraud or constituted an act oppressive to
labor, or "as done in a manner contrary to morals, &ood customs or public policy.%H >e believe that the
dismissal of the respondents "as attended "ith bad faith and meant to evade the la"ful obli&ations imposed
upon an employer.
To rule other"ise "ould lead to the anomaly of respondents bein& terminated from employment in 3HHD as a
matter of fact, but "ithout le&al redress. This runs counter to notions of fair play, substantial <ustice and the
constitutional mandate that labor ri&hts should be respected. If doubts e5ist bet"een the evidence presented
by the employer and the employee, the scales of <ustice must be tilted in favor of the latter E the employer
must a?rmatively sho" rationally adequate evidence that the dismissal "as for a <usti.able cause.DA It is a
time#honored rule that in controversies bet"een a laborer and his master, doubts reasonably arisin& from the
evidence, or in the interpretation of a&reements and "ritin& should be resolved in the former's favor.D3 The
policy is to e5tend the doctrine to a &reater number of employees "ho can avail of the bene.ts under the
la", "hich is in consonance "ith the avo"ed policy of the !tate to &ive ma5imum aid and protection of
labor.D)
>e therefore reinstate the ,abor Arbiter's decision "ith the follo"in& modi.cationsK
FaG !eparation pay for the ille&al dismissal of respondents ,overes, Macando& and ,larenaL F!antos
-roUola cannot be &ranted separation pay as he made no such claimGL
FbG /etirement pay for respondents 7uades, 1icerio, and Alamares, "ho at the time of dismissal "ere
entitled to their retirement bene.ts pursuant to Article )2D of the ,abor Code as amendedLD$ and
FcG +ama&es for respondents ,overes, Macando&, ,larena, 7uades, 1icerio, Atractivo, and -roUola.
1. Mone? .ai2s
The CA held that contrary to the 1,/C's rulin&, petitioners had not dischar&ed the burden of provin& that the
monetary claims of the respondents have been paid.D( The CA thus reinstated the ,abor Arbiter's &rant of
respondents' monetary claims, includin& dama&es.
Petitioners assail this rulin& by repeatin& their lon& and convoluted ar&ument that as there "as no ille&al
dismissal, then respondents are not entitled to their monetary claims or separation pay and dama&es.
Petitioners' ar&uments are not only tirin&, repetitive and unconvincin&, but confusin& and confused E
entitlement to labor standard bene.ts is a separate and distinct concept from payment of separation pay
arisin& from ille&al dismissal, and are &overned by di=erent provisions of the ,abor Code.
>e a&ree "ith the CA and the ,abor Arbiter. /espondents have set out "ith particularity in their complaint,
position paper, a?davits and other documents the labor standard bene.ts they are entitled to, and "hich
they alle&ed that petitioners have failed to pay them. It "as therefore petitioners' burden to prove that they
have paid these money claims. 0ne "ho pleads payment has the burden of provin& it, and even "here the
employees must alle&e nonpayment, the &eneral rule is that the burden rests on the defendant to prove
nonpayment, rather than on the plainti= to prove non payment.D* This petitioners failed to do.
Pa&e (+ of #$%
>e also a&ree "ith the ,abor Arbiter and the CA that the documents petitioners submitted, i.e., a?davits
e5ecuted by some of respondents durin& an ocular inspection conducted by an inspector of the +0,4L notices
of inspection result and 'acility 4valuation 0rders issued by +0,4, are not su?cient to prove
payment.D% +espite repeated orders from the ,abor Arbiter,DD petitioners failed to submit the pertinent
employee .les, payrolls, records, remittances and other similar documents "hich "ould sho" that
respondents rendered "ork entitlin& them to payment for overtime "ork, ni&ht shift di=erential, premium pay
for "ork on holidays and rest day, and payment of these as "ell as the C0,A and the !I,P V documents "hich
are not in respondents' possession but in the custody and absolute control of petitioners. D2 -y choosin& not
to fully and completely disclose information and present the necessary documents to prove payment of labor
standard bene.ts due to respondents, petitioners failed to dischar&e the burden of proof.DH Indeed,
petitioners' failure to submit the necessary documents "hich as employers are in their possession, inspite of
orders to do so, &ives rise to the presumption that their presentation is pre<udicial to its cause.2A As aptly
quoted by the CAK
M>Nhen the evidence tends to prove a material fact "hich imposes a liability on a party, and he has it
in his po"er to produce evidence "hich from its very nature must overthro" the case made a&ainst
him if it is not founded on fact, and he refuses to produce such evidence, the presumption arises that
the evidence, if produced, "ould operate to his pre<udice, and support the case of his adversary.23
PETITIONERS CONTENTIONP5! Petitioners ne5t claim that the cost of the food and snacks provided to
respondents as facilities should have been included in reckonin& the payment of respondents' "a&es. They
state that althou&h on the surface respondents appeared to receive minimal "a&es, petitioners had &ranted
respondents other bene.ts "hich are considered part and parcel of their "a&es and are allo"ed under
e5istin& la"s.2) They claim that these bene.ts make up for "hatever inadequacies there may be in
compensation.2$ !peci.cally, they invoked !ections * and %, /ule 9II#A, "hich allo" the deduction of facilities
provided by the employer throu&h an appropriate 'acility 4valuation 0rder issued by the /e&ional +irector of
the +0,4.2(Petitioners also aver that they &ive .ve F*G percent of the &ross income each month as
incentives. As proof of compliance of payment of minimum "a&es, petitioners submitted the 1otice of
Inspection /esults issued in 3HH* and 3HHD by the +0,4 /e&ional 0?ce.2*
RULIN0! The cost of meals and snacks purportedly provided to respondents cannot be deducted as part of
respondents' minimum "a&e. As stated in the ,abor Arbiter's decisionK2%
>hile MpetitionersN submitted 'acility 4valuation 0rders Fpp. (%2, (%HL vol. II, rolloG issued by the +0,4
/e&ional 0?ce "hereby the cost of meals &iven by MpetitionersN to MrespondentsN "ere speci.ed for
purposes of considerin& the same as part of their "a&es, >e cannot consider the cost of meals in the
0rders as applicable to MrespondentsN. M/espondentsN "ere not intervie"ed by the +0,4 as to the
quality and quantity of food appearin& in the applications of MpetitionersN for facility evaluation prior
to its approval to determine "hether or not MrespondentsN "ere indeed &iven such kind and quantity
of food. Also, there "as no evidence that the quality and quantity of food in the 0rders "ere
voluntarily accepted by MrespondentsN. 0n the contraryL "hile some Mof the respondentsN admitted
that they "ere &iven meals and merienda, the quality of food serveMdN to them "ere not "hat "ere
provided for in the 0rders and that it "as only "hen they .led these cases that they came to kno"
about said 'acility 4valuation 0rders Fpp. 3AAL $DHM,N vol. II, rolloL p. (A, tsnM,N 8une 3H, 3HH2G.
MPetitionerN 8osefa herself, "ho applied for evaluation of the facility FfoodG &iven to MrespondentsN,
testi.ed that she did not inform MrespondentsN concernin& said 'acility 4valuation 0rders Fp. $(, tsnM,N
Au&ust 3$, 3HH2G.
4ven &rantin& that meals and snacks "ere provided and indeed constituted facilities, such facilities could not
be deducted "ithout compliance "ith certain le&al requirements. As stated in Ma3eQa v. NLRC,2D the
employer simply cannot deduct the value from the employee's "a&es "ithout satisfyin& the follo"in&K FaG
proof that such facilities are customarily furnished by the tradeL FbG the provision of deductible facilities is
voluntarily accepted in "ritin& by the employeeL and FcG the facilities are char&ed at fair and reasonable
value. The records are clear that petitioners failed to comply "ith these requirements. There "as no proof of
respondents' "ritten authori:ation. Indeed, the ,abor Arbiter found that "hile the respondents admitted that
they "ere &iven meals and /eriena, the quality of food served to them "as not "hat "as provided for in the
'acility 4valuation 0rders and it "as only "hen they .led the cases that they came to kno" of this supposed
'acility 4valuation 0rders.22 Petitioner 8osefa Po ,am herself ad2itted that she did not inform the
respondents of the facilities she had applied for.2H
Considerin& the failure to comply "ith the above#mentioned le&al requirements, the ,abor Arbiter therefore
erred "hen he ruled that the cost of the meals actually provided to respondents should be deducted as part
of their salaries, on the &round that respondents have availed themselves of the food &iven by
petitioners.HA The la" is clear that mere availment is not su?cient to allo" deductions from employees'
"a&es.
More important, "e note the uncontroverted testimony of respondents on record that they "ere required to
Pa&e (# of #$%
eat in the hotel and restaurant so that they "ill not &o home and there is no interruption in the services of
Mayon 6otel @ /estaurant. As ruled in Ma3eQa, food or snacks or other convenience provided by the
employers are deemed as supplements if they are &ranted for the convenience of the employer. The criterion
in makin& a distinction bet"een a supplement and a facility does not so much lie in the kind Ffood, lod&in&G
but the purpose.H3 Considerin&, therefore, that hotel "orkers are required to "ork di=erent shifts and are
e5pected to be available at various odd hours, their ready availability is a necessary matter in the operations
of a small hotel, such as petitioners' business.H) The deduction of the cost of meals from respondents' "a&es,
therefore, should be removed.
PETITIONERS CONTENTION P1! >e also do not a&ree "ith petitioners that the .ve F*G percent of the &ross
income of the establishment can be considered as part of the respondents' "a&es. >e quote "ith approval
the ,abor Arbiter on this matter, to "itK
>hile complainants, "ho "ere employed in the hotel, receiveMdN various amounts as pro.t share, the
same cannot be considered as part of their "a&es in determinin& their claims for violation of labor
standard bene.ts. Althou&h called pro.t shareM,N such is in the nature of share from service char&es
char&ed by the hotel. This is more e5plained by MrespondentsN "hen they testi.ed that "hat they
received are not .5ed amounts and the same are paid not on a monthly basis Fpp. **, H$, H(, 3A$,
3A(L vol. II, rolloG. Also, MpetitionersN failed to submit evidence that the amounts received by
MrespondentsN as pro.t share are to be considered part of their "a&es and had been a&reed by them
prior to their employment. 'urther, ho" can the amounts receiveMdN by MrespondentsN be considered
as pro.t share "hen the same MareN based on the &ross receipt of the hotelMPN 1o pro.t can as yet be
determined out of the &ross receipt of an enterprise. Pro.ts are reali:ed after e5penses are deducted
from the &ross income.
ISSUE P4! 0n the issue of the proper minimum "a&e applicable to respondents, "e sustain the ,abor
Arbiter. >e note that petitioners themselves have admitted that the establishment employs Bmore or less
si5teen F3%G employees,BH$ therefore they are estopped from claimin& that the applicable minimum "a&e
should be for service establishments employin& 3* employees or less.
As for petitioners repeated invocation of serious business losses, su?ce to say that this is not a defense to
payment of labor standard bene.ts. The employer cannot e5empt himself from liability to pay minimum
"a&es because of poor .nancial condition of the company. The payment of minimum "a&es is not dependent
on the employer's ability to pay.H(
Thus, "e reinstate the a"ard of monetary claims &ranted by the ,abor Arbiter.
4. Con."sion
There is no denyin& that the actuations of petitioners in this case have been reprehensible. They have
terminated the respondents' employment in an underhanded manner, and have used and abused the quasi#
<udicial and <udicial processes to resist payment of their employees' ri&htful claims, thereby protractin& this
case and causin& the unnecessary clo&&in& of dockets of the Court. They have also forced respondents to
unnecessary hardship and .nancial e5pense. Indeed, the circumstances of this case "ould have called for
e5emplary dama&es, as the dismissal "as e=ected in a "anton, oppressive or malevolent manner, H* and
public policy requires that these acts must be suppressed and discoura&ed.H%
1evertheless, "e cannot a&ree "ith the ,abor Arbiter in &rantin& e5emplary dama&es of P3A,AAA.AA each to
all respondents. >hile it is true that other forms of dama&es under the Civil Code may be a"arded to ille&ally
dismissed employees,HD any a"ard of moral dama&es by the ,abor Arbiter cannot be based on the ,abor
Code but should be &rounded on the Civil Code.H2 And the la" is clear that e5emplary dama&es can only be
a"arded if plainti= sho"s proof that he is entitled to moral, temperate or compensatory dama&es.HH
As only respondents ,overes, 7uades, Macando&, ,larena, 1icerio, Atractivo and -roUola speci.cally claimed
dama&es from petitioners, then only they are entitled to e5emplary dama&es.s<&s3
'inally, "e rule that attorney's fees in the amount to P3A,AAA.AA should be &ranted to each respondent. It is
settled that in actions for recovery of "a&es or "here an employee "as forced to liti&ate and incur e5penses
to protect his ri&hts and interest, he is entitled to an a"ard of attorney's fees. 3AA This case undoubtedly falls
"ithin this rule.
IN 7IE: :HEREOF, the petition is hereby +41I4+. The +ecision of 8anuary 3D, )AA$ of the Court of Appeals
in CA#7./. !P 1o. %2%() upholdin& the 8oint +ecision of 8uly 3(, )AAA of the ,abor Arbiter in /A- 9 Case 1os.
A(#AAADH#HD and A(#AAA2A#HD is A''I/M4+, "ith the follo"in& M0+I'ICATI01!K
F3G 7rantin& separation pay of one#half F3J)G month for every year of service to respondents ,overes,
Macando& and ,larenaL
F)G 7rantin& retirement pay for respondents 7uades, 1icerio, and AlamaresL
Pa&e (5 of #$%
F$G /emovin& the deductions for food facility from the amounts due to all respondentsL
F(G A"ardin& moral dama&es of P)A,AAA.AA each for respondents ,overes, Macando&, ,larena,
7uades, 1icerio, Atractivo, and -roUolaL
F*G +eletin& the a"ard of e5emplary dama&es of P3A,AAA.AA from all respondents e5cept ,overes,
Macando&, ,larena, 7uades, 1icerio, Atractivo, and -roUolaL and
F%G 7rantin& attorney's fees of P3A,AAA.AA each to all respondents.
The case is /4MA1+4+ to the ,abor Arbiter for the /4C0MPTATI01 of the total monetary bene.ts a"arded
and due to the employees concerned in accordance "ith the decision. The ,abor Arbiter is 0/+4/4+ to
submit his compliance thereon "ithin thirty F$AG days from notice of this decision, "ith copies furnished to the
parties.
SO ORDERED.
7./. 1o. 3)3($H 8anuary )*, )AAA
A=LAN ELECTRIC COOPERATI7E INCORPORATED 'A=ELCO-, petitioner,
vs.
NATIONAL LA&OR RELATIONS COMMISSION 'Fo"rt9 Division-, RODOLFO M. RETISO and #)%
OTHERS,3respondents.
0ONHA0A*REYES, J.:
In his petition for certiorari and prohibition "ith prayer for "rit of preliminary in<unction andJor temporary
restrainin& order, petitioner assails FaG the decision dated April )A, 3HH*, of public respondent 1ational ,abor
/elations Commission F1,/CG, 'ourth F(thG +ivision, Cebu City, in 1,/C Case 1o. 9#A3($#H( reversin& the
'ebruary )*, 3HH( decision of ,abor Arbiter +ennis +. 8uanon and orderin& petitioner to pay "a&es in the
a&&re&ate amount of P%,(2*,D%D.HA to private respondents, and FbG the resolution dated 8uly )2, 3HH*
denyin& petitioner's motion for reconsideration, for havin& been issued "ith &rave abuse of discretion.
A temporary restrainin& order "as issued by this Court on 0ctober H, 3HH* en<oinin& public respondent from
e5ecutin& the questioned decision upon a surety bond posted by petitioner in the amount of P%,(AA,AAA.AA.)
The facts as found by the ,abor Arbiter are as follo"sK$
These are consolidated casesJclaims for non#payment of salaries and "a&es, 3$th month pay, 4C0,A
and other frin&e bene.ts as rice, medical and clothin& allo"ances, submitted by complainant /odolfo
M. /etiso and 3%$ others, ,yn 4. -anilla and >ilson -. !allador a&ainst respondents Aklan 4lectric
Cooperative, Inc. FAX4,C0G, Atty. ,eovi&ildo Mation& in his capacity as 7eneral Mana&erL Manuel
Cali:o, in his capacity as Actin& -oard President, -oard of +irectors, AX4,C0.
Complainants alle&ed that prior to the temporary transfer of the o?ce of AX4,C0 from ,e:o Aklan to
Amon Theater, Xalibo, Aklan, complainants "ere continuously performin& their task and "ere duly
paid of their salaries at their main o?ce located at ,e:o, Aklan.
That on 8anuary )), 3HH), by "ay of resolution of the -oard of +irectors of AX4,C0 allo"ed the
temporary transfer holdin& of o?ce at Amon Theater, Xalibo, Aklan per information by their Pro<ect
!upervisor, Atty. ,eovi&ildo Mation&, that their head o?ce is closed and that it is dan&erous to hold
o?ce thereatL
1evertheless, ma<ority of the employees includin& herein complainants continued to report for "ork
at ,e:o Aklan and "ere paid of their salaries.
That on 'ebruary %, 3HH), the administrator of 14A, /odri&o Cabrera, "rote a letter addressed to the
-oard of AX4,C0, that he is not interposin& any ob<ections to the action taken by respondent Mation&.
. .
That on 'ebruary 33, 3HH), unnumbered resolution "as passed by the -oard of AX4,C0 "ithdra"in&
the temporary desi&nation of o?ce at Xalibo, Aklan, and that the daily operations must be held a&ain
at the main o?ce of ,e:o, AklanL(
That complainants "ho "ere then reportin& at the ,e:o o?ce from 8anuary 3HH) up to May 3HH) "ere
duly paid of their salaries, "hile in the meantime some of the employees throu&h the insti&ation of
respondent Mation& continued to remain and "ork at Xalibo, AklanL
That from 8une 3HH) up to March 32, 3HH$, complainants "ho continuously reported for "ork at ,e:o,
Aklan in compliance "ith the aforementioned resolution "ere not paid their salariesL
That on March 3H, 3HH$ up to the present, complainants "ere a&ain allo"ed to dra" their salariesL
Pa&e (1 of #$%
"ith the e5ception of a fe" complainants "ho "ere not paid their salaries for the months of April and
May 3HH$L
Per alle&ations of the respondents, the follo"in& are the factsK
3. That these complainants voluntarily abandoned their respective "orkJ<ob assi&nments,
"ithout any <usti.able reason and "ithout notifyin& the mana&ement of the Aklan 4lectric
Cooperative, Inc. FAX4,C0G, hence the cooperative su=ered dama&es and systems lossL
). That the complainants herein de.ed the la"ful orders and other issuances by the 7eneral
Mana&er and the -oard of +irectors of the AX4,C0. These complainants "ere requested to
report to "ork at the Xalibo o?ce . . . but despite these la"ful orders of the 7eneral Mana&er,
the complainants did not follo" and "ilfully and maliciously de.ed said orders and issuance of
the 7eneral Mana&erL that the -oard of +irectors passed a /esolution resistin& and denyin&
the claims of these complainants, . . . under the principle of Bno "ork no payB "hich is le&ally
<usti.edL That these complainants have Bmass leaveB from their customary "ork on 8une 3HH)
up to March 32, 3HH$ and had a Bsit#do"nB stance for these periods of time in their alle&ed
protest of the appointment of respondent Atty. ,eovi&ildo Mation& as the ne" 7eneral
Mana&er of the Aklan 4lectric Cooperative, Inc. FAX4,C0G by the -oard of +irectors and
con.rmed by the Administrator of the 1ational 4lectri.cation Administration F14AG, Sue:on
CityL That they en&a&ed in B. . . slo"do"n mass leaves, sit do"ns, attempts to dama&e,
destroy or sabota&e plant equipment and facilities of the Aklan 4lectric Cooperative, Inc.
FAX4,C0G.
0n 'ebruary )*, 3HH(, a decision "as rendered by ,abor Arbiter +ennis +. 8uanon dismissin& the
complaints.*
+issatis.ed "ith the decision, private respondents appealed to the respondent Commission.
0n appeal, the 1,/C's 'ourth +ivision, Cebu City,% reversed and set aside the ,abor Arbiter's decision and
held that private respondents are entitled to unpaid "a&es from 8une 3%, 3HH) to March 32, 3HH$, thusKD
The evidence on records, more speci.cally the evidence submitted by the complainants, "hich areK
the letter dated April D, 3HH$ of Pedrito ,. ,eyson, 0?ce Mana&er of AX4,C0 FAnne5 BCBL
complainants' position paperL Rollo, p. 3A)G addressed to respondent Atty. ,eovi&ildo T. Mation&L
respondent AX4,C0 7eneral Mana&erL the memorandum of said Atty. Mation& dated 3( April 3HH$, in
ans"er to the letter of Pedrito ,eyson FAnne5 B+B complainants' position paperGL as "ell as the
computation of the unpaid "a&es due to complainants FAnne5es B4B to B4#$BL complainants' position
paper, Rollo, pa&es 3A)( to 3A)DG clearly sho" that complainants had rendered services durin& the
period#8une 3%, 3HH) to March 32, 3HH$. The record is bereft of any sho"in& that the respondents had
submitted any evidence, documentary or other"ise, to controvert this asseveration of the
complainants that services "ere rendered durin& this period. B!ub<ectin& these evidences submitted
by the complainants to the crucible of scrutiny, >e .nd that respondent Atty. Mation& responded to
the request of the 0?ce Mana&er, Mr. ,eyson, "hich >e quote, to "itK
/est assured that >e shall recommend your aforesaid request to our -oard of +irectors for
their consideration and appropriate action. This payment, ho"ever, shall be sub<ect, amon&
others, to the availability of funds.
This assurance is an admission that complainants are entitled to payment for services rendered from
8une 3%, 3HH) to March 32, 3HH$, specially so that the recommendation and request comes from the
o?ce mana&er himself "ho has direct kno"led&e re&ardin& the services and performance of
employees under him. 'or ho" could one o?ce mana&er recommend payment of "a&es, if no
services "ere rendered by employees under him. An o?ce mana&er is the most quali.ed person to
kno" the performance of personnel under him. And therefore, any request comin& from him for
payment of "a&es addressed to his superior as in the instant case shall be &iven "ei&ht.
'urthermore, the record is clear that complainants "ere paid of their "a&es and other frin&e bene.ts
from 8anuary, 3HH) to May, 3HH) and from March 3H, 3HH$ up to the time complainants .led the
instant cases. In the intere&num, from 8une 3%, 3HH) to March 32, 3HH$, complainants "ere not paid
of their salaries, hence these claims. >e could see no rhyme nor reason in respondents' refusal to pay
complainants salaries durin& this period "hen complainants had "orked and actually rendered
service to AX4,C0.
>hile the respondents maintain that complainants "ere not paid durin& this interi/ period under the
principle of Bno "ork, no payB, ho"ever, no proof "as submitted by the respondents to substantiate
this alle&ation. The labor arbiter, therefore, erred in dismissin& the claims of the complainants, "hen
he adopted the Bno "ork, no payB principle advanced by the respondents.3a"phi3.nbt
Pa&e (4 of #$%
>64/4'0/4, in vie" of the fore&oin&, the appealed decision dated 'ebruary )*, 3HH( is hereby
/eversed and !et Aside and a ne" one entered orderin& respondent AX4,C0 to pay complainants
their claims amountin& to P%,(2*,D%D.HA as sho"n in the computation FAnne5es B4B to B4#$BG.
A motion for reconsideration "as .led by petitioner but the same "as denied by public respondent in a
resolution dated 8uly )2, 3HH*.2
Petitioner brou&ht the case to this Court alle&in& that respondent 1,/C committed &rave abuse of discretion
citin& the follo"in& &roundsKH
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Petitioner contends that public respondent committed &rave abuse of discretion in .ndin& that private
respondents are entitled to their "a&es from 8une 3%, 3HH) to March 32, 3HH$, thus disre&ardin& the principle
of Bno "ork, no payB. It alle&es that private respondents stated in their pleadin&s that they not only ob<ected
to the transfer of petitioner's business o?ce to Xalibo but they also de.ed the directive to report thereat
because they considered the transfer ille&al. It further claims that private respondents refused to reco&ni:e
the authority of petitioner's la"ful o?cers and a&ents resultin& in the disruption of petitioner's business
operations in its o?cial business o?ce in ,e:o, Aklan, forcin& petitioner to transfer its o?ce from ,e:o to
Xalibo transferrin& all its equipments, records and facilitiesL that private respondents cannot choose "here to
"ork, thus, "hen they de.ed the la"ful orders of petitioner to report at Xalibo, private respondents "ere
considered dismissed as far as petitioner "as concerned. Petitioner also disputes private respondents'
alle&ation that they "ere paid their salaries from 8anuary to May 3HH) and a&ain from March 3H, 3HH$ up to
the present but not for the period from 8une 3HH) to March 32, 3HH$ sayin& that private respondents ille&ally
collected fees and char&es due petitioner and appropriated the collections amon& themselves for "hich
reason they are claimin& salaries only for the period from 8une 3HH) to March 3HH$ and that private
respondents "ere paid their salaries startin& only in April 3HH$ "hen petitioner's -oard a&reed to accept
private respondents back to "ork at Xalibo o?ce out of compassion and not for the reason that they rendered
service at the ,e:o o?ce. Petitioner also adds that compensable service is best sho"n by timecards, payslips
and other similar documents and it "as an error for public respondent to consider the computation of the
claims for "a&es and bene.ts submitted merely by private respondents as substantial evidence.
The !olicitor 7eneral .led its Manifestation in lieu of Comment prayin& that the decision of respondent 1,/C
be set aside and payment of "a&es claimed by private respondents be denied for lack of merit alle&in& that
private respondents could not have "orked for petitioner's o?ce in ,e:o durin& the stated period since
petitioner transferred its business operation in Xalibo "here all its records and equipments "ere brou&htL that
computations of the claims for "a&es and bene.ts submitted by private respondents to petitioner is not proof
of rendition of "ork. 'ilin& its o"n Comment, public respondent 1,/C claims that the ori&inal and e5clusive
Pa&e (% of #$%
<urisdiction of this Court to revie" decisions or resolutions of respondent 1,/C does not include a correction
of its evaluation of evidence as factual issues are not .t sub<ect for certiorari.
Private respondents, in their Comment, alle&e that revie" of a decision of 1,/C in a petition
for certiorari under /ule %* does not include the correctness of its evaluation of the evidence but is con.ned
to issues of <urisdiction or &rave abuse of discretion and that factual .ndin&s of administrative bodies are
entitled &reat "ei&ht, and accorded not only respect but even .nality "hen supported by substantial
evidence. They claim that petitioner's -oard of +irectors passed an unnumbered resolution on 'ebruary 33,
3HH) returnin& back the o?ce to ,e:o from Xalibo Aklan "ith a directive for all employees to immediately
report at ,e:oL that the letter#reply of Atty. Mation& to the letter of o?ce mana&er ,eyson that he "ill
recommend the payment of the private respondents' salary from 8une 3%, 3HH) to March 32, 3HH$ to the
-oard of +irectors "as an admission that private respondent are entitled to such payment for services
rendered. Private respondents state that in appreciatin& the evidence in their favor, public respondent 1,/C
at most may be liable for errors of <ud&ment "hich, as di=erentiated from errors of <urisdiction, are not "ithin
the province of the special civil action ofcertiorari.
Petitioner .led its /eply alle&in& that revie" of the decision of public respondent is proper if there is a conOict
in the factual .ndin&s of the labor arbiter and the 1,/C and "hen the evidence is insu?cient and
insubstantial to support 1,/C's factual .ndin&sL that public respondent's .ndin&s that private respondent
rendered compensable services "ere merely based on private respondents' computation of claims "hich is
self#servin&L that the alle&ed unnumbered board resolution dated 'ebruary 33, 3HH), directin& all employees
to report to ,e:o 0?cer "as never implemented because it "as not a valid action of AX4,C0's le&itimate
board.
The sole issue for determination is "hether or not public respondent 1,/C committed &rave abuse of
discretion amountin& to e5cess or "ant of <urisdiction "hen it reversed the .ndin& of the ,abor Arbiter that
private respondent refused to "ork under the la"ful orders of the petitioner AX4,C0 mana&ementL hence
they are covered by the Bno "ork, no payB principle and are thus not entitled to the claim for unpaid "a&es
from 8une 3%, 3HH) to March 32, 3HH$.
>e .nd merit in the petition.
At the outset, "e reiterate the rule that in certiorari proceedin&s under /ule %*, this Court does not assess
and "ei&h the su?ciency of evidence upon "hich the labor arbiter and public respondent 1,/C based their
resolutions. 0ur query is limited to the determination of "hether or not public respondent 1,/C acted "ithout
or in e5cess of its <urisdiction or "ith &rave abuse of discretion in renderin& the assailed resolutions.3A >hile
administrative .ndin&s of fact are accorded &reat respect, and even .nality "hen supported by substantial
evidence, nevertheless, "hen it can be sho"n that administrative bodies &rossly misappreciated evidence of
such nature as to compel a contrary conclusion, this court had not hesitated to reverse their factual
.ndin&s.33 'actual .ndin&s of administrative a&encies are not infallible and "ill be set aside "hen they fail
the test of arbitrariness.3) Moreover, "here the .ndin&s of 1,/C contradict those of the labor arbiter, this
Court, in the e5ercise of its equity <urisdiction, may look into the records of the case and ree5amine the
questioned .ndin&s.3$
>e .nd co&ent reason, as sho"n by the petitioner and the !olicitor 7eneral, not to a?rm the factual .ndin&s
of public respondent 1,/C.
>e do not a&ree "ith the .ndin& that private respondents had rendered services from 8une 3%, 3HH) to March
32, 3HH$ so as to entitle them to payment of "a&es. Public respondent based its conclusion on the follo"in&K
FaG the letter dated April D, 3HH$ of Pedrito ,. ,eyson, 0?ce Mana&er of AX4,C0 addressed to AX4,C0's
7eneral Mana&er, Atty. ,eovi&ildo T. Mation&, requestin& for the payment of private respondents' unpaid
"a&es from 8une 3%, 3HH) to March 32, 3HH$L FbG the memorandum of said Atty. Mation& dated 3( April 3HH$,
in ans"er to the letter request of Pedrito ,eyson "here Atty. Mation& made an assurance that he "ill
recommend such requestL FcG the private respondents' o"n computation of their unpaid "a&es. >e .nd that
the fore&oin& does not constitute substantial evidence to support the conclusion that private respondents are
entitled to the payment of "a&es from 8une 3%, 3HH) to March 32, 3HH$. !ubstantial evidence is that amount
of relevant evidence "hich a reasonable mind mi&ht accept as adequate to <ustify a conclusion.3( These
evidences relied upon by public respondent did not establish the fact that private respondents actually
rendered services in the Xalibo o?ce durin& the stated period.
The letter of Pedrito ,eyson to Atty. Mation& "as considered by public respondent as evidence that services
"ere rendered by private respondents durin& the stated period, as the recommendation and request came
from the o?ce mana&er "ho has direct kno"led&e re&ardin& the services and performance of employees
under him. >e are not convinced. Pedrito ,eyson is one of the herein private respondents "ho are claimin&
for unpaid "a&es and "e .nd his actuation of requestin& in behalf of the other private respondents for the
payment of their back"a&es to be biased and self#servin&, thus not credible.
0n the other hand, petitioner "as able to sho" that private respondents did not render services durin& the
Pa&e () of #$%
stated period. Petitioner's evidences sho" that on 8anuary )), 3HH), petitioner's -oard of +irectors passed a
resolution temporarily transferrin& the 0?ce from ,e:o, Aklan to Amon Theater, Xalibo, Aklan upon the
recommendation of Atty. ,eovi&ildo Mation&, then pro<ect supervisor, on the &round that the o?ce at ,e:o
"as dan&erous and unsafe. !uch transfer "as approved by then 14A Administrator, /odri&o 4. Cabrera, in a
letter dated 'ebruary %, 3HH) addressed to petitioner's -oard of +irectors.3* Thus, the 14A Administrator, in
the e5ercise of supervision and control over all electric cooperatives, includin& petitioner, "rote a letter dated
'ebruary %, 3HH) addressed to the Provincial +irector PCJI1P Xalibo Aklan requestin& for military assistance
for the petitioner's team in retrievin& the electric cooperative's equipments and other removable facilities
andJor .5tures consequential to the transfer of its principal business address from ,e:o to Xalibo and in
maintainin& peace and order in the cooperative's covera&e area.3% The fore&oin& establishes the fact that
the continuous operation of the petitioner's business o?ce in ,e:o Aklan "ould pose a serious and imminent
threat to petitioner's o?cials and other employees, hence the necessity of temporarily transferrin& the
operation of its business o?ce from ,e:o to Xalibo. !uch transfer "as done in the e5ercise of a mana&ement
prero&ative and in the absence of contrary evidence is not un<usti.ed. >ith the transfer of petitioner's
business o?ce from its former o?ce, ,e:o, to Xalibo, Aklan, its equipments, records and facilities "ere also
removed from ,e:o and brou&ht to the Xalibo o?ce "here petitioner's o?cial business "as bein& conductedL
thus private respondents' alle&ations that they continued to report for "ork at ,e:o to support their claim for
"a&es has no basis.
Moreover, private respondents in their position paper admitted that they did not report at the Xalibo o?ce, as
,e:o remained to be their o?ce "here they continuously reported, to "itK3D
0n 8anuary )), 3HH3 by "ay of a resolution of the -oard of +irectors of AX4,C0 it allo"ed the
temporary holdin& of o?ce at Amon Theater, Xalibo, Aklan, per information by their pro<ect
supervisor, Atty. ,eovi&ildo Mation& that their head o?ce is closed and that it is dan&erous to hold
o?ce thereat.
1evertheless, ma<ority of the employees includin& the herein complainants, continued to report for
"ork at ,e:o, Aklan and "ere paid of their salaries.
5 5 5 5 5 5 5 5 5
The transfer of o?ce from ,e:o, Aklan to Xalibo, Aklan bein& ille&al for failure to comply "ith the le&al
requirements under P.+. )%H, the complainants remained and continued to "ork at the ,e:o 0?ce
until they "ere ille&ally locked out therefrom by the respondents. +espite the ille&al lock out ho"ever,
complainants continued to report daily to the location of the ,e:o 0?ce, prepared to continue in the
performance of their re&ular duties.
Complainants thus could not be considered to have abandoned their "ork as ,e:o remained to be
their o?ce and not Xalibo despite the temporary transfer thereto. 'urther the fact that they "ere
allo"ed to dra" their salaries up to May, 3HH) is an ackno"led&ment by the mana&ement that they
are "orkin& durin& the period.
5 5 5 5 5 5 5 5 5
It must be pointed out that complainants "orked and continuously reported at ,e:o o?ce despite the
mana&ement holdin& o?ce at Xalibo. In fact, they "ere paid their "a&es before it "as "ithheld and
then "ere allo"ed to dra" their salaries a&ain on March 3HH$ "hile reportin& at ,e:o up to the
present.
/espondents' acts and payment of complainants' salaries and a&ain from March 3HH$ is an
unequivocal reco&nition on the part of respondents that the "ork of complainants is continuin& and
uninterrupted and they are therefore entitled to their unpaid "a&es for the period from 8une 3HH) to
March 3HH$.
The admission is detrimental to private respondents' cause. Their e5cuse is that the transfer to Xalibo "as
ille&al but "e a&ree "ith the ,abor Arbiter that it "as not for private respondents to declare the
mana&ement's act of temporarily transferrin& the AX4,C0 o?ce to Xalibo as an ille&al act. There is no
alle&ation nor proof that the transfer "as made in bad faith or "ith malice. The ,abor Arbiter correctly
rationali:ed in its decision as follo"sK32
>e do not subscribe to complainants theory and assertions. They, by their o"n alle&ations, have
unilaterally committed acts in violation of mana&ement'sJrespondents' directives purely classi.ed as
mana&ement prero&ative. They have taken amon&st themselves declarin& mana&ement's acts
of te/porarily transferrin& the holdin& of the AX4,C0 o?ce from ,e:o to Xalibo, Aklan as ille&al. It is
never incumbent upon themselves to declare the same as such. It is lod&ed in another forum or body
le&ally mantled to do the same. >hat they should have done "as .rst to follo" mana&ement's
orders te/porarily transferrin& o?ce for it has the .rst presumption of le&ality. 'urther, the transfer
"as only te/porary. 'orK
Pa&e ($ of #$%
The employer as o"ner of the business, also has inherent ri&hts, amon& "hich are the ri&ht to
select the persons to be hired and dischar&e them for <ust and valid causeL to promul&ate and
enforce reasonable employment rules and re&ulations and to modify, amend or revoke the
sameL to desi&nate the "ork as "ell as the employee or employees to perform itL to transfer
or promote employeesL to schedule, direct, curtail or control company operationsL to introduce
or install ne" or improved labor or money savin&s methods, facilities or devicesL to create,
mer&e, divide, reclassify and abolish departments or positions in the company and to sell or
close the business.
5 5 5 5 5 5 5 5 5
4ven as the la" is solicitous of the "elfare of the employees it must also protect the ri&ht of
an employer to e5ercise "hat are clearly mana&ement prero&atives. The free "ill of
mana&ement to conduct its o"n business a=airs to achieve its purpose can not be denied.
The transfer of assi&nment of a medical representative from Manila to the province has
therefore been held la"ful "here this "as demanded by the requirements of the dru&
company's marketin& operations and the former had at the time of his employment
undertaken to accept assi&nment any"here in the Philippines. FAbbot ,aboratories FPhils.G,
Inc., et al. vs. 1,/C, et al., 7./. 1o. ,#D%H*H, 0ct. 3), 3H2DG.
It is the employer's prero&ative to abolish a position "hich it deems no lon&er necessary, and the
courts, absent any .ndin&s of malice on the part of the mana&ement, cannot erase that initiative
simply to protect the person holdin& o?ce F7reat Paci.c ,ife Assurance Corporation vs. 1,/C, et al.,
7./. 1o. 22A33, 8uly $A, 3HHAG.
Private respondents claim that petitioner's -oard of +irectors passed an unnumbered resolution dated
'ebruary 33, 3HH) returnin& back the o?ce from its temporary o?ce in Xalibo to ,e:o. Thus, they did not defy
any la"ful order of petitioner and "ere <usti.ed in continuin& to remain at ,e:o o?ce. This alle&ation "as
controverted by petitioner in its /eply sayin& that such unnumbered resolution "as never implemented as it
"as not a valid act of petitioner's -oard. >e are convinced by petitioner's ar&ument that such unnumbered
resolution "as not a valid act of petitioners le&itimate -oard considerin& the subsequent actions taken by the
petitioner's -oard of +irectors decryin& private respondents inimical act and de.ance, to "it F3G /esolution
1o. (33, s. of 3HH) on !eptember H, 3HH), dismissin& all AX4,C0 employees "ho "ere on ille&al strike and
"ho refused to return to "ork e=ective 8anuary $3, 3HH) despite the directive of the 14A pro<ect supervisor
and petitioner's actin& &eneral mana&erL3H F)G /esolution 1o. (DD, s. of 3HH$ dated March 3A, 3HH$
acceptin& back private respondents "ho sta&ed ille&al strike, de.ed le&al orders and issuances, out of
compassion, reconciliation, Christian values and humanitarian reason sub<ect to the condition of Bno "ork, no
payB)A F$G /esolution 1o. (H%, s. of 3HH$ dated 8une (, 3HH$, re<ectin& the demands of private respondents
for back"a&es from 8une 3%, 3HH) to March 3HH$ adoptin& the policy of Bno "ork, no payB as such demand
has no basis, and directin& the C00P ,e&al Counsel to .le criminal cases a&ainst employees "ho
misappropriated collections and o?cers "ho authori:ed disbursements of funds "ithout le&al authority from
the 14A and the AX4,C0 -oard.)3 If indeed there "as a valid board resolution transferrin& back petitioner's
o?ce to ,e:o from its temporary o?ce in Xalibo, there "as no need for the -oard to pass the above#cited
resolutions.
>e are also unable to a&ree "ith public respondent 1,/C "hen it held that the assurance made by Atty.
Mation& to the letter#request of o?ce mana&er ,eyson for the payment of private respondents' "a&es from
8une 3HH) to March 3HH$ "as an admission on the part of &eneral mana&er Mation& that private respondents
are indeed entitled to the same. The letter reply of Atty. Mation& to ,eyson merely stated that he "ill
recommend the request for payment of back"a&es to the -oard of +irectors for their consideration and
appropriate action and nothin& else, thus, the ultimate approval "ill come from the -oard of +irectors. >e
.nd "ell#taken the ar&ument advanced by the !olicitor 7eneral as follo"sK))
The alle&ation of private respondents that petitioner had already approved payment of their "a&es is
"ithout basis. Mation&'s o=er to recommend the payment of private respondents' "a&es is hardly
approval of their claim for "a&es. It is <ust an undertakin& to recommend payment. Moreover, the
o=er is conditional. It is sub<ect to the condition that petitioner's -oard of +irectors "ill &ive its
approval and that funds "ere available. Mation&'s reply to ,eyson's letter for payment of "a&es did
not constitute approval or assurance of payment. The fact is that, the -oard of +irectors of petitioner
re<ected private respondents demand for payment F-oard /esolution 1o. (H%, s. 3HH$G.
>e are accordin&ly constrained to overturn public respondent's .ndin&s that petitioner is not <usti.ed in its
refusal to pay private respondents' "a&es and other frin&e bene.ts from 8une 3%, 3HH) to March 32, 3HH$L
public respondents stated that private respondents "ere paid their salaries from 8anuary to May 3HH) and
a&ain from March 3H, 3HH$ up to the present. As cited earlier, petitioner's -oard in a /esolution 1o. (33 dated
!eptember H, 3HH) dismissed private respondents "ho "ere on ille&al strike and "ho refused to report for
"ork at Xalibo o?ce e=ective 8anuary $3, 3HH)L since no services "ere rendered by private respondents they
Pa&e (( of #$%
"ere not paid their salaries. Private respondents never questioned nor controverted the /esolution dismissin&
them and no"here in their Comment is it stated that they questioned such dismissal. Private respondents
also have not rebutted petitioner's claim that private respondents ille&ally collected fees and char&es due
petitioner and appropriated the collections amon& themselves to satisfy their salaries from 8anuary to May
3HH), for "hich reason, private respondents are merely claimin& salaries only for the period from 8une 3%,
3HH) to March 3HH$.
Private respondents "ere dismissed by petitioner e=ective 8anuary $3, 3HH) and "ere accepted back by
petitioner, as an act of compassion, sub<ect to the condition of Bno "ork, no payB e=ective March 3HH$ "hich
e5plains "hy private respondents "ere allo"ed to dra" their salaries a&ain. 1otably, the letter#request of Mr.
,eyson for the payment of back"a&es and other frin&e bene.ts in behalf of private respondents "as made
only in April 3HH$, after a -oard /esolution acceptin& them back to "ork out of compassion and humanitarian
reason. It took private respondents about ten months before they requested for the payment of their
back"a&es, and the lon& inaction of private respondents to .le their claim for unpaid "a&es cast doubts as to
the veracity of their claim.
The a&e#old rule &overnin& the relation bet"een labor and capital, or mana&ement and employee of a Bfair
day's "a&e for a fair day's laborB remains as the basic factor in determinin& employees' "a&es. If there is no
"ork performed by the employee there can be no "a&e or pay unless, of course, the laborer "as able, "illin&
and ready to "ork but "as ille&ally locked out, suspended or dismissed,)$ or other"ise ille&ally prevented
from "orkin&,)( a situation "hich "e .nd is not present in the instant case. It "ould neither be fair nor <ust to
allo" private respondents to recover somethin& they have not earned and could not have earned because
they did not render services at the Xalibo o?ce durin& the stated period.
'inally, "e hold that public respondent erred in merely relyin& on the computations of compensable services
submitted by private respondents. There must be competent proof such as time cards or o?ce records to
sho" that they actually rendered compensable service durin& the stated period to entitle them to "a&es. It
has been established that the petitioner's business o?ce "as .transferred to Xalibo and all its equipments,
records and facilities "ere transferred thereat and that it conducted its o?cial business in Xalibo durin& the
period in question. It "as incumbent upon private respondents to prove that they indeed rendered services
for petitioner, "hich they failed to do. It is a basic rule in evidence that each party must prove his a?rmative
alle&ation. !ince the burden of evidence lies "ith the party "ho asserts the a?rmative alle&ation, the plainti=
or complainant has to prove his a?rmative alle&ations in the complaint and the defendant or the respondent
has to prove the a?rmative alle&ation in his a?rmative defenses and counterclaim.)*
>64/4'0/4, in vie" of the fore&oin&, the petition for '9R5"!R6R" is 7/A1T4+. Consequently the decision of
public respondent 1,/C dated April )A, 3HH* and the /esolution dated 8uly )2, 3HH* in 1,/C Case 1o. 9#
A3($#H( are hereby /494/!4+ and !4T A!I+4 for havin& been rendered "ith &rave abuse of discretion
amountin& to lack or e5cess of <urisdiction. Private respondents complaint for payment of unpaid "a&es
before the ,abor Arbiter is +I!MI!!4+.3a"phi3.nbt
!0 0/+4/4+.
7./. 1o. 3)22(* 8une 3, )AAA
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS 'ISAE-, petitioner,
vs.
HON. LEONARDO A. @UISUM&IN0 in 9is apait? as t9e Seretar? oB La3or and E2p.o?2entG HON.
CRESENCIANO &. TRA<ANO in 9is apait? as t9e AtinC Seretar? oB La3or and E2p.o?2entG DR.
&RIAN MACCAULEY in 9is apait? as t9e S"perintendent oB Internationa. S9oo.*Mani.aG and
INTERNATIONAL SCHOOL, INC., respondents.
=APUNAN, J.:
/eceivin& salaries less than their counterparts hired abroad, the local#hires of private respondent !chool,
mostly 'ilipinos, cry discrimination. >e a&ree. That the local#hires are paid more than their collea&ues in other
schools is, of course, beside the point. The point is that employees should be &iven equal pay for "ork of
equal value. That is a principle lon& honored in this <urisdiction. That is a principle that rests on fundamental
notions of <ustice. That is the principle "e uphold today.3a"phi3.nbt
Private respondent International !chool, Inc. Fthe !chool, for shortG, pursuant to Presidential +ecree D$), is a
domestic educational institution established primarily for dependents of forei&n diplomatic personnel and
other temporary residents.3To enable the !chool to continue carryin& out its educational pro&ram and
improve its standard of instruction, !ection )FcG of the same decree authori:es the !chool to employ its o"n
teachin& and mana&ement personnel selected by it either locally or abroad, from Philippine or other
nationalities, such personnel bein& e5empt from other"ise applicable la"s and re&ulations attendin& their
employment, e5cept la"s that have been or "ill be enacted for the protection of employees.
Accordin&ly, the !chool hires both forei&n and local teachers as members of its faculty, classifyin& the same
Pa&e (, of #$%
into t"oK F3G forei&n#hires and F)G local#hires. The !chool employs four tests to determine "hether a faculty
member should be classi.ed as a forei&n#hire or a local hireK
a. >hat is one's domicileP
b. >here is one's home economyP
c. To "hich country does one o"e economic alle&ianceP
d. >as the individual hired abroad speci.cally to "ork in the !chool and "as the !chool responsible
for brin&in& that individual to the PhilippinesP)
!hould the ans"er to any of these queries point to the Philippines, the faculty member is classi.ed as a local
hireL other"ise, he or she is deemed a forei&n#hire.
The !chool &rants forei&n#hires certain bene.ts not accorded local#hires.3avvphi3 These include housin&,
transportation, shippin& costs, ta5es, and home leave travel allo"ance. 'orei&n#hires are also paid a salary
rate t"enty#.ve percent F)*[G more than local#hires. The !chool <usti.es the di=erence on t"o Bsi&ni.cant
economic disadvanta&esB forei&n#hires have to endure, namelyK FaG the Bdislocation factorB and FbG limited
tenure. The !chool e5plainsK
A forei&n#hire "ould necessarily have to uproot himself from his home country, leave his family and
friends, and take the risk of deviatin& from a promisin& career path E all for the purpose of pursuin&
his profession as an educator, but this time in a forei&n land. The ne" forei&n hire is faced "ith
economic realitiesK decent abode for oneself andJor for one's family, e=ective means of
transportation, allo"ance for the education of one's children, adequate insurance a&ainst illness and
death, and of course the primary bene.t of a basic salaryJretirement compensation.
-ecause of a limited tenure, the forei&n hire is confronted a&ain "ith the same economic reality after
his termK that he "ill eventually and inevitably return to his home country "here he "ill have to
confront the uncertainty of obtainin& suitable employment after alon& period in a forei&n land.
The compensation scheme is simply the !chool's adaptive measure to remain competitive on an
international level in terms of attractin& competent professionals in the .eld of international
education.$
>hen ne&otiations for a ne" collective bar&ainin& a&reement "ere held on 8une 3HH*, petitioner International
!chool Alliance of 4ducators, Ba le&itimate labor union and the collective bar&ainin& representative of all
faculty membersB( of the !chool, contested the di=erence in salary rates bet"een forei&n and local#hires.
This issue, as "ell as the question of "hether forei&n#hires should be included in the appropriate bar&ainin&
unit, eventually caused a deadlock bet"een the parties.
0n !eptember D, 3HH*, petitioner .led a notice of strike. The failure of the 1ational Conciliation and Mediation
-oard to brin& the parties to a compromise prompted the +epartment of ,abor and 4mployment F+0,4G to
assume <urisdiction over the dispute. 0n 8une 3A, 3HH%, the +0,4 Actin& !ecretary, Crescenciano -. Tra<ano,
issued an 0rder resolvin& the parity and representation issues in favor of the !chool. Then +0,4 !ecretary
,eonardo A. Suisumbin& subsequently denied petitioner's motion for reconsideration in an 0rder dated March
3H, 3HHD. Petitioner no" seeks relief in this Court.
ISSUE! Petitioner claims that the point#of#hire classi.cation employed by the !chool is discriminatory to
'ilipinos and that the &rant of hi&her salaries to forei&n#hires constitutes racial discrimination.
The !chool disputes these claims and &ives a breakdo"n of its faculty members, numberin& $2 in all, "ith
nationalities other than 'ilipino, "ho have been hired locally and classi.ed as local hires.* The Actin&
!ecretary of ,abor found that these non#'ilipino local#hires received the same bene.ts as the 'ilipino local#
hires.
The compensation packa&e &iven to local#hires has been sho"n to apply to all, re&ardless of race.
Truth to tell, there are forei&ners "ho have been hired locally and "ho are paid equally as 'ilipino
local hires.%
The Actin& secretary upheld the point#of#hire classi.cation for the distinction in salary ratesK
The Principle Bequal pay for equal "orkB does not .nd applications in the present case. The
international character of the !chool requires the hirin& of forei&n personnel to deal "ith di=erent
nationalities and di=erent cultures, amon& the student population.
>e also take co&ni:ance of the e5istence of a system of salaries and bene.ts accorded to forei&n
hired personnel "hich system is universally reco&ni:ed. >e a&ree 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.
Pa&e ,+ of #$%
'urthermore, "e took note of the fact that forei&n hires have limited contract of employment unlike
the local hires "ho en<oy security of tenure. To apply parity therefore, in "a&es and other bene.ts
"ould also require parity in other terms and conditions of employment "hich include the employment
"hich include the employment contract.
A perusal of the parties' 3HH)#3HH* C-A points us to the conditions and provisions for salary and
professional compensation "herein the parties a&ree as follo"sK
All members of the bar&ainin& unit shall be compensated only in accordance "ith Appendi5 C
hereof provided that the !uperintendent of the !chool has the discretion to recruit and hire
e5patriate teachers from abroad, under terms and conditions that are consistent "ith
accepted international practice.
Appendi5 C of said C-A further providesK
The ne" salary schedule is deemed at equity "ith the 0verseas /ecruited !ta= F0!/!G salary
schedule. The )*[ di=erential is reOective of the a&reed value of system displacement and
contracted status of the 0!/! as di=erentiated from the tenured status of ,ocally /ecruited
!ta= F,/!G.
To our mind, these provisions demonstrate the parties' reco&nition of the di=erence in the status of
t"o types of employees, hence, the di=erence in their salaries.
The nion cannot also invoke the equal protection clause to <ustify its claim of parity. It is an
established principle of constitutional la" that the &uarantee of equal protection of the la"s is not
violated by le&islation or private covenants based on reasonable classi.cation. A classi.cation is
reasonable if it is based on substantial distinctions and apply to all members of the same class. 9erily,
there is a substantial distinction bet"een forei&n hires and local hires, the former en<oyin& only a
limited tenure, havin& no amenities of their o"n in the Philippines and have to be &iven a &ood
compensation packa&e in order to attract them to <oin the teachin& faculty of the !chool.D
>e cannot a&ree.
RULIN0! That public policy abhors inequality and discrimination is beyond contention. 0ur Constitution and
la"s reOect the policy a&ainst these evils. The Constitution2 in the Article on !ocial 8ustice and 6uman /i&hts
e5horts Con&ress to B&ive hi&hest priority to the enactment of measures that protect and enhance the ri&ht of
all people to human di&nity, reduce social, economic, and political inequalities.B The very broad Article 3H of
the Civil Code requires every person, Bin the e5ercise of his ri&hts and in the performance of his duties, MtoN
act "ith <ustice, &ive everyone his due, and observe honesty and &ood faith.
International la", "hich sprin&s from &eneral principles of la",H like"ise proscribes discrimination. 7eneral
principles of la" include principles of equity, 3A i.e., the &eneral principles of fairness and <ustice, based on
the test of "hat is reasonable. 33 The niversal +eclaration of 6uman /i&hts, 3) the International Covenant
on 4conomic, !ocial, and Cultural /i&hts, 3$ the International Convention on the 4limination of All 'orms of
/acial +iscrimination, 3( the Convention a&ainst +iscrimination in 4ducation, 3* the Convention F1o. 333G
Concernin& +iscrimination in /espect of 4mployment and 0ccupation 3% E all embody the &eneral principle
a&ainst discrimination, the very antithesis of fairness and <ustice. The Philippines, throu&h its Constitution,
has incorporated this principle as part of its national la"s.
In the "orkplace, "here the relations bet"een capital and labor are often ske"ed in favor of capital,
inequality and discrimination by the employer are all the more reprehensible.
The Constitution 3D speci.cally provides that labor is entitled to Bhumane conditions of "ork.B These
conditions are not restricted to the physical "orkplace E the factory, the o?ce or the .eld E but include as
"ell the manner by "hich employers treat their employees.
The Constitution 32 also directs the !tate to promote Bequality of employment opportunities for all.B !imilarly,
the ,abor Code 3H provides that the !tate shall Bensure equal "ork opportunities re&ardless of se5, race or
creed.B It "ould be an a=ront to both the spirit and letter of these provisions if the !tate, in spite of its
primordial obli&ation to promote and ensure equal employment opportunities, closes its eyes to unequal and
discriminatory terms and conditions of employment. )A
+iscrimination, particularly in terms of "a&es, is fro"ned upon by the ,abor Code. Article 3$*, for e5ample,
prohibits and penali:es )3 the payment of lesser compensation to a female employee as a&ainst a male
employee for "ork of equal value. Article )(2 declares it an unfair labor practice for an employer to
discriminate in re&ard to "a&es in order to encoura&e or discoura&e membership in any labor or&ani:ation.
1otably, the International Covenant on 4conomic, !ocial, and Cultural /i&hts, -upra, in Article D thereof,
providesK
Pa&e ,# of #$%
The !tates Parties to the present Covenant reco&ni:e the ri&ht of everyone to the en<oyment of <ust
and favourable conditions of "ork, "hich ensure, in particularK
a. /emuneration "hich provides all "orkers, as a minimum, "ithK
FiG 'air "a&es and equal remuneration for "ork of equal value "ithout distinction of
any kind, in particular "omen bein& &uaranteed conditions of "ork not inferior to
those en<oyed by men, "ith equal pay for equal "orkL
5 5 5 5 5 5 5 5 5
The fore&oin& provisions impre&nably institutionali:e in this <urisdiction the lon& honored le&al truism of
Bequal pay for equal "ork.B Persons "ho "ork "ith substantially equal quali.cations, skill, e=ort and
responsibility, under similar conditions, should be paid similar salaries. )) This rule applies to the !chool, its
Binternational characterB not"ithstandin&.
The !chool contends that petitioner has not adduced evidence that local#hires perform "ork equal to that of
forei&n#hires.)$ The Court .nds this ar&ument a little cavalier. If an employer accords employees the same
position and rank, the presumption is that these employees perform equal "ork. This presumption is borne by
lo&ic and human e5perience. If the employer pays one employee less than the rest, it is not for that employee
to e5plain "hy he receives less or "hy the others receive more. That "ould be addin& insult to in<ury. The
employer has discriminated a&ainst that employeeL it is for the employer to e5plain "hy the employee is
treated unfairly.
The employer in this case has failed to dischar&e this burden. There is no evidence here that forei&n#hires
perform )*[ more e?ciently or e=ectively than the local#hires. -oth &roups have similar functions and
responsibilities, "hich they perform under similar "orkin& conditions.
The !chool cannot invoke the need to entice forei&n#hires to leave their domicile to rationali:e the distinction
in salary rates "ithout violatin& the principle of equal "ork for equal pay.
B!alaryB is de.ned in -lack's ,a" +ictionary F*th ed.G as Ba re"ard or recompense for services performed.B
!imilarly, the Philippine ,e&al 4ncyclopedia states that BsalaryB is the BMcNonsideration paid at re&ular
intervals for the renderin& of services.B In $on%co &. National La,or Relation- 'o//i--ion, )( "e said thatK
BsalaryB means a recompense or consideration made to a person for his pains or industry in another
man's business. >hether it be derived from Bsalarium,B or more fancifully from Bsal,B the pay of the
/oman soldier, it carries "ith it the fundamental idea of compensation for services rendered.
F4mphasis supplied.G
>hile "e reco&ni:e the need of the !chool to attract forei&n#hires, salaries should not be used as an
enticement to the pre<udice of local#hires. The local#hires perform the same services as forei&n#hires and they
ou&ht to be paid the same salaries as the latter. 'or the same reason, the Bdislocation factorB and the forei&n#
hires' limited tenure also cannot serve as valid bases for the distinction in salary rates. The dislocation factor
and limited tenure a=ectin& forei&n#hires are adequately compensated by certain bene.ts accorded them
"hich are not en<oyed by local#hires, such as housin&, transportation, shippin& costs, ta5es and home leave
travel allo"ances.
The Constitution en<oins the !tate to Bprotect the ri&hts of "orkers and promote their "elfare,B )* Bto a=ord
labor full protection.B )% The !tate, therefore, has the ri&ht and duty to re&ulate the relations bet"een labor
and capital. )D These relations are not merely contractual but are so impressed "ith public interest that labor
contracts, collective bar&ainin& a&reements included, must yield to the common &ood. )2 !hould such
contracts contain stipulations that are contrary to public policy, courts "ill not hesitate to strike do"n these
stipulations.
In this case, "e .nd the point#of#hire classi.cation employed by respondent !chool to <ustify the distinction in
the salary rates of forei&n#hires and local hires to be an invalid classi.cation. There is no reasonable
distinction bet"een the services rendered by forei&n#hires and local#hires. The practice of the !chool of
accordin& hi&her salaries to forei&n#hires contravenes public policy and, certainly, does not deserve the
sympathy of this Court.3avvphi3
>e a&ree, ho"ever, that forei&n#hires do not belon& to the same bar&ainin& unit as the local#hires.
A bar&ainin& unit is Ba &roup of employees of a &iven employer, comprised of all or less than all of the entire
body of employees, consistent "ith equity to the employer, indicate to be the best suited to serve the
reciprocal ri&hts and duties of the parties under the collective bar&ainin& provisions of the la".B )H The
factors in determinin& the appropriate collective bar&ainin& unit are F3G the "ill of the employees F7lobe
+octrineGL F)G a?nity and unity of the employees' interest, such as substantial similarity of "ork and duties,
or similarity of compensation and "orkin& conditions F!ubstantial Mutual Interests /uleGL F$G prior collective
bar&ainin& historyL and F(G similarity of employment status. $A The basic test of an asserted bar&ainin& unit's
Pa&e ,5 of #$%
acceptability is "hether or not it is fundamentally the combination "hich "ill best assure to all employees the
e5ercise of their collective bar&ainin& ri&hts. $3
It does not appear that forei&n#hires have indicated their intention to be &rouped to&ether "ith local#hires for
purposes of collective bar&ainin&. The collective bar&ainin& history in the !chool also sho"s that these &roups
"ere al"ays treated separately. 'orei&n#hires have limited tenureL local#hires en<oy security of tenure.
Althou&h forei&n#hires perform similar functions under the same "orkin& conditions as the local#hires,
forei&n#hires are accorded certain bene.ts not &ranted to local#hires. These bene.ts, such as housin&,
transportation, shippin& costs, ta5es, and home leave travel allo"ance, are reasonably related to their status
as forei&n#hires, and <ustify the e5clusion of the former from the latter. To include forei&n#hires in a bar&ainin&
unit "ith local#hires "ould not assure either &roup the e5ercise of their respective collective bar&ainin& ri&hts.
>64/4'0/4, the petition is 7I941 +4 C0/!4. The petition is hereby 7/A1T4+ I1 PA/T. The 0rders of the
!ecretary of ,abor and 4mployment dated 8une 3A, 3HH% and March 3H, 3HHD, are hereby /494/!4+ and !4T
A!I+4 insofar as they uphold the practice of respondent !chool of accordin& forei&n#hires hi&her salaries than
local#hires.
!0 0/+4/4+.
7./. 1o. 3(HD*2 Au&ust )*, )AA*
PHILE; 0OLD PHILIPPINES, INC., 0ERARDO H. &RIMO, LEONARD P. <OSEF, and <OSE &.
ANIE7AS,Petitioners,
vs.
PHILE; &ULA:AN SUPER7ISORS UNION, represented 3? its President, <OSE D.
PAMPLIE0A, /espondent.
+ 4 C I ! I 0 1
AHCUNA, J.!
This is a petition for revie" on certiorari, "ith prayer for the issuance of a temporary restrainin& andJor
status quo order, assailin& the +ecision of the Court of Appeals in CA#7./. !P 1o. *DDA3 promul&ated on April
)$, )AA3 and its /esolution, promul&ated on Au&ust )H, )AA3, denyin& petitionerIs Motion for
/econsideration. The said +ecision of the Court of Appeals reversed and set aside the /esolution dated
'ebruary )H, )AAA of the 9oluntary Arbitrator and reinstated the 9oluntary ArbitratorIs /esolution dated
8anuary 3(, )AAA "ith modi.cation.
The antecedents3 of the case are as follo"sK
/espondent Phile5 -ula"an !upervisors nion FBPhile5 !upervisors nionBG is the sole and e5clusive
bar&ainin& representative of all supervisors of petitioner Phile5 7old Philippines, Incorporated FBPhile5 7oldBG,
a &old minin& company "ith mine site at 9ista Ale&re, 1abulao, !ipalay, 1e&ros 0ccidental. 0n 8uly ), 3HHD,
respondent union entered into a Collective -ar&ainin& A&reement FC-AG "ith petitioner company e=ective
Au&ust 3, 3HH% up to 8uly $3, )AA3.
It appears, ho"ever, that after the si&nin& of the C-A, Phile5 7old made the employees of Phile5 Minin&
Corporation from Padcal, Tuba, -en&uet, its re&ular supervisory employees e=ective 8uly 3, 3HHD. !ome of the
so#called Be5#PadcalB supervisors be&an to "ork in the -ula"an mines of Phile5 Minin& Corporation in 3HH) as
ordinary rank#and#.le "orkers. >hen Phile5 7old "as incorporated in 3HH% to e5clusively handle &old minin&,
it took over the operations of the -ula"an mines and absorbed some of the e5#Padcal employees.
Phile5 7old conveyed to Phile5 !upervisors nion the status of the e5#Padcal supervisors in 1ovember 3HHD
upon the insistence of the union to be informed of their standin&.
It turned out that the e5#Padcal supervisors "ere maintained under a con.dential payroll, receivin& a di=erent
set of bene.ts and hi&her salaries compared to the locally hired supervisors of similar rank and classi.cation
doin& parallel duties and functions.
Phile5 !upervisors nion .led a Complaint) a&ainst Phile5 7old "ith the 1ational Conciliation and Mediation
-oard F1CM-G, -acolod City, for the payment of "a&e di=erential and dama&es and the recti.cation of the
discriminatory salary structure and bene.ts bet"een the e5#Padcal supervisors and the local#hires.
After the submission of the partiesI respective position papers and re<oindersJsupplemental position papers,
the 9oluntary Arbitrator rendered a decision on 8anuary 3(, )AAA in favor of respondent nion.
As re&ards the supervisorsI "a&e rates$ "hich "as submitted by Phile5 7old, the 9oluntary Arbitrator heldK
. . .
The >a&e rates of the employers as classi.ed and classed by them are not also reasonable and
undiscriminatory.
Pa&e ,1 of #$%
This is sho"n by the fact that the ma5imum rate for !#( at P32,A%* per month is hi&her than the minimum
rate for !#*, the hi&hest cate&ory at P3$,)H* a month only. The rate di=erence bet"een the ma5imum rate of
!#( and the minimum rate for !#* is P(,DDA, the ma5imum rate of !#( bein& hi&her than the minimum rate of
!#*.
!imply stated, an !#( employee &ettin& the ma5imum salary of P32,A%* a month "ill merely &et a reduced or
diminished salary of P3$,)H* upon his promotion to !#*, the hi&hest class or cate&ory of supervisors upon his
promotion. This condition is not an ideal labor relation but a situation "hich "ill surely i&nite labor conOicts
and disputes in the "ork place.
In "hatever shade or color that "e shall look upon the issue of "hether or not the herein employer can be
held liable to pay the "a&e di=erential pay to the ,0CA,,; 6I/4+ !P4/9I!0/! due to its obvious
discriminatory "a&e policy, one thin& stands outEsupervisors of the same ranks are not paid the same rates
of pay.
This inequitable rates of pay bein& implemented by respondents result naturally into the herein employersI
discriminatory "a&e policy "hich Article )(2 FeG of the ,A-0/ C0+4 prohibits and de.nes as 1'AI/ ,A-0/
P/ACTIC4 0' 4MP,0;4/!.(
The dispositive portion of the +ecision readsK
:HEREFORE, in vie" of all the '0/470I17, <ud&ment is hereby decreed 0/+4/I17 the respondent P6I,4Y
70,+ P6I,IPPI14!, I1C.J74/A/+ 6. -/IM0J,401A/+ P. 80!4'J80!4 -. A1I49A!, 80I1T,; and !494/A,,; toK
3. /ead<ust the M01T6,; /AT4! 0' PA; of locally hired !P4/9I!0/! in the cate&ories of !#3 to !#* /A1X! in
the same levelJor amount "ith that of PA+CA, !P4/9I!0/! of the same /A1X! namelyK
!#3 ################# P3$,A23.%A
!#) ################# P3$,2H$.%A
!#$ ################# P3*,)AH.%A
!#( ################# P3D,(D).AA
!#* ################# P)A,$AA.AA
e=ective 1ovember 3, 3HH2 and to pay >a&e di=erential pay from 1ovember 3, 3HH2 up to the date of the
+ecision to all a=ected locally hired supervisors.
). To revise or modify its e5istin& "a&e rates per supervisory rankin&, makin& the ma5imum rate of a lo"er
cate&ory lo"er than the minimum rate of the ne5t hi&her cate&oryL and,
$. Pay to the 1I01 ATT0/14;I! '44! at *[ of the total sum of the >a&e di=erential pay a"arded "ithin ten
F3AG days from receipt of this +ecision.
The respondent is further ordered to deposit "ith the cashier of the 1CM- the sum "hich is equivalent to the
"a&e di=erential pay computed at a di=erential of P*,*A3.)( per personJsupervisor per month from
1ovember 3, 3HH2 up to the date of this decision, for !#3L P*,%%$.)( per month per supervisor, for !#
)L P*,HDH.)( per supervisor per month, for !#$LPD,A%*.D* per supervisor per month for !#( and P2,()2.(% per
supervisor per month for !#*, and the ATT0/14;I! '44 "hich is *[ of the total "a&e di=erential pay also
"ithin ten F3AG days from receipt of this decision.
SO ORDERED.*
Phile5 !upervisors nion .led a Motion for Partial /econsideration dated 8anuary )A, )AAA, seekin&, amon&
others, the modi.cation of the e=ectivity of the read<ustment of the monthly rates of pay of the locally hired
supervisors and of the computation of their "a&e di=erential from 1ovember 3, 3HH2 to Au&ust 3, 3HHD
althou&h the discrimination in "a&es started upon the re&ulari:ation of the e5#Padcal supervisors on 8uly 3,
3HHD.
0n 8anuary )*, )AAA, Phile5 7old also .led a motion for reconsideration, "hich "as alle&edly .led a day late,
contendin& that it "as denied due process as the 9oluntary Arbitrator decided the
case "ithout its supplemental position paper, that the decision undermined the collective bar&ainin& process
bet"een the parties relative to "a&e di=erentials, and that there "as neither unla"ful discrimination nor
"a&e distortion bet"een the e5#Padcal supervisors and the locally hired supervisors.
0n 'ebruary )H, )AAA, the 9oluntary Arbitrator issued the assailed /esolution modifyin& his earlier +ecision
Pa&e ,4 of #$%
dated 8anuary 3(, )AAA, this time .ndin& that there "as no discrimination in the determination of the rates of
pay of the supervisors. The 9oluntary Arbitrator, ho"ever, read<usted the amount of "a&es of local
supervisors by addin& or increasin& their "a&es in the uniform sum of P2AA.AA a month e=ective 0ctober 3,
3HHH Bto erase the shado"s of inequities amon& the various &rades of supervisors.B The dispositive portion of
the +ecision readsK
>64/4'0/4, I1 9I4> of the fore&oin&, the +ecision dated 8anuary 3(, )AAA is hereby modi.ed in the
follo"in& manner, to "itK
3. The respondent employer is hereby ordered to re#ad<ust the "a&e rates of !#3 to !#* supervisors by addin&
or increasin& their "a&es in the uniform sum of P2AA.AA a month each e=ective 0ctober 3, 3HHHL and to
compute and pay their di=erential pay from 0ctober 3, 3HHH up to the time it is paid and implementedL
). The respondent is further ordered to pay AttorneyIs 'ee to the nionIs la"yer at *[ of the total amount of
>A74 +I''4/41TIA, PA;L
$. 'inally, the respondent employer is ordered to deposit to the cashier of the 1CM- the >A74 +I''4/41TIA,
PA; and the AttorneyIs 'ee ad<ud&ed "ithin 3A days from receipt of this /esolution.
SO ORDERED. %
0n March 3$, )AAA, respondent nion .led a petition for revie" before the Court of Appeals raisin& the
follo"in& issuesK F3G "hether or not the 9oluntary Arbitrator erred in admittin& petitionerIs motion for
reconsideration "hich "as .led beyond the re&lementary periodL F)G "hether or not the 9oluntary Arbitrator
erred in modifyin& his decision by .ndin& petitioner to be liable to its locally hired members in the sum
of P2AA per month as "a&e ad<ustment e=ective 0ctober 3HHHL and F$G "hether or not the 9oluntary
Arbitrator erred in failin& to &rant 3A percent attorneyIs fees on the total a"ards.
0n March ), )AAA, petitioners .led a Manifestation of Compliance "ith the 9oluntary Arbitrator alle&in& that
on account of its payment to respondent union members of monetary bene.ts Fin the amount of P3,AAAG
provided by the Amendments and !upplement to the C-A, it has complied "ith the /esolution dated 'ebruary
)H, )AAA.
In a /esolution dated April (, )AAA, the 9oluntary Arbitrator deniedD said Manifestation of Compliance for lack
of merit.
>hile CA#7./. !P 1o. *DDA3 "as pendin&, respondent nion .led on April 2, )AAA a Motion for Issuance of
>rit of 45ecution of the /esolution dated 'ebruary )H, )AAA.
In an 0rder dated 8une )D, )AAA, the 9oluntary Arbitrator issued a >rit of 45ecution enforcin& the /esolution
dated 'ebruary )H, )AAA.
0n 8une )H, )AAA, Phile5 7old .led a Motion to ,ift >rit of 45ecution, "hich "as not acted upon by the
9oluntary Arbitrator.
0n 8uly 3A, )AAA, Phile5 7old .led a petition for revie" before the Court of Appeals, docketed as CA#7./. !P
1o. %AA%*, questionin& the propriety and validity of the 9oluntary ArbitratorIs 0rder &rantin& e5ecution
pendin& appeal. !aid petition "as denied for lack of merit.
0n April )$, )AA3, the Court of Appeals rendered the assailed +ecision, in CA#7./. !P 1o. *DDA3, .ndin& that
petitioners failed to prove that they did not discriminate a&ainst the locally hired supervisors in payin& them
lo"er salaries than the e5#Padcal supervisors. It held, thusK
Phile5 7oldIs attempt to e5plain the disparity in the salary rates bet"een Be5#PadcalB supervisors and the
local#hires failed to convince s. It presented a salary structure for supervisors classi.ed into .ve cate&ories,
namelyK B!#3, !#), !#$, !#(, and !#*B "ith di=erent rates of pay. 4ach classi.cation is further divided in terms
of "a&e rates into minimum, medium, and ma5imum. >hile the Be5#PadcalB supervisors received the
ma5imum for each cate&ory, presumably because of seniority in employment, lon&er "ork e5perience in &old
minin&, speciali:ed skills, and the Bdislocation factorB, the local#hires received the minimum.
This e5planation is frau&ht "ith inconsistencies. 'irst, the C-A bet"een the parties did not disclose this multi#
tiered classi.cation of supervisors F/ollo, pp. $%#$D, (%#D(G. !econd, as found by the voluntary arbitrator in
his ori&inal decision, the local#hires actually received salaries less than those they "ere supposed to be
entitled F/ollo, p. (3G. Third, the minimum "a&e rate for a hi&her cate&ory happened to be lesser than the
ma5imum rate of a lo"er cate&ory such that a supervisor "ith a rank of B!#3B ma5imum "ould &et less upon
his promotion to B!#)B minimum F/ollo, pp. $2#$H, HAG. And .nally, this pay structure "as kept from the
kno"led&e of the union and "as only revealed in the course of the proceedin&s before the voluntary
arbitrator. These factors only accentuate the fact "hich Phile5 7old tried to hide, that is, it unduly favored the
Be5#PadcalB supervisors over the local#hires throu&h a system of con.dential salary structure.
The lon& honored le&al truism of Bequal pay for equal "ork,B meanin&, Bpersons "ho "ork "ith substantially
Pa&e ,% of #$%
equal quali.cation, skill, e=ort and responsibility, under similar conditions, should be paid similar salaries,B
has been institutionali:ed in our <urisdiction. !uch that Bif an employer accords employees the same position
and rank, the presumption is that these employees perform equal "orkB as Bborne by lo&ic and human
e5perience.B The rami.cation is that BFiGf the employer pays one employee less than the rest, it is not for that
employee to e5plain "hy he receives less or "hy the others receive more. That "ould be addin& insult to
in<ury. The employer has discriminated a&ainst that employeeL it is for the employer to e5plain "hy the
employee is treated unfairly.B F"nternational $c*ool 6lliance o. 9ucator- &. Hui-u/,in%, et al., 7./. 1o.
3)22(*, 8une 3, )AAAG.
Phile5 7old havin& failed to dischar&e this burden, >e opt therefore to reinstate, albeit "ith modi.cation, the
ori&inal decision dated 3( 8anuary )AAA of the voluntary arbitrator as the same is duly supported by the
pleadin&s .led before s.2
The dispositive portion of the +ecision readsK
>64/4'0/4, premises considered, the assailed resolution of )H 'ebruary )AAA is RE7ERSED and SET
ASIDE and a ne" one entered REINSTATIN0 the 3( 8anuary )AAA decision sub<ect to
the MODIFICATION that the read<ustment of the monthly rates of pay of locally hired supervisors as "ell as
their "a&e di=erential pay be made e=ective 3 Au&ust 3HHD up to the .nality of this decision. This case
is REMANDED to the voluntary arbitrator for the proper computation of "a&e di=erential and attorneyIs fees.
1o costs.
SO ORDERED.H
PetitionersI motion for reconsideration "as denied by the appellate court in its /esolution dated Au&ust )H,
)AA3.
Petitioners thus .led this petition "ith a prayer for the issuance of a temporary restrainin& order. The Court
issued a temporary restrainin& order en<oinin& the e5ecution of the +ecision of the Court of Appeals dated
April )$, )AA3 and its /esolution dated Au&ust )H, )AA3 after petitioners posted a cash bond.
Petitioners raise the follo"in& issuesK
3. !ection (, /ule ($ and Lu0on (e&elop/ent +ank M&. 6--ociation o. Lu0on (e&elop/ent +ank 9/ployee-,
)(H !C/A 3%) F3HH*GN provide that the decision of a voluntary arbitrator becomes .nal after 3* days from
notice of the a"ard. Assumin& the validity of service on Phile5 7oldIs liaison o?ce, instead of its counselIs
address on record, did the Court of Appeals commit an error in la" by statin& that the +ecision dated 3(
8anuary )AAA of 9A !it<ar became B.nal and e5ecutoryB after eleven days from noticeP
). 7rantin& ar%ueno that Phile5 7old had only a period of 3A days "ithin "hich to seek reconsideration of
the !it<ar +ecision, did the period be&in to run upon service of said +ecision at an address "hich is not the
address on record or upon the actual receipt thereof by Phile5 7oldIs counselP
$. 9A !it<ar found petitioners -rimo, 8osef and 8ose -. Anievas, in their capacity as corporate o?cers, <ointly
and severally liable for the alle&ed obli&ation of Phile5 7old to pay "a&e di=erentials to P-!. +id the Court
of Appealsco//it an error in law in a1r/in% 76 $it3ar "hen the latter disposed of an issue not submitted to
him for arbitration and in directin& solidary liability bet"een Phile5 7old and its top o?cers despite the
absence of any .ndin& of malice, bad faith, or &ross ne&li&enceP
(. In levelin& the "a&es of the Padcal !upervisors and the ,ocally#6ired !upervisors, the Court of Appeals
applied the e&alitarian doctrine of Bequal pay for equal "orkB in "nternational $c*ool 6lliance o. 9ucator- &.
Hui-u/,in%. +oes Bequal pay for equal "orkB unquali.edly remove mana&ement prero&ative to institute
qualitative di=erence in pay and bene.ts on the basis of seniority, skill, e5perience and other valid factors in
the same class of "orkers doin& the same kind of "orkP3A
The relevant issues in this case are as follo"sK
F3G >hether the notice sent throu&h petitioner companyIs ,iaison 0?ce can be considered as notice to
counselL
F)G >hether the petitioners#corporate o?cers are solidarily liable "ith Phile5 7old in any liability to
respondent nionL
F$G >hether the doctrine of Bequal pay for equal "orkB should not remove mana&ement prero&ative to
institute di=erence in salary on the basis of seniority, skill, e5perience and the dislocation factor in the same
class of supervisory "orkers doin& the same kind of "ork.
"irst Issue : #$et$er t$e noti%e sent t$rou&$ petitioner
%o'p(n)*s Li(ison +%e %(n ,e %onsidered (s noti%e to %ounsel
Petitioners contend that the Court of Appeals erred in holdin& that their motion for reconsideration of the
Pa&e ,) of #$%
+ecision of the 9oluntary Arbitrator dated 8anuary 3(, )AAA "as .led out of time.
Indeed, the Court of Appeals found that BMbNased on the certi.cation issued by the voluntary arbitrator
himself, the decision "as received by the respondents Fpetitioners hereinG on 3( 8anuary )AAA F/ollo, p. 3)$G,
and they .led their motion for reconsideration on )* 8anuary )AAA, or on the eleventh day from receipt of the
decision.B The appellate court ruled that the late .lin& rendered the decision .nal and e5ecutory as re&ards
the petitioners, and that the 9oluntary Arbitrator erred in admittin& petitionersI motion for reconsideration.
Petitioners ar&ue that the service of the 9oluntary ArbitratorIs +ecision on Phile5 7oldIs ,iaison 0?ce at
,ibertad !t., -acolod City on 8anuary 3(, )AAA "as improper since their counselIs address of record "as at
9ista Ale&re, 1abulao, !ipalay, 1e&ros 0ccidental %33$. Petitioners state that Phile5 7oldIs ,iaison 0?ce
for"arded said +ecision to their counsel only the ne5t day or on 8anuary 3*, )AAA, "hich should be the date
of notice to counsel and the basis for computation of the period to .le a motion for reconsideration of said
+ecision.
The contention is meritorious.
!ection (, /ule III of the 1CM- Procedural 7uidelines in the Conduct of 9oluntary Arbitration Proceedin&s
statesK
Setion 4. $er&ice o. #leain%-, Notice- an 6war-. V Copies of pleadin&s, notices or copies of ManN a"ard
may be served throu&h personal service or by re&istered mails on the parties to the disputeK -rovided, t$(t
.$ere ( p(rt) is represented ,) %ounsel or (ut$ori/ed represent(tive, servi%e s$(ll ,e '(de on
t$e l(tter. !ervice by re&istered mail is complete upon receipt by the addressee or his a&ents.33
In this case, petitioners "ere represented before the 9oluntary Arbitrator by Attys. +eo&racias 7. Contreras 8r.
and >eldy . Manlon&. 6ence, under the 1CM- 7uidelines, service of pleadin&s, notices and a"ards should
be made on petitionersI counsel.
The Court noted that in petitionersI Position Paper and !upplemental Position Paper .led "ith the 9oluntary
Arbitrator, the address of petitionersI counsel "as indicated as 9ista Ale&re, 1abulao, !ipalay, 1e&ros
0ccidental, %33$. 6o"ever, the +ecision of the 9oluntary Arbitrator dated 8anuary 3(, )AAA "as sent throu&h
the ,iaison 0?ce of Phile5 7old, thusK
ATT;. >41+; . MA1,017
Counsel for the /espondents
P6I,4Y 70,+ P6I,IPPI14!, I1C.
74/A/+0 -/IM0, ,401A/+ P. 80!4',
80!4 -. A1I49A!
CJ0 ,iaison 0?ce, ,ibertad !t.
-acolod City
4ven the Court of Appeals stated that Bbased on the certi.cation issued by the voluntary arbitrator himself,
the decision "as received by the re-ponent- on 3( 8anuary )AAA. . . .B !aid service on Phile5 7oldIs ,iaison
0?ce or on the petitioners themselves cannot be considered as notice in la" to petitionersI counsel.
nder the circumstances, reliance may be placed on the assertion of petitioners that a copy of the +ecision of
the 9oluntary Arbitrator dated 8anuary 3(, )AAA "as delivered to their counsel the ne5t day or on 8anuary 3*,
)AAA, "hich must be deemed as the date of notice to counsel of said +ecision.3)
6ence, "hen petitionersI motion for reconsideration "as .led on 8anuary )*, )AAA, it "as .led "ithin the 3A#
day re&lementary period under Article )%)#A of the ,abor Code. The Court of Appeals,
therefore, erred in holdin& that said motion for reconsideration "as .led out of time.
Se%ond Issue : #$et$er t$e petitioners0%orpor(te o+%ers (re solid(ril) li(,le .it$ -$ile1 2old in
(n) li(,ilit) to respondent 3nion
Petitioners o?cers contend that they should not be ad<ud&ed solidarily liable "ith Phile5 7old.
The contention is meritorious.
A corporation is a <uridical entity "ith le&al personality separate and distinct from those actin& for and in its
behalf and, in &eneral, from the people comprisin& it.3$ The rule is that obli&ations incurred by the
corporation, actin& throu&h its directors, o?cers and employees, are its sole liabilities.3( 6o"ever, it is
possible for a corporate director, trustee or o?cer to be held solidarily liable "ith the corporation in the
follo"in& instancesK
Pa&e ,$ of #$%
3. >hen directors and trustees or, in appropriate cases, the o?cers of a corporation##
FaG vote for or assent to patently unla"ful acts of the corporationL
FbG act in ,a .ait* or "ith %ro-- ne%li%ence in directin& the corporate a=airsL
FcG are &uilty of conIict o. intere-t to the pre<udice of the corporation, its stockholders or members, and other
persons.
). >hen a director or o?cer has consented to the issuance of watere -tock- or "ho, havin& kno"led&e
thereof, did not forth"ith .le "ith the corporate secretary his "ritten ob<ection thereto.
$. >hen a director, trustee or o?cer has contractually a&reed or stipulated to hold himself personally and
solidarily liable "ith the Corporation.
#
(. >hen a director, trustee or o?cer is made, by speci.c provision of la", personally liable for his corporate
action.3*
The corporate o?cers in this case have not been proven to fall under any of the aforecited instancesL hence,
they cannot be held solidarily liable "ith the company in the payment of any liability.
T$ird Issue : #$et$er t$e do%trine o4 5e6u(l p() 4or e6u(l .ork5 s$ould not re'ove '(n(&e'ent
prero&(tive to institute di7eren%e in s(l(r) .it$in t$e s('e supervisor) level
Petitioners submit that the Bequal pay for equal "orkB doctrine in "nternational $c*ool 6lliance o. 9ucator- &.
Hui-u/,in%,3% "hich the Court of Appeals cited to support its +ecision should be narro"ly construed to apply
to a situation "here invidious discrimination e5ists by reason of race or ethnicity, but not "here valid factors
e5ist to <ustify distinctive treatment of employees even if they do the same "ork.
Petitioners e5plained that the e5#Padcal supervisors "ere paid hi&her because of their lon&er years of service,
e5perience, their trainin& and skill in the under&round minin& method "antin& in the local supervisors, and
their relocation to -ula"an, 1e&ros 0ccidental. They assert that the di=erential treatment of the e5#Padcal
supervisors is not arbitrary, malicious or discriminatory but <usti.ed by the circumstances of their relocation
and inte&ration in the ne" minin& operation in -ula"an.
The Court is not persuaded by petitionersI contention.
Petitioners admit that the Bsame class of "orkers MareN doin& the same kind of "ork.B This means that an e5#
Padcal supervisor and a locally hired supervisor of equal rank do the same kind of "ork. If an employer
accords employees the same position and rank, the presumption is that these employees perform equal
"ork.3D 6ence, the doctrine of Bequal pay for equal "orkB in "nternational $c*ool 6lliance o. 9ucator- "as
correctly applied by the Court of Appeals.
Petitioners no" contend that the doctrine of Bequal pay for equal "orkB should not remove mana&ement
prero&ative to institute di=erence in salary on the basis of seniority, skill, e5perience and the dislocation
factor in t*e -a/e cla-- of supervisory "orkers oin% t*e -a/e kin o. work.32
In this case, the Court cannot a&ree because petitioners failed to adduce evidence to sho" that an e5#Padcal
supervisor and a locally hired supervisor of the same rank are initially paid the same basic salary for doin&
the same kind of "ork. They failed to di=erentiate this basic salary from any kind of salary increase or
additional bene.t "hich may have been &iven to the e5#Padcal supervisors due to their seniority, e5perience
and other factors.
The records only sho" that an e5#Padcal supervisor is paid a hi&her salary than a locally hired supervisor of
the same rank. Therefore, petitioner failed to prove "ith satisfactory evidence that it has not discriminated
a&ainst the locally hired supervisor in vie" of the unequal salary.
To reiterate the rulin& of #*ilippine-$in%apore 5ran-port $er&ice-, "nc. &. NLR',3H "hich "as cited by the Court
of Appeals in its +ecisionK
. . .
It is note"orthy to state that an employer is free to mana&e and re&ulate, accordin& to his o"n discretion and
<ud&ment, all phases of employment, "hich includes hirin&, "ork assi&nments, "orkin& methods, time, place
and manner of "ork, supervision of "orkers, "orkin& re&ulations, transfer of employees, lay#o= of "orkers,
and the discipline, dismissal and recall of "ork. >hile the la" reco&ni:es and safe&uards this ri&ht of an
employer to e5ercise "hat are clearly mana&ement prero&atives, such ri&ht should not be abused and used
as a tool of oppression a&ainst labor. The companyIs prero&ative must be e5ercised in &ood faith and "ith
due re&ard to the ri&hts of labor. 6 priori, t*ey are not a,-olute prero%ati&e- ,ut are -u,3ect to le%al li/it-,
collecti&e ,ar%ainin% a%ree/ent- an t*e %eneral principle- o. .air play an 3u-tice.)A F4mphasis supplied.G
Pa&e ,( of #$%
:HEREFORE, the petition is hereby DENIED. 1o reversible error "as committed by the Court of Appeals in
its +ecision in CA#7./. !P 1o. *DDA3 and in its /esolution promul&ated on Au&ust )H, )AA3. The Temporary
/estrainin& 0rder issued by the Court is LIFTED.
1o costs.
SO ORDERED.
7./. 1o. 3(A%2H 'ebruary 3D, )AA(
&AN=ARD EMPLOYEES UNION*:OR=ERS ALLIANCE TRADE UNIONS, petitioner,
vs.
NATIONAL LA&OR RELATIONS COMMISSION and &AN=ARD, INC., respondents.
+ 4 C I ! I 0 1
CARPIO MORALES, J.:
The present Petition for /evie" on 'ertiorari under /ule (* of the /ules of Court raises t9e iss"e of "hether
the unilateral adoption by an employer of an up&raded salary scale that increased the hirin& rates of ne"
employees "ithout increasin& the salary rates of old employees resulted in "a&e distortion "ithin the
contemplation of Article 3)( of the ,abor Code.
-ankard, Inc. F-ankardG classi.es its employees by levels, to "itK ,evel I, ,evel II, ,evel III, ,evel I9, and ,evel
9. 0n May )2, 3HH$, its -oard of +irectors approved a B1e" !alary !caleB, made retroactive to April 3, 3HH$,
for the purpose of makin& its hirin& rate competitive in the industryIs labor market. The B1e" !alary !caleB
increased the hirin& rates of ne" employees, to "itK ,evels I and 9 by one thousand pesos FP3,AAA.AAG, and
,evels II, III and I9 by nine hundred pesos FPHAA.AAG. Accordin&ly, the salaries of employees "ho fell belo"
the ne" minimum rates "ere also ad<usted to reach such rates under their levels.
-ankardIs move dre" the -ankard 4mployees nion#>AT FpetitionerG, the duly certi.ed e5clusive bar&ainin&
a&ent of the re&ular rank and .le employees of -ankard, to press for the increase in the salary of its old,
re&ular employees.
&AN=ARD, INC.! -ankard took the position, ho"ever, that there "as no obli&ation on the part of the
mana&ement to &rant to all its employees the same increase in an across#the#board manner.
As the continued request of petitioner for increase in the "a&es and salaries of -ankardIs re&ular employees
remained unheeded, it .led a 1otice of !trike on Au&ust )%, 3HH$ on the &round of discrimination and other
acts of nfair ,abor Practice F,PG.
A director of the 1ational Conciliation and Mediation -oard treated the 1otice of !trike as a BPreventive
Mediation CaseB based on a .ndin& that the issues therein "ere Bnot strikeableB.
Petitioner .led another 1otice of !trike on 0ctober 2, 3HH$ on the &rounds of refusal to bar&ain,
discrimination, and other acts of ,P # union bustin&. The strike "as averted, ho"ever, "hen the dispute "as
certi.ed by the !ecretary of ,abor and 4mployment for compulsory arbitration.
The !econd +ivision of the 1,/C, by 0rder of May $3, 3HH*, .ndin& no "a&e distortion, dismissed the case
for lack of merit.
PetitionerIs motion for reconsideration of the dismissal of the case "as, by /esolution of 8uly )2, 3HH*,
denied.
Petitioner thereupon .led a petition for certiorari before this Court, docketed as 7./. 3)3HDA. In accordance
"ith its rulin& in $t. ;artin 4uneral <o/e- &. NLR',3 the petition "as referred to the Court of Appeals "hich,
by 0ctober )2, 3HHH, denied the same for lack of merit.
6ence, the present petition "hich faults the appellate court as follo"sK
F3G It misapprehended the basic issues "hen it concluded that under -ankardIs ne" "a&e structure,
the old salary &aps bet"een the di=erent classi.cation or level of employees "ere Bstill reOectedB by
the ad<usted salary rates)L and
F)G It erred in concludin& that B"a&e distortion does not appear to e5istB, "hich conclusion is
manifestly contrary to la" and <urisprudence.$
pon the enactment of /.A. 1o. %D)D F>A74 /ATI01A,IÂTI01 ACT, amendin&, amon& others, Article 3)( of
the ,abor CodeG on 8une H, 3H2H, the term B"a&e distortionB "as e5plicitly de.ned asK
... a situation "here an increase in prescribed "a&e rates results in the elimination or severe contraction of
intentional quantitative di=erences in "a&e or salary rates bet"een and amon& employee &roups in an
establishment as to e=ectively obliterate the distinctions embodied in such "a&e structure based on skills,
Pa&e ,, of #$%
len&th of service, or other lo&ical bases of di=erentiation.(
#ru,anker- 6--ociation &. #ruential +ank an 5ru-t 'o/pany* laid do"n the four elements of "a&e
distortion, to "itK F3.G An e5istin& hierarchy of positions "ith correspondin& salary ratesL F)G A si&ni.cant
chan&e in the salary rate of a lo"er pay class "ithout a concomitant increase in the salary rate of a hi&her
oneL F$G The elimination of the distinction bet"een the t"o levelsL and F(G The e5istence of the distortion in
the same re&ion of the country.
1ormally, a company has a "a&e structure or method of determinin& the "a&es of its employees. In a
problem dealin& "ith B"a&e distortion,B the basic assumption is that there e5ists a &roupin& or classi.cation
of employees that establishes distinctions amon& them on some relevant or le&itimate bases.%
Involved in the classi.cation of employees are various factors such as the de&rees of responsibility, the skills
and kno"led&e required, the comple5ity of the <ob, or other lo&ical basis of di=erentiation. The di=erin& "a&e
rate for each of the e5istin& classes of employees reOects this classi.cation.
PETITIONER! Petitioner maintains that for purposes of "a&e distortion, the classi.cation is not one based on
BlevelsB or BranksB but on t"o &roups of employees, the ne"ly hired and the old, in each and every level, and
not bet"een and amon& the di=erent levels or ranks in the salary structure.
NLRC! Public respondent 1ational ,abor /elations Commission F1,/CG refutes petitionerIs position, ho"ever.
It, throu&h the 0?ce of the !olicitor 7eneral, essays in its Comment of April 3), )AAA as follo"sK
To determine the e5istence of "a&e distortion, the BhistoricalB classi.cation of the employees prior to the
"a&e increase must be established. ,ike"ise, it must be sho"n that as bet"een the di=erent classi.cation of
employees, there e5ists a BhistoricalB &ap or di=erence.
5 5 5
The classi.cation preferred by petitioner is belied by the "a&e structure of private respondent as sho"n in
the ne" salary scale it adopted on May )2, 3HH$, retroactive to April 3, 3HH$, "hich provides, thusK
<irin% ;ini/u/ ;a:i/u/
,evel 'rom To 'rom To 'rom To
I $,3AA (,3AA $,)AA (,)AA D,)AA H,)*A
II $,)AA (,3AA $,$AA (,)AA D,*AA H,*AA
III $,$AA (,)AA $,(AA (,$AA 2,AAA 3A,AAA
I9 $,*AA (,(AA $,%AA (,*AA 2,*AA 3A,*AA
9 $,DAA (,DAA $,2AA (,2AA H,AAA 33,AAA
Thus the employees of private respondent have been BhistoricallyB .assiMed into .eve.s, i.e. I to 7, and
not on t9e 3asis oB t9eir .enCt9 oB servie. Put di=erently, the entry of ne" employees to the
company ipso facto placeMsN them under any of the levels mentioned in the ne" salary scale "hich private
respondent adopted retroactive MtoN April 3, 3HH$. Petitioner cannot make a contrary classi.cation of private
respondentIs employees "ithout encroachin& upon reco&ni:ed mana&ement prero&ative of formulatin&
a DaCe str"t"re, in t9is ase, one 3ased on .eve..D F4mphasis and underscorin& suppliedG
The issue of "hether "a&e distortion e5ists bein& a question of fact that is "ithin the <urisdiction of quasi#
<udicial tribunals,2and it bein& a basic rule that .ndin&s of facts of quasi#<udicial a&encies, like the 1,/C, are
&enerally accorded not only respect but at times even .nality if they are supported by substantial
evidence, as are the .ndin&s in the case at bar, they must be respected. 'or these a&encies have acquired
e5pertise, their <urisdiction bein& con.ned to speci.c matters.H
It is thus clear that there is no hierarchy of positions bet"een the ne"ly hired and re&ular employees of
-ankard, hence, the .rst element of "a&e distortion provided in #ru,anker- is "antin&.la"phi3.nbt
>hile seniority may be a factor in determinin& the "a&es of employees, it cannot be made the so.e basis in
cases "here the nature of their "ork di=ers.
Moreover, for purposes of determinin& the e5istence of "a&e distortion, employees cannot create their o"n
independent classi.cation and use it as a basis to demand an across#the#board increase in salary.
As National 4eeration o. La,or &. NLR', et al.3A teaches, the formulation of a "a&e structure throu&h the
classi.cation of employees is a matter of mana&ement <ud&ment and discretion.
Pa&e #++ of #$%
M>Nhether or not a ne" additional scheme of classi.cation of employees for compensation purposes should
be established by the Company Fand the le&itimacy or viability of the bases of distinction there embodiedG is
properly a 2atter oB 2anaCe2ent R"dC2ent and disretion, and ".ti2ate.?, per9aps, a s"3Ret
2atter Bor 3arCaininC neCotiationsbet"een employer and employees. It is assuredly somethin& that falls
outside the concept of B"a&e distortion.B33F4mphasis and underscorin& suppliedG
As did the Court of Appeals, this Court .nds that the third element provided in #ru,anker- is also "antin&.
'or, as the appellate court e5plainedK
In tryin& to prove "a&e distortion, petitioner union presented a list of .ve F*G employees alle&edly a=ected by
the said increaseK
Pay of 0ldJ Pay of 1e"ly +i=erence
/e&ular 4mployees 6ired 4mployees
A. Prior to April 3, 3HH$
,evel I P(,*32.D*
F!ammy 7uceG
P$,3AA P3,(32.D*
,evel II P%,)().AA
F1a:ario AbelloG
P$,)AA P$,A().AA
,evel III P(,2*A.AA
FArthur Chave:G
P$,$AA P3,**A.AA
,evel I9 P*,$$H.AA
Melissa CorderoG
P$,*AA P3,2$H.AA
,evel 9 PD,AHA.%H
FMa. ,ourdes +eeG
P$,DAA P$,$HA.%H
-. 4=ective April 3, 3HH$
,evel I P(,*32.D*
!ammy 7uceG
P(,3AA P(32.D*
,evel II P%,)().AA
F1a:ario AbelloG
P(,3AA P),3().AA
,evel III P(,2*A.AA
FArthur Chave:G
P(,)AA P%*A.AA
,evel I9 P*,$$A.AA
FMelissa CorderoG
P(,(AA PH$H.AA
,evel 9 PD,AHA.%H
FMa. ,ourdes +eeG
P(,DAA P),$HA.%H
4ven assumin& that there is a decrease in the "a&e &ap bet"een the pay of the old employees and the ne"ly
hired employees, to 0ur mind said &ap is not si&ni.cant as to obliterate or result in severe contraction of the
intentional quantitative di=erences in the salary rates bet"een the employee &roup. As already stated, the
classi.cation under the "a&e structure is based on the ranE of an employee, not on seniority. 'or this reason,
,"a&e distortion does not appear to e5ist.3) F4mphasis and underscorin& suppliedG
Apart from the .ndin&s of fact of the 1,/C and the Court of Appeals that some of the elements of "a&e
distortion are absent, petitioner cannot le&ally obli&ate -ankard to correct the alle&ed B"a&e distortionB as
the increase in the "a&es and salaries of the ne"ly#hired "as not due to a prescribed la" or "a&e order.
The "ordin&s of Article 3)( are clear. If it "as the intention of the le&islators to cover all kinds of "a&e
ad<ustments, then the lan&ua&e of the la" should have been broad, not restrictive as it is currently phrasedK
Article 3)(. !tandardsJCriteria for Minimum >a&e 'i5in&.
5 5 5
>here the application oB an? presri3ed DaCe inrease 3? virt"e oB a .aD or :aCe Order iss"ed 3?
an? ReCiona. &oard results in distortions of the "a&e structure "ithin an establishment, the employer and
the union shall ne&otiate to correct the distortions. Any dispute arisin& from the "a&e distortions shall be
Pa&e #+# of #$%
resolved throu&h the &rievance procedure under their collective bar&ainin& a&reement and, if it remains
unresolved, throu&h voluntary arbitration.
5 5 5 FItalics and emphasis suppliedG
Article 3)( is entitled SStandardsFCriteria Bor Mini2"2 :aCe FiNinC.S It is found in CHAPTER 7 on
S:A0E STUDIES, :A0E A0REEMENTS AND :A0E DETERMINATIONS "hich principally deals "ith the
.5in& of minimum "a&e. Article 3)( should thus be construed and correlated in relation to minimum "a&e
.5in&, the intention of the la" bein& that in the event of an increase in minimum "a&e, the distinctions
embodied in the "a&e structure based on skills, len&th of service, or other lo&ical bases of di=erentiation "ill
be preserved.
If the compulsory mandate under Article 3)( to correct B"a&e distortionB is applied to voluntary and
unilateral increases by the employer in .5in& hirin& rates "hich is inherently a business <ud&ment
prero&ative, then the hands of the employer "ould be completely tied even in cases "here an increase in
"a&es of a particular &roup is <usti.ed due to a re#evaluation of the hi&h productivity of a particular &roup, or
as in the present case, the need to increase the competitiveness of -ankardIs hirin& rate. An employer "ould
be discoura&ed from ad<ustin& the salary rates of a particular &roup of employees for fear that it "ould result
to a demand by all employees for a similar increase, especially if the .nancial conditions of the business
cannot address an across#the#board increase.
Petitioner cites ;etro 5ran-it !r%ani0ation, "nc. &. NLR'3$ to support its claim that the obli&ation to rectify
"a&e distortion is not con.ned to "a&e distortion resultin& from &overnment decreed la" or "a&e order.
/eliance on ;etro 5ran-it is ho"ever misplaced, as the obli&ation therein to rectify the "a&e distortion "as
not by virtue of Article 3)( of the ,abor Code, but on account of a then e5istin& Bcompany practiceB that
"henever rank#and#.le employees "ere paid a statutorily mandated salary increase, supervisory employees
"ere, as a matter of practice, also paid the same amount plus an added premium. Thus this Court held in said
caseK
>e conclude that the supervisory employees, "ho then Fi.e., on April 3D, 3H2HG had, unlike the rank#and#.le
employees, no C-A &overnin& the terms and conditions of their employment, had the ri&ht to rely on
the o2pan? pratie of unilaterally correctin& the "a&e distortion e=ects of a salary increase &iven to the
rank#and#.le employees, by &ivin& the supervisory employees a correspondin& salary increase plus a
premium. . . .3( F4mphasis suppliedG
>a&e distortion is a factual and economic condition that may be brou&ht about by di=erent causes. In ;etro
5ran-it, the reduction or elimination of the normal di=erential bet"een the "a&e rates of rank#and#.le and
those of supervisory employees "as due to the &rantin& to the former of "a&e increase "hich "as, ho"ever,
denied to the latter &roup of employees.
The mere factual e5istence of "a&e distortion does not, ho"ever, ip-o .acto result to an obli&ation to rectify
it, absent a la" or other source of obli&ation "hich requires its recti.cation.
nlike in ;etro 5ran-it then "here there e5isted a Bcompany practice,B no such mana&ement practice is
herein alle&ed to obli&ate -ankard to provide an across#the#board increase to all its re&ular employees.
-ankardIs ri&ht to increase its hirin& rate, to establish minimum salaries for speci.c <obs, and to ad<ust the
rates of employees a=ected thereby is embodied under !ection ), Article 9 F!alary and Cost of ,ivin&
Allo"anceG of the partiesI Collective -ar&ainin& A&reement FC-AG, to "itK
!ection ). Any salary increase &ranted under this Article shall be "ithout pre<udice to the ri&ht of the
Company to e-ta,li-* -uc* /ini/u/ -alarie- as it /ay *erea.ter 2n appropriate .or -peci2c 3o,-, an to
a3u-t t*e rate- o. t*e e/ployee- thereby a=ected to such minimum salaries thus established.3* FItalics and
underscorin& suppliedG
This C-A provision, "hich is based on le&itimate business#<ud&ment prero&atives of the employer, is a valid
and le&ally enforceable source of ri&hts bet"een the parties.
In .ne, absent any indication that the voluntary increase of salary rates by an employer "as done arbitrarily
and ille&ally for the purpose of circumventin& the la"s or "as devoid of any le&itimate purpose other than to
discriminate a&ainst the re&ular employees, this Court "ill not step in to interfere "ith this mana&ement
prero&ative. 4mployees are of course not precluded from ne&otiatin& "ith its employer and lobby for "a&e
increases throu&h appropriate channels, such as throu&h a C-A.
This Court, time and a&ain, has sho"n concern and compassion to the pli&ht of "orkers in adherence to the
Constitutional provisions on social <ustice and has al"ays upheld the ri&ht of "orkers to press for better terms
and conditions of employment. It does not mean, ho"ever, that every dispute should be decided in favor of
labor, for employers correspondin&ly have ri&hts under the la" "hich need to be respected.
Pa&e #+5 of #$%
:HEREFORE, the present petition is hereby +41I4+.
!0 0/+4/4+.
7./. 1o. ,#3)((( 'ebruary )2, 3H%$
STATES MARINE CORPORATION and ROYAL LINE, INC., petitioners,
vs.
CE&U SEAMENAS ASSOCIATION, INC., respondent.
#ero +. @y 'aleron .or petitioner-.
Gauio-o '. 7illa%on0alo .or re-ponent.
PAREDES, J.:
Petitioners !tates Marine Corporation and /oyal ,ine, Inc. "ere en&a&ed in the business of marine coast"ise
transportation, employin& therein several steamships of Philippine re&istry. They had a collective bar&ainin&
contract "ith the respondent Cebu !eamen's Association, Inc. 0n !eptember 3), 3H*), the respondent union
.led "ith the Court of Industrial /elations FCI/G, a petition FCase 1o. D(A#9G a&ainst the !tates Marine
Corporation, later amended on May (, 3H*$, by includin& as party respondent, the petitioner /oyal ,ine, Inc.
The nion alle&ed that the o?cers and men "orkin& on board the petitioners' vessels have not been paid
their sick leave, vacation leave and overtime payL that the petitioners threatened or coerced them to accept a
reduction of salaries, observed by other shipo"nersL that after the Minimum >a&e ,a" had taken e=ect, the
petitioners required their employees on board their vessels, to pay the sum of P.(A for every meal, "hile the
masters and o?cers "ere not required to pay their meals and that because Captain Carlos Asensi had
refused to yield to the &eneral reduction of salaries, the petitioners dismissed said captain "ho no" claims for
reinstatement and the payment of back "a&es from +ecember )*, 3H*), at the rate of P*(A.AA, monthly.
The petitioners' shippin& companies, ans"erin&, averred that very much belo" $A of the men and o?cers in
their employ "ere members of the respondent unionL that the "ork on board a vessel is one of comparative
easeL that petitioners have su=ered .nancial losses in the operation of their vessels and that there is no la"
"hich provides for the payment of sick leave or vacation leave to employees or "orkers of private .rmsL that
as re&ards the claim for overtime pay, the petitioners have al"ays observed the provisions of Comm. Act 1o.
(((, F4i&ht#6our ,abor ,a"G, not"ithstandin& the fact that it does not apply to those "ho provide means of
transportationL that the shipo"ners and operators in Cebu "ere payin& the salaries of their o?cers and men,
dependin& upon the mar&in of pro.ts they could reali:e and other factors or circumstances of the businessL
that in enactin& /ep. Act 1o. %A) FMinimum >a&e ,a"G, the Con&ress had in mind that the amount of P.(A per
meal, furnished the employees should be deducted from the daily "a&esL that Captain Asensi "as not
dismissed for alle&ed union activities, but "ith the e5piration of the terms of the contract bet"een said o?cer
and the petitioners, his services "ere terminated.
A decision "as rendered on 'ebruary )3, 3H*D in favor of the respondent union. The motion for
reconsideration thereof, havin& been denied, the companies .led the present "rit of certiorari, to resolve
le&al question involved. Al"ays bearin& in mind the deep#rooted principle that the factual .ndin&s of the
Court of Industrial /elations should not be disturbed, if supported by substantial evidence, the di=erent issues
are taken up, in the order they are raised in the brief for the petitioners.
3. 4ir-t a--i%n/ent o. error. E The respondent court erred in holdin& that it had <urisdiction over case
1o. D(A#9, not"ithstandin& the fact that those "ho had dispute "ith the petitioners, "ere less than
thirty F$AG in number.
The CI/ made a .ndin& that at the time of the .lin& of the petition in case 1o. D(A#9,
respondent nion had more than thirty members actually "orkin& "ith the companies, and
the court declared itself "ith <urisdiction to take co&ni:ance of the case. A&ainst this order,
the herein petitioners did not .le a motion for reconsideration or a petition for certiorari. The
.ndin& of fact made by the CI/ became .nal and conclusive, "hich >e are not no" authori:ed
to alter or modify. It is a5iomatic that once the CI/ had acquired <urisdiction over a case, it
continues to have that <urisdiction, until the case is terminated FManila 6otel 4mp. Association
v. Manila 6otel Company, et al., (A 0.7. 1o. %, p. $A)DG. It "as abundantly sho"n that there
"ere *% members "ho si&ned 45hibits A, A#I to A#2, and that 3A$ members of the nion are
listed in 45hibits -, -#3 to -#$*, ', '#3 and X#) to X#$. !o that at the time of the .lin& of the
petition, the respondent union had a total membership of 3*H, "orkin& "ith the herein
petitioners, "ho "ere presumed interested in or "ould be bene.ted by the outcome of the
case F1AMA/C0 v. CI/, ,#3D2A(, 8an. 3H%$G. Anne5 +, F0rder of the CI/, dated March 2, 3H*(G,
like"ise belies the contention of herein petitioner in this re&ard. The fact that only D claimed
for overtime pay and only D "itnesses testi.ed, does not "arrant the conclusion that the
employees "ho had some dispute "ith the present petitioners "ere less than $A. The rulin& of
the CI/, "ith respect to the question of <urisdiction is, therefore, correct.
Pa&e #+1 of #$%
). $econ a--i%n/ent o. error. E The CI/ erred in holdin&, that inasmuch as in the shippin& articles,
the herein petitioners have bound themselves to supply the cre" "ith provisions and "ith such Bdaily
subsistence as shall be mutually a&reed uponB bet"een the master and the cre", no deductions for
meals could be made by the aforesaid petitioners from their "a&es or salaries.
$. 5*ir a--i%n/ent o. error. E The CI/ erred in holdin& that inasmuch as "ith re&ard to meals
furnished to cre" members of a vessel, section $FfG of Act 1o. %A) is the &eneral rule, "hich section
3H thereof is the e5ception, the cost of said meals may not be le&ally deducted from the "a&es or
salaries of the aforesaid cre" members by the herein petitioners.
(. 4ourt* a--i%n/ent o. error. E The CI/ erred in declarin& that the deduction for costs of meals from
the "a&es or salaries after Au&ust (, 3H*3, is ille&al and same should be reimbursed to the employee
concerned, in spite of said section $, par. FfG of Act 1o. %A).
It "as sho"n by substantial evidence, that since the be&innin& of the operation of the petitioner's business,
all the cre" of their vessels have been si&nin& Bshippin& articlesB in "hich are stated opposite their names,
the salaries or "a&es they "ould receive. All seamen, "hether members of the cre" or deck o?cers or
en&ineers, have been furnished free meals by the ship o"ners or operators. All the shippin& articles si&ned by
the master and the cre" members, contained, amon& others, a stipulation, that Bin consideration of "hich
services to be duly performed, the said master hereby a&rees to pay to the said cre", as "a&es, the sums
a&ainst their names respectively e5pressed in the contractL an to -upply t*e/ wit* pro&i-ion- as provided
herein ...B F!ec. 2, par. MbN, shippin& articlesG, and durin& the duration of the contract Bthe master of the vessel
"ill provide each member of the cre" -uc* aily -u,-i-tence as shall be mutually a&reed daily upon bet"een
said master and cre"L or, in lieu of such subsistence the cre" may reserve the ri&ht to demand at the time of
e5ecution of these articles that adequate aily ration- be furnished each member of the cre".B F!ec. 2, par.
MeN, shippin& articlesG. It is, therefore, apparent that, aside from the payment of the respective salaries or
"a&es, set opposite the names of the cre" members, the petitioners bound themselves to supply the cre"
"ith ship's provisions, daily subsistence or daily rations, "hich include food.
This "as the situation before Au&ust (, 3H*3, "hen the Minimum >a&e ,a" became e=ective. After this date,
ho"ever, the companies be&an deductin& the cost of meals from the "a&es or salaries of cre" membersL but
no such deductions "ere made from the salaries of the deck o?cers and en&ineers in all the boats of the
petitioners. nder the e5istin& la"s, therefore, the query conver&es on the le&ality of such deductions. >hile
the petitioners herein contend that the deductions are le&al and should not be reimbursed to the respondent
union, the latter, ho"ever, claims that same are ille&al and reimbursement should be made.
>herefore, the parties respectfully pray that the fore&oin& stipulation of facts be admitted and approved by
this 6onorable Court, "ithout pre<udice to the parties adducin& other evidence to prove their case not
covered by this stipulation of facts.3c"phd3.Uet
>e hold that such deductions are not authori:ed. In the coast"ise business of transportation of passen&ers
and frei&ht, the men "ho compose the complement of a vessel are provided "ith free meals by the
shipo"ners, operators or a&ents, because they hold on to their "ork and duties, re&ardless of Bthe stress and
strain concomitant of a bad "eather, unmindful of the dan&ers that lurk ahead in the midst of the hi&h seas.B
!ection $, par. f, of the Minimum >a&e ,a", F/.A. 1o. %A)G, provides as follo"s E
FfG ntil and unless investi&ations by the !ecretary of ,abor on his initiative or on petition of any
interested party result in a di=erent determination of the fair and reasonable value, the .urni-*in% o.
/eal- shall be valued at not more than thirty centavos per meal for a&ricultural employees an not
/ore t*an .orty centavos for any other employees covered by this Act, and the furnishin& of housin&
shall be valued at not more than t"enty centavos daily for a&ricultural "orkers and not more than
forty centavos daily for other employees covered by this Act.
Petitioners maintain, in vie" of the above provisions, that in .5in& the minimum "a&e of employees,
Con&ress took into account the meals furnished by employers and that in .5in& the rate of forty centavos per
meal, the la"makers had in mind that the latter amount should be deducted from the daily "a&e, other"ise,
no rate for meals should have been provided.
6o"ever, section 3H, same la", states E
!4C. 3H. Relation- to ot*er la,or law- an practice-.E 1othin& in this Act shall deprive an employee
of the ri&ht to seek fair "a&es, shorter "orkin& hours and better "orkin& conditions nor 3u-ti.y an
e/ployer in violatin& any other labor la" applicable to his e/ployee-, in reucin% t*e wa%e now pai
to any o. *i- e/ployee- in e:ce-- o. t*e /ini/u/ wa%e e-ta,li-*e uner t*i- 6ct, or in reucin%
-upple/ent- .urni-*e on t*e ate o. enact/ent.
At .rst blush, it "ould appear that there e5ists a contradiction bet"een the provisions of section $FfG and
section 3H of /ep. Act 1o. %A)L but from a careful e5amination of the same, it is evident that !ection $FfG
Pa&e #+4 of #$%
constitutes the &eneral rule, "hile section 3H is the e5ception. In other "ords, if there are no supplements
&iven, "ithin the meanin& and contemplation of section 3H, but merely facilities, section $FfG &overns. There
is no conOictL the t"o provisions could, as they should be harmoni:ed. And even if there is such a conOict, the
respondent CI/ should resolve the same in favor of the safety and decent livin& laborers FArt. 3DA), ne" Civil
CodeG..
It is ar&ued that the food or meals &iven to the deck o?cers, marine en&ineers and unlicensed cre" members
in question, "ere mere BfacilitiesB "hich should be deducted from "a&es, and not BsupplementsB "hich,
accordin& to said section 3H, should not be deducted from such "a&es, because it is provided thereinK
B1othin& in this Act shall deprive an employee of the ri&ht to such fair "a&e ... or in reducin& supplements
furnished on the date of enactment.B In the case of Atok#-i& >ed&e Assn. v. Atok#-i& >ed&e Co., ,#D$(H, 8uly
3H, 3H**L *3 0.7. $($), the t"o terms are de.ned as follo"s E
B!upplementsB, therefore, constitute e5tra remuneration or special privile&es or bene.ts &iven to or
received by the laborers o&er and a,o&e t*eir orinary earnin%- or wa%e-. B'acilitiesB, on the other
hand, are items of e5pense necessary for the laborer's and his family's e5istence and subsistence so
that by e5press provision of la" F!ec. )M&NG, they form part of the "a&e and "hen furnished by the
employer are deductible therefrom, since if they are not so furnished, the laborer "ould spend and
pay for them <ust the same.
In short, the bene.t or privile&e &iven to the employee "hich constitutes an e5tra remuneration above and
over his basic or ordinary earnin& or "a&e, is supplementL and "hen said bene.t or privile&e is part of the
laborers' basic "a&es, it is a facility. The criterion is not so much "ith the kind of the bene.t or item Ffood,
lod&in&, bonus or sick leaveG &iven, but its purpose. Considerin&, therefore, as de.nitely found by the
respondent court that the meals "ere freely &iven to cre" members prior to Au&ust (, 3H*3, "hile they "ere
on the hi&h seas Bnot as part of their "a&es but as a necessary matter in the maintenance of the health and
e?ciency of the cre" personnel durin& the voya&eB, the deductions therein made for the meals &iven after
Au&ust (, 3H*3, should be returned to them, and the operator of the coast"ise vessels a=ected should
continue &ivin& the same bene.t..
In the case of 'e,u 6uto,u- 'o/pany &. @nite 'e,u 6uto,u- 9/ployee- 6--n., L-9J42, !ct. 2J, 1955, the
company used to pay to its drivers and conductors, "ho "ere assi&ned outside of the City limits, aside from
their re&ular salary, a certain percenta&e of their daily "a&e, as allo"ance for food. pon the e=ectivity of the
Minimum >a&e ,a", ho"ever, that privile&e "as stopped by the company. The order CI/ to the company to
continue &rantin& this privile&e, "as upheld by this Court.
The shippin& companies ar&ue that the furnishin& of meals to the cre" before the e=ectivity of /ep. Act 1o.
%A), is of no moment, because such circumstance "as already taken into consideration by Con&ress, "hen it
stated that B"a&eB includes the fair and reasonable value of boards customarily furnished by the employer to
the employees. If >e are to follo" the theory of the herein petitioners, then a cre" member, "ho used to
receive a monthly "a&e of P3AA.AA, before Au&ust (, 3H*3, "ith no deduction for meals, after said date,
"ould receive only P2%.AA monthly Fafter deductin& the cost of his meals at P.(A per mealG, "hich "ould be
very much less than the P3)).AA monthly minimum "a&e, .5ed in accordance "ith the Minimum >a&e ,a".
Instead of bene.tin& him, the la" "ill adversely a=ect said cre" member. !uch interpretation does not
conform "ith the avo"ed intention of Con&ress in enactin& the said la".
0ne should not overlook a fact fully established, that only unlicensed cre" members "ere made to pay for
their meals or food, "hile the deck o?cers and marine en&ineers receivin& hi&her pay and provided "ith
better victuals, "ere not. This pictures in no uncertain terms, a &reat and un<ust discrimination obtainin& in
the present case FPambu<an !ur nited Mine >orkers v. CI/, et al., ,#D3DD, May $3, 3H**G.
4i.t*, $i:t* an $e&ent* a--i%n/ent- o. error.E The CI/ erred in holdin& that !everino Pepito, a boatsman,
had rendered overtime "ork, not"ithstandin& the provisions of section 3, of C.A. 1o. (((L in basin& its .ndin&
ofthe alle&ed overtime, on the uncorroborated testimony of said !everino PepitoL and in orderin& the herein
petitioners to pay him. !everino Pepito "as found by the CI/ to have "orked overtime and had not been paid
for such services. !everino Pepito cate&orically stated that he "orked durin& the late hours of the evenin&
and durin& the early hours of the day "hen the boat docks and unloads. Aside from the above, he did other
<obs such as removin& rusts and cleanin& the vessel, "hich overtime "ork totalled to % hours a day, and of
"hich he has not been paid as yet. This statement "as not rebutted by the petitioners. 1obody "orkin& "ith
him on the same boat BMJ9 AdrianaB contra"ise. The testimonies of boats"ains of other vesselsFMJ9 Iruna
and MJ9 PrincesaG, are incompetent and unreliable. And considerin& the established fact that the "ork of
!everino Pepito "as continuous, and durin& the time he "as not "orkin&, he could not leave and could not
completely rest, because of the place and nature of his "ork, the provisions of sec. 3, of Comm. Act 1o. (((,
"hich states B>hen the "ork is not continuous, the time durin& "hich the laborer is not "orkin& and can
leave his "orkin& place and can rest completely shall not be countedB, .nd no application in his case.
2. 9i%*t* a--i%n/ent o. error.E The CI/ erred in orderin& petitioners to reinstate Capt. Carlos Asensi to his
Pa&e #+% of #$%
former position, considerin& the fact that said o?cer had been employed since 8anuary H, 3H*$, as captain of
a vessel belon&in& to another shippin& .rm in the City of Cebu.
The CI/ held E
'indin& that the claims of Captain Carlos Asensi for back salaries from the time of his alle&ed lay#o=
on March )A, 3H*), is not supported by the evidence on record, the same is hereby dismissed.
Considerin&, ho"ever, that Captain Asensi had been laid#o= for a lon& time and that his failure to
report for "ork is not su?cient cause for his absolute dismissal, respondents are hereby ordered to
reinstate him to his former <ob "ithout back salary but under the same terms and conditions of
employment e5istin& prior to his lay#o=, "ithout loss of seniority and other bene.ts already acquired
by him prior to March )A, 3H*). This Court is empo"ered to reduce the punishment meted out to an
errin& employee F!tandard 9acuum 0il Co., Inc. v. Xatipunan ,abor nion, 7./. 1o. ,#H%%%, 8an. $A,
3H*DG. This step taken is in consonance "ith section 3) of Comm. Act 3A$, as amended.B Fp. 3%,
+ecision, Anne5 '7'G.
The rulin& is in conformity "ith the evidence, la" and equity.
Nint* an 5ent* a--i%n/ent- o. error. E The CI/ erred in denyin& a duly veri.ed motion for ne" trial, and in
overrulin& petitioner's motion for reconsideration.
The motion for ne" trial, supported by an a?davit, states that the movants have a &ood and valid defense
and the same is based on three orders of the >A! F>a&e Administration !erviceG, dated 1ovember %, 3H*%. It
is alle&ed that they "ould inevitably a=ect the defense of the petitioners. The motion for ne" trial is "ithout
merit. 6avin& the said "a&e 0rders in their possession, "hile the case "as pendin& decision, it "as not
e5plained "hy the proper move "as not taken to introduce them before the decision "as promul&ated. The
said "a&e orders, dealin& as they do, "ith the e&aluation o. /eal- an .acilitie-, are irrelevant to the present
issue, it havin& been found and held that the meals or food in question are not facilities but supplements. The
ori&inal petition in the CI/ havin& been .led on !ept. 3), 3H*), the >A! could have intervened in the manner
provided by la" to e5press its vie"s on the matter. At any rate, the admission of the three "a&e orders have
not altered the decision reached in this case.
I1 9I4> 64/40', the petition is dismissed, "ith costs a&ainst the petitioners.
7./. 1o. 33A*)( March 3(, )AAA
DOU0LAS MILLARES and RO0ELIO LA0DA, petitioners,
vs.
NATIONAL LA&OR RELATIONS COMMISSION, TRANS*0LO&AL MARITIME A0ENCY, INC. and ESSO
INTERNATIONAL SHIPPIN0 CO., LTD., respondents.
=APUNAN, J.:
Petitioners +ou&las Millares and /o&elio ,a&da seek the nulli.cation of the decision, dated 8une 3, 3HH$, of
the public respondent 1ational ,abor /elations Commission F1,/CG rendered in P04A Case FMG Ad< 2H#3A#H%3
entitled B+ou&las Millares and /o&elio ,a&da v. Trans#7lobal Maritime A&ency, Inc. and 4!!0 International
!hippin& Co., ,td.,. et. al.B dismissin& for lack of merit petitioners' appeal and motion for ne" trial and
a?rmin& the decision, dated 8uly 3D, 3HH3, rendered by the Philippine 0verseas 4mployment Administration
FP04AG.3a"phi3.nbt
The antecedent facts of the instant case are as follo"sK
Petitioner +ou&las Millares "as employed by private respondent 4!!0 International !hippin& Company ,td.
F4sso International, for brevityG throu&h its local mannin& a&ency, private respondent Trans#7lobal Maritime
A&ency, Inc. FTrans#7lobal, for brevityG on 1ovember 3%, 3H%2 as a machinist. In 3HD*, he "as promoted as
Chief 4n&ineer "hich position he occupied until he opted to retire in 3H2H. 6e "as then receivin& a monthly
salary of ! _3,H$H.AA. 3
0n 8une 3$, 3H2H, petitioner Millares applied for a leave of absence for the period 8uly H to Au&ust D, 3H2H. In
a letter dated 8une 3(, 3H2H, Michael 8. 4staniel, President of private respondent Trans#7lobal, approved the
request for leave of absence. ) 0n 8une )3, 3H2H, petitioner Millares "rote 7.!. 6anly, 0perations Mana&er of
455on International Co., Fno" 4sso InternationalG throu&h Michael 8. 4staniel, informin& him of his intention to
avail of the optional retirement plan under the Consecutive 4nlistment Incentive Plan FC4IPG considerin& that
he had already rendered more than t"enty F)AG years of continuous service. 0n 8uly 3$, 3H2H respondent
4sso International, throu&h >.8. 9rints, 4mployee /elations Mana&er, denied petitioner Millares' request for
optional retirement on the follo"in& &rounds, to "itK F3G he "as employed on a contractual basisL F)G his
contract of enlistment FC04G did not provide for retirement before the a&e of si5ty F%AG yearsL and F$G he did
not comply "ith the requirement for claimin& bene.ts under the C4IP, i.e., to submit a "ritten advice to the
Pa&e #+) of #$%
company of his intention to terminate his employment "ithin thirty F$AG days from his last disembarkation
date. $
0n Au&ust H, 3H2H, petitioner Millares requested for an e5tension of his leave of absence from Au&ust H to )(,
3H2H. 0n Au&ust 3H, 3H2H, /oy C. Palomar, Cre"in& Mana&er, !hip 7roup A, Trans#7lobal, "rote petitioner
Millares advisin& him that respondent 4sso International Bhas corrected the de.ciency in its manpo"er
requirements speci.cally in the Chief 4n&ineer rank by promotin& a 'irst Assistant 4n&ineer to this position as
a result of FhisG previous leave of absence "hich e5pired last Au&ust 2, 3H2H. The ad<ustment in said rank "as
required in order to meet manpo"er schedules as a result of FhisG inability.B (
0n !eptember )%, 3H2H, respondent 4sso International, throu&h 6. /e&enboo&, Personnel Administrator,
advised petitioner Millares that in vie" of his absence "ithout leave, "hich is equivalent to abandonment of
his position, he had been dropped from the roster of cre" members e=ective !eptember 3, 3H2H. *
0n the other hand, petitioner ,a&da "as employed by private respondent 4sso International as "iperJoiler in
8une 3H%H. 6e "as promoted as Chief 4n&ineer in 3H2A, a position he continued to occupy until his last C04
e5pired on April 3A, 3H2H. 6e "as then receivin& a monthly salary of !_3,H$H.AA. %
0n May 3%, 3H2H, petitioner ,a&da applied for a leave of absence from 8une 3H, 3H2H up to the "hole month
of Au&ust 3H2H. 0n 8une 3(, 3H2H, respondent Trans#7lobal's President, Michael 8. 4staniel, approved
petitioner ,a&da's leave of absence from 8une )), 3H2H to 8uly )A, 3H2H D and advised him to report for re#
assi&nment on 8uly )3, 3H2H.
0n 8une )%, 3H2H, petitioner ,a&da "rote a letter to 7.!. !tanley, 0perations Mana&er of respondent 4sso
International, throu&h respondent Trans#7lobal's President Michael 8. 4staniel, informin& him of his intention
to avail of the optional early retirement plan in vie" of his t"enty F)AG years continuous service in the
company. 2
0n 8uly 3$, 3H2H, respondent Trans#7lobal denied petitioner ,a&da's request for availment of the optional
early retirement scheme on the same &rounds upon "hich petitioner Millares' request "as denied. H
0n Au&ust $, 3H2H, he requested for an e5tension of his leave of absence up to Au&ust )%, 3H2H and the
same "as approved. 3A 6o"ever, on !eptember )D, 3H2H, respondent 4sso International, throu&h 6.
/e&enboo&, Personnel Administrator, advised petitioner ,a&da that in vie" of his Bunavailability for
contractual sea service,B he had been dropped from the roster of cre" members e=ective !eptember 3,
3H2H. 33
PETITION! 0n 0ctober *, 3H2H, petitioners Millares and ,a&da .led a complaint#a?davit, docketed as P04A
FMG 2H#3A#H%D3, for ille&al dismissal and non#payment of employee bene.ts a&ainst private respondents 4sso
International and Trans#7lobal, before the P04A.
0n 8uly 3D, 3HH3, the P04A rendered a decision dismissin& the complaint for lack of merit. 3)
Petitioners appealed the decision to the 1,/C. 0n 8une 3, 3HH$, public respondent 1,/C rendered the
assailed decision dismissin& petitioners' appeal and denyin& their motion for ne" trial for lack of merit. 3$
6ence, the instant petition for certiorari based on the follo"in& &roundsK
I. P-,IC /4!P01+41T 7/A94,; A-!4+ IT! +I!C/4TI01 I1 /,I17 T6AT P4TITI014/! A/4 10T
/47,A/ 4MP,0;44!.
II. P-,IC /4!P01+41T 7/A94,; A-!4+ IT! +I!C/4TI01 I1 /,I17 T6AT T64 T4/MI1ATI01 0'
P4TITI014/! >A! 9A,I+, +4!PIT4 T64 A-!41C4 0' A1; 8!T 0/ AT60/I^4+ CA!4 '0/
+I!MI!!A,.
III. P-,IC /4!P01+41T 7/A94,; A-!4+ IT! +I!C/4TI01 I1 /,I17 T6AT T64 T4/MI1ATI01 0'
P4TITI014/! >A! 9A,I+, +4!PIT4 T64 'ACT T6AT P4TITI014/! >4/4 10T 7I941 A1 0PP0/T1IT;
T0 -4 64A/+ P/I0/ T0 T64I/ T4/MI1ATI01.
I9. P-,IC /4!P01+41T 7/A94,; A-!4+ IT! +I!C/4TI01 I1 /,I17 T6AT P4TITI014/! A/4 10T
41TIT,4+ T0 A1; /4TI/4M41T -414'IT 1+4/ T64 0PTI01A, 4A/,; /4TI/4M41T P0,IC;
A1101C4+ -; /4!P01+41T!.
9. P-,IC /4!P01+41T 7/A94,; A-!4+ IT! +I!C/4TI01 I1 'AI,I17 T0 /,4 T6AT, 4941 I1 T64
A-!41C4 0' A1 0PTI01A, 4A/,; /4TI/4M41T P0,IC; A1101C4+ -; /4!P01+41T!, P4TITI014/!
>4/4 !TI,, 41TIT,4+ T0 /4C4I94 3AA[ 0' T64I/ T0TA, C/4+IT4+ C01T/I-TI01! T0 T64 C4IP,
A! 4YP/4!!,; P/09I+4+ T1 PA/!. ) F&G A1+ ) FhG 0' T64 ,4TT4/ M4M0/A1+M +AT4+ MA/C6 H,
3HDD F6NN9K 9 0' 6NN9K '-#95"5"!NG A1+ PA/. III, !4C. FcG A1+ PA/. III, !4C. FbG 0' T64 C4IP
F6NN9K (-#95"5"!NG >6IC6 >4/4 I!!4+ -; /4!P01+41T!.
9I. P-,IC /4!P01+41T 7/A94,; A-!4+ IT! +I!C/4TI01 I1 'AI,I17 T0 /,4 01 T64 ,IA-I,IT;
Pa&e #+$ of #$%
'0/ +AMA74! 0' /4!P01+41T! '0/ 6A9I17 >/017',,; A1+ MA,ICI0!,; CA!4+ T64 1AM4
0' P4TITI014/ MI,,A/4! T0 -4 P,AC4+ I1 T64 P04A >ATC6,I!T A1+ T64/4-; P/4941TI17 6I!
TIM4,; +4PA/T/4.
9II. P-,IC /4!P01+41T 7/A94,; A-!4+ IT! +I!C/4TI01 I1 'AI,I17 T0 /,4 01 T64 ,IA-I,IT; 0'
/4!P01+41T! '0/ PA;M41T 0' M0/A, A1+ 4Y4MP,A/; +AMA74!, A! >4,, A! ATT0/14;'! '44!
A1+ C0!T! 0' ,ITI7ATI01. 3(
Petitioners contend that public respondent 1,/C &ravely abused its discretion in rulin& that they are not
re&ular employees but are merely contractual employees "hose employments are terminated every time
their contracts of employment e5pire. Petitioners further aver that after renderin& t"enty F)AG consecutive
years of service, performin& activities "hich "ere necessary and desirable in the trade or business of private
respondents, they should be considered re&ular employees under Article )2A of the ,abor Code.
Consequently, they may only be dismissed for any of the <ust or authori:ed causes for dismissal provided by
la". 'urthermore, petitioners asseverate that their dismissal "as unla"ful for failure of private respondents to
comply "ith the t"in requirements of due process, i.e., notice and hearin&. Petitioners alle&e that they "ere
not &iven any opportunity to be heard by private respondents prior to their termination.
Petitioners further contend that public respondent &ravely abused its discretion in not &ivin& evidentiary
"ei&ht to the a?rmation of eleven F33G former employees, as "ell as three F$G other "itnesses as to the
e5istence of the optional early retirement policy. !aid "itnesses "ere alle&edly present "hen Captain 4staniel
announced the optional early retirement policy under the C4IP. 0n the other hand, "hile the 33 former
employees "ere not actually present at the announcement thereof, they attested to the fact that they "ere
informed of said policy by the o?cers of private respondents. Petitioners point out that these former
employees did not stand to bene.t from the policyL thus, in the absence of any vested interest on their part,
their a?davits should have been &iven more "ei&ht than the self#servin& denials of private respondents'
o?cers.
Petitioners also invoke the principle of estoppel. Accordin& to petitioners, estoppel bars a party "ho has, by
his o"n declaration, act or omission, led another to believe a particular thin& to be true, and to act upon such
belief, from denyin& his o"n acts and representations to the pre<udice of the other party "ho relied upon
them. In the instant case, petitioners alle&e that since they relied in &ood faith and acted on the basis of the
representations of private respondents that an optional early retirement plan indeed e5isted, the principle of
estoppel in pai- is clearly applicable to them.
Petitioners, like"ise, maintain that public respondent 1,/C seriously erred in invokin& the parol evidence rule
a&ainst them as there is no "ritten a&reement to speak of on optional retirement so as to make this rule
applicable. Petitioners declare that Bno"here in the contract Fof enlistmentG is there any mention of the
speci.c terms of the C4IP, particularly the provisions on the e5tent of bene.ts to be received by the seamenB
but rather, the Bspeci.c details are contained in a separate document "hich is in the nature of an inter#o?ce
memorandum that is unilaterally issued by private respondents.B
Petitioners further claim that public respondent 1,/C abused its discretion in failin& to consider that even in
the absence of the optional early retirement policy, petitioners are still entitled to receive 3AA[ of their total
credited contributions to the C4IP either under !ec. III, par. FcG of the C4IP, or par. ) FhG of the ,etter#
Memorandum dated March H, 3HDD. !aid memorandum "hich "as si&ned by the then PresidentJChairman of
Trans#7lobal, Inocencio P. 4staniel Fno" deceasedG, itemi:ed the bene.ts that may be availed of by eli&ible
employees. Para&raph ) FhG thereof alle&edly &uarantees that an employee "ho is terminated for any reason,
other than misconduct on his part, "ill be &iven 3AA[ of the Total Credited C4IP Contributions for si5ty F%AG
months of credited service.
0n the other hand, !ection III, para&raph FcG of the Consecutive 4nlistment Incentive Plan providesK
III. (i-tri,ution o. +ene2t-.
5 5 5 5 5 5 5 5 5
C. !t*er 5er/ination-
>hen the employment of an employee is terminated by the Company for a reason other than one in
A, "ithout any misconduct on his part, a percenta&e of the total amount credited to his account "ill
be distributed to him in accordance "ith the follo"in&.
'reite $er&ice #ercenta%e
$% months *A[
(2 month D*[
%A months 3AA[
Pa&e #+( of #$%
>hen the employment of an employee is terminated due to his poor performance, misconduct,
unavailability, etc., or if employee is not o=ered re#en&a&ement for similar reasons, no distribution of
any portion of employee's account "ill ever be made to him For his eli&ible survivorJsG. A
determination of poor performance, misconduct and unavailability shall be made by the Company.
Misconduct shall include acts and o=enses as de.ned in the Contract of 4nlistment and Company
Manuals.
5 5 5 5 5 5 5 5 5 3*
Petitioners claim that since both of them had rendered at least t"enty F)AG years, or )(A months, of faithful
service to private respondents, they are entitled to receive 3AA[ of the total credited contributions, pursuant
to the aforesaid provisions. Contrary to the .ndin&s of public respondent, petitioners ar&ue that they "ere not
&uilty of Bpoor performanceB for petitioner Millares, in fact, quali.ed for the Merit Pay Pro&ram 3% of private
respondents at least * times in the years 3HDD, 3H2(, 3H2*, 3H2% and 3H2D in reco&nition of his a,o&e-
a&era%e per.or/ance as ship o?cer. 0n the other hand, petitioner ,a&da quali.ed for the Merit Pay Pro&ram
for $ consecutive years, i.e., in 3H2%, 3H2D and 3H22, like"ise, in vie" of his a,o&e-a&era%e per.or/ance.
Petitioner Millares further contends that public respondent 1,/C committed &rave abuse of discretion
amountin& to lack of <urisdiction "hen it failed to rule that private respondents should pay actual dama&es in
the amount of PDDA,AAA.AA for havin& "ron&fully caused his name to be placed in the P04A
"atchlist. 3D !uch "ron&ful act alle&edly prevented petitioner Millares' from leavin& the Philippines to report
on time to his ne" employer, 1A4!! !hippin& Corporation. Anent petitioner, public respondent failed to
consider the evidence presented by petitioner Millares on this issue.
'inally, petitioners aver that public respondent erred in not &rantin& them moral and e5emplary dama&es, as
"ell as attorney's fees and costs of liti&ation.
At this <uncture, it is "orthy to note that the !olicitor 7eneral, in his Manifestation and Motion in ,ieu of
Comment, manifested that he is not opposin& the instant petition and that he, in fact, .nds the contentions of
petitioners meritorious in part.
Art. )2A of the ,abor Code, as amended, de.nes re&ular employment as follo"sK
Art. )2A. Re%ular an ca-ual e/ploy/ent. E The provisions of "ritten a&reement to the contrary
not"ithstandin& and re&ardless of the oral a&reement of the parties, an employment shall be deemed
to be re&ular "here the employee has been en&a&ed to perform activities "hich are usually
necessary or desirable in the usual business or trade of the employer, e5cept "here the employment
has been .5ed for a speci.c pro<ect or undertakin& the completion or termination of "hich has been
determined at the time of the en&a&ement of the employee or "here the "ork or services to be
performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the precedin&
para&raph. #ro&ie, 5*at, any employee "ho has rendered at least one year of service, "hether
such service is continuous or broken, shall be considered a re&ular employee "ith respect to the
activity in "hich he is employed and his employment shall continue "hile such activity e5ists.
The primary standard to determine a re&ular employment is the reasonable connection bet"een the
particular activity performed by the employee in relation to the usual business or trade of the employer. The
test is "hether the former is usually necessary or desirable in the usual business or trade of the employer. 32
The connection can be determined by considerin& the nature of the "ork performed and its relation to the
scheme of the particular business or trade in its entirety. Also, if the employee has been performin& the <ob
for at least one year, even if the performance is not continuous or merely intermittent, the la" deems the
repeated and continuin& need for its performance as su?cient evidence of the necessity if not
indispensability of that activity to the business. 6ence, the employment is also considered re&ular, but only
"ith respect to such activity and "hile such activity e5ists. 3H
In the case at bar, it is undisputed that petitioners "ere employees of private respondents until their services
"ere terminated on !eptember 3, 3H2H. They served in their capacity as Chief 4n&ineers, performin&
activities "hich "ere necessary and desirable in the business of private respondents 4sso International, a
shippin& companyL and Trans#7lobal, its local mannin& a&ency "hich supplies the manpo"er and cre"
requirements of 4sso International's vessels.
It is, like"ise, clear that petitioners had been in the employ of private respondents for )A years. The records
reveal that petitioners "ere repeatedly re#hired by private respondents even after the e5piration of their
respective ei&ht#month contracts. !uch repeated re#hirin& "hich continued for )A years, cannot but be
appreciated as su?cient evidence of the necessity and indispensability of petitioner's service to the private
respondents' business or trade.
Pa&e #+, of #$%
9erily, as petitioners had rendered )A years of service, performin& activities "hich, "ere necessary and
desirable in the business or trade of private respondents, they are, by e5press provision of Article )2A of the
,abor Code, considered re&ular employees.
-ein& re&ular employees, petitioners may not be dismissed e5cept for a valid or <ust cause under Article )2)
of the ,abor Code. )A In the instant case, clearly, there "as no valid cause for the termination of petitioners.
It "ill be recalled, that petitioner Millares "as dismissed for alle&edly havin& BabandonedB his postL and
petitioner ,a&da, for his alle&ed Bunavailability for contractual sea service.B 6o"ever, that petitioners did not
abandon their <obs such as to <ustify the unla"ful termination of their employment is borne out by the
records.
To constitute abandonment, t"o elements must concurK F3G the failure to report for "ork or absence "ithout
valid or <usti.able reasonL and F)G a clear intention to sever the employer#employee relationship, "ith the
second element as the more determinative factor and bein& manifested by some overt acts. Mere absence is
not su?cient. It is the employer "ho has the burden of proof to sho" a deliberate and un<usti.ed refusal of
the employee to resume his employment "ithout any intention of returnin&. )3
In this case, private respondents failed to dischar&e this burden. They did not adduce any proof of some overt
act of the petitioners that clearly and unequivocally sho" their intention to abandon their posts. 0n the
contrary, the petitioners lost no time in .lin& the case for ille&al dismissal a&ainst private respondents, takin&
them only about a month from the time their termination became e=ective on !eptember 3, 3H2H to the .lin&
of their complaint on 0ctober *, 3H2H. They cannot, by any reasonin&, be said to have abandoned their "ork,
for as "e have also previously ruled, the .lin& by an employee of a complaint for ille&al dismissal is proof
enou&h of his desire to return to "ork, thus ne&atin& the employer's char&e of abandonment. ))
'urthermore, the absence of petitioners "as <usti.ed by the fact that they secured the approval of private
respondents to take a leave of absence after the termination of their last contracts of enlistment.
!ubsequently, petitioners sou&ht for e5tensions of their respective leaves of absence. 7rantin& ar%ueno that
their subsequent requests for e5tensions "ere not approved, it cannot be said that petitioners "ere
unavailable or had abandoned their "ork "hen they failed to report back for assi&nment as they "ere still
questionin& the denial of private respondents of their desire to avail of the optional early retirement policy,
"hich they believed in &ood faith to e5ist.
ClearlyL petitioners' termination is ille&al. Thus, under Article )DH )$ of the ,abor Code, petitioners are
entitled to reinstatement "ithout loss of seniority ri&hts and other privile&es and to their full back"a&es,
inclusive of allo"ances, and to their other bene.ts or the monetary equivalent thereof computed from the
time their compensation "as "ithheld from them up to the time of their actual reinstatement. !hould
reinstatement not be possible, private respondents are ordered to pay petitioners separation pay as provided
by la".
Anent petitioners' contention that they are entitled to retirement bene.ts under the optional retirement
policy, "e are constrained to uphold the .ndin&s of public respondent 1,/C. A perusal of the records "ill
reveal that the 1,/C did not err in denyin& petitioners' claim under the optional retirement policy alle&edly
announced by Captain Inocencio 4staniel at the 7eneral Assembly held at the Army and 1avy Club sometime
in 3HDD. The evidence of petitioners re&ardin& the supposed announcement by Captain 4staniel of the
controverted optional retirement plan "hich consisted merely of the a?davits of petitioners and their
"itnesses "as successfully rebutted by the evidence adduced by private respondents. 'urthermore, no"here
in the C4IP )( is there a reference to the alle&ed optional retirement plan, nor is there a provision for
retirement upon service of )A years in the company.
6avin& failed to substantiate their alle&ation that indeed Captain 4staniel announced this company policy on
early retirement in 3HDD, petitioners cannot, thus, successfully invoke the doctrine of estoppel a&ainst private
respondents.
/e&ardin& petitioners' alle&ation that public respondent 1,/C seriously erred in invokin& the parol evidence
rule a&ainst petitioners as there is no "ritten a&reement on optional retirement so as to make this rule
applicable, "e .nd the same to be "ithout merit. Contrary to the alle&ations of petitioners, provisions on
retirement bene.ts are speci.cally embodied in the C4IP "hich "as part and parcel of the contract of
enlistment si&ned by the petitioners. Moreover, "e note that petitioners are in fact anchorin& their claim for
retirement bene.ts, in the alternative, under !ection III, para&raph FcG of this same C4IP. 6ence, they cannot
validly deny the e5istence of the provisions on retirement bene.ts, and rely merely on the alle&ed unilateral
issuance of private respondents.
The above not"ithstandin&, petitioners can nevertheless properly claim 3AA[ of the total amount credited to
their account under !ection III of the C4IP, )* as "ell as para&raph ) FhG of the Memorandum dated March H,
3HDD. )% The Consecutive 4nlistment Incentive Plan or C4IP provides, amon& othersK FaG that "hen the
employment of an employee terminates because of his retirement M"ith si5ty F%AG years bein& the mandatory
retirement a&eN, death or permanent and total disability, 3AA[ of the total amount credited to his account
Pa&e ##+ of #$%
"ill be distributed to him For his eli&ible survivorJsGL FbG that "hen an employee voluntarily terminates his
employment Fre&ardless of the reasonG no distribution of any portion of the employee's account "ill ever be
made to him For to his eli&ible survivorJsGL and, FcG that "hen the termination is for a reason other than
retirement, death or permanent and total disability, "ithout any misconduct on his part, he shall be entitled
to *A[ Ffor $% months credited serviceG, D*[ F(2 monthsG and 3AA[ F%A monthsG of the total amount
credited to his account. The C4IP, further, provides that "hen the employment is terminated due to his poor
performance, misconduct, unavailability, etc., or if the employee is not o=ered re#en&a&ement for similar
reasons, no distribution of any portion of the employee's account "ill ever be made to him.
As discussed above, petitioners did not voluntarily terminate their employment "ith private respondents.
They merely e5pressed their desire to avail of the optional early retirement plan in the mistaken belief that
such plan e5isted and that they "ould still receive the bene.ts due them under the C4IP. 1either "ere they
dismissed for any of the causes, i.e., poor performance, misconduct, unavailability, etc., "hich "ould result in
forfeiture of the aforesaid retirement bene.ts. /ather, their dismissal "as "ithout <ust cause and, therefore,
deemed ille&al under the la". 6ence, havin& been in the employ of private respondents for a &ood )A years
or )(A months, petitioners are entitled to the retirement bene.ts under !ection III, para&raph FcG of the
C4IP. )D
Anent petitioner Millares' contention that he is entitled to an a"ard of actual dama&es in the amount of
PDDA,AAA.AA, "e .nd the same to be bereft of merit. Actual or compensatory dama&es is the term used for
compensation for pecuniary loss E in trade, business, property, profession, <ob or occupation. The same must
be proved, other"ise, if the proof is Oimsy and unsubstantiated, no dama&es "ill be &iven. )2
Petitioner Millares failed to substantiate his claim that the placin& of his name on the P04A "atchlist cost him
his ne" <ob "ith 1A4!! !hippin& Corporation and that he incurred losses in the sum of PDDA,AAA.AA. 0n the
contrary, private respondents, despite their admission that the placin& of petitioners Millares' name on the
"atchlist "as a mistake, "ere able to prove that he "as able to leave the Philippines not"ithstandin& such
mistake.
'inally, on the issue of "hether or not private respondents are liable to pay moral and e5emplary dama&es,
attorney's fees and cost, the Court rules in the ne&ative. The records reveal that petitioners failed to establish
that they su=ered diverse in<uries such as mental an&uish, besmirched reputation, "ounded feelin&s and
social humiliation on account of private respondent's "ron&ful act or omission such as to entitle them to an
a"ard of moral dama&es under the Civil Code. The a"ard of moral dama&es cannot be <usti.ed solely upon
the premise that the employer .red his employee "ithout <ust cause or due process. ,ike"ise, petitioners
failed to establish that their dismissal "as e=ected in a "anton, oppressive or malevolent manner to <ustify
an a"ard of e5emplary dama&es. 6ence, no moral or e5emplary dama&es may be a"arded to the petitioners.
Consequently, neither can they claim attorney's fees or costs of liti&ation.3a"phi3
>64/4'0/4, premises considered, the assailed +ecision, dated 8une 3, 3HH$, of the 1ational ,abor /elations
Commission is hereby /494/!4+ and !4T A!I+4 and a ne" <ud&ment is hereby rendered orderin& the private
respondents toK
F3G /einstate petitioners Millares and ,a&da to their former positions "ithout loss of seniority ri&hts,
and to pay full back"a&es computed from the time of ille&al dismissal to the time of actual
reinstatementL
F)G Alternatively, if reinstatement is not possible, pay petitioners Millares and ,a&da separation pay
equivalent to one month's salary for every year of serviceL and,
F$G 8ointly and severally pay petitioners 0ne 6undred Percent F3AA[G of their total credited
contributions as provided under the Consecutive 4nlistment Incentive Plan.
!0 0/+4/4+.
7./. 1o. ,#*AHHH March )$, 3HHA
<OSE SON0CO, ROMEO CIPRES, and AMANCIO MANUEL, petitioners,
vs
NATIONAL LA&OR RELATIONS COMMISSION 'FIRST DI7ISION-, LA&OR AR&ITER FLA7IO A0UAS, and
F.E. HUELLI0 'M-, INC., respondents.
Raul 9. 9-pino-a .or petitioner-.
Luca- 9//anuel +. 'anilao .or petitioner 6. ;anuel.
6tien0a, 5a,ora, (el Ro-ario > 'a-tillo .or pri&ate re-ponent.

MEDIALDEA, J.:
Pa&e ### of #$%
This is a petition for certiorari seekin& to modify the decision of the 1ational ,abor /elations Commission in
1,/C Case 1o. /-#I9#)A2(A#D2#T entitled, BJo-e $on%co an Ro/eo 'ipre-, 'o/plainant--6ppellant-, &. 4.9.
Guelli% A;B, "nc., Re-ponent-6ppelleeB and 1,/C Case 1o. /1# I9#)A2**#D2#T entitled, F6/ancio ;anuel,
'o/plainant-6ppellant, &. 4.9. Guelli% A;B, "nc., Re-ponent-6ppellee,F "hich dismissed the appeal of
petitioners herein and in e=ect a?rmed the decision of the ,abor Arbiter orderin& private respondent to pay
petitioners separation pay equivalent to their one month salary Fe5clusive of commissions, allo"ances, etc.G
for every year of service.
The antecedent facts are as follo"sK
Private respondent '.4. ûelli& FMG, Inc., Fhereinafter referred to as ûelli&G .led "ith the +epartment of ,abor
F/e&ional 0?ce 1o. (G an application seekin& clearance to terminate the services of petitioners 8ose !on&co,
/omeo Cipres, and Amancio Manuel Fhereinafter referred to as petitionersG alle&edly on the &round of
retrenchment due to .nancial losses. This application "as seasonably opposed by petitioners alle&in& that
the company is not su=erin& from any losses. They alle&ed further that they are bein& dismissed because of
their membership in the union. At the last hearin& of the case, ho"ever, petitioners manifested that they are
no lon&er contestin& their dismissal. The parties then a&reed that the sole issue to be resolved is the basis of
the separation pay due to petitioners. Petitioners, "ho "ere in the sales force of ûelli& received monthly
salaries of at least P(A,AAA. In addition, they received commissions for every sale they made.
The collective -ar&ainin& A&reement entered into bet"een ûelli& and '.4. ûelli& 4mployees Association, of
"hich petitioners are members, contains the follo"in& provision Fp. D3, RolloGK
A/TIC,4 YI9 E /etirement 7ratuity
!ection lFaG#Any employee, "ho is separated from employment due to old a&e, sickness,
death or permanent lay#o= not due to the fault of said employee shall receive from the
company a retirement &ratuity in an amount equivalent to one F3G month's -alary per year of
service. 0ne month of -alary as used in this para&raph shall be deemed equivalent to
the -alary at date of retirementL years of service shall be deemed equivalent to total service
credits, a fraction of at least si5 months bein& considered one year, includin& probationary
employment. F4mphasis suppliedG
0n the other hand, Article )2( of the ,abor Code then prevailin& providesK
Art. )2(. Reuction o. per-onnel. E The termination of employment of any employee due to
the installation of labor savin&#devices, redundancy, retrenchment to prevent losses, and
other similar causes, shall entitle the employee a=ected thereby to separation pay. In case of
termination due to the installation of labor#savin& devices or redundancy, the separation pay
shall be equivalent to one F3G month pay or to at least one F3G month pay for every year of
service, "hichever is hi&her. In case of retrenchment to prevent losses and other similar
causes, the separation pay shall be equivalent to one F3G month pay or at least one#half F3J)G
month pay for every year of service, "hichever is hi&her. A fraction of at least si5 F%G months
shall be considered one F3G "hole year. F4mphasis suppliedG
In addition, !ections HFbG and 3A, /ule 3, -ook 9I of the /ules Implementin& the ,abor Code provideK
5 5 5
!ec. HFbG. >here the termination of employment is due to retrechment initiated by the
employer to prevent losses or other similar causes, or "here the employee su=ers from a
disease and his continued employment is prohibited by la" or is pre<udicial 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 monthpay for every year of service, "hichever
is hi&her, a fraction of at least si5 F%G months bein& considered as one "hole year.
5 5 5
!ec. 3A. +a-i- o. ter/ination pay. E The computation of the termination pay of an employee
as provided herein shall be based on his latest salary rate, unless the same "as reduced by
the employer to defeat the intention of the Code, in "hich case the basis of computation shall
be the rate before its deduction. F4mphasis suppliedG
0n 8une )%,3HD2, the ,abor Arbiter rendered a decision, the dispositive portion of "hich reads Fp. D2, RolloGK
/4!P01!I94 T0 T64 '0/470I17, respondent should be as it is hereby, ordered to pay the
complainants separation pay equivalent to their one month salary Fe5clusive of commissions,
allo"ances, etc.G for every year of service that they have "orked "ith the company.
!0 0/+4/4+.
Pa&e ##5 of #$%
The appeal by petitioners to the 1ational ,abor /elations Commission "as dismissed for lack of merit.
6ence, the present petition.
0n 8une ), 3H2A, the Court, actin& on the veri.ed B1otice of 9oluntary Abandonment and >ithdra"al of
Petition dated April D, 3H2A .led by petitioner /omeo Cipres, based on the &round that he "ants Bto abide by
the decision appealed fromB since he had Breceived, to his full and complete satisfaction, his separation pay,B
resolved to dismiss the petition as to him.
The issue is "hether or not earned sales commissions and allo"ances should be included in the monthly
salary of petitioners for the purpose of computation of their separation pay.
The petition is impressed "ith merit.
Petitioners' position "as that in arrivin& at the correct and le&al amount of separation pay due them, "hether
under the ,abor Code or the C-A, their basic salary, earned sales commissions and allo"ances should be
added to&ether. They cited Article HDFfG of the ,abor Code "hich includes commission as part on one's salary,
to "itL
FfG '>a&e' paid to any employee shall mean the remuneration or earnin&s, ho"ever
desi&nated, capable of bein& e5pressed in terms of money, "hether .5ed or ascertained on a
time, task, piece, or commission basis, or other method of calculatin& the same, "hich is
payable by an employer to an employee under a "ritten or un"ritten contract of employment
for "ork done or to be done, or for services rendered or to be rendered, and includes the fair
and reasonable value, as determined by the !ecretary of ,abor, of board, lod&in&, or other
facilities customarily furnished by the employer to the employee. ''air reasonable value' shall
not include any pro.t to the employer or to any person a?liated "ith the employer.
ûelli& ar&ues that if it "ere really the intention of the ,abor Code as "ell as its implementin& rules to include
commission in the computation of separation pay, it could have e5plicitly said so in clear and unequivocal
terms. 'urthermore, in the de.nition of the term B"a&eB, BcommissionB is used only as one of the features or
desi&nations attached to the "ord remuneration or earnin&s.
Insofar as the issue of "hether or not allo"ances 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 $anto-
&. NLR', et al., 7./. 1o. D%D)3, !eptember )3, 3H2D, 3*( !C/A 3%%, "here >e ruled that Bin the computation
of back"a&es and separation pay, account must be taken not only of the basic salary of petitioner but also of
her transportation and emer&ency livin& allo"ances.B This rulin& "as reiterated in $oriano &. NLR', et al., 7./.
1o. D**3A, 0ctober )D, 3H2D, 3** !C/A 3)( and recently, in #lanter- #rouct-, "nc. &. NLR', et al., 7./. 1o.
D2*)(, 8anuary )A, 3H2H.
>e shall concern ourselves no" "ith the issue of "hether or not earned sales commission should be included
in the monthly salary of petitioner for the purpose of computation of their separation pay.
Article HDFfG by itself is e5plicit that commission is included in the de.nition of the term B"a&eB. It has been
repeatedly declared by the courts that "here the la" speaks in clear and cate&orical lan&ua&e, there is no
room for interpretation or constructionL there is only room for application FCebu Portland Cement Co. v.
Municipality of 1a&a, 7./. 1os. )(33%#3D, Au&ust )), 3H%2, )( !C/A DA2L 7on:a&a v. Court of Appeals,
7./.1o. ,#) D(**, 8une )2,3HD$, *3 !C/A $23G. A plain and unambi&uous statute speaks for itself, and any
attempt to make it clearer is vain labor and tends only to obscurity. 6o" ever, it may be ar&ued that if >e
correlate Article HDFfG "ith Article YI9 of the Collective -ar&ainin& A&reement, Article )2( of the ,abor Code
and !ections HFbG and 3A of the Implementin& /ules, there appears to be an ambi&uity. In this re&ard, the
,abor Arbiter rationali:ed his decision in this manner Fpp. D(#D%, /olloGK
The de.nition of '"a&e' provided in Article H% FsicG of the Code can be correctly be FsicG stated
as a &eneral de.nition. It is '"a&e ' in its &eneric sense. A careful perusal of the same does
not sho" any indication that commission is part of salary. >e can say that commission by
itself may be considered a "a&e. This is not somethin& novel for it cannot be &ainsaid that
certain types of employees like a&ents, .eld personnel and salesmen do not earn any re&ular
daily, "eekly or monthly salaries, but rely mainly on commission earned.
pon the other hand, the provisions of !ection 3A, /ule 3, -ook 9I of the implementin& rules
in con<unction "ith Articles )D$ and )D( FsicG of the Code speci.cally states that the basis of
the termination pay due to one "ho is sou&ht to be le&ally separated from the service is 'his
latest salary rates.
5 5 5.
4ven Articles )D$ and )D( FsicG invariably use 'monthly pay or monthly salary'.
Pa&e ##1 of #$%
The above terms found in those Articles and the particular /ules "ere intentionally used to
e5press the intent of the framers of the la" that for purposes of separation pay they mean to
be speci.cally referrin& to salary only.
.... 4ach particular bene.t provided in the Code and other +ecrees on ,abor has its o"n
pecularities and nuances and should be interpreted in that li&ht. Thus, for a speci.c provision,
a speci.c meanin& is attached to simplify matters that may arise there from. The &eneral
&uidelines in FsicG the formation of speci.c rules for particular purpose. Thus, that "hat should
be controllin& in matters concernin& termination pay should be the speci.c provisions of both
-ook 9I of the Code and the /ules. At any rate, settled is the rule that in matters of conOict
bet"een the &eneral provision of la" and that of a particular# or speci.c provision, the latter
should prevail.
0n its part, the 1,/C ruled Fp. 33A, RolloGK
'rom the aforequoted provisions of the la" and the implementin& rules, it could be deduced
that "a&e is used in its &eneric sense and obviously refers to the basic "a&e rate to be
ascertained on a time, task, piece or commission basis or other method of calculatin& the
same. It does not, ho"ever, mean that commission, allo"ances or analo&ous income
necessarily forms part of the employee's salary because to do so "ould lead to anomalies
FsicG, if not absurd, construction of the "ord Bsalary.B 'or "hat "ill prevent the employee from
insistin& that emer&ency livin& allo"ance, 3$th month pay, overtime, and premium pay, and
other frin&e bene.ts 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.
>e rule other"ise. The ambi&uity bet"een Article HDFfG, "hich de.nes the term '"a&e' and Article YI9 of the
Collective -ar&ainin& A&reement, Article )2( of the ,abor Code and !ections HFbG and 3A of the Implementin&
/ules, "hich mention the terms BpayB and BsalaryB, is more apparent than real. -roadly, the "ord BsalaryB
means a recompense or consideration made to a person for his pains or industry in another man's business.
>hether it be derived from Bsalarium,B or more fancifully from Bsal,B the pay of the /oman soldier, it carries
"ith it the fundamental idea of compensation for services rendered. Indeed, there is eminent authority for
holdin& that the "ords B"a&esB and BsalaryB are in essence synonymous F>ords and Phrases, 9ol. $2
Permanent 4dition, p. (( citin& 6opkins vs. Crom"ell, 2* 1.;.!. 2$H,2(3,2H App. +iv. (23L $2 Am. 8ur. (H%G.
B!alary,B the etymolo&y of "hich is the ,atin "ord Bsalarium,B is often used interchan&eably "ith B"a&eB, the
etymolo&y of "hich is the Middle 4n&lish "ord B"a&enB. -oth "ords &enerally refer to one and the same
meanin&, that is, a re"ard or recompense for services performed. ,ike"ise, BpayB is the synonym of B"a&esB
and BsalaryB F-lack's ,a" +ictionary, *th 4d.G. Inasmuch as the "ords B"a&esB, BpayB and BsalaryB have the
same meanin&, and commission is included in the de.nition of B"a&eB, the lo&ical conclusion, therefore, is, in
the computation of the separation pay of petitioners, their salary base should include also their earned sales
commissions.
The aforequoted provisions are not the only consideration for decidin& the petition in favor of the petitioners.
>e a&ree "ith the !olicitor 7eneral that &rantin&, in %ratia ar%u/enti, that the commissions "ere in the form
of incentives or encoura&ement, so that the petitioners "ould be inspired to put a little more industry on the
<obs particularly assi&ned to them, still these commissions are direct remuneration services rendered "hich
contributed to the increase of income of ûelli& . Commission is the recompense, compensation or re"ard of
an a&ent, salesman, e5ecutor, trustees, receiver, factor, broker or bailee, "hen the same is calculated as a
percenta&e on the amount of his transactions or on the pro.t to the principal F-lack's ,a" +ictionary, *th 4d.,
citin& >einer v. !"ales, )3D Md. 3)$, 3(3 A.)d D(H, D*AG. The nature of the "ork of a salesman and the
reason for such type of remuneration for services rendered demonstrate clearly that commission are part of
petitioners' "a&e or salary. >e take <udicial notice of the fact that some salesmen do not receive any basic
salary but depend on commissions and allo"ances or commissions alone, are part of petitioners' "a&e or
salary. >e take <udicial notice of the fact that some salesman do not received any basic salary but depend on
commissions and allo"ances or commissions alone, althou&h an employer#employee relationship e5ists.
-earin& in mind the preceedin& dicussions, if "e adopt the opposite vie" that commissions, do not form part
of "a&e or salary, then, in e=ect, >e "ill be sayin& that this kind of salesmen do not receive any salary and
therefore, not entitled to separation pay in the event of dischar&e from employment. >ill this not be absurdP
This narro" interpretation is not in accord "ith the liberal spirit of our labor la"s and considerin& the purpose
of separation pay "hich is, to alleviate the di?culties "hich confront a dismissed employee thro"n the the
streets to face the harsh necessities of life.
Additionally, in $oriano &. NLR', et al., -upra, in resolvin& the issue of the salary base that should be used in
computin& the separation pay, >e held thatK
The commissions also claimed by petitioner F'override commission' plus 'net deposit
incentive'G are not properly includible in such base .&ure since such commissions must be
Pa&e ##4 of #$%
earned by actual market transactions attributable to petitioner.
Applyin& this by analo&y, since the commissions in the present case "ere earned by actual market
transactions attributable to petitioners, these should be included in their separation pay. In the computation
thereof, "hat should be taken into account is the avera&e commissions earned durin& their last year of
employment.
The .nal consideration is, in carryin& out and interpretin& the ,abor Code's provisions and its implementin&
re&ulations, the "orkin&man's "elfare should be the primordial and paramount consideration. This kind of
interpretation &ives meanin& and substance to the liberal and compassionate spirit of the la" as provided for
in Article ( of the ,abor Code "hich states that Ball doubts in the implementation and interpretation of the
provisions of the ,abor Code includin& its implementin& rules and re&ulations shall be resolved in favor of
laborB FAbella v. 1,/C, 7./. 1o. D323), 8uly $A,3H2D,3*) !C/A 3(AL Manila 4lectric Company v. 1,/C, et al.,
7./. 1o. D2D%$, 8uly 3),3H2HG, and Article 3DA) of the Civil Code "hich provides that Bin case of doubt, all
labor le&islation and all labor contracts shall be construed in favor of the safety and decent livin& for the
laborer.
ACC0/+I17,;, the petition is hereby 7/A1T4+. The decision of the respondent 1ational ,abor /elations
Commission is M0+I'I4+ by includin& allo"ances and commissions in the separation pay of petitioners 8ose
!on&co and Amancio Manuel. The case is remanded to the ,abor Arbiter for the proper computation of said
separation pay.
!0 0/+4/4+.
7./. 1o. 3)3H)D April )), 3HH2
ANTONIO :. IRAN 'doinC 3"siness "nder t9e na2e and st?.e oB Tones Iran Enterprises-, petitioner,
vs.
NATIONAL LA&OR RELATIONS COMMISSION 'Fo"rt9 Division-, 0ODOFREDO O. PETRAL&A, MORENO
CADALSO, PEPITO TECSON, APOLINARIO 0OTHON0 0EMINA, <ESUS &ANDILAO, ED:IN MARTIN,
CELSO LA&IA0A, DIOSDADO 0ONHAL0O, FERNANDO M. COLINA, respondents.

ROMERO, J.:
>hether or not commissions are included in determinin& compliance "ith the minimum "a&e requirement is
the principal issue presented in this petition.
Petitioner Antonio Iran is en&a&ed in softdrinks merchandisin& and distribution in Mandaue City, Cebu,
employin& truck drivers "ho double as salesmen, truck helpers, and non#.eld personnel in pursuit thereof.
Petitioner hired private respondents 7odofredo Petralba, Moreno Cadalso, Celso ,abia&a and 'ernando Colina
as driversJsalesmen "hile private respondents Pepito Tecson, Apolinario 7imena, 8esus -andilao, 4d"in Martin
and +iosdado 7on:al&o "ere hired as truck helpers. +riversJsalesmen drove petitioner's delivery trucks and
promoted, sold and delivered softdrinks to various outlets in Mandaue City. The truck helpers assisted in the
delivery of softdrinks to the di=erent outlets covered by the driverJsalesmen.
As part of their compensation, the driverJsalesmen and truck helpers of petitioner received commissions per
case of softdrinks sold at the follo"in& ratesK
!A,4!M41K
Ten Centavos FPA.3AG per case of /e&ular softdrinks.
T"elve Centavos FPA.3)G per case of 'amily !i:e softdrinks.
T/CX 64,P4/!K
4i&ht Centavos FPA.A2G per case of /e&ular softdrinks.
Ten Centavos FPA.3AG per case of 'amily !i:e softdrinks.
!ometime in 8une 3HH3, petitioner, "hile conductin& an audit of his operations, discovered cash shorta&es
and irre&ularities alle&edly committed by private respondents. Pendin& the investi&ation of irre&ularities and
settlement of the cash shorta&es, petitioner required private respondents to report for "ork everyday. They
"ere not allo"ed, ho"ever, to &o on their respective routes. A fe" days thereafter, despite aforesaid order,
private respondents stopped reportin& for "ork, promptin& petitioner to conclude that the former had
abandoned their employment. Consequently, petitioner terminated their services. 6e also .led on 1ovember
D, 3HH3, a complaint for estafa a&ainst private respondents.
0n the other hand, private respondents, on +ecember *, 3HH3, .led complaints a&ainst petitioner for ille&al
dismissal, ille&al deduction, underpayment of "a&es, premium pay for holiday and rest day, holiday pay,
service incentive leave pay, 3$th month pay, allo"ances, separation pay, recovery of cash bond, dama&es
Pa&e ##% of #$%
and attorney's fees. !aid complaints "ere consolidated and docketed as /ab 9II#3)#3DH3#H3, /A- 9II#3)#
32)*#H3 and /A- 9II#3)#32)%#H3, and assi&ned to ,abor Arbiter 4rnesto '. Carreon.
The labor arbiter found that petitioner had validly terminated private respondents, there bein& <ust cause for
the latter's dismissal. 1evertheless, he also ruled that petitioner had not complied "ith minimum "a&e
requirements in compensatin& private respondents, and had failed to pay private respondents their 3$th
month pay. The labor arbiter, thus, rendered a decision on 'ebruary 32, 3HH$, the dispositive portion of "hich
readsK
>64/4'0/4, premises considered, <ud&ment is hereby rendered orderin& the respondent
Antonio >. Iran to pay the complainants the follo"in&K
3. Celso ,abia&a P3A,A$$.3A
). 7odofredo Petralba 3,)*A.AA
$. 'ernando Colina 33,D*$.3A
(. Moreno Cadalso 33,D*$.3A
*. +iosdado 7on:al&o D,3*H.A(
%. Apolinario 7imena 2,$3).)(
D. 8esus -andilao 3(,D)H.*A
2. Pepito Tecson. H,3)%.**
EEEE
Attorney's 'ees F3A[G D(,33%.%$
of the &ross a"ard D,(33.%%
EEEE
7/A1+ T0TA, A>A/+ P23,*)2.)H
ZZZZZZZZ
The other claims are dismissed for lack of merit.
!0 0/+4/4+. #
-oth parties seasonably appealed to the 1,/C, "ith petitioner contestin& the labor arbiter's refusal to include
the commissions he paid to private respondents in determinin& compliance "ith the minimum "a&e
requirement. 6e also presented, for the .rst time on appeal, vouchers denominated as 3$th month pay
si&ned by private respondents, as proof that petitioner had already paid the latter their 3$th month pay.
Private respondents, on the other hand, contested the .ndin&s of the labor arbiter holdin& that they had not
been ille&ally dismissed, as "ell as mathematical errors in computin& 8esus -andilao's "a&e di=erentials. The
1,/C, in its decision of +ecember )3, 3HH(, a?rmed the validity of private respondent's dismissal, but found
that said dismissal did not comply "ith the procedural requirements for dismissin& employees. 'urthermore, it
corrected the labor arbiter's a"ard of "a&e di=erentials to 8esus -andilao. The dispositive portion of said
decision readsK
>64/4'0/4, premises considered, the decision is hereby M0+I'I4+ in that complainant 8esus
-andilao's computation for "a&e di=erential is corrected from P3*(.AA to P(,**A.AA. In
addition to all the monetary claim F-icG ori&inally a"arded by the ,abor Arbiter a quo,
P3,AAA.AA is hereby &ranted to each complainants F-icG as indemnity fee for failure of
respondents to observe procedural due process.
!0 0/+4/4+. 5
Petitioner's motion for reconsideration of said decision "as denied on 8uly $3, 3HH*, promptin& him to elevate
this case to this Court, raisin& the follo"in& issuesK
3. T64 6010/A-,4 C0MMI!!I01 ACT4+ >IT6 7/A94 A-!4 0' +I!C/4TI01 A1+ C01T/A/;
T0 ,A> A1+ 8/I!P/+41C4 I1 A''I/MI17 T64 +4CI!I01 0' T64 ,A-0/ A/-IT4/ 6
H@! 4YC,+I17 T64 C0MMI!!I01! /4C4I94+ -; T64 P/I9AT4 /4!P01+41T! I1 C0MPTI17
T64I/ >A74!L
). T64 6010/A-,4 C0MMI!!I01 ACT4+ >IT6 7/A94 A-!4 0' +I!C/4TI01 I1 'I1+I17
P4TITI014/ 7I,T; 0' P/0C4+/A, ,AP!4! I1 T4/MI1ATI17 P/I9AT4 /4!P01+41T! A1+ I1
A>A/+I17 4AC6 0' T64 ,ATT4/ P3,AAA.AA A! I1+4M1IT; '44L
$. T64 6010/A-,4 C0MMI!!I01 7/A94,; 4//4+ I1 10T C/4+ITI17 T64 A+9A1C4 AM01T
/4C4I94+ -; T64 P/I9AT4 /4!P01+41T! A! PA/T 0' T64I/ 3$T6 M01T6 PA;.
The petition is impressed "ith merit.
The 1,/C, in denyin& petitioner's claim that commissions be included in determinin& compliance "ith the
minimum "a&e ratiocinated thusK
Pa&e ##) of #$%
/espondent Fpetitioner hereinG insist assiduously that the commission should be included in
the computation of actual "a&es per a&reement. >e "ill not fall prey to this fallacious
ar&ument. An employee should receive the minimum "a&e as mandated by la" and that the
attainment of the minimum "a&e should not be dependent on the commission earned by an
employee. A commission is an incentive for an employee to "ork harder for a better
production that "ill bene.t both the employer and the employee. To include the commission
in the computation of "a&e in order to comply "ith labor standard la"s is to ne&ate the
practice that a commission is &ranted after an employee has already earned the minimum
"a&e or even beyond it. 1
This holdin& is unsupported by la" and <urisprudence. Article HDFfG of the ,abor Code de.nes "a&e as follo"sK
Art. HDFfG E B>a&eB paid to any employee shall mean the remuneration or earnin&s, ho"ever
desi&nated, capable of bein& e5pressed in terms of money, "hether .5ed or ascertained on a
time, task, piece, orco//i--ion ,a-i-, or other method of calculatin& the same, "hich is
payable by an employer to an employee under a "ritten or un"ritten contract of employment
for "ork done or to be done, or for services rendered or to be rendered and includes the fair
and reasonable value, as determined by the !ecretary of ,abor, of board, lod&in&, or other
facilities customarily furnished by the employer to the employee.
555 555 555 F4mphasis suppliedG
This de.nition e5plicitly includes commissions as part of "a&es. >hile commissions are, indeed, incentives or
forms of encoura&ement to inspire employees to put a little more industry on the <obs particularly assi&ned to
them, still these commissions are direct remunerations for services rendered. In fact, commissions have been
de.ned as the recompense, compensation or re"ard of an a&ent, salesman, e5ecutor, trustee, receiver,
factor, broker or bailee, "hen the same is calculated as a percenta&e on the amount of his transactions or on
the pro.t to the principal. The nature of the "ork of a salesman and the reason for such type of remuneration
for services rendered demonstrate clearly that commissions are part of a salesman's "a&e or salary. 4
Thus, the commissions earned by private respondents in sellin& softdrinks constitute part of the
compensation or remuneration paid to driversJsalesmen and truck helpers for servin& as such, and hence,
must be considered part of the "a&es paid them.
The 1,/C asserts that the inclusion of commissions in the computation of "a&es "ould ne&ate the practice of
&rantin& commissions only after an employee has earned the minimum "a&e or over. >hile such a practice
does e5ist, the universality and prevalence of such a practice is questionable at best. In truth, this Court has
taken <udicial notice of the fact that some salesmen do not receive any basic salary but depend entirely on
commissions and allo"ances or commissions alone, althou&h an employer#employee relationship
e5ists. % ndoubtedly, this salary structure is intended for the bene.t of the corporation establishin& such, on
the apparent assumption that thereby its salesmen "ould be moved to &reater enterprise and dili&ence and
close more sales in the e5pectation of increasin& their sales commissions. This, ho"ever, does not detract
from the character of such commissions as part of the salary or "a&e paid to each of its salesmen for
renderin& services to the corporation. )
,ike"ise, there is no la" mandatin& that commissions be paid only after the minimum "a&e has been paid to
the employee. 9erily, the establishment of a minimum "a&e only sets a Ooor belo" "hich an employee's
remuneration cannot fall, not that commissions are e5cluded from "a&es in determinin& compliance "ith the
minimum "a&e la". This conclusion is bolstered by #*ilippine 6%ricultural 'o//ercial an "nu-trial =orker-
@nion &-. NLR', $ "here this Court ackno"led&ed that drivers and conductors "ho are compensated purely
on a commission basis are automatically entitled to the basic minimum pay mandated by la" should said
commissions be less than their basic minimum for ei&ht hours "ork. It can, thus, be inferred that "ere said
commissions equal to or even e5ceed the minimum "a&e, the employer need not pay, in addition, the basic
minimum pay prescribed by la". It follo"s then that commissions are included in determinin& compliance
"ith minimum "a&e requirements.
>ith re&ard to the second issue, it is settled that in terminatin& employees, the employer must furnish the
"orker "ith t"o "ritten notices before the latter can be le&ally terminatedK FaG a notice "hich apprises the
employee of the particular acts or omissions .or w*ic* *i- i-/i--al i- -ou%*t, and FbG the subsequent notice
"hich informs the employee of the employer's decision to dismiss him. ( F4mphasis oursG Petitioner
asseverates that no procedural lapses "ere committed by him in terminatin& private respondents. In his o"n
"ordsK
. . . "hen irre&ularities "ere discovered, that is, "hen the misappropriation of several
thousands of pesos "as found out, the petitioner instructed private respondents to report
back for "ork and settle their accountabilities but the latter never reported for "ork. This
instruction by the petitioner to report back for "ork and settle their accountabilities served as
notices to private respondents for the latter to e5plain or account for the missin& funds held in
Pa&e ##$ of #$%
trust by them before they disappeared. ,
Petitioner considers this return#to#"ork order as equivalent to the .rst notice apprisin& the employee of the
particular acts or omissions for "hich his dismissal is sou&ht. -ut by petitioner's o"n admission, private
respondents "ere never told in said notice that their dismissal "as bein& sou&ht, only that they should settle
their accountabilities. In petitioner's incriminatin& "ordsK
It should be emphasi:ed here that at the time the misappropriation "as discovered and
subsequently thereafter, the petitioner's .rst concern "as not e=ectin& the dismissal of
private respondents but the recovery of the misappropriated funds thus the latter "ere
advised to report back to "ork. #+
As above#stated, the .rst notice should inform the employee that his dismissal is bein& sou&ht. Its absence in
the present case makes the termination of private respondents defective, for "hich petitioner must be
sanctioned for his non#compliance "ith the requirements of or for failure to observe due process. ## The t"in
requirements of notice and hearin& constitute the essential elements of due process, and neither of these
elements can be disre&arded "ithout runnin& afoul of the constitutional &uarantee. 1ot bein& mere
technicalities but the very essence of due process, to "hich every employee is entitled so as to ensure that
the employer's prero&ative to dismiss is not e5ercised arbitrarily, #5 these requisites must be complied "ith
strictly.
Petitioner makes much capital of private respondents' failure to report to "ork, construin& the same as
abandonment "hich thus authori:ed the latter's dismissal. As correctly pointed out by the 1,/C, to "hich the
!olicitor 7eneral a&reed, !ection ) of -ook 9, /ule YI9 of the 0mnibus /ules Implementin& the ,abor Code
requires that in cases of abandonment of "ork, notice should be sent to the "orker's last kno"n address. If
indeed private respondents had abandoned their <obs, it "as incumbent upon petitioner to comply "ith this
requirement. This, petitioner failed to do, entitlin& respondents to nominal dama&es in the amount of
P*,AAA.AA each, in accordance "ith recent <urisprudence, #1 to vindicate or reco&ni:e their ri&ht to
procedural due process "hich "as violated by petitioner.
,astly, petitioner ar&ues that the 1,/C &ravely erred "hen it disre&arded the vouchers presented by the
former as proof of his payment of 3$th month pay to private respondents. >hile admittin& that said vouchers
covered only a ten#day period, petitioner ar&ues that the same should be credited as amounts received by
private respondents as part of their 3$th month pay, !ection $FeG of the /ules and /e&ulations Implementin&
P.+. 1o. 2*3 providin& that the employer shall pay the di=erence "hen he pays less than 3J3)th of the
employee's basic salary. #4
>hile it is true that the vouchers evidencin& payments of 3$th month pay "ere submitted only on appeal, it
"ould have been more in keepin& "ith the directive of Article ))3 #% of the ,abor Code for the 1,/C to have
taken the same into account. #)Time and a&ain, "e have allo"ed evidence to be submitted on appeal,
emphasi:in& that, in labor cases, technical rules of evidence are not bindin&. #$ ,abor o?cials should use
every and all reasonable means to ascertain the facts in each case speedily and ob<ectively, "ithout re&ard to
technicalities of la" or procedure. #(
It must also be borne in mind that the intent of P.+. 1o. 2*3 is the &rantin& of additional income in the form of
3$th month pay to employees not as yet receivin& the same and not that a double burden should be imposed
on the employer "ho is already payin& his employees a 3$th month pay or its equivalent. #, An employer
"ho pays less than 3J3)th of the employees basic salary as their 3$th month pay is only required to pay the
di=erence. 5+
The fore&oin& not"ithstandin&, the vouchers presented by petitioner covers only a particular year. It does not
cover amounts for other years claimed by private respondents. It cannot be presumed that the same
amounts "ere &iven on said years. 6ence, petitioner is entitled to credit only the amounts paid for the
particular year covered by said vouchers.
>64/4'0/4, in vie" of the fore&oin&, the decision of the 1,/C dated 8uly $3, 3HH*, insofar as it e5cludes the
commissions received by private respondents in the determination of petitioner's compliance "ith the
minimum "a&e la", as "ell as its e5clusion of the particular amounts received by private respondents as part
of their 3$th month pay is /494/!4+ and !4T A!I+4. This case is /4MA1+4+ to the ,abor Arbiter for a
recomputation of the alle&ed de.ciencies. 'or non#observance of procedural due process in e=ectin& the
dismissal of private respondents, said decision is M0+I'I4+ by increasin& the a"ard of nominal dama&es to
private respondents from P3,AAA.AA to P*,AAA.AA each. 1o costs.
!0 0/+4/4+.
7./. 1o. ,#((3%H +ecember $, 3H2*
ROSARIO A. 0AA, petitioner,
Pa&e ##( of #$%
vs.
THE HONORA&LE COURT OF APPEALS, EUROPHIL INDUSTRIES CORPORATION, and CESAR R.
RO;AS, Dep"t? S9eriO oB Mani.a, respondents.
4eerico '. 6likpala an 4eerico L. 6likpala, Jr. .or petitioner.
+or,e an #al/a .or pri&ate re-ponent.

PATA<O, J.:
This is a petition for revie" on certiorari of the decision of the Court of Appeals promul&ated on March $A,
3HD%, a?rmin& the decision of the Court of 'irst Instance of Manila.
It appears that respondent 4urophil Industries Corporation "as formerly one of the tenants in Trinity -uildin&
at T.M. Xala" !treet, Manila, "hile petitioner /osario A. 7aa "as then the buildin& administrator. 0n
+ecember 3), 3HD$, 4urophil Industries commenced an action FCivil Case 1o. H)D((G in the Court of 'irst
Instance of Manila for dama&es a&ainst petitioner Bfor havin& perpetrated certain acts that 4urophil Industries
considered a trespass upon its ri&hts, namely, cuttin& of its electricity, and removin& its name from the
buildin& directory and &ate passes of its o?cials and employeesB Fp. 2D /olloG. 0n 8une )2, 3HD(, said court
rendered <ud&ment in favor of respondent 4urophil Industries, orderin& petitioner to pay the former the sum
of P3A,AAA.AA as actual dama&es, P*,AAA.AA as moral dama&es, P*,AAA.AA as e5emplary dama&es and to pay
the costs.
The said decision havin& become .nal and e5ecutory, a "rit of &arnishment "as issued pursuant to "hich
+eputy !heri= Cesar A. /o5as on Au&ust 3, 3HD* served a 1otice of 7arnishment upon 4l 7rande 6otel,
"here petitioner "as then employed, &arnishin& her Bsalary, commission andJor remuneration.B Petitioner
then .led "ith the Court of 'irst Instance of Manila a motion to lift said &arnishment on the &round that her
Bsalaries, commission and, or remuneration are e5empted from e5ecution under Article 3DA2 of the 1e" Civil
Code. !aid motion "as denied by the lo"er Court in an order dated 1ovember D, 3HD*. A motion for
reconsideration of said order "as like"ise denied, and on 8anuary )%, 3HD% petitioner .led "ith the Court of
Appeals a petition for certiorari a&ainst .led "ith the Court of Appeals a petition for certiorari a&ainst said
order of 1ovember D, 3HD*.
0n March $A, 3HD%, the Court of Appeals dismissed the petition for certiorari. In dismissin& the petition, the
Court of Appeals held that petitioner is not a mere laborer as contemplated under Article 3DA2 as the term
laborer does not apply to one "ho holds a mana&erial or supervisory position like that of petitioner, but only
to those Blaborers occupyin& the lo"er strata.B It also held that the term B"a&esB means the pay &ivenB as
hire or re"ard to artisans, mechanics, domestics or menial servants, and laborers employed in manufactories,
a&riculture, mines, and other manual occupation and usually employed to distin&uish the sums paid to
persons hired to perform manual labor, skilled or unskilled, paid at stated times, and measured by the day,
"eek, month, or season,B citin& %D C.8. )2*, "hich is the ordinary acceptation of the said term, and that
B"a&esB in !panish is B<ornalB and one "ho receives a "a&e is a B<ornalero.B
In the present petition for revie" 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 3DA2 of the 1e" Civil
Code "hich reads as follo"sK
A/T. 3DA2. The laborer's "a&e shall not be sub<ect to e5ecution or attachment, e5cept for
debts incurred for food, shelter, clothin& and medical attendance.
It is beyond dispute that petitioner is not an ordinary or rank and .le laborer but Ba responsibly place
employee,B of 4l 7rande 6otel, Bresponsible for plannin&, directin&, controllin&, and coordinatin& the activities
of all housekeepin& personnelB Fp. H*, /olloG so as to ensure the cleanliness, maintenance and orderliness of
all &uest rooms, function rooms, public areas, and the surroundin&s of the hotel. Considerin& the importance
of petitioner's function in 4l 7rande 6otel, it is undeniable that petitioner is occupyin& a position equivalent to
that of a mana&erial or supervisory position.
In its broadest sense, the "ord BlaborerB includes everyone "ho performs any kind of mental or physical
labor, but as commonly and customarily used and understood, it only applies to one en&a&ed in some form of
manual or physical labor. That is the sense in "hich the courts &enerally apply the term as applied in
e5emption acts, since persons of that class usually look to the re"ard of a day's labor for immediate or
present support and so are more in need of the e5emption than are other. F)) Am. 8ur. )) citin& +ri-coe &-.
;ont%o/ery, H$ 7a %A), )A !4 (AL ;iller &-. (u%a-, DD 7a ( Am !t /ep 3H)L $tate e: rel ".K.L. Grocery vs.
,and, 3A2 ,a *3), $) !o ($$L =ilner &-. 4er%u-on, () Minn 33), ($ 1> DH$L % ,/A $$2L Anno 3A) Am !t
/ep. 2(.
In !li&er &-. ;acon <arware 'o., H2 7a )(H !4 (A$, it "as held that in determinin& "hether a particular
Pa&e ##, of #$%
laborer or employee is really a Blaborer,B the character of the "ord he does must be taken into consideration.
6e must be classi.ed not accordin& to the arbitrary desi&nation &iven to his callin&, but "ith reference to the
character of the service required of him by his employer.
In =ilner &-. 4er%u-on, () Minn 33), ($ 1> DH$, the Court also held that all men "ho earn compensation by
labor or "ork of any kind, "hether of the head or hands, includin& <ud&es, lay"ers, bankers, merchants,
o?cers of corporations, and the like, are in some sense Blaborin& men.B -ut they are not Blaborin& menB in
the popular sense of the term, "hen used to refer to a must presume, the le&islature used the term. The
Court further held in said caseK
There are many cases holdin& that contractors, consultin& or assistant en&ineers, a&ents,
superintendents, secretaries of corporations and livery stable keepers, do not come "ithin the
meanin& of the term. F#owell &. 9lre, $H Mich, **(, 6tkin &. =a--on, )* 1.;. (2)L $*ort &.
;e,erry, )H 6un. $HL (ean &. (e =ol., 3% 6un. 32%L )rau-en &. +uckel, 3D 6un. (%$L 9ric-on
&. +rown, $H -arb. $HAL 'o1n &. Reynol-, $D 1.;. %(AL+ru-ie &. Gri1t*, $( Cal. $A%L (a&e &.
Nunan, %) Cal. (AAG.
Thus, in Jone- &-. 6&ery, *A Mich, $)%, 3* 1.>. /ep. (H(, it "as held that a travelin& salesman, sellin& by
sample, did not come "ithin the meanin& of a constitutional provision makin& stockholders of a corporation
liable for Blabor debtsB of the corporation.
In )line &-. Ru--ell 33$ 7a. 3A2*, $H !4 (DD, citin& !li&er &-. ;acon <arware 'o., -upra, it "as held that a
laborer, "ithin the statute e5emptin& from &arnishment the "a&es of a Blaborer,B is one "hose "ork depends
on mere physical po"er to perform ordinary manual labor, and not one en&a&ed in services consistin& mainly
of "ork requirin& mental skill or business capacity, and involvin& the e5ercise of intellectual faculties.
!o, also in =ake2el &-. 4ar%o, HA 1.;. )3$, the Court, in construin& an act makin& stockholders in a
corporation liable for debts due Blaborers, servants and apprenticesB for services performed for the
corporation, held that a BlaborerB is one "ho performs menial or manual services and usually looks to the
re"ard of a day's labor or services for immediate or present support. And in =ey/out* &-. $an,orn, ($ 1.6.
3D$, 2A Am. +ec. 3((, it "as held that BlaborerB is a term ordinarily employed to denote one "ho subsists by
physical toil in contradistinction to those "ho subsists by professional skill. And in 'on-oliate 5ank Line 'o.
&-. <unt, 2$ Io"a, %, $) Am. !t. /ep. )2*, ($ 1.>. 3A*D, 3) ,./.A. (D%, it "as stated that BlaborersB are those
persons "ho earn a livelihood by their o"n manual labor.
Article 3DA2 used the "ord B"a&esB and not BsalaryB in relation to BlaborerB "hen it declared "hat are to be
e5empted from attachment and e5ecution. The term B"a&esB as distin&uished from BsalaryB, applies to the
compensation for manual labor, skilled or unskilled, paid at stated times, and measured by the day, "eek,
month, or season, "hile BsalaryB denotes a hi&her de&ree of employment, or a superior &rade of services, and
implies a position of o?ceK by contrast, the term "a&es B indicates considerable pay for a lo"er and less
responsible character of employment, "hile BsalaryB is su&&estive of a lar&er and more important service F$*
Am. 8ur. (H%G.
The distinction bet"een "a&es and salary "as adverted to in +ell &-. "nian Li&e-tock 'o. FTe5. !up.G, 33 !.>.
$((, "herein it "as saidK B'>a&es' are the compensation &iven to a hired person for service, and the same is
true of 'salary'. The "ords seem to be synonymous, convertible terms, thou&h "e believe that use and
&eneral acceptation have &iven to the "ord 'salary' a si&ni.cance some"hat di=erent from the "ord '"a&es'
in thisK that the former is understood to relate to position of o?ce, to be the compensation &iven for o?cial or
other service, as distin&uished from '"a&es', the compensation for labor.B Annotation 3A) Am. !t. /ep. 23, H*.
>e do not think that the le&islature intended the e5emption in Article 3DA2 of the 1e" Civil Code to operate
in favor of any but those "ho are laborin& men or "omen in the sense that their "ork is manual. Persons
belon&in& to this class usually look to the re"ard of a day's labor for immediate or present support, and such
persons are more in need of the e5emption than any others. Petitioner /osario A. 7aa is de.nitely not "ithin
that class.
>e .nd, therefore, and so hold that the Trial Court did not err in denyin& in its order of 1ovember D, 3HD* the
motion of petitioner to lift the notice of &arnishment a&ainst her salaries, commission and other remuneration
from 4l 7rande 6otel since said salaries, Commission and other remuneration due her from the 4l 7rande
6otel do not constitute "a&es due a laborer "hich, under Article 3DA2 of the Civil Code, are not sub<ect to
e5ecution or attachment.
I1 9I4> 0' T64 '0/470I17, >e .nd the present petition to be "ithout merit and hereby A''I/M the decision
of the Court of Appeals, "ith costs a&ainst petitioner.
!0 0/+4/4+.
7./. 1o. 3%(DD) 8une 2, )AA%
Pa&e #5+ of #$%
E@UITA&LE &AN=IN0 CORPORATION 'noD EnoDn as E@UITA&LE*PCI &AN=-, petitioner,
vs.
RICARDO SADAC, /espondent.
+ 4 C I ! I 0 1
CHICO*NAHARIO, J.:
-efore s is a Petition for /evie" on Certiorari "ith Motion to /efer the Petition to the Court 4n -anc .led by
4quitable -ankin& Corporation Fno" kno"n as 4quitable#PCI -ankG, seekin& to reverse the +ecision3 and
/esolution) of the Court of Appeals, dated % April )AA( and )2 8uly )AA(, respectively, as amended by the
!upplemental +ecision$ dated )% 0ctober )AA( in CA#7./. !P 1o. D*A3$, "hich reversed and set aside the
/esolutions of the 1ational ,abor /elations Commission F1,/CG, dated )2 March )AA3 and )( !eptember
)AA) in 1,/C#1C/ Case 1o. AA#33#A*)*)#2H.
The Antecedents
As culled from the records, respondent !adac "as appointed 9ice President of the ,e&al +epartment of
petitioner -ank e=ective 3 Au&ust 3H23, and subsequently 7eneral Counsel thereof on 2 +ecember 3H23. 0n
)% 8une 3H2H, nine la"yers of petitioner -ankIs ,e&al +epartment, in a letter#petition to the Chairman of the
-oard of +irectors, accused respondent !adac of abusive conduct, inter alia, and ultimately, petitioned for a
chan&e in leadership of the department. 0n the &round of lack of con.dence in respondent !adac, under the
rules of client and la"yer relationship, petitioner -ank instructed respondent !adac to deliver all materials in
his custody in all cases in "hich the latter "as appearin& as its counsel of record. In reaction thereto,
respondent !adac requested for a full hearin& and formal investi&ation but the same remained unheeded. 0n
H 1ovember 3H2H, respondent !adac .led a complaint for ille&al dismissal "ith dama&es a&ainst petitioner
-ank and individual members of the -oard of +irectors thereof. After learnin& of the .lin& of the complaint,
petitioner -ank terminated the services of respondent !adac. 'inally, on 3A Au&ust 3H2H, respondent !adac
"as removed from his o?ce and ordered disentitled to any compensation and other bene.ts.(
In a +ecision* dated ) 0ctober 3HHA, ,abor Arbiter 8ovencio ,l. Mayor, 8r., dismissed the complaint for lack of
merit. 0n appeal, the 1,/C in its /esolution% of )( !eptember 3HH3 reversed the ,abor Arbiter and declared
respondent !adacIs dismissal as ille&al. The decretal portion thereof reads, thusK
>64/4'0/4, in vie" of all the fore&oin& considerations, let the +ecision of 0ctober ), 3HHA be, as it is
hereby, !4T A!I+4, and a ne" one 41T4/4+ declarin& the dismissal of the complainant as ille&al, and
consequently orderin& the respondents <ointly and severally to reinstate him to his former position as bank
9ice#President and 7eneral Counsel "ithout loss of seniority ri&hts and other privile&es, and to pay him full
back"a&es and other bene.ts from the time his compensation "as "ithheld to his actual reinstatement, as
"ell as moral dama&es of P3AA,AAA.AA, e5emplary dama&es of P*A,AAA.AA, and attorneyIs fees equivalent to
Ten Percent F3A[G of the monetary a"ard. !hould reinstatement be no lon&er possible due to strained
relations, the respondents are ordered like"ise <ointly and severally to &rant separation pay at one F3G month
per year of service in the total sum of P)H$,%*A.AA "ith back"a&es and other bene.ts from 1ovember 3%,
3H2H to !eptember 3*, 3HH3 Fcut o= date, sub<ect to ad<ustmentG computed at P3,A**,D(A.(2, plus dama&es
of P3AA,AAA.AA Fmoral dama&esG, P*A,AAA.AA Fe5emplary dama&esG and attorneyIs fees equal to Ten Percent
F3A[G of all the monetary a"ard, or a &rand total of P3,%(H,$)H.*$.D
Petitioner -ank came to us for the .rst time via a !pecial Civil Action for Certiorari assailin& the 1,/C
/esolution of )( !eptember 3HH3 in 4quitable -ankin& Corporation v. 1ational ,abor /elations Commission,
docketed as 7./. 1o. 3A)(%D.2
In our +ecisionH of 3$ 8une 3HHD, "e held respondent !adacIs dismissal ille&al. >e said that the e5istence of
the employer#employee relationship bet"een petitioner -ank and respondent !adac had been duly
established brin&in& the case "ithin the covera&e of the ,abor Code, hence, "e did not permit petitioner
-ank to rely on !ec. )%, /ule 3$23A of the /ules of Court, claimin& that the association bet"een the parties
"as one of a client#la"yer relationship, and, thus, it could terminate at any time the services of respondent
!adac. Moreover, "e did not .nd that respondent !adacIs dismissal "as &rounded on any of the causes
stated in Article )2) of the ,abor Code. >e similarly found that petitioner -ank disre&arded the procedural
requirements in terminatin& respondent !adacIs employment as so required by !ection ) and !ection *, /ule
YI9, -ook 9 of the Implementin& /ules of the ,abor Code. >e decreedK
>64/4'0/4, the herein questioned /esolution of the 1,/C is A''I/M4+ "ith the follo"in& M0+I'ICATI01!K
That private respondent shall be entitled to back"a&es from termination of employment until turnin& si5ty
F%AG years of a&e Fin 3HH*G and, thereupon, to retirement bene.ts in accordance "ith la"L that private
respondent shall be paid an additional amount of P*,AAA.AAL that the a"ard of moral and e5emplary dama&es
are deletedL and that the liability herein pronounced shall be due from petitioner bank alone, the other
petitioners bein& absolved from solidary liability. 1o costs.33
0n )2 8uly 3HHD, our +ecision in 7./. 1o. 3A)(%D dated 3$ 8une 3HHD became .nal and e5ecutory.3)
Pa&e #5# of #$%
Pursuant thereto, respondent !adac .led "ith the ,abor Arbiter a Motion for 45ecution3$ thereof. ,ike"ise,
petitioner -ank .led a Manifestation and Motion3( prayin& that the a"ard in favor of respondent !adac be
computed and that after payment is made, petitioner -ank be ordered forever released from liability under
said <ud&ment.
Per respondent !adacIs computation, the total amount of the monetary a"ard is P%,A$A,(*%.*H, representin&
his back"a&es and other bene.ts, includin& the &eneral increases "hich he should have earned durin& the
period of his ille&al termination. /espondent !adac theori:ed that he started "ith a monthly compensation of
P3),*AA.AA in Au&ust 3H23, "hen he "as appointed as 9ice President of petitioner -ankIs ,e&al +epartment
and later as its 7eneral Counsel in +ecember 3H23. As of 1ovember 3H2H, "hen he "as dismissed ille&ally,
his monthly compensation amounted to P)H,$%*.AA or more than t"ice his ori&inal compensation. The
di=erence, he posited, can be attributed to the annual salary increases "hich he received equivalent to 3*
percent F3*[G of his monthly salary.
/espondent !adac anchored his claim on Article )DH of the ,abor Code of the Philippines, and cited as
authority the cases of 4ast Asiatic Company, ,td. v. Court of Industrial /elations,3* !t. ,ouis Colle&e of
Tu&ue&arao v. 1ational ,abor /elations Commission,3% and !i&ma Personnel !ervices v. 1ational ,abor
/elations Commission.3D Accordin& to respondent !adac, the catena of cases uniformly holds that it is the
obli&ation of the employer to pay an ille&ally dismissed employee the "hole amount of the salaries or "a&es,
plus all other bene.ts and bonuses and &eneral increases to "hich he "ould have been normally entitled had
he not been dismissedL and therefore, salary increases should be deemed a component in the computation of
back"a&es. Moreover, respondent !adac contended that his check#up bene.t, clothin& allo"ance, and cash
conversion of vacation leaves must be included in the computation of his back"a&es.
Petitioner -ank disputed respondent !adacIs computation. Per its computation, the amount of monetary
a"ard due respondent !adac is P),H23,(().H2 only, to the e5clusion of the latterIs &eneral salary increases
and other claimed bene.ts "hich, it maintained, "ere unsubstantiated. The <urisprudential precedent relied
upon by petitioner -ank in assailin& respondent !adacIs computation is 4van&elista v. 1ational ,abor
/elations Commission,32 citin& Paramount 9inyl Products Corp. v. 1ational ,abor /elations
Commission,3H holdin& that an unquali.ed a"ard of back"a&es means that the employee is paid at the "a&e
rate at the time of his dismissal. 'urthermore, petitioner -ank ar&ued before the ,abor Arbiter that the a"ard
of salary di=erentials is not allo"ed, the established rule bein& that upon reinstatement, ille&ally dismissed
employees are to be paid their back"a&es "ithout deduction and quali.cation as to any "a&e increases or
other bene.ts that may have been received by their co#"orkers "ho "ere not dismissed or did not &o on
strike.
0n ) Au&ust 3HHH, ,abor Arbiter 8ovencio ,l. Mayor, 8r. rendered an 0rder)A adoptin& respondent !adacIs
computation. In the main, the ,abor Arbiter relyin& on Millares v. 1ational ,abor /elations
Commission)3 concluded that respondent !adac is entitled to the &eneral increases as a component in the
computation of his back"a&es. Accordin&ly, he a"arded respondent !adac the amount of P%,A$A,(*%.*H
representin& his back"a&es inclusive of allo"ances and other claimed bene.ts, namely check#up bene.t,
clothin& allo"ance, and cash conversion of vacation leave plus 3) percent F3)[G interest per annum
equivalent to P3,$%D,*HA.2H as of $A 8une 3HHH, or a total of PD,$H2,A(D.(2. 6o"ever, considerin& that
respondent !adac had already received the amount of P3,A**,D(A.(2 by virtue of a >rit of
45ecution)) earlier issued on 32 8anuary 3HHH, the ,abor Arbiter directed petitioner -ank to pay respondent
!adac the amount of P%,$(),$AD.AA. The ,abor Arbiter also &ranted an a"ard of attorneyIs fees equivalent to
ten percent F3A[G of all monetary a"ards, and imposed a 3) percent F3)[G interest per annum reckoned
from the .nality of the <ud&ment until the satisfaction thereof.
The ,abor Arbiter decreed, thusK
>64/4'0/4, in vie" of al FsicG the fore&oin&, let an BA,IA!B >rit of 45ecution be issued commandin& the
!heri=, this -ranch, to collect from respondent -ank the amount of Ph%,$(),$AD.AA representin& the
back"a&es "ith 3)[ interest per annum due complainant.)$
Petitioner -ank interposed an appeal "ith the 1,/C, "hich reversed the ,abor Arbiter in a
/esolution,)( promul&ated on )2 March )AA3. It ratiocinated that the doctrine on &eneral increases as
component in computin& back"a&es in !i&ma Personnel !ervices and !t. ,ouis "as merely obiter dictum. The
1,/C found 4ast Asiatic Co., ,td. inapplicable on the &round that the ori&inal circumstances therein are not
only peculiar to the said case but also completely stran&e to the case of respondent !adac. 'urther, the 1,/C
disallo"ed respondent !adacIs claim to check#up bene.t ratiocinatin& that there "as no clear and substantial
proof that the same "as bein& &ranted and en<oyed by other employees of petitioner -ank. The a"ard of
attorneyIs fees "as similarly deleted.
The dispositive portion of the /esolution statesK
>64/4'0/4, the instant appeal is considered meritorious and accordin&ly, the computation prepared by
respondent 4quitable -ankin& Corporation on the a"ard of back"a&es in favor of complainant /icardo !adac
Pa&e #55 of #$%
under the decision promul&ated by the !upreme Court on 8une 3$, 3HHD in 7./. 1o. 3A)(D% in the a&&re&ate
amount of P),H23,(().H2 is hereby ordered.)*
/espondent !adacIs Motion for /econsideration thereon "as denied by the 1,/C in its
/esolution,)% promul&ated on )( !eptember )AA).
A&&rieved, respondent !adac .led before the Court of Appeals a Petition for Certiorari seekin& nulli.cation of
the t"in resolutions of the 1,/C, dated )2 March )AA3 and )( !eptember )AA), as "ell as prayin& for the
reinstatement of the ) Au&ust 3HHH 0rder of the ,abor Arbiter.
'or the resolution of the Court of Appeals "ere the follo"in& issues, vi:.K
F3G >hether periodic &eneral increases in basic salary, check#up bene.t, clothin& allo"ance, and cash
conversion of vacation leave are included in the computation of full back"a&es for ille&ally dismissed
employeesL
F)G >hether respondent is entitled to attorneyIs feesL and
F$G >hether respondent is entitled to t"elve percent F3)[G per annum as interest on all accounts
outstandin& until full payment thereof.
'indin& for respondent !adac Ftherein petitionerG, the Court of Appeals rendered a +ecision on % April )AA(,
the dispositive portion of "hich is quoted hereunderK
>64/4'0/4, premises considered, the March )2, )AA3 and the !eptember )(, )AA) /esolutions of the
1ational ,abor /elations Commissions FsicG are /494/!4+ and !4T A!I+4 and the Au&ust ), 3HHH 0rder of
the ,abor Arbiter is /49I94+ to the e=ect that private respondent is +I/4CT4+ T0 PA; petitioner the sum of
PhP%,$(),$AD.AA, representin& full back "a&es FsicG "hich sum includes annual &eneral increases in basic
salary, check#up bene.t, clothin& allo"ance, cash conversion of vacation leave and other sundry bene.ts plus
3)[ per annum interest on outstandin& balance from 8uly )2, 3HHD until full payment.
Costs a&ainst private respondent.)D
The Court of Appeals, citin& 4ast Asiatic held that respondent !adacIs &eneral increases should be added as
part of his back"a&es. Accordin& to the appellate court, respondent !adacIs entitlement to the annual
&eneral increases has been duly proven by substantial evidence that the latter, in fact, en<oyed an annual
increase of more or less 3* percent F3*[G. /espondent !adacIs check#up bene.t, clothin& allo"ance, and
cash conversion of vacation leave "ere similarly ordered added in the computation of respondent !adacIs
basic "a&e.
Anent the matter of attorneyIs fees, the Court of Appeals sustained the 1,/C. It ruled that our +ecision)2 of
3$ 8une 3HHD did not a"ard attorneyIs fees in respondent !adacIs favor as there "as nothin& in the aforesaid
+ecision, either in the dispositive portion or the body thereof that supported the &rant of attorneyIs fees.
/esolvin& the .nal issue, the Court of Appeals imposed a 3) percent F3)[G interest per annum on the total
monetary a"ard to be computed from )2 8uly 3HHD or the date our <ud&ment in 7./. 1o. 3A)(%D became .nal
and e5ecutory until fully paid at "hich time the quanti.cation of the amount may be deemed to have been
reasonably ascertained.
0n D May )AA(, respondent !adac .led a Partial Motion for /econsideration)H of the % April )AA( Court of
Appeals +ecision insofar as the appellate court did not a"ard him attorneyIs fees. !imilarly, petitioner -ank
.led a Motion for Partial /econsideration thereon. 'ollo"in& an e5chan&e of pleadin&s bet"een the parties,
the Court of Appeals rendered a /esolution,$A dated )2 8uly )AA(, denyin& petitioner -ankIs Motion for Partial
/econsideration for lack of merit.
Assi&nment of 4rrors
6ence, the instant Petition for /evie" by petitioner -ank on the follo"in& assi&nment of errors, to "itK
FaG The 6on. Court of Appeals erred in rulin& that &eneral salary increases should be included in the
computation of full back"a&es.
FbG The 6on. Court of Appeals erred in rulin& that the applicable authorities in this case areK FiG 4ast
Asiatic, ,td. v. CI/, (A !C/A *)3 F3HD3GL FiiG !t. ,ouis Colle&e of Tu&ue&arao v. 1,/C, 3DD !C/A 3*3
F3H2HGL FiiiG !i&ma Personnel !ervices v. 1,/C, ))( !C/A 323 F3HH$GL and FivG Millares v. 1,/C, $A*
!C/A *AA F3HHHG and not FiG Art. )DH of the ,abor CodeL FiiG Paramount 9inyl Corp. v. 1,/C, 3HA !C/A
*)* F3HHAGL FiiiG 4van&elista v. 1,/C, )(H !C/A 3H( F3HH*GL and FivG 4spe<o v. 1,/C, )** !C/A ($A
F3HH%G.
FcG The 6on. Court of Appeals erred in rulin& that respondent is entitled to check#up bene.t, clothin&
allo"ance and cash conversion of vacation leaves not"ithstandin& that respondent did not present
any evidence to prove entitlement to these claims.
Pa&e #51 of #$%
FdG The 6on. Court of Appeals erred in rulin& that respondent is entitled to be paid le&al interest even
if the principal amount due him has not yet been correctly and .nally determined.$3
Mean"hile, on )% 0ctober )AA(, the Court of Appeals rendered a !upplemental +ecision &rantin& respondent
!adacIs Partial Motion for /econsideration and amendin& the dispositive portion of the % April )AA( +ecision
in this "ise, vi:.K
>64/4'0/4, premises considered, the March )( FsicG, )AA3 and the !eptember )(, )AA) /esolutions of the
1ational ,abor /elations Commission are hereby /494/!4+ and !4T A!I+4 and the Au&ust ), 3HHH 0rder of
the ,abor Arbiter is hereby /49I94+ to the e=ect that private respondent is hereby +I/4CT4+ T0 PA;
petitioner the sum of P%,$(),$AD.AA, representin& full back"a&es "hich sum includes annual &eneral
increases in basic salary, check#up bene.t, clothin& allo"ance, cash conversion of vacation leave and other
sundry bene.ts Band attorneyIs fees equal to T41 P4/C41T F3A[G of all the monetary a"ardB plus 3)[ per
annum interest on all outstandin& balance from 8uly )2, 3HHD until full payment.
Costs a&ainst private respondent.$)
0n )) 1ovember )AA(, petitioner -ank .led a !upplement to Petition for /evie"$$ contendin& in the main
that the Court of Appeals erred in issuin& the !upplemental +ecision by directin& petitioner -ank to pay an
additional amount to respondent !adac representin& attorneyIs fees equal to ten percent F3A[G of all the
monetary a"ard.
The CourtIs /ulin&
I.
>e are called to "rite .nis to a controversy that comes to us for the second time. At the core of the instant
case are the diver&ent contentions of the parties on the manner of computation of back"a&es.
Petitioner -ank asseverates that Article )DH of the ,abor Code of the Philippines does not contemplate the
inclusion of salary increases in the de.nition of Bfull back"a&es.B It controverts the reliance by the appellate
court on the cases of FiG 4ast AsiaticL FiiG !t. ,ouisL FiiiG !i&ma PersonnelL and FivG Millares. >hile it is in accord
"ith the pronouncement of the Court of Appeals that /epublic Act 1o. %D3*, in amendin& Article )DH, intends
to &ive more bene.ts to "orkers, petitioner -ank submits that the Court of Appeals "as in error in relyin& on
4ast Asiatic to support its .ndin& that salary increases should be included in the computation of back"a&es
as no"here in Article )DH, as amended, are salary increases spoken of. The prevailin& rule in the milieu of the
4ast Asiatic doctrine "as to deduct earnin&s earned else"here from the amount of back"a&es payable to an
ille&ally dismissed employee.
Petitioner -ank posits that even &rantin& that 4ast Asiatic allo"ed &eneral salary increases in the
computation of back"a&es, it "as because the inclusion "as purposely to cushion the blo" of the deduction
of earnin&s derived else"hereL "ith the amendment of Article )DH and the consequent elimination of the rule
on the deduction of earnin&s derived else"here, the rationale for includin& salary increases in the
computation of back"a&es no lon&er e5ists. 0n the references of salary increases in the aforementioned
cases of FiG !t. ,ouisL FiiG !i&ma PersonnelL and FiiiG Millares, petitioner -ank contends that the same "ere
merely obiter dicta. In .ne, petitioner -ank anchors its claim on the cases of FiG Paramount 9inyl Products
Corp. v. 1ational ,abor /elations CommissionL$( FiiG 4van&elista v. 1ational ,abor /elations
CommissionL$* and FiiiG 4spe<o v. 1ational ,abor /elations Commission,$% "hich ruled that an unquali.ed
a"ard of back"a&es is e5clusive of &eneral salary increases and the employee is paid at the "a&e rate at the
time of the dismissal.
'or his part, respondent !adac submits that the Court of Appeals "as correct "hen it ruled that his
back"a&es should include the &eneral increases on the basis of the follo"in& cases, to "itK FiG 4ast AsiaticL FiiG
!t. ,ouisL FiiiG !i&ma PersonnelL and FivG Millares.
/esolvin& the protracted liti&ation bet"een the parties necessitates us to revisit our pronouncements on the
interpretation of the term back"a&es. >e said that back"a&es in &eneral are &ranted on &rounds of equity
for earnin&s "hich a "orker or employee has lost due to his ille&al dismissal.$D It is not private compensation
or dama&es but is a"arded in furtherance and e=ectuation of the public ob<ective of the ,abor Code. 1or is it
a redress of a private ri&ht but rather in the nature of a command to the employer to make public reparation
for dismissin& an employee either due to the formerIs unla"ful act or bad faith.$2 The Court, in the landmark
case of -ustamante v. 1ational ,abor /elations Commission,$Hhad the occasion to e5plicate on the meanin&
of full back"a&es as contemplated by Article )DH(A of the ,abor Code of the Philippines, as amended by
!ection $( of /ep. Act 1o. %D3*. The Court in -ustamante said, thusK
The Court deems it appropriate, ho"ever, to reconsider such earlier rulin& on the computation of back"a&es
as enunciated in said Pines City 4ducational Center case, by no" holdin& that conformably "ith the evident
le&islative intent as e5pressed in /ep. Act 1o. %D3*, above#quoted, back"a&es to be a"arded to an ille&ally
dismissed employee, should not, as a &eneral rule, be diminished or reduced by the earnin&s derived by him
Pa&e #54 of #$%
else"here durin& the period of his ille&al dismissal. The underlyin& reason for this rulin& is that the employee,
"hile liti&atin& the le&ality Fille&alityG of his dismissal, must still earn a livin& to support himself and family,
"hile full back"a&es have to be paid by the employer as part of the price or penalty he has to pay for ille&ally
dismissin& his employee. The clear le&islative intent of the amendment in /ep. Act 1o. %D3* is to &ive more
bene.ts to "orkers than "as previously &iven them under the Mercury +ru& rule or the Bdeduction of
earnin&s else"hereB rule. Thus, a closer adherence to the le&islative policy behind /ep. Act 1o. %D3* points to
Bfull back"a&esB as meanin& e5actly that, i.e., "ithout deductin& from back"a&es the earnin&s derived
else"here by the concerned employee durin& the period of his ille&al dismissal. In other "ords, the provision
callin& for Bfull back"a&esB to ille&ally dismissed employees is clear, plain and free from ambi&uity and,
therefore, must be applied "ithout attempted or strained interpretation. Inde5 animi sermo est.(3
9erily, <urisprudence has sho"n that the de.nition of full back"a&es has forcefully evolved. In Mercury +ru&
Co., Inc. v. Court of Industrial /elations,() the rule "as that back"a&es "ere &ranted for a period of three
years "ithout quali.cation and "ithout deduction, meanin&, the a"ard of back"a&es "as not reduced by
earnin&s actually earned by the dismissed employee durin& the interim period of the separation. This came to
be kno"n as the Mercury +ru& rule.($ Prior to the Mercury +ru& rulin& in 3HD(, the total amount of
back"a&es "as reduced by earnin&s obtained by the employee else"here from the time of the dismissal to
his reinstatement. The Mercury +ru& rule "as subsequently modi.ed in 'errer v. 1ational ,abor /elations
Commission(( and Pines City 4ducational Center v. 1ational ,abor /elations Commission,(*"here "e allo"ed
the recovery of back"a&es for the duration of the ille&al dismissal minus the total amount of earnin&s "hich
the employee derived else"here from the date of dismissal up to the date of reinstatement, if any. In 'errer
and in Pines, the three#year period "as deleted, and instead, the dismissed employee "as paid back"a&es
for the entire period that he "as "ithout "ork sub<ect to the deductions, as mentioned. 'inally came our
rulin& in -ustamante "hich superseded Pines City 4ducational Center and allo"ed full recovery of back"a&es
"ithout deduction and "ithout quali.cation pursuant to the e5press provisions of Article )DH of the ,abor
Code, as amended by /ep. Act 1o. %D3*, i.e., "ithout any deduction of income the employee may have
derived from employment else"here from the date of his dismissal up to his reinstatement, that is, coverin&
the entirety of the period of the dismissal.
The .rst issue for our resolution involves another aspect in the computation of full back"a&es, mainly, the
basis of the computation thereof. 0ther"ise stated, "hether &eneral salary increases should be included in
the base .&ure to be used in the computation of back"a&es.
In so concludin& that &eneral salary increases should be made a component in the computation of
back"a&es, the Court of Appeals ratiocinated, thusK
The !upreme Court held in 4ast Asiatic, ,td. v. Court of Industrial /elations, (A !C/A *)3 F3HD3G that B&eneral
increasesB should be added as a part of full back"a&es, to "itK
In other "ords, the <ust and equitable rule re&ardin& the point under discussion is thisK It is the obli&ation of
the employer to pay an ille&ally dismissed employee or "orker the "hole amount of the salaries or "a&es,
plus all other bene.ts and bonuses and &eneral increases, to "hich he "ould have been normally entitled had
he not been dismissed and had not stopped "orkin&, but it is the ri&ht, on the other hand of the employer to
deduct from the total of these, the amount equivalent to the salaries or "a&es the employee or "orker "ould
have earned in his old employment on the correspondin& days he "as actually &ainfully employed else"here
"ith an equal or hi&her salary or "a&e, such that if his salary or "a&e in his other employment "as less, the
employer may deduct only "hat has been actually earned.
The doctrine in 4ast Asiatic "as subsequently reiterated, in the cases of !t. ,ouis Colle&e of Tu&ue&MaNrao v.
1,/C, 3DD !C/A 3*3 F3H2HGL !i&ma Personnel !ervices v. 1,/C, ))( !C/A 323 F3HH$G and Millares v. 1ational
,abor /elations Commission, $A* !C/A *AA F3HHHG.
Private respondent, in opposin& the petitionerIs contention, alle&ed in his Memorandum that only the "a&e
rate at the time of the employeeIs ille&al dismissal should be considered V private respondent citin& the
follo"in& decisions of the !upreme CourtK Paramount 9inyl Corp. v. 1,/C 3HA !C/A *)* F3HHAGL 4van&elista v.
1,/C, )(H !C/A 3H( F3HH*GL 4spe<o v. 1,/C, )** !C/A ($A F3HH%G "hich rendered obsolete the rulin& in 4ast
Asiatic, ,td. v. Court of Industrial /elations, (A !C/A *)3 F3HD3G.
>e are not convinced.
The !upreme Court had consistently held that payment of full back"a&es is the price or penalty that the
employer must pay for havin& ille&ally dismissed an employee.
In Ala Mode 7arments, Inc. v. 1,/C )%2 !C/A (HD F3HHDG and -ustamante v. 1,/C and 4ver&reen 'arms, Inc.
)%* !C/A %3 F3HH%G the !upreme Court held that the clear le&islative intent in the amendment in /epublic
Act %D3* "as to &ive more bene.ts to "orkers than "as previously &iven them under the Mercury +ru& rule
or the Bdeductions of earnin&s else"hereB rule.
The Paramount 9inyl, 4van&elista, and 4spe<o cases cited by private respondent are inapplicable to the case
Pa&e #5% of #$%
at bar. The doctrines therein came about as a result of the old Mercury +ru& rule, "hich "as repealed "ith
the passa&e of /epublic Act %D3* into la". It "as in Ale5 'errer v. 1,/C )** !C/A ($A F3HH$G "hen the
!upreme Court returned to the doctrine in 4ast Asiatic, "hich "as soon supplanted by the case of
-ustamante v. 1,/C and 4ver&reen 'arms, Inc., "hich held that the back"a&es to be a"arded to an ille&ally
dismissed employee, should not, as a &eneral rule, be diminished or reduced by the earnin&s derived from
him durin& the period of his ille&al dismissal. 'urthermore, the Mercury +ru& rule "as never meant to
pre<udice the "orkers, but merely to speed the recovery of their back"a&es.
4ver since Mercury +ru& Co. Inc. v. CI/ *% !C/A %H( F3HD(G, it had been the intent of the !upreme Court to
increase the back"a&es due an ille&ally dismissed employee. In the Mercury +ru& case, full back"a&es "as
to be recovered even thou&h a three#year limitation on recovery of full back"a&es "as imposed in the name
of equity. Then in -ustamante, full back"a&es "as interpreted to mean absolutely no deductions re&ardless
of the duration of the ille&al dismissal. In -ustamante, the !upreme Court no lon&er re&arded equity as a
basis "hen dealin& "ith ille&al dismissal cases because it is not equity at play in ille&al dismissals but rather,
it is employerIs obli&ation to pay full back "a&es FsicG. It is an obli&ation of the employer because it is Bthe
price or penalty the employer has to pay for ille&ally dismissin& his employee.B
The applicable modern de.nition of full back"a&es is no" found in Millares v. 1ational ,abor /elations
Commission $A* !C/A *AA F3HHHG, "here althou&h the issue in Millares concerned separation pay V
separation pay and back"a&es both have employeeIs "a&e rate at their foundation.
5 5 5 The rationale is not di?cult to discern. It is the obli&ation of the employer to pay an ille&ally dismissed
employee the "hole amount of his salaries plus all other bene.ts, bonuses and &eneral increases to "hich he
"ould have been normally entitled had he not been dismissed and had not stopped "orkin&. The same holds
true in case of retrenched employees. 5 5 5
5 5 5 5
5 5 5 Annual &eneral increases are akin to Ballo"ancesB or Bother bene.ts.B (% FItalics ours.G
>e do not a&ree.
Attention must be called to Article )DH of the ,abor Code of the Philippines, as amended by !ection $( of /ep.
Act 1o. %D3*. The la" provides as follo"sK
A/T. )DH. !ecurity of Tenure. V In cases of re&ular employment, the employer shall not terminate the services
of an employee e5cept for a <ust cause or "hen authori:ed by this Title. An employee "ho is un<ustly
dismissed from "ork shall be entitled to reinstatement "ithout loss of seniority ri&hts and other privile&es
and to his full back"a&es, inclusive of allo"ances, and to his other bene.ts or their monetary equivalent
computed from the time his compensation "as "ithheld from him up to the time of his actual reinstatement.
F4mphasis supplied.G
Article )DH mandates that an employeeIs full back"a&es shall be inclusive of allo"ances and other bene.ts
or their monetary equivalent. Contrary to the rulin& of the Court of Appeals, "e do not see that a salary
increase can be interpreted as either an allo"ance or a bene.t. !alary increases are not akin to allo"ances or
bene.ts, and cannot be confused "ith either. The term Ballo"ancesB is sometimes used synonymously "ith
Bemoluments,B as indirect or contin&ent remuneration, "hich may or may not be earned, but "hich is
sometimes in the nature of compensation, and sometimes in the nature of reimbursement. (D Allo"ances and
bene.ts are &ranted to the employee apart or separate from, and in addition to the "a&e or salary. In
contrast, salary increases are amounts "hich are added to the employeeIs salary as an increment thereto for
varied reasons deemed appropriate by the employer. !alary increases are not separate &rants by themselves
but once &ranted, they are deemed part of the employeeIs salary. To e5tend the covera&e of an allo"ance or
a bene.t to include salary increases "ould be to strain both the ima&ination of the Court and the lan&ua&e of
la". As aptly observed by the 1,/C, Bto other"ise &ive the meanin& other than "hat the la" speaks for by
itself, "ill open the Oood&ates to various interpretations.B(2 Indeed, if the intent "ere to include salary
increases as basis in the computation of back"a&es, the same should have been e5plicitly stated in the same
manner that the la" used clear and unambi&uous terms in e5pressly providin& for the inclusion of allo"ances
and other bene.ts.
Moreover, "e .nd 4ast Asiatic inapplicable to the case at bar. In 4ast Asiatic, therein petitioner 4ast Asiatic
Company, ,td. "as found &uilty of unfair labor practices a&ainst therein respondent, !oledad A. +i:on, and
the Court ordered her reinstatement "ith back pay. 0n the question of the amount of back"a&es, the Court
&ranted the dismissed employee the "hole amount of the salaries plus all &eneral increases and bonuses she
"ould have received durin& the period of her lay#o= "ith the correspondin& ri&ht of the employer to deduct
from the total amounts, all the earnin&s earned by the employee durin& her lay#o=. The emphasis in 4ast
Asiatic is the duty of both the employer and the employee to disclose the material facts and competent
evidence "ithin their peculiar kno"led&e relative to the proper determination of back"a&es, especially as the
earnin&s derived by the employee else"here are deductions to "hich the employer are entitled. 6o"ever,
Pa&e #5) of #$%
4ast Asiatic does not .nd relevance in the resolution of the issue before us. 'irst, the material date to
consider is )3 March 3H2H, "hen the la" amendin& Article )DH of the ,abor Code, /ep. Act 1o. %D3*,
other"ise kno"n as the 6errera#9eloso ,a", took e=ect. It is obvious that the backdrop of 4ast Asiatic,
decided by this Court on $3 Au&ust 3HD3 "as prior to the current state of the la" on the de.nition of full
back"a&es. !econd, it bears stressin& that 4ast Asiatic "as decided at a time "hen even as an ille&ally
dismissed employee is entitled to the "hole amount of the salaries or "a&es, it "as the reco&ni:ed ri&ht of
the employer to deduct from the total of these, the amount equivalent to the salaries or "a&es the employee
or "orker "ould have earned in his old employment on the correspondin& days that he "as actually &ainfully
employed else"here "ith an equal or hi&her salary or "a&e, such that if his salary or "a&e in his other
employment "as less, the employer may deduct only "hat has been actually earned.(H It is for this reason
the Court centered its discussion on the duty of both parties to be candid and open about facts "ithin their
kno"led&e to establish the amount of the deductions, and not leave the burden on the employee alone to
establish his claim, as "ell as on the duty of the court to compel the parties to cooperate in disclosin& such
material facts. The inapplicability of 4ast Asiatic to respondent !adac "as su?ciently elucidated upon by the
1,/C, vi:.K
A full discernment of the pertinent portion of the <ud&ment sou&ht to be e5ecuted in 4ast Asiatic Co., ,td.
"ould reveal as follo"sK
B5 5 5 to reinstate !oledad A. +i:on immediately to her former position "ith back"a&es from !eptember 3,
3H*2 until actually reinstated "ith all the ri&hts and privile&es acquired and due her, includin& seniority and
such other terms and conditions of employment AT T64 TIM4 0' 64/ ,A;#0''B
The basis on "hich this doctrine "as laid out "as summed up by the !upreme Court "hich ratiocinated in this
li&ht. To quoteK
B5 5 5 on the other hand, of the employer to deduct from the total of these, the amount equivalent to these
salaries or "a&es the employee or "orker "ould have earned in his old employment on the correspondin&
days that he "as actually &ainfully employed else"here "ith an equal or hi&her salary or "a&e, such that if
his salary or "a&e in his other employment "as less, the employer may deduct only "hat has been actually
earned 5 5 5B FIbid, pp. *(D#*(2G.
-ut the !upreme Court, in the instant case, pronounced a clear but di=erent <ud&ment from that of 4ast
Asiatic Co. decretal portion, in this "iseK
B>64/4'0/4, the herein questioned /esolution of the 1,/C is A''I/M4+ "ith the follo"in& M0+I'ICATI01!K
that private respondent shall be entitled to back"a&es from termination of employment until turnin& si5ty
F%AG years of a&e Fin 3HH*G and, thereupon, to retirement bene.ts in accordance "ith la"L 555B
ndisputably FsicG, it "as decreed in plain and unambi&uous lan&ua&e that complainant !adac Bshall be
entitled to back"a&es.B 1o more, no less.
Thus, this decree for !adac cannot be considered in any "ay, substantially in essence, "ith the a"ard of
back"a&es as pronounced for Ms. +i:on in the case of 4ast Asiatic Co. ,td.*A
In the same vein, "e cannot accept the Court of AppealsI reliance on the doctrine as espoused in Millares. It
is evident that Millares concerns itself "ith the computation of the salary base used in computin& the
separation pay of petitioners therein. The distinction bet"een back"a&es and separation pay is elementary.
!eparation pay is &ranted "here reinstatement is no lon&er advisable because of strained relations bet"een
the employee and the employer. -ack"a&es represent compensation that should have been earned but "ere
not collected because of the un<ust dismissal. The bases for computin& the t"o are di=erent, the .rst bein&
usually the len&th of the employeeIs service and the second the actual period "hen he "as unla"fully
prevented from "orkin&.*3
The issue that confronted the Court in Millares "as "hether petitionersI housin& and transportation
allo"ances therein "hich they alle&edly received on a monthly basis durin& their employment should have
been included in the computation of their separation pay. It is plain to see that the reference to &eneral
increases in Millares citin& 4ast Asiatic "as a mere obiter. The cru5 in Millares "as our pronouncement that
the receipt of an allo"ance on a monthly basis does not ipso facto characteri:e it as re&ular and formin& part
of salary because the nature of the &rant is a factor "orth considerin&. >hether salary increases are deemed
part of the salary base in the computation of back"a&es "as not the issue in Millares.
1either can "e look at !t. ,ouis of Tu&ue&arao to resolve the instant controversy. >hat "as mainly
contentious therein "as the inclusion of frin&e bene.ts in the computation of the a"ard of back"a&es, in
particular additional vacation and sick leaves &ranted to therein concerned employees, it evidently appearin&
that the reference to 4ast Asiatic in a footnote "as a mere obiter dictum. !alary increases are not akin to
frin&e bene.ts*) and neither is it lo&ical to conceive of both as belon&in& to the same ta5onomy.
>e must also resolve a&ainst the applicability of !i&ma Personnel !ervices to the case at bar. The basic issue
Pa&e #5$ of #$%
before the Court therein "as "hether the employee, !usan !umatre, a domestic helper in Abu +habi, nited
Arab 4mirates, had been ille&ally dismissed, in li&ht of the contention of !i&ma Personnel !ervices, a duly
licensed recruitment a&ency, that the former "as a mere probationary employee "ho "as, on top of this
status, mentally unsound.*$ 4ven a cursory readin& of !i&ma Personnel !ervices citin& !t. ,ouis Colle&e of
Tu&ue&arao "ould readily sho" that inclusion of salary increases in the computation of back"a&es "as not at
issue. The same "as not on all fours "ith the instant petition.
>hat, then, is the basis of computation of back"a&esP Are annual &eneral increases in basic salary deemed
component in the computation of full back"a&esP The "ei&ht of authority leans in petitioner -ankIs favor and
a&ainst respondent !adacIs claim for the inclusion of &eneral increases in the computation of his back"a&es.
>e stressed in Paramount that an unquali.ed a"ard of back"a&es means that the employee is paid at the
"a&e rate at the time of his dismissal, thusK
The determination of the salary base for the computation of back"a&es requires simply an application of
<udicial precedents de.nin& the term Bback"a&esB. nfortunately, the ,abor Arbiter erred in this re&ard. An
unquali.ed a"ard of back"a&es means that the employee is paid at the "a&e rate at the time of his
dismissal M+avao 'ree >orker 'ront v. Court of Industrial /elations, 7./. 1o. ,#)H$*%, 0ctober )D, 3HD*, %D
!C/A (32L Capital 7arments Corporation v. 0ple, 7./. 1o. *$%)D, !eptember $A, 3H2), 33D !C/A (D$L
+urabilt /ecappin& Plant @ Company v. 1,/C, 7./. 1o. D%D(%, 8uly )D, 3H2D, 3*) !C/A $)2N. And the Court
has declared that the base .&ure to be used in the computation of back"a&es due to the employee should
include not <ust the basic salary, but also the re&ular allo"ances that he had been receivin&, such as the
emer&ency livin& allo"ances and the 3$th month pay mandated under the la" M!ee Pan#Philippine ,ife
Insurance Corporation v. 1,/C, 7./. 1o. *$D)3, 8une )H, 3H2), 3(( !C/A 2%%L !antos v. 1,/C, 7./. 1o.
D%D)3, !eptember )3, 3H2D, 3*( !C/A 3%%L !oriano v. 1,/C, 7./. 1o. D**3A, 0ctober )D, 3H2D, 3** !C/A
3)(L Insular ,ife Assurance Co., ,td. v. 1,/C, supra.N*( F4mphasis supplied.G
There is no ambivalence in Paramount, that the base .&ure to be used in the computation of back"a&es is
pe&&ed at the "a&e rate at the time of the employeeIs dismissal, inclusive of re&ular allo"ances that the
employee had been receivin& such as the emer&ency livin& allo"ances and the 3$th month pay mandated
under the la".
In 4van&elista v. 1ational ,abor /elations Commission,** "e addressed the sole issue of "hether the
computation of the a"ard of back"a&es should be based on current "a&e level or the "a&e levels at the time
of the dismissal. >e resolved that an unquali.ed a"ard of back"a&es means that the employee is paid at the
"a&e rate at the time of his dismissal, thusK
As e5plicitly declared in Paramount 9inyl Products Corp. vs. 1,/C, the determination of the salary base for the
computation of back"a&es requires simply an application of <udicial precedents de.nin& the term
Bback"a&es.B An unquali.ed a"ard of back"a&es means that the employee is paid at the "a&e rate at the
time of his dismissal. 'urthermore, the a"ard of salary di=erentials is not allo"ed, the established rule bein&
that upon reinstatement, ille&ally dismissed employees are to be paid their back"a&es "ithout deduction and
quali.cation as to any "a&e increases or other bene.ts that may have been received by their co#"orkers "ho
"ere not dismissed or did not &o on strike.*%
The case of Paramount "as relied upon by the Court in the latter case of 4spe<o v. 1ational ,abor /elations
Commission,*D "here "e reiterated that the computation of back"a&es should be based on the basic salary
at the time of the employeeIs dismissal plus the re&ular allo"ances that he had been receivin&. 'urther, the
clari.cation made by the Court in 7eneral -aptist -ible Colle&e v. 1ational ,abor /elations
Commission,*2 settles the issue, thusK
>e also "ant to clarify that "hen there is an a"ard of back"a&es this actually refers to back"a&es "ithout
quali.cations and deductions. Thus, >e held thatK
BThe term Qback"a&es "ithout quali.cation and deductionI means that the "orkers are to be paid their
back"a&es .5ed as of the time of the dismissal or strike "ithout deduction for their earnin&s else"here
durin& their layo= and "ithout quali.cation of their "a&es as thus .5edL i.e., unquali.ed by any "a&e
increases or other bene.ts that may have been received by their co#"orkers "ho are not dismissed or did not
&o on strike. A"ards includin& salary di=erentials are not allo"ed. The salary base properly used should,
ho"ever, include not only the basic salary but also the emer&ency cost of livin& allo"ances and also
transportation allo"ances if the "orkers are entitled thereto.B*H FItalics supplied.G
Indeed, even a cursory readin& of the dispositive portion of the CourtIs +ecision of 3$ 8une 3HHD in 7./. 1o.
3A)(%D, a"ardin& back"a&es to respondent !adac, readily sho"s that the a"ard of back"a&es therein is
unquali.ed, er&o, "ithout quali.cation of the "a&e as thus .5ed at the time of the dismissal and "ithout
deduction.
A demarcation line bet"een salary increases and back"a&es "as dra"n by the Court in Pa&uio v. Philippine
,on& +istance Telephone Co., Inc.,%A "here therein petitioner Pa&uio, on account of his ille&al transfer sou&ht
Pa&e #5( of #$%
back"a&es, includin& an amount equal to 3% percent F3%[G of his monthly salary representin& his salary
increases durin& the period of his demotion, contendin& that he had been consistently &ranted salary
increases because of his above avera&e or outstandin& performance. >e saidK
In several cases, the Court had the opportunity to elucidate on the reason for the &rant of back"a&es.
-ack"a&es are &ranted on &rounds of equity to "orkers for earnin&s lost due to their ille&al dismissal from
"ork. They are a reparation for the ille&al dismissal of an employee based on earnin&s "hich the employee
"ould have obtained, either by virtue of a la"ful decree or order, as in the case of a "a&e increase under a
"a&e order, or by ri&htful e5pectation, as in the case of oneIs salary or "a&e. The outstandin& feature of
back"a&es is thus the de&ree of assuredness to an employee that he "ould have had them as earnin&s had
he not been ille&ally terminated from his employment.
PetitionerIs claim, ho"ever, is based simply on e5pectancy or his assumption that, because in the past he
had been consistently rated for his outstandin& performance and his salary correspondin&ly increased, it is
probable that he "ould similarly have been &iven hi&h ratin&s and salary increases but for his transfer to
another position in the company.
In contrast to a &rant of back"a&es or an a"ard of lucrum cessans in the civil la", this contention is based
merely on speculation. 'urthermore, it assumes that in the other position to "hich he had been transferred
petitioner had not been &iven any performance evaluation. As held by the Court of Appeals, ho"ever, the
mere fact that petitioner had been previously &ranted salary increases by reason of his e5cellent performance
does not necessarily &uarantee that he "ould have performed in the same manner and, therefore, qualify for
the said increase later. >hat is more, his claim is tantamount to sayin& that he had a vested ri&ht to remain
as 6ead of the 7arnet 45chan&e and &iven salary increases simply because he had performed "ell in such
position, and thus he should not be moved to any other position "here mana&ement "ould require his
services.%3
Applyin& Pa&uio to the case at bar, "e are not prepared to accept that this de&ree of assuredness applies to
respondent !adacIs salary increases. There "as no la"ful decree or order supportin& his claim, such that his
salary increases can be made a component in the computation of back"a&es. >hat is evident is that salary
increases are a mere e5pectancy. They are, by its nature volatile and are dependent on numerous variables,
includin& the companyIs .scal situation and even the employeeIs future performance on the <ob, or the
employeeIs continued stay in a position sub<ect to mana&ement prero&ative to transfer him to another
position "here his services are needed. In short, there is no vested ri&ht to salary increases. That respondent
!adac may have received salary increases in the past only proves fact of receipt but does not establish a
de&ree of assuredness that is inherent in back"a&es. 'rom the fore&oin&, the plain conclusion is that
respondent !adacIs computation of his full back"a&es "hich includes his prospective salary increases cannot
be permitted.
/espondent !adac cannot take e5ception by ar&uin& that <urisprudence speaks only of "a&e and not salary,
and therefore, the rule is inapplicable to him. It is respondent !adacIs stance that he "as not paid at the
"a&e rate nor "as he en&a&ed in some form of manual or physical labor as he "as hired as 9ice President of
petitioner -ank. 6e cites 7aa v. Court of Appeals%) "here the Court distin&uished bet"een "a&e and salary.
The reliance is misplaced. The distinction bet"een salary and "a&e in 7aa "as for the purpose of Article
3DA2 of the Civil Code "hich mandates that, BMtNhe laborerIs "a&e shall not be sub<ect to e5ecution or
attachment, e5cept for debts incurred for food, shelter, clothin& and medical attendance.B In labor la",
ho"ever, the distinction appears to be merely semantics. Paramount and 4van&elista may have involved
"a&e earners, but the petitioner in 4spe<o "as a 7eneral Mana&er "ith a monthly salary of PH,AAA.AA plus
privile&es. That "a&e and salary are synonymous has been settled in !on&co v. 1ational ,abor /elations
Commission.%$ >e saidK
-roadly, the "ord BsalaryB means a recompense or consideration made to a person for his pains or industry in
another manIs business. >hether it be derived from Bsalarium,B or more fancifully from Bsal,B the pay of the
/oman soldier, it carries "ith it the fundamental idea of compensation for services rendered. Indeed, there is
eminent authority for holdin& that the "ords B"a&esB and BsalaryB are in essence synonymous F>ords and
Phrases, 9ol. $2 Permanent 4dition, p. (( citin& 6opkins vs. Crom"ell, 2* 1.;.!.2$H, 2(3, 2H App. +iv. (23L $2
Am. 8ur. (H%G. B!alary,B the etymolo&y of "hich is the ,atin "ord Bsalarium,B is often used interchan&eably
"ith B"a&eB, the etymolo&y of "hich is the Middle 4n&lish "ord B"a&enB. -oth "ords &enerally refer to one
and the same meanin&, that is, a re"ard or recompense for services performed. ,ike"ise, BpayB is the
synonym of B"a&esB and BsalaryB F-lackIs ,a" +ictionary, *th 4dG. 5 5 5%( FItalics supplied.G
II.
Petitioner -ank ascribes as its second assi&nment of error the Court of AppealsI rulin& that respondent !adac
is entitled to check#up bene.t, clothin& allo"ance and cash conversion of vacation leaves not"ithstandin&
that respondent !adac did not present any evidence to prove entitlement to these claims.%*
Pa&e #5, of #$%
The determination of respondent !adacIs entitlement to check#up bene.t, clothin& allo"ance, and cash
conversion of vacation leaves involves a question of fact. The "ell#entrenched rule is that only errors of la"
not of facts are revie"able by this Court in a petition for revie". %% The <urisdiction of this Court in a petition
for revie" on certiorari under /ule (* of the 3HHD /ules of Civil Procedure, as amended, is limited to
revie"in& only errors of la", not of fact, unless the factual .ndin&s bein& assailed are not supported by
evidence on record or the impu&ned <ud&ment is based on a misapprehension of facts.%D This Court is also
not precluded from delvin& into and resolvin& issues of facts, particularly if the .ndin&s of the ,abor Arbiter
are inconsistent "ith those of the 1,/C and the Court of Appeals.%2 !uch is the case in the instant petition.
The ,abor Arbiter and the Court of Appeals are in a&reement anent the entitlement of respondent !adac to
check#up bene.t, clothin& allo"ance, and cash conversion of vacation leaves, but the .ndin&s of the 1,/C
"ere to the contrary. The ,abor Arbiter sustained respondent !adacIs entitlement to check#up bene.t,
clothin& allo"ance and cash conversion of vacation leaves. 6e &ave "ei&ht to petitioner -ankIs
ackno"led&ment in its computation that respondent !adac is entitled to certain bene.ts, namely, rice
subsidy, tuition fee allo"ance, and medicine allo"ance, thus, there e5ists no reason to deprive respondent
!adac of his other bene.ts. The ,abor Arbiter also reasoned that the petitioner -ank did not adduce evidence
to support its claim that the bene.ts sou&ht by respondent !adac are not &ranted to its employees and
o?cers. !imilarly, the Court of Appeals ratiocinated that if ordinary employees are entitled to receive these
bene.ts, so it is "ith more reason for a 9ice President, like herein respondent !adac to receive the same.
>e .nd in the records that, per petitioner -ankIs computation, the bene.ts to be received by respondent are
monthly rice subsidy, tuition fee allo"ance per year, and medicine allo"ance per year. %H Contained no"here
is an ackno"led&ment of herein claimed bene.ts, namely, check#up bene.t, clothin& allo"ance, and cash
conversion of vacation leaves. >e cannot sustain the rationali:ation that the ackno"led&ment by petitioner
-ank in its computation of certain bene.ts &ranted to respondent !adac means that the latter is also entitled
to the other bene.ts as claimed by him but not ackno"led&ed by petitioner -ank. The rule is, he "ho alle&es,
not he "ho denies, must prove. Mere alle&ations by respondent !adac does not su?ce in the absence of
proof supportin& the same.
III.
>e come to the third assi&nment of error raised by petitioner -ank in its !upplement to Petition for /evie",
assailin& the )% 0ctober )AA( !upplemental +ecision of the Court of Appeals "hich amended the fallo of its %
April )AA( +ecision to include BattorneyIs fees equal to T41 P4/C41T F3A[G of all the monetary a"ardB
&ranted to respondent !adac. Petitioner -ank posits that neither the dispositive portion of our 3$ 8une 3HHD
+ecision in 7./. 1o. 3A)(%D nor the body thereof a"ards attorneyIs fees to respondent !adac. It is postulated
that the body of the 3$ 8une 3HHD +ecision does not contain any .ndin&s of facts or conclusions of la"
relatin& to attorneyIs fees, thus, this Court did not intend to &rant to respondent !adac the same, especially
in the li&ht of its .ndin& that the petitioner -ank "as not motivated by malice or bad faith and that it did not
act in a "anton, oppressive, or malevolent manner in terminatin& the services of respondent !adac.DA
>e do not a&ree.
At the outset it must be emphasi:ed that "hen a .nal <ud&ment becomes e5ecutory, it thereby becomes
immutable and unalterable. The <ud&ment may no lon&er be modi.ed in any respect, even if the modi.cation
is meant to correct "hat is perceived to be an erroneous conclusion of fact or la", and re&ardless of "hether
the modi.cation is attempted to be made by the Court renderin& it or by the hi&hest Court of the land. The
only reco&ni:ed e5ceptions are the correction of clerical errors or the makin& of so#called nunc pro tunc
entries "hich cause no pre<udice to any party, and, of course, "here the <ud&ment is void.D3 The CourtIs 3$
8une 3HHD +ecision in 7./. 1o. 3A)(%D became .nal and e5ecutory on )2 8uly 3HHD. This renders moot
"hatever ar&ument petitioner -ank raised a&ainst the &rant of attorneyIs fees to respondent !adac. 0f even
&reater import is the settled rule that it is the dispositive part of the <ud&ment that actually settles and
declares the ri&hts and obli&ations of the parties, .nally, de.nitively, and authoritatively, not"ithstandin& the
e5istence of inconsistent statements in the body that may tend to confuse.D)
Proceedin& therefrom, "e make a determination of "hether the Court in 4quitable -ankin& Corporation v.
1ational ,abor /elations Commission,D$ 7./. 1o. 3A)(%D, dated 3$ 8une 3HHD, a"arded attorneyIs fees to
respondent !adac. In recapitulation, the dispositive portion of the aforesaid +ecision is hereunder quotedK
>64/4'0/4, the herein questioned /esolution of the 1,/C is A''I/M4+ "ith the follo"in& M0+I'ICATI01!K
That private respondent shall be entitled to back"a&es from termination of employment until turnin& si5ty
F%AG years of a&e Fin 3HH*G and, thereupon, to retirement bene.ts in accordance "ith la"L that private
respondent shall be paid an additional amount of P*,AAA.AAL that the a"ard of moral and e5emplary dama&es
are deletedL and that the liability herein pronounced shall be due from petitioner bank alone, the other
petitioners bein& absolved from solidary liability. 1o costs.D(
The dispositive portion of the )( !eptember 3HH3 +ecision of the 1,/C a"ards respondent !adac attorneyIs
fees equivalent to ten percent F3A[G of the monetary a"ard, vi:K
Pa&e #1+ of #$%
>64/4'0/4, in vie" of all the fore&oin& considerations, let the +ecision of 0ctober ), 3HHA be, as it is
hereby, !4T A!I+4 and a ne" one 41T4/4+ declarin& the dismissal of the complainant as ille&al, and
consequently orderin& the respondents <ointly and severally to reinstate him to his former position as bank
9ice#President and 7eneral Counsel "ithout loss of seniority ri&hts and other privile&es, and to pay him full
back"a&es and other bene.ts from the time his compensation "as "ithheld to his actual reinstatement, as
"ell as moral dama&es of P3AA,AAA.AA, e5emplary dama&es of P*A,AAA.AA, and attorneyIs fees equivalent to
Ten Percent F3A[G of the monetary a"ard. !hould reinstatement be no lon&er possible due to strained
relations, the respondents are ordered like"ise <ointly and severally to &rant separation pay at one F3G month
per year of service in the total sum of P)H$,%*A.AA "ith back"a&es and other bene.ts from 1ovember 3%,
3H2H to !eptember 3*, 3HH3 Fcut o= date, sub<ect to ad<ustmentG computed at P3,A**,D(A.(2, plus dama&es
of P3AA,AAA.AA Fmoral dama&esG, P*A,AAA.AA Fe5emplary dama&esG and attorneyIs fees equal to Ten Percent
F3A[G of all the monetary a"ard, or a &rand total of P3,%(H,$)H.*$.D* FItalics 0urs.G
As can be &leaned from the fore&oin&, the CourtIs +ecision of 3$ 8une 3HHD A''I/M4+ "ith M0+I'ICATI01 the
1,/C +ecision of )( !eptember 3HH3, "hich modi.cation did not touch upon the a"ard of attorneyIs fees as
&ranted, hence, the a"ard stands. 8u5taposin& the decretal portions of the 1,/C +ecision of )( !eptember
3HH3 "ith that of the CourtIs +ecision of 3$ 8une 3HHD, "e .nd that "hat "as deleted by the Court "as Bthe
a"ard of moral and e5emplary dama&es,B but not the a"ard of BattorneyIs fees equivalent to Ten Percent
F3A[G of the monetary a"ard.B The issue on the &rant of attorneyIs fees to respondent !adac has been
adequately and de.nitively threshed out and settled "ith .nality "hen petitioner -ank came to us for the .rst
time on a Petition for Certiorari in 4quitable -ankin& Corporation v. 1ational ,abor /elations Commission,
docketed as 7./. 1o. 3A)(%D. The Court had spoken in its +ecision of 3$ 8une 3HHD in the said case "hich
attained .nality on )2 8uly 3HHD. It is no" immutable.
I9.
>e proceed "ith the penultimate issue on the entitlement of respondent !adac to t"elve percent F3)[G
interest per annum on the outstandin& balance as of )2 8uly 3HHD, the date "hen our +ecision in 7./. 1o.
3A)(%D became .nal and e5ecutory.
In 4astern !hippin& ,ines, Inc. v. Court of Appeals,D% the Court, speakin& throu&h the 6onorable 8ustice 8ose
C. 9itu&, laid do"n the follo"in& rules of thumbK
I. >hen an obli&ation, re&ardless of its source, i.e., la", contracts, quasi#contracts, delicts or quasi#
delicts is breached, the contravenor can be held liable for dama&es. The provisions under Title Y9III
on B+ama&esB of the Civil Code &overn in determinin& the measure of recoverable dama&es.
II. >ith re&ard particularly to an a"ard of interest in the concept of actual or compensatory dama&es,
the rate of interest, as "ell as the accrual thereof, is imposed, as follo"sK
3. >hen the obli&ation is breached, and it consists in the payment of a sum of money, i.e., a
loan or forbearance of money, the interest due should be that "hich may have been
stipulated in "ritin&. 'urthermore, the interest due shall itself earn le&al interest from the time
it is <udicially demanded. In the absence of stipulation, the rate of interest shall be 3)[ per
annum to be computed from default, i.e., from <udicial or e5tra<udicial demand under and
sub<ect to the provisions of Article 33%H of the Civil Code.
). >hen an obli&ation, not constitutin& a loan or forbearance of money, is breached, an
interest on the amount of dama&es a"arded may be imposed at the discretion of the court at
the rate of %[ per annum. 1o interest, ho"ever, shall be ad<ud&ed on unliquidated claims or
dama&es e5cept "hen or until the demand can be established "ith reasonable certainty.
Accordin&ly, "here the demand is established "ith reasonable certainty, the interest shall
be&in to run from the time the claim is made <udicially or e5tra<udicially FArticle 33%H, Civil
CodeG but "hen such certainty cannot be so reasonably established at the time the demand is
made, the interest shall be&in to run only from the date the <ud&ment of the court is made Fat
"hich time the quanti.cation of dama&es may be deemed to have been reasonably
ascertainedG. The actual base for the computation of le&al interest shall, in any case, be on
the amount .nally ad<ud&ed.
$. >hen the <ud&ment of the court a"ardin& a sum of money becomes .nal and e5ecutory,
the rate of le&al interest, "hether the case falls under para&raph 3 or para&raph ) above,
shall be 3)[ per annum from such .nality until its satisfaction, this interim period bein&
deemed to be by then an equivalent to a forbearance of credit.DD
It is obvious that the le&al interest of t"elve percent F3)[G per annum shall be imposed from the time
<ud&ment becomes .nal and e5ecutory, until full satisfaction thereof. Therefore, petitioner -ank is liable to
pay interest from )2 8uly 3HHD, the .nality of our +ecision in 7./. 1o. 3A)(%D.D2 The Court of Appeals "as
not in error in imposin& the same not"ithstandin& that the parties "ere at variance in the computation of
Pa&e #1# of #$%
respondent !adacIs back"a&es. >hat is si&ni.cant is that the +ecision of 3$ 8une 3HHD "hich a"arded
back"a&es to respondent !adac became .nal and e5ecutory on )2 8uly 3HHD.
9.
'inally, petitioner -ankIs Motion to /efer the Petition 4n -anc must necessarily be denied as established in
our fore&oin& discussion. >e are not herein modifyin& or reversin& a doctrine or principle laid do"n by the
Court en banc or in a division. The instant case is not one that should be heard by the Court en
banc.DH3avvphil.net
'allo
>64/4'0/4, the petition is PA/TIA,,; 7/A1T4+ in the sense that in the computation of the back"a&es,
respondent !adacIs claimed prospective salary increases, check#up bene.t, clothin& allo"ance, and cash
conversion of vacation leaves are e5cluded. The petition is PA/TIA,,; +41I4+ insofar as "e A''I/M4+ the
&rant of attorneyIs fees equal to ten percent F3A[G of all the monetary a"ard and the imposition of t"elve
percent F3)[G interest per annum on the outstandin& balance as of )2 8uly 3HHD. 6ence, the +ecision and
/esolution of the Court of Appeals in CA#7./. !P 1o. D*A3$, dated % April )AA( and )2 8uly )AA(, respectively,
and the !upplemental +ecision dated )% 0ctober )AA( are M0+I'I4+ in the follo"in& manner, to "itK
Petitioner -ank is +I/4CT4+ T0 PA; respondent !adac the follo"in&K
F3G -ACX>A74! in accordance "ith 0ur +ecision dated 3$ 8une 3HHD in 7./. 1o. 3A)(%D "ith a
clari.cation that the a"ard of back"a&es 4YC,+4! respondent !adacIs claimed prospective salary
increases, check#up bene.t, clothin& allo"ance, and cash conversion of vacation leavesL
F)G ATT0/14;I! '44! equal to T41 P4/C41T F3A[G of the total sum of all monetary a"ardL and
F$G I1T4/4!T of T>4,94 P4/C41T F3)[G per annum is hereby imposed on the total sum of all
monetary a"ard from )2 8uly 3HHD, the date of .nality of 0ur +ecision in 7./. 1o. 3A)(%D until full
payment of the said monetary a"ard.
The Motion to /efer the Petition to the Court 4n -anc is +41I4+.
1o costs.
!0 0/+4/4+.
0.R. No. (##$) Apri. #,, #,(,
PLASTIC TO:N CENTER CORPORATION, petitioner,
vs.
NATIONAL LA&OR RELATIONS COMMISSION AND NA0=A=AISAN0 LA=AS N0 MAN00A0A:A 'NLM-*
=ATIPUNAN, respondents.
Genero-a R. Jacinto .or petitioner.
5*e $olicitor General .or pu,lic re-ponent.

0UTIERREH, JR., J.:
An issue in this petition is the interpretation of certain provisions of the Collective -ar&ainin& A&reement
FC-AG bet"een Plastic To"n Center Corporation and the respondent union.
0n !eptember D,3H2(, the respondent 1a&kakaisan& ,akas n& Man&&a&a"a F1,MG#Xatipunan .led a
complaint dated Au&ust $A, 3H2( char&in& the petitioner "ithK
a. 9iolation of >a&e 0rder 1o. *, by creditin& the Pl.AA per day increase in the C-A as part of the compliance
"ith said >a&e 0rder 1o. *, and y instead of thirty F$AG days equivalent to one F3G month as &ratuity pay to
resi&nin& employees. Fp. $, /olloG
b. nfair labor practice thru violation of the C-A by &ivin& only t"enty#si5 F)%G days pay instead of thirty F$AG
days equivalent to one F3G month as &ratuity pay to resi&nin& employees. Fp. $, /olloG
0n 8uly )*,3H2*, ,abor Arbiter /uben Alberto ruled in favor of Plastic To"n Center Corporation. The pertinent
portions of the decision read as follo"sK
... In this particular case, the P3.AA increase "as ahead of the implementation of the C-A
provision or could be said "as advanta&eous to complainant members, chronolo&ically stated.
'or the above co&ent reason "e can not fault respondent for its refusal to &rant a second
Pl.AA increase on 8uly 3, 3H2(.
Pa&e #15 of #$%
555 555 555
Complainant sustains the vie" that a month salary pertains to salary for $A days, citin& the
provision of the Civil Code on the matter.
pon the other hand, respondents understandin& of the controverted provision is pra&matic
or practical. !ince the "orkers are paid on daily basis, it computed the salary received by the
"orker in a month as a month salary. In this case the salary of )% days is a month salary.
>e a&ree "ith the respondent's interpretation. As daily "a&e earner, there "ould be no
instance that the "orker "ould "ork for $A days a month since "ork does not include !unday
or rest days. In the mind of the daily "orker in a month he could not e5pect a month salary
e5ceedin& the equivalent of )% days service. To a"ard the daily "a&e earner pay for more
than )% days is pay for days he does not "ork. -ut as re&ards the monthly# paid "orkers he
e5pects his monthly salary to be .5ed "hich is a month salary. 6ence, a distinction separates
him "ith the daily "a&es.
I1 9I4> 0' T64 '0/470I17, the unfair labor practice char&e should be, as it is hereby
dismissed for lack of le&al and factual basis. Fpp# *%#*D, /olloG
0n Au&ust $A, 3H2D, the respondent labor union appealed to the 1ational ,abor /elations Commission.
0n 8une $A, 3H2D, the 1,/C rendered the questioned decision "ith the follo"in& dispositive portionK
>64/4'0/4, the appealed decision is hereby reversed and the respondent is ordered to &rant
Pl.AA increase for 8uly 3, 3H2( and the equivalent of thirty days salary in &ratuity pay, as
required by its C-A "ith the complainants. Fp. $H, /olloG
The motion for reconsideration of said decision "as denied on +ecember D, 3H2D. 6ence, this petition.
The applicable provisions of the C-A read as follo"sK
!ection 3 #The company a&rees to &rant permanent re&ular rank and .le "orkers covered by
this A&reement "ho have rendered at least one year of continuous service, across#the#board
"a&e increases as follo"sK
a. 4=ective 3 8uly, 3H2$#Pl.AA per "orked dayL
b 4=ective 3 8uly, 3H2(#Pl.AA per "orked dayL
c. 4=ective 3 8uly, 3H2*#Pl.AA per "orked dayL
!ection $# It is a&reed and understood by the parties herein that the aforementioned increase
in pay shall be credited a&ainst future allo"ances or "a&e orders hereinafter implemented or
enforced by virtue of ,etters of Instructions, +ecrees and other labor le&islation. Fpp. $%#$D,
/olloG
>a&e 0rder 1o. ( provided for the inte&ration of the mandatory emer&ency cost of livin& allo"ances F4C0,AG
under Presidential +ecrees 3%3(,3%$(,3%D2 and 3D3$ into the basic pay of all covered "orkers e=ective May
3, 3H2(. It further provided that after the inte&ration, the applicable statutory minimum daily "a&e rate must
be complied "ith, "hich in this case is P$).AA.
The petitioner incurred a de.ciency of P3.AA in the "a&e rate after inte&ratin& the 4C0,A "ith basic pay. !o
the petitioner advanced to May 3, 3H2( or t"o months earlier the implementation of the one#peso "a&e
increase provided for in the C-A startin& 8uly 3, 3H2( for the bene.t of the "orkers.
The petitioner ar&ues that it did not credit the Pl.AA per day across the board increase under the C-A as
compliance "ith >a&e 0rder 1o. * implemented on 8une 3%,3H2( since it &ave an additional P$.AA per day to
the basic salary pursuant to said order. It, ho"ever, credited the Pl.AA a day increase to the requirement
under >a&e 0rder 1o. ( to "hich the private respondents alle&edly did not ob<ect.
The other controverted provision of the C-A readsK
!ection ). It is the intention of both the C0MPA1; and the 1I01, that the &rant of &ratuity
pay by the C0MPA1; herein set forth is to re"ard employees and laborers, "ho have rendered
satisfactory and e?cient service "ith the C0MPA1;. T6!, in case of voluntary resi&nation,
"hich is not covered by !ection 3 above, the C0MPA1; nevertheless a&rees to &rant a
&ratuity pay to the resi&nin& employee or laborer as follo"sK
3. T"o to 'ive years of service K 3 month salary
). !i5 F%G to Ten F3AG yrs. of K T"o and 0ne#half F)3J)Gservice months salary
Pa&e #11 of #$%
$ 4leven FllG to 'ifteen yrs. of service K ( months salary
( !i5teen F3%G to t"enty yrs. of K * months
* T"enty one yrs. of service and above K T"elve F3)G months salary.
Fp. $2, /olloG
The petitioner alle&es that one month salary for daily paid "orkers should be computed on the basis of
t"enty#si5 F)%G days and not thirty F$AG days since daily "a&e "orkers do not "ork every day of the month
includin& !undays and holidays.
The petition is devoid of merit.
The sub<ect for interpretation in this petition for revie" is not the ,abor Code or its implementin& rules and
re&ulations but the provisions of the collective bar&ainin& a&reement entered into by mana&ement and the
labor union. As a contract, it constitutes the la" bet"een the parties F'e&urin v. 1ational ,abor /elations
Commission, 3)A !C/A H3A M3H2$NG and in interpretin& contracts, the rules on contract must &overn.
Contracts "hich are not ambi&uous are to be interpreted accordin& to their literal meanin& and should not be
interpreted beyond their obvious intendment F6errera v. Petrophil Corp., 3(% !C/A $2* M3H2%NG.
In the case at bar, the petitioner alle&es that on May 3, 3H2(, it &ranted a Pl.AA increase pursuant to >a&e
0rder 1o. ( "hich in consonance "ith !ection $ of the C-A "as to be credited to the 8uly 3, 3H2( increase
under the C-A. It "as, therefore, a 8uly increase. !ection $ of the C-A, ho"ever, clearly states that C-A
&ranted increases shall be credited a&ainst .uture allo"ances or "a&e orders. Thus, the C-A increase to be
e=ected on 8uly 3, 3H2( can not be retroactively applied to mean compliance "ith >a&e 0rder 1o. ( "hich
took e=ect on May 3, 3H2(. The "ords of the contract are plain and readily understandable so "e .nd no
need for any further construction or interpretation petition F+ihiansan v. Court of Appeals, 3*$ !C/A D3)
M3H2DNG. 'urthermore, "e a&ree "ith the 1,/C as it heldK
It is our .ndin& that the respondent is bound by the C-A to &rant an increase on 8uly 3, 3H2(.
In this case, bet"een 8uly 3, 3H2$ and 8uly 3, 3H2(, there "ere actually t"o increases
mandated by >a&e 0rder 1o. ( on May 3, 3H2( and by >a&e 0rder 1o. * on 8une 3%,3H2(.
The fact that the respondent had complied "ith >a&e 0rder 1o. ( and >a&e 0rder 1o. * does
not relieve it of its obli&ation to &rant the P3.AA increase under the C-A. Fpp. $D#$2, /olloG
>ith re&ards to the second issue, the petitioner maintains that under the principle of Bfair day's "a&e for fair
day's laborB, &ratuity pay should be computed on the basis of )% days for one month salary considerin& that
the employees are daily paid.
>e .nd no abuse of discretion on the part of the 1,/C in &rantin& &ratuity pay equivalent to one month or $A
days salary .
>e quote "ith favor the 1,/C decision "hich statesK
555 555 555
... To say that a"ardin& the daily "a&e earner salary for more than )% days is payin& him for
days he does not "ork misses the point entirely. The issue here is not payment for days
"orked but payment of &ratuity pay equivalent to one month or $A days salary. Fp. )H, /olloG
,ookin& into the de.nition of &ratuity, "e .nd the follo"in& in Moreno's #*ilippine Law (ictionary, to "itK
!omethin& &iven freely, or "ithout recompenseL a &iftL somethin& voluntarily &iven in return
for a favor or servicesL a bountyL a tip. #Pirovano v. +e la /ama !teamship Co., H% Phil. $*D.
That paid to the bene.ciary for past services rendered purely out of the &enerosity of the
&iver or &rantor.#Peralta v. Auditor 7eneral, 3AA Phil. 3A*(.
!alary or compensation. The very term '&ratuity' di=ers from the "ords 'salary' or
'compensation' in leavin& the amount thereof, "ithin the limits of reason, to the arvitrament
of the &iver.#6erran: @ 7arri: v. -arbudo,3) Phil. H.
'rom the fore&oin&, &ratuity pay is therefore, not intended to pay a "orker for actual services rendered. It is a
money bene.t &iven to the "orkers "hose purpose is Bto re"ard employees or laborers, "ho have rendered
satisfactory and e?cient service to the company.B F!ec. ), C-AG >hile it may be enforced once it forms part
of a contractual undertakin&, the &rant of such bene.t is not mandatory so as to be considered a part of labor
standard la" unlike the salary, cost of livin& allo"ances, holiday pay, leave bene.ts, etc., "hich are covered
by the ,abor Code. 1o"here has it ever been stated that &ratuity pay should be based on the actual number
of days "orked over the period of years formin& its basis. >e see no point in countin& the number of days
Pa&e #14 of #$%
"orked over a ten#year period to determine the meanin& of Bt"o and one# half months' &ratuity.B Moreover
any doubts or ambi&uity in the contract bet"een mana&ement and the union members should be resolved in
the li&ht of Article 3DA) of the Civil Code thatK
In case of doubt, all labor le&islation and all labor contracts shall be construed in favor of the
safety and decent livin& for the laborer.
This is also in consonance "ith the principle enunciated in the ,abor Code that all doubts should be resolved
in favor of the "orker.
The Civil Code provides that "hen months are not desi&nated by name, a month is understood to be thirty
F$AG days. The provision applies under the circumstances of this case.
In vie" of the fore&oin&, the public respondent did not act "ith &rave abuse of discretion "hen it rendered
the assailed decision "hich is in accordance "ith la" and <urisprudence.
>64/4'0/4, the petition is hereby +I!MI!!4+ for lack of merit.
!0 0/+4/4+.
0.R. No. #%(),1 Nove23er #$, 5++4
<ENNY M. A0A&ON and 7IR0ILIO C. A0A&ON, petitioners,
vs.
NATIONAL LA&OR RELATIONS COMMISSION 'NLRC-, RI7IERA HOME IMPRO7EMENTS, INC. and
7ICENTE AN0ELES, respondents.
DECISION
This petition for revie" seeks to reverse the decision3 of the Court of Appeals dated 8anuary )$, )AA$, in CA#
7./. !P 1o. %$A3D, modifyin& the decision of 1ational ,abor /elations Commission F1,/CG in 1,/C#1C/ Case
1o. A)$(()#AA.
Private respondent /iviera 6ome Improvements, Inc. is en&a&ed in the business of sellin& and installin&
ornamental and construction materials. It employed petitioners 9ir&ilio A&abon and 8enny A&abon as &ypsum
board and cornice installers on 8anuary ), 3HH)) until 'ebruary )$, 3HHH "hen they "ere dismissed for
abandonment of "ork.
Petitioners then .led a complaint for ille&al dismissal and payment of money claims$ and on +ecember )2,
3HHH, the ,abor Arbiter rendered a decision declarin& the dismissals ille&al and ordered private respondent to
pay the monetary claims. The dispositive portion of the decision statesK
>64/4'0/4, premises considered, >e .nd the termination of the complainants ille&al. Accordin&ly,
respondent is hereby ordered to pay them their back"a&es up to 1ovember )H, 3HHH in the sum ofK
3. 8enny M. A&abon # P*%, )$3.H$
). 9ir&ilio C. A&abon # *%, )$3.H$
and, in lieu of reinstatement to pay them their separation pay of one F3G month for every year of
service from date of hirin& up to 1ovember )H, 3HHH.
/espondent is further ordered to pay the complainants their holiday pay and service incentive leave
pay for the years 3HH%, 3HHD and 3HH2 as "ell as their premium pay for holidays and rest days and
9ir&ilio A&abon's 3$th month pay di=erential amountin& to T>0 T60!A1+ 014 61+/4+ 'I'T;
FP),3*A.AAG Pesos, or the a&&re&ate amount of 014 61+/4+ T>41T; 014 T60!A1+ !IY
61+/4+ !4941T; 4I76T @ H$J3AA FP3)3,%D2.H$G Pesos for 8enny A&abon, and 014 61+/4+
T>41T; T6/44 T60!A1+ 4I76T 61+/4+ T>41T; 4I76T @ H$J3AA FP3)$,2)2.H$G Pesos for
9ir&ilio A&abon, as per attached computation of 8ulieta C. 1icolas, 0IC, /esearch and Computation
nit, 1C/.
!0 0/+4/4+.(
0n appeal, the 1,/C reversed the ,abor Arbiter because it found that the petitioners had abandoned their
"ork, and "ere not entitled to back"a&es and separation pay. The other money claims a"arded by the ,abor
Arbiter "ere also denied for lack of evidence.*
pon denial of their motion for reconsideration, petitioners .led a petition for certiorari "ith the Court of
Pa&e #1% of #$%
Appeals.
The Court of Appeals in turn ruled that the dismissal of the petitioners "as not ille&al because they had
abandoned their employment but ordered the payment of money claims. The dispositive portion of the
decision readsK
>64/4'0/4, the decision of the 1ational ,abor /elations Commission is /494/!4+ only insofar as it
dismissed petitioner's money claims. Private respondents are ordered to pay petitioners holiday pay
for four F(G re&ular holidays in 3HH%, 3HHD, and 3HH2, as "ell as their service incentive leave pay for
said years, and to pay the balance of petitioner 9ir&ilio A&abon's 3$th month pay for 3HH2 in the
amount of P),3*A.AA.
!0 0/+4/4+.%
6ence, this petition for revie" on the sole issue of "hether petitioners "ere ille&ally dismissed.D
Petitioners assert that they "ere dismissed because the private respondent refused to &ive them assi&nments
unless they a&reed to "ork on a FpakyawF basis "hen they reported for duty on 'ebruary )$, 3HHH. They did
not a&ree on this arran&ement because it "ould mean losin& bene.ts as !ocial !ecurity !ystem F!!!G
members. Petitioners also claim that private respondent did not comply "ith the t"in requirements of notice
and hearin&.2
Private respondent, on the other hand, maintained that petitioners "ere not dismissed but had abandoned
their "ork.H In fact, private respondent sent t"o letters to the last kno"n addresses of the petitioners
advisin& them to report for "ork. Private respondent's mana&er even talked to petitioner 9ir&ilio A&abon by
telephone sometime in 8une 3HHH to tell him about the ne" assi&nment at Paci.c Pla:a To"ers involvin&
(A,AAA square meters of cornice installation "ork. 6o"ever, petitioners did not report for "ork because they
had subcontracted to perform installation "ork for another company. Petitioners also demanded for an
increase in their "a&e to P)2A.AA per day. >hen this "as not &ranted, petitioners stopped reportin& for "ork
and .led the ille&al dismissal case.3A
It is "ell#settled that .ndin&s of fact of quasi#<udicial a&encies like the 1,/C are accorded not only respect but
even .nality if the .ndin&s are supported by substantial evidence. This is especially so "hen such .ndin&s
"ere a?rmed by the Court of Appeals.33 6o"ever, if the factual .ndin&s of the 1,/C and the ,abor Arbiter
are conOictin&, as in this case, the revie"in& court may delve into the records and e5amine for itself the
questioned .ndin&s.3)
Accordin&ly, the Court of Appeals, after a careful revie" of the facts, ruled that petitioners' dismissal "as for a
<ust cause. They had abandoned their employment and "ere already "orkin& for another employer.
To dismiss an employee, the la" requires not only the e5istence of a <ust and valid cause but also en<oins the
employer to &ive the employee the opportunity to be heard and to defend himself. 3$ Article )2) of the ,abor
Code enumerates the <ust causes for termination by the employerK FaG serious misconduct or "illful
disobedience by the employee of the la"ful orders of his employer or the latter's representative in connection
"ith the employee's "orkL FbG &ross and habitual ne&lect by the employee of his dutiesL FcG fraud or "illful
breach by the employee of the trust reposed in him by his employer or his duly authori:ed representativeL FdG
commission of a crime or o=ense by the employee a&ainst the person of his employer or any immediate
member of his family or his duly authori:ed representativeL and FeG other causes analo&ous to the fore&oin&.
Abandonment is the deliberate and un<usti.ed refusal of an employee to resume his employment.3( It is a
form of ne&lect of duty, hence, a <ust cause for termination of employment by the employer. 3* 'or a valid
.ndin& of abandonment, these t"o factors should be presentK F3G the failure to report for "ork or absence
"ithout valid or <usti.able reasonL and F)G a clear intention to sever employer#employee relationship, "ith the
second as the more determinative factor "hich is manifested by overt acts from "hich it may be deduced
that the employees has no more intention to "ork. The intent to discontinue the employment must be sho"n
by clear proof that it "as deliberate and un<usti.ed.3%
In 'ebruary 3HHH, petitioners "ere frequently absent havin& subcontracted for an installation "ork for
another company. !ubcontractin& for another company clearly sho"ed the intention to sever the employer#
employee relationship "ith private respondent. This "as not the .rst time they did this. In 8anuary 3HH%, they
did not report for "ork because they "ere "orkin& for another company. Private respondent at that time
"arned petitioners that they "ould be dismissed if this happened a&ain. Petitioners disre&arded the "arnin&
and e5hibited a clear intention to sever their employer#employee relationship. The record of an employee is a
relevant consideration in determinin& the penalty that should be meted out to him.3D
In $ano&al $*ipyar &. 'la&e,32 "e held that an employee "ho deliberately absented from "ork "ithout
leave or permission from his employer, for the purpose of lookin& for a <ob else"here, is considered to have
abandoned his <ob. >e should apply that rule "ith more reason here "here petitioners "ere absent because
they "ere already "orkin& in another company.
Pa&e #1) of #$%
The la" imposes many obli&ations on the employer such as providin& <ust compensation to "orkers,
observance of the procedural requirements of notice and hearin& in the termination of employment. 0n the
other hand, the la" also reco&ni:es the ri&ht of the employer to e5pect from its "orkers not only &ood
performance, adequate "ork and dili&ence, but also &ood conduct3H and loyalty. The employer may not be
compelled to continue to employ such persons "hose continuance in the service "ill patently be inimical to
his interests.)A
After establishin& that the terminations "ere for a <ust and valid cause, "e no" determine if the procedures
for dismissal "ere observed.
The procedure for terminatin& an employee is found in -ook 9I, /ule I, !ection )FdG of the !/ni,u- Rule-
"/ple/entin% t*e La,or 'oeK
$tanar- o. ue proce--8 require/ent- o. notice. V In all cases of termination of employment, the
follo"in& standards of due process shall be substantially observedK
I. 'or termination of employment based on <ust causes as de.ned in Article )2) of the CodeK
FaG A "ritten notice served on the employee specifyin& the &round or &rounds for termination, and
&ivin& to said employee reasonable opportunity "ithin "hich to e5plain his sideL
FbG A hearin& or conference durin& "hich the employee concerned, "ith the assistance of counsel if
the employee so desires, is &iven opportunity to respond to the char&e, present his evidence or rebut
the evidence presented a&ainst himL and
FcG A "ritten notice of termination served on the employee indicatin& that upon due consideration of
all the circumstances, &rounds have been established to <ustify his termination.
In case of termination, the fore&oin& notices shall be served on the employee's last kno"n address.
+ismissals based on <ust causes contemplate acts or omissions attributable to the employee "hile dismissals
based on authori:ed causes involve &rounds under the ,abor Code "hich allo" the employer to terminate
employees. A termination for an authori:ed cause requires payment of separation pay. >hen the termination
of employment is declared ille&al, reinstatement and full back"a&es are mandated under Article )DH. If
reinstatement is no lon&er possible "here the dismissal "as un<ust, separation pay may be &ranted.
Procedurally, F3G if the dismissal is based on a <ust cause under Article )2), the employer must &ive the
employee t"o "ritten notices and a hearin& or opportunity to be heard if requested by the employee before
terminatin& the employmentK a notice specifyin& the &rounds for "hich dismissal is sou&ht a hearin& or an
opportunity to be heard and after hearin& or opportunity to be heard, a notice of the decision to dismissL and
F)G if the dismissal is based on authori:ed causes under Articles )2$ and )2(, the employer must &ive the
employee and the +epartment of ,abor and 4mployment "ritten notices $A days prior to the e=ectivity of his
separation.
'rom the fore&oin& rules four possible situations may be derivedK F3G the dismissal is for a <ust cause under
Article )2) of the ,abor Code, for an authori:ed cause under Article )2$, or for health reasons under Article
)2(, and due process "as observedL F)G the dismissal is "ithout <ust or authori:ed cause but due process "as
observedL F$G the dismissal is "ithout <ust or authori:ed cause and there "as no due processL and F(G the
dismissal is for <ust or authori:ed cause but due process "as not observed.
In the .rst situation, the dismissal is undoubtedly valid and the employer "ill not su=er any liability.
In the second and third situations "here the dismissals are ille&al, Article )DH mandates that the employee is
entitled to reinstatement "ithout loss of seniority ri&hts and other privile&es and full back"a&es, inclusive of
allo"ances, and other bene.ts or their monetary equivalent computed from the time the compensation "as
not paid up to the time of actual reinstatement.
In the fourth situation, the dismissal should be upheld. >hile the procedural in.rmity cannot be cured, it
should not invalidate the dismissal. 6o"ever, the employer should be held lia,le .or non-co/pliance wit* t*e
proceural require/ent- o. ue proce--.
The present case squarely falls under the fourth situation. The dismissal should be upheld because it "as
established that the petitioners abandoned their <obs to "ork for another company. Private respondent,
ho"ever, did not follo" the notice requirements and instead ar&ued that sendin& notices to the last kno"n
addresses "ould have been useless because they did not reside there anymore. nfortunately for the private
respondent, this is not a valid e5cuse because the la" mandates the t"in notice requirements to the
employee's last kno"n address.)3 Thus, it should be held lia,le .or non-co/pliance wit* t*e proceural
require/ent- o. ue proce--.
A revie" and re#e5amination of the relevant le&al principles is appropriate and timely to clarify the various
rulin&s on employment termination in the li&ht of $errano &. National La,or Relation- 'o//i--ion.))
Pa&e #1$ of #$%
Prior to 3H2H, the rule "as that a dismissal or termination is ille&al if the employee "as not &iven any notice.
In the 3H2H case of =enp*il 'orp. &. National La,or Relation- 'o//i--ion,)$ "e reversed this lon&#standin&
rule and held that the dismissed employee, althou&h not &iven any notice and hearin&, "as not entitled to
reinstatement and back"a&es because the dismissal "as for &rave misconduct and insubordination, a <ust
&round for termination under Article )2). The employee had a violent temper and caused trouble durin&
o?ce hours, defyin& superiors "ho tried to pacify him. >e concluded that reinstatin& the employee and
a"ardin& back"a&es Bmay encoura&e him to do even "orse and "ill render a mockery of the rules of
discipline that employees are required to observe.B)( >e further held thatK
nder the circumstances, the dismissal of the private respondent for <ust cause should be maintained.
6e has no ri&ht to return to his former employment.
6o"ever, the petitioner must nevertheless be held to account for failure to e5tend to private
respondent his ri&ht to an investi&ation before causin& his dismissal. The rule is e5plicit as above
discussed. The dismissal of an employee must be .or 3u-t or aut*ori0e cau-e an a.ter ue proce--.
Petitioner committed an infraction of the second requirement. Thus, it must be imposed a sanction for
its failure to &ive a formal notice and conduct an investi&ation as required by la" before dismissin&
petitioner from employment. Considerin& the circumstances of this case petitioner must indemnify
the private respondent the amount of P3,AAA.AA. The measure of this a"ard depends on the facts of
each case and the &ravity of the omission committed by the employer.)*
The rule thus evolvedK "here the employer had a valid reason to dismiss an employee but did not follo" the
due process requirement, the dismissal may be upheld but the employer "ill be penali:ed to pay an
indemnity to the employee. This became kno"n as the =enp*il or -elated +ue Process /ule.
0n 8anuary )D, )AAA, in $errano, the rule on the e5tent of the sanction "as chan&ed. >e held that the
violation by the employer of the notice requirement in termination for <ust or authori:ed causes "as not a
denial of due process that "ill nullify the termination. 6o"ever, the dismissal is ine=ectual and the employer
must pay full back"a&es from the time of termination until it is <udicially declared that the dismissal "as for a
<ust or authori:ed cause.
The rationale for the re#e5amination of the =enp*il doctrine in $errano "as the si&ni.cant number of cases
involvin& dismissals "ithout requisite notices. >e concluded that the imposition of penalty by "ay of
dama&es for violation of the notice requirement "as not servin& as a deterrent. 6ence, "e no" required
payment of full back"a&es from the time of dismissal until the time the Court .nds the dismissal "as for a
<ust or authori:ed cause.
$errano "as confrontin& the practice of employers to Bdismiss no" and pay laterB by imposin& full
back"a&es.
>e believe, ho"ever, that the rulin& in $errano did not consider the full meanin& of Article )DH of the ,abor
Code "hich statesK
A/T. )DH. !ecurity of Tenure. V In cases of re&ular employment, the employer shall not terminate the
services of an employee e5cept for a <ust cause or "hen authori:ed by this Title. An employee "ho is
un<ustly dismissed from "ork shall be entitled to reinstatement "ithout loss of seniority ri&hts and
other privile&es and to his full back"a&es, inclusive of allo"ances, and to his other bene.ts or their
monetary equivalent computed from the time his compensation "as "ithheld from him up to the time
of his actual reinstatement.
This means that the termination is ille&al only if it is not for any of the <usti.ed or authori:ed causes provided
by la". Payment of back"a&es and other bene.ts, includin& reinstatement, is <usti.ed only if the employee
"as un<ustly dismissed.
The fact that the $errano rulin& can cause unfairness and in<ustice "hich elicited stron& dissent has prompted
us to revisit the doctrine.
To be sure, the +ue Process Clause in Article III, !ection 3 of the Constitution embodies a system of ri&hts
based on moral principles so deeply imbedded in the traditions and feelin&s of our people as to be deemed
fundamental to a civili:ed society as conceived by our entire history. +ue process is that "hich comports "ith
the deepest notions of "hat is fair and ri&ht and <ust.)% It is a constitutional restraint on the le&islative as "ell
as on the e5ecutive and <udicial po"ers of the &overnment provided by the -ill of /i&hts.
+ue process under the ,abor Code, like 'on-titutional ue proce--, has t"o aspectsK substantive, i.e., the
valid and authori:ed causes of employment termination under the ,abor CodeL and procedural, i.e., the
manner of dismissal. Procedural due process requirements for dismissal are found in the Implementin& /ules
of P.+. ((), as amended, other"ise kno"n as the ,abor Code of the Philippines in -ook 9I, /ule I, !ec. ), as
amended by +epartment 0rder 1os. H and 3A.)D -reaches of these ue proce-- requirements violate the
,abor Code. Therefore -tatutory ue proce-- should be di=erentiated from failure to comply
Pa&e #1( of #$%
"ith con-titutional ue proce--.
'on-titutional ue proce-- protects the individual from the &overnment and assures him of his ri&hts in
criminal, civil or administrative proceedin&sL "hile -tatutory ue proce-- found in the ,abor Code and
Implementin& /ules protects employees from bein& un<ustly terminated "ithout <ust cause after notice and
hearin&.
In $e,u%uero &. National La,or Relation- 'o//i--ion,)2 the dismissal "as for a <ust and valid cause but the
employee "as not accorded due process. The dismissal "as upheld by the Court but the employer "as
sanctioned. The sanction should be in the nature of indemni.cation or penalty, and depends on the facts of
each case and the &ravity of the omission committed by the employer.
In Nat* &. National La,or Relation- 'o//i--ion,)H it "as ruled that even if the employee "as not &iven due
process, the failure did not operate to eradicate the <ust causes for dismissal. The dismissal bein& for <ust
cause, al,eit "ithout due process, did not entitle the employee to reinstatement, back"a&es, dama&es and
attorney's fees.
Mr. 8ustice 8ose C. 9itu&, in his separate opinion in ;GG ;arine $er&ice-, "nc. &. National La,or Relation-
'o//i--ion,$A "hich opinion he reiterated in $errano, statedK
C. >here there is <ust cause for dismissal but due process has not been properly observed by an
employer, it "ould not be ri&ht to order either the reinstatement of the dismissed employee or the
payment of back"a&es to him. In failin&, ho"ever, to comply "ith the procedure prescribed by la" in
terminatin& the services of the employee, the employer must be deemed to have opted or, in any
case, should be made liable, for the payment of separation pay. It mi&ht be pointed out that the
notice to be &iven and the hearin& to be conducted &enerally constitute the t"o#part due process
requirement of la" to be accorded to the employee by the employer. 1evertheless, peculiar
circumstances mi&ht obtain in certain situations "here to undertake the above steps "ould be no
more than a useless formality and "here, accordin&ly, it "ould not be imprudent to apply the re- ip-a
loquiturrule and a"ard, in lieu of separation pay, nominal dama&es to the employee. 5 5 5.$3
After carefully analy:in& the consequences of the diver&ent doctrines in the la" on employment termination,
"e believe that in cases involvin& dismissals for cause but "ithout observance of the t"in requirements of
notice and hearin&, the better rule is to abandon the !errano doctrine and to follo" =enp*il by holdin& that
the dismissal "as for <ust cause but imposin& sanctions on the employer. !uch sanctions, ho"ever, must be
sti=er than that imposed in =enp*il. -y doin& so, this Court "ould be able to achieve a fair result by
dispensin& <ustice not <ust to employees, but to employers as "ell.
The unfairness of declarin& ille&al or ine=ectual dismissals for valid or authori:ed causes but not complyin&
"ith statutory due process may have far#reachin& consequences.
This "ould encoura&e frivolous suits, "here even the most notorious violators of company policy are
re"arded by invokin& due process. This also creates absurd situations "here there is a <ust or authori:ed
cause for dismissal but a procedural in.rmity invalidates the termination. ,et us take for e5ample a case
"here the employee is cau&ht stealin& or threatens the lives of his co#employees or has become a criminal,
"ho has Oed and cannot be found, or "here serious business losses demand that operations be ceased in
less than a month. Invalidatin& the dismissal "ould not serve public interest. It could also discoura&e
investments that can &enerate employment in the local economy.
The constitutional policy to provide full protection to labor is not meant to be a s"ord to oppress employers.
The commitment of this Court to the cause of labor does not prevent us from sustainin& the employer "hen it
is in the ri&ht, as in this case.$) Certainly, an employer should not be compelled to pay employees for "ork
not actually performed and in fact abandoned.
The employer should not be compelled to continue employin& a person "ho is admittedly &uilty of
misfeasance or malfeasance and "hose continued employment is patently inimical to the employer. The la"
protectin& the ri&hts of the laborer authori:es neither oppression nor self#destruction of the employer.$$
It must be stressed that in the present case, the petitioners committed a &rave o=ense, i.e., abandonment,
"hich, if the requirements of due process "ere complied "ith, "ould undoubtedly result in a valid dismissal.
An employee "ho is clearly &uilty of conduct violative of Article )2) should not be protected by the !ocial
8ustice Clause of the Constitution. !ocial <ustice, as the term su&&ests, should be used only to correct an
in<ustice. As the eminent 8ustice 8ose P. ,aurel observed, social <ustice must be founded on the reco&nition of
the necessity of interdependence amon& diverse units of a society and of the protection that should be
equally and evenly e5tended to all &roups as a combined force in our social and economic life, consistent "ith
the fundamental and paramount ob<ective of the state of promotin& the health, comfort, and quiet of all
persons, and of brin&in& about Bthe &reatest &ood to the &reatest number.B$(
Pa&e #1, of #$%
This is not to say that the Court "as "ron& "hen it ruled the "ay it did in =enp*il, $errano and related cases.
!ocial <ustice is not based on ri&id formulas set in stone. It has to allo" for chan&in& times and circumstances.
8ustice Isa&ani Cru: stron&ly asserts the need to apply a balanced approach to labor#mana&ement relations
and dispense <ustice "ith an even hand in every caseK
>e have repeatedly stressed that social <ustice V or any <ustice for that matter V is for the deservin&,
"hether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of
reasonable doubt, "e are to tilt the balance in favor of the poor to "hom the Constitution .ttin&ly
e5tends its sympathy and compassion. -ut never is it <usti.ed to &ive preference to the poor simply
because they are poor, or re<ect the rich simply because they are rich, for <ustice must al"ays be
served for the poor and the rich alike, accordin& to the mandate of the la".$*
8ustice in every case should only be for the deservin& party. It should not be presumed that every case of
ille&al dismissal "ould automatically be decided in favor of labor, as mana&ement has ri&hts that should be
fully respected and enforced by this Court. As interdependent and indispensable partners in nation#buildin&,
labor and mana&ement need each other to foster productivity and economic &ro"thL hence, the need to
"ei&h and balance the ri&hts and "elfare of both the employee and employer.
>here the dismissal is for a <ust cause, as in the instant case, the lack of statutory due process should not
nullify the dismissal, or render it ille&al, or ine=ectual. 6o"ever, the employer should indemnify the employee
for the violation of his statutory ri&hts, as ruled in Reta &. National La,or Relation- 'o//i--ion.$% The
indemnity to be imposed should be sti=er to discoura&e the abhorrent practice of Bdismiss no", pay later,B
"hich "e sou&ht to deter in the $errano rulin&. The sanction should be in the nature of indemni.cation or
penalty and should depend on the facts of each case, takin& into special consideration the &ravity of the due
process violation of the employer.
nder the Civil Code, nominal dama&es is ad<udicated in order that a ri&ht of the plainti=, "hich has been
violated or invaded by the defendant, may be vindicated or reco&ni:ed, and not for the purpose of
indemnifyin& the plainti= for any loss su=ered by him.$D
As enunciated by this Court in 7ierne- &. National La,or Relation- 'o//i--ion-,$2 an employer is liable to
pay indemnity in the form of nominal dama&es to an employee "ho has been dismissed if, in e=ectin& such
dismissal, the employer fails to comply "ith the requirements of due process. The Court, after considerin& the
circumstances therein, .5ed the indemnity at P),*HA.*A, "hich "as equivalent to the employee's one month
salary. This indemnity is intended not to penali:e the employer but to vindicate or reco&ni:e the employee's
ri&ht to statutory due process "hich "as violated by the employer.$H
The violation of the petitioners' ri&ht to statutory due process by the private respondent "arrants the
payment of indemnity in the form of nominal dama&es. The amount of such dama&es is addressed to the
sound discretion of the court, takin& into account the relevant circumstances.(A Considerin& the prevailin&
circumstances in the case at bar, "e deem it proper to .5 it at P$A,AAA.AA. >e believe this form of dama&es
"ould serve to deter employers from future violations of the statutory due process ri&hts of employees. At
the very least, it provides a vindication or reco&nition of this fundamental ri&ht &ranted to the latter under the
,abor Code and its Implementin& /ules.
Private respondent claims that the Court of Appeals erred in holdin& that it failed to pay petitioners' holiday
pay, service incentive leave pay and 3$th month pay.
>e are not persuaded.
>e a?rm the rulin& of the appellate court on petitioners' money claims. Private respondent is liable for
petitioners' holiday pay, service incentive leave pay and 3$th month pay "ithout deductions.
As a &eneral rule, one "ho pleads payment has the burden of provin& it. 4ven "here the employee must
alle&e non#payment, the &eneral rule is that the burden rests on the employer to prove payment, rather than
on the employee to prove non#payment. The reason for the rule is that the pertinent personnel .les, payrolls,
records, remittances and other similar documents V "hich "ill sho" that overtime, di=erentials, service
incentive leave and other claims of "orkers have been paid V are not in the possession of the "orker but in
the custody and absolute control of the employer.(3
In the case at bar, if private respondent indeed paid petitioners' holiday pay and service incentive leave pay,
it could have easily presented documentary proofs of such monetary bene.ts to disprove the claims of the
petitioners. -ut it did not, e5cept "ith respect to the 3$th month pay "herein it presented cash vouchers
sho"in& payments of the bene.t in the years disputed.() Alle&ations by private respondent that it does not
operate durin& holidays and that it allo"s its employees 3A days leave "ith pay, other than bein& self#
servin&, do not constitute proof of payment. Consequently, it failed to dischar&e the onu- pro,ani thereby
makin& it liable for such claims to the petitioners.
Pa&e #4+ of #$%
Anent the deduction of !!! loan and the value of the shoes from petitioner 9ir&ilio A&abon's 3$th month pay,
"e .nd the same to be unauthori:ed. The evident intention of Presidential +ecree 1o. 2*3 is to &rant
an aitional inco/e in the form of the 3$th month pay to employees not already receivin& the same($ so as
Bto .urt*er protect t*e le&el o. real wa%e- .ro/ t*e ra&a%e- o. worl-wie inIation.B(( Clearly, as additional
income, the 3$th month pay is included in the de.nition of "a&e under Article HDFfG of the ,abor Code, to "itK
FfG B>a&eB paid to any employee shall mean the remuneration or earnin&s, ho"ever desi&nated,
capable of bein& e5pressed in terms of money "hether .5ed or ascertained on a time, task, piece , or
commission basis, or other method of calculatin& the same, "hich is payable by an employer to an
employee under a "ritten or un"ritten contract of employment for "ork done or to be done, or for
services rendered or to be rendered and includes the fair and reasonable value, as determined by the
!ecretary of ,abor, of board, lod&in&, or other facilities customarily furnished by the employer to the
employeeTB
from "hich an employer is prohibited under Article 33$(* of the same Code from makin& any deductions
"ithout the employee's kno"led&e and consent. In the instant case, private respondent failed to sho" that
the deduction of the !!! loan and the value of the shoes from petitioner 9ir&ilio A&abon's 3$th month pay
"as authori:ed by the latter. The lack of authority to deduct is further bolstered by the fact that petitioner
9ir&ilio A&abon included the same as one of his money claims a&ainst private respondent.
The Court of Appeals properly reinstated the monetary claims a"arded by the ,abor Arbiter orderin& the
private respondent to pay each of the petitioners holiday pay for four re&ular holidays from 3HH% to 3HH2, in
the amount of P%,*)A.AA, service incentive leave pay for the same period in the amount of P$,)**.AA and the
balance of 9ir&ilio A&abon's thirteenth month pay for 3HH2 in the amount of P),3*A.AA.
:HEREFORE, in vie" of the fore&oin&, the petition is DENIED. The decision of the Court of Appeals dated
8anuary )$, )AA$, in CA#7./. !P 1o. %$A3D, .ndin& that petitioners' 8enny and 9ir&ilio A&abon abandoned
their "ork, and orderin& private respondent to pay each of the petitioners holiday pay for four re&ular
holidays from 3HH% to 3HH2, in the amount of P%,*)A.AA, service incentive leave pay for the same period in
the amount of P$,)**.AA and the balance of 9ir&ilio A&abon's thirteenth month pay for 3HH2 in the amount of
P),3*A.AA is AFFIRMED "ith the MODIFICATION that private respondent /iviera 6ome Improvements, Inc.
is further ORDERED to pay each of the petitioners the amount of P$A,AAA.AA as nominal dama&es for non#
compliance "ith statutory due process.
1o costs.
SO ORDERED.
(a&ie, Jr., '.J., #uno, #an%ani,an, Hui-u/,in%, $ano&al-Gutierre0, 'arpio, 6u-tria-;artine0, 'orona, 'arpio-
;orale-, 'alle3o, $r., 60cuna, 5in%a, '*ico-Na0ario, an Garcia, JJ., concur.
SEPARATE OPINION
TIN0A, J!
I concur in the result, the .nal disposition of the petition bein& correct. There is no denyin& the importance of
the Court's rulin& today, "hich should be considered as de.nitive as to the e=ect of the failure to render the
notice and hearin& required under the ,abor Code "hen an employee is bein& dismissed for <ust causes, as
de.ned under the same la". The Court emphatically rea?rms the rule that dismissals for <ust cause are not
invalidated due to the failure of the employer to observe the proper notice and hearin& requirements under
the ,abor Code. At the same time, The (eci-ion like"ise establishes that the Civil Code provisions on
dama&es serve as the proper frame"ork for the appropriate relief to the employee dismissed for <ust cause if
the notice#hearin& requirement is not met. $errano &. NLR',3 insofar as it is controllin& in dismissals for
unauthori:ed causes, is no lon&er the controllin& precedent. Any and all previous rulin&s and statements of
the Court inconsistent "ith these determinations are no" deemed inoperative.
My vie"s on the questions raised in this petition are comprehensive, if I may so in all modesty. I o=er this
opinion to discuss the reasonin& behind my conclusions, pertainin& as they do to questions of fundamental
importance.
#rolo%ue
The factual backdrop of the present #etition .or Re&iew is not novel. Petitioners claim that they "ere ille&ally
dismissed by the respondents, "ho alle&e in turn that petitioners had actually abandoned their employment.
There is little di?culty in upholdin& the .ndin&s of the 1/,C and the Court of Appeals that petitioners are
&uilty of abandonment, one of the <ust causes for termination under the ,abor Code. ;et, the records also
sho" that the employer "as remiss in not &ivin& the notice required by the ,abor CodeL hence, the resultant
controversy as to the le&al e=ect of such failure &i--E-&i- the "arranted dismissal.
Pa&e #4# of #$%
0stensibly, the matter has been settled by our decision in $errano), "herein the Court ruled that the failure
to properly observe the notice requirement did not render the dismissal, "hether for <ust or authori:ed
causes, null and void, for such violation "as not a denial of the constitutional ri&ht to due process, and that
the measure of appropriate dama&es in such cases ou&ht to be the amount of "a&es the employee should
have received "ere it not for the termination of his employment "ithout prior notice.$ !till, the Court has, for
&ood reason, opted to ree5amine the so#called $errano doctrine throu&h the present petition
6nteceent 4act-
/espondent /iviera 6ome Improvements, Inc F/iviera 6omeG is en&a&ed in the manufacture and installation
of &ypsum board and cornice. In 8anuary of 3HH), the A&abons "ere hired in 8anuary of 3HH) as cornice
installers by /iviera 6ome. Accordin& to their personnel .le "ith /iviera 6ome, the A&abon &iven address "as
$/+! Tailorin&, 4. /odri&ue: Ave., Moon"alk !ubdivision, P#II ParaUaque City, Metro Manila.(
It is not disputed that sometime around 'ebruary 3HHH, the A&abons stopped renderin& services for /iviera
6ome. The A&abons alle&e that be&innin& on )$ 'ebruary 3HHH, they stopped receivin& assi&nments from
/iviera 6ome.* >hen they demanded an e5planation, the mana&er of /iviera 6omes, Marivic 9entura,
informed them that they "ould be hired a&ain, but on a Bpakya"B Fpiece#"orkG basis. >hen the A&abons
spurned this proposal, /iviera 6omes refused to continue their employment under the ori&inal terms and
a&reement.% Takin& a=ront, the A&abons .led a complaint for ille&al dismissal "ith the 1ational ,abor
/elations Commission FB1,/CBG.
/iviera 6omes adverts to a di=erent version of events leadin& to the .lin& of the complaint for ille&al
dismissal. It alle&ed that in the early quarter of 3HHH, the A&abons stopped reportin& for "ork "ith /iviera.
T"o separate letters dated 3A March 3HHH, "ere sent to the A&abons at the address indicated in their
personnel .le. In these notices, the A&abons "ere directed to report for "ork immediately.D 6o"ever, these
notices "ere returned unserved "ith the notation B/T! Moved.B Then, in 8une of 3HHH, 9ir&ilio A&abon
informed /iviera 6omes by telephone that he and 8enny A&abon "ere ready to return to "ork for /iviera
6omes, on the condition that their "a&es be .rst ad<usted. 0n 32 8une 3HHH, the A&abons "ent to /iviera
6omes, and in a meetin& "ith mana&ement, requested a "a&e increase of up to T"o 6undred 4i&hty Pesos
FP)2A.AAG a day. >hen no a?rmative response "as o=ered by /iviera 6omes, the A&abons initiated the
complaint before the 1,/C.2
In their #o-ition #aper, the A&abons like"ise alle&ed that they "ere required to "ork even on holidays and
rest days, but "ere never paid the le&al holiday pay or the premium pay for holiday or rest day. They also
asserted that they "ere denied !ervice Incentive ,eave pay, and that 9ir&ilio A&abon "as not &iven his
thirteenth F3$thG month pay for the year 3HH2.H
After due deliberation, ,abor Arbiter +aisy 7. Cauton#-arcelona rendered a (eci-ion dated )2 +ecember
3HHH, .ndin& the termination of the A&abons ille&al, and orderin& /iviera 6omes to pay back"a&es in the
sum of 'ifty !i5 Thousand T"o 6undred Thirty 0ne Pesos and 1inety Three Centavos FP*%,)$3.H$G each. The
,abor Arbiter like"ise ordered, in lieu of reinstatement, the payment of separation pay of one F3G month pay
for every year of service from date of hirin& up to )H 1ovember 3HHH, as "ell as the payment of holiday pay,
service incentive leave pay, and premium pay for holiday and restday, plus thirteenth F3$thG month
di=erential to 9ir&ilio A&abon.3A
In so rulin&, the ,abor Arbiter declared that /iviera 6omes "as unable to satisfactorily refute the A&abons'
claim that they "ere no lon&er &iven "ork to do after )$ 'ebruary 3HHH and that their rehirin& "as only on
Bpakya"B basis. The ,abor Arbiter also held that /iviera 6omes failed to comply "ith the notice requirement,
notin& that /iviera 6omes "ell kne" of the chan&e of address of the A&abons, considerin& that the
identi.cation cards it issued stated a di=erent address from that on the personnel .le.33 The ,abor Arbiter
asserted the principle that in all termination cases, strict compliance by the employer "ith the demands of
procedural and substantive due process is a condition -ine qua non for the same to be declared valid.3)
0n appeal, the 1,/C !econd +ivision set aside the ,abor Arbiter's (eci-ion and ordered the dismissal of the
complaint for lack of merit.3$ The 1,/C held that the A&abons "ere not able to refute the assertion that for
the payroll period endin& on 3* 'ebruary 3HHH, 9ir&ilio and 8enny A&abon "orked for only t"o and one#half
F)fG and three F$G days, respectively. It disputed the earlier .ndin& that /iviera 6omes had kno"n of the
chan&e in address, notin& that the address indicated in the
identi.cation cards "as not the A&abons, but that of the persons "ho should be noti.ed in case of emer&ency
concernin& the employee.3( Thus, proper service of the notice "as deemed to have been accomplished.
'urther, the notices evinced &ood reason to believe that the A&abons had not been dismissed, but had
instead abandoned their <obs by refusin& to report for "ork.
In support of its conclusion that the A&abons had abandoned their "ork, the 1,/C also observed that the
A&abons did not seek reinstatement, but only separation pay. >hile the choice of relief "as premised by the
A&abons on their purported strained relations "ith /iviera 6omes, the 1,/C pointed out that such claim "as
Pa&e #45 of #$%
amply belied by the fact that the A&abons had actually sou&ht a conference "ith /iviera 6omes in 8une of
3HHH. The 1,/C like"ise found that the failure of the ,abor Arbiter to <ustify the a"ard of e5traneous money
claims, such as holiday and service incentive leave pay, con.rmed that there "as no proof to <ustify such
claims.
A #etition .or 'ertiorari "as promptly .led "ith the Court of Appeals by the A&abons, imputin& &rave abuse of
discretion on the part of the 1,/C in dismissin& their complaint for ille&al dismissal. In a (eci-ion3* dated )$
8anuary )AA$, the Court of Appeals a?rmed the .ndin& that the A&abons had abandoned their employment.
It noted that the t"o elements constitutin& abandonment had been established, to "itK the failure to report
for "ork or absence "ithout valid <usti.able reason, andL a clear intention to sever the employer#employee
relationship. The intent to sever the employer#employee relationship "as buttressed by the A&abon's choice
to seek not reinstatement, but separation pay. The Court of Appeals like"ise found that the service of the
notices "ere valid, as the A&abons did not notify /iviera 6omes of their chan&e of address, and thus the
failure to return to "ork despite notice amounted to abandonment of "ork.
6o"ever, the Court of Appeals reversed the 1,/C as re&ards the denial of the claims for holiday pay, service
incentive leave pay, and the balance of 9ir&ilio A&abon's thirteenth F3$thG month pay. It ruled that the failure
to adduce proof in support thereof "as not fatal and that the burden of provin& that such bene.ts had already
been paid rested on /iviera 6omes.3% 7iven that /iviera 6omes failed to present proof of payment to the
A&abons of their holiday pay and service incentive leave pay for the years 3HH%, 3HHD and 3HH2, the Court of
Appeals chose to believe that such bene.ts had not actually been received by the employees. It also ruled
that the apparent deductions made by /iviera 6omes on the thirteenth F3$thG month pay of 9ir&ilio A&abon
violated !ection 3A of the /ules and /e&ulations Implementin& Presidential +ecree 1o. 2*3. 3D Accordin&ly,
/iviera 6omes "as ordered to pay the A&abons holiday for four F(G re&ular holidays in 3HH%, 3HHD and 3HH2,
as "ell as their service incentive leave pay for said years, and the balance of 9ir&ilio A&abon's thirteenth
F3$thG month pay for 3HH2 in the amount of T"o Thousand 0ne 6undred 'ifty Pesos FP),3*A.AAG.32
In their #etition .or Re&iew, the A&abons claim that they had been ille&ally dismissed, reassertin& their
version of events, thusK F3G that they had not been &iven ne" assi&nments since )$ 'ebruary 3HHHL F)G that
they "ere told that they "ould only be re#hired on a Bpakya"B basis, andL F$G that /iviera 6omes had
kno"in&ly sent the notices to their old address despite its kno"led&e of their chan&e of address as indicated
in the identi.cation cards.3H 'urther, the A&abons note that only one notice "as sent to each of them, in
violation of the rule that the employer must furnish t"o "ritten notices before termination E the .rst to
apprise the employee of the cause for "hich dismissal is sou&ht, and the second to notify the employee of
the decision of dismissal.)A The A&abons like"ise maintain that they did not seek reinstatement o"in& to the
strained relations bet"een them and /iviera 6omes.
The A&abons present to this Court only one issue, i.e.K "hether or not they "ere ille&ally dismissed from their
employment.)3 There are several dimensions thou&h to this issue "hich "arrant full consideration.
5*e 6,anon/ent (i/en-ion
Re&iew o. 4actual 4inin% o. 6,anon/ent
As the (eci-ion points out, abandonment is characteri:ed by the failure to report for "ork or absence "ithout
valid or <usti.able reason, and a clear intention to sever the employer#employee relationship. The question of
"hether or not an employee has abandoned employment is essentially a factual issue.)) The 1,/C and the
Court of Appeals, both appropriate triers of fact, concluded that the A&abons had actually abandoned their
employment, thus there is little need for deep inquiry into the correctness of this factual .ndin&. There is no
doubt that the A&abons stopped reportin& for "ork sometime in 'ebruary of 3HHH. And there is no evidence
to support their assertion that such absence "as due to the deliberate failure of /iviera 6omes to &ive them
"ork. There is also the fact, as noted by the 1,/C and the Court of Appeals, that the A&abons did not pray for
reinstatement, but only for separation
pay and money claims.)$ This failure indicates their disinterest in maintainin& the employer#employee
relationship and their unabated avo"ed intent to sever it. Their e5cuse that strained relations bet"een them
and /iviera 6omes rendered reinstatement no lon&er feasible "as hardly &iven credence by the 1,/C and the
Court of Appeals.)(
The contrary conclusion arrived at by the ,abor Arbiter as re&ards abandonment is of little bearin& to the
case. All that the ,abor Arbiter said on that point "as that /iviera 6omes "as not able to refute the A&abons'
claim that they "ere terminated on )$ 'ebruary 3HHH.)* The ,abor Arbiter did not e5plain "hy or ho" such
.ndin& "as reachhy or ho" such .ndin& "as reachhe A&abons "as more credible than that of /iviera 6omes'.
-ein& bereft of reasonin&, the conclusion deserves scant consideration.
'o/pliance wit* Notice Require/ent
At the same time, both the 1,/C and the Court of Appeals failed to consider the apparent fact that the rules
&overnin& notice of termination "ere not complied "ith by /iviera 6omes. !ection ), -ook 9, /ule YYIII of the
Pa&e #41 of #$%
0mnibus /ules Implementin& the ,abor Code FImplementin& /ulesG speci.cally provides that for termination
of employment based on <ust causes as de.ned in Article )2), there must beK F3G "ritten notice served on the
employee specifyin& the &rounds for termination and &ivin& employee reasonable opportunity to e5plain
hisJher sideL F)G a hearin& or conference "herein the employee, "ith the assistance of counsel if so desired, is
&iven opportunity to respond to the char&e, present his evidence or rebut evidence presented a&ainst
himJherL and F$G "ritten notice of termination served on the employee indicatin& that upon due consideration
of all the circumstances, &rounds have been established to <ustify termination.
At the same time, !ection ), -ook 9, /ule YYIII of the Implementin& /ules does not require strict compliance
"ith the above procedure, but only that the same be Bsubstantially observed.B
/iviera 6omes maintains that the letters it sent on 3A March 3HHH to the A&abons su?ciently complied "ith
the notice rule. These identically "orded letters noted that the A&abons had stopped "orkin& "ithout
permission that they failed to return for "ork despite havin& been repeatedly told to report to the o?ce and
resume their employment.)% The letters ended "ith an invitation to the A&abons to report back to the o?ce
and return to "ork.)D
The apparent purpose of these letters "as to advise the A&abons that they "ere "elcome to return back to
"ork, and not to notify them of the &rounds of termination. !till, considerin& that only substantial compliance
"ith the notice requirement is required, I am prepared to say that the letters su?ciently conform to the .rst
notice required under the Implementin& /ules. The purpose of the .rst notice is to duly inform the employee
that a particular trans&ression is bein& considered a&ainst him or her, and that an opportunity is bein&
o=ered for him or her to respond to the char&es. The letters served the purpose of informin& the A&abons of
the pendin& matters becloudin& their employment, and e5tendin& them the opportunity to clear the air.
Contrary to the A&abons' claim, the letter#notice "as correctly sent to the employee's last kno"n address, in
compliance "ith the Implementin& /ules. There is no dispute that these letters "ere not actually received by
the A&abons, as they had apparently moved out of the address indicated therein. !till, the letters "ere sent
to "hat /iviera 6omes kne" to be the A&abons' last kno"n address, as indicated in their personnel .le. The
A&abons insist that /iviera 6omes had kno"n of the chan&e of address, o=erin& as proof their company I+s
"hich purportedly print out their correct ne" address. ;et, as pointed out by the 1,/C and the Court of
Appeals, the addresses indicated in the I+s are not the A&abons, but that of the person "ho is to be noti.ed
in case on emer&ency involve either or both of the A&abons.
The actual violation of the notice requirement by /iviera 6omes lies in its failure to serve on the A&abons the
second notice "hich should inform them of termination. As the (eci-ion notes, /iviera 6omes' ar&ument that
sendin& the second notice "as useless due to the chan&e of address is inutile, since the Implementin& /ules
plainly require that the notice of termination should be served at the employee's last kno"n address.
The importance of sendin& the notice of termination should not be triviali:ed. The termination letter serves as
indubitable proof of loss of employment, and its receipt compels the employee to evaluate his or her ne5t
options. >ithout such notice, the employee may be left uncertain of his fateL thus, its service is mandated by
the Implementin& /ules. 1on#compliance "ith the notice rule, as evident in this case, contravenes the
Implementin& /ules. &"t does t9e vio.ation serve to inva.idate t9e ACa3onsA dis2issa. Bor R"st
a"se>
T$e So0C(lled Constitution(l L(. 8i'ension
8ustices Puno and Pan&aniban opine that the A&abons should be reinstated as a consequence of the violation
of the notice requirement. I respectfully disa&ree, for the reasons e5pounded belo".
'on-titutional 'on-ieration-
!. (ue #roce-- an t*e Notice-<earin%
Require/ent in La,or 5er/ination 'a-e-
8ustice Puno proposes that the failure to render due notice and hearin& prior to dismissal for <ust cause
constitutes a violation of the constitutional ri&ht to due process. This vie", as ackno"led&ed by 8ustice Puno
himself, runs contrary to the Court's pronouncement in $errano &. NLR')2 that the absence of due notice and
hearin& prior to dismissal, if for <ust cause, violates statutory due process.
The ponencia of 8ustice 9icente 9. Mendo:a in $errano provides this co&ent overvie" of the history of the
doctrineK
Indeed, to contend that the notice requirement in the ,abor Code is an aspect of due process is to
overlook the fact that Art. )2$ had its ori&in in Art. $A) of the !panish Code of Commerce of 322)
"hich &ave either party to the employer#employee relationship the ri&ht to terminate their
relationship by &ivin& notice to the other one month in advance. In lieu of notice, an employee could
be laid o= by payin& him a /e-aa equivalent to his salary for one month. This provision "as
repealed by Art. ))DA of the Civil Code, "hich took e=ect on Au&ust $A, 3H*A. -ut on 8une 3), 3H*(,
Pa&e #44 of #$%
/.A. 1o. 3A*), other"ise kno"n as the Termination Pay ,a", "as enacted revivin& the mesada. 0n
8une )3, 3H*D, the la" "as amended by /.A. 1o. 3D2D providin& for the &ivin& of advance notice for
every year of service.)H
nder !ection 3 of the Termination Pay ,a", an employer could dismiss an employee "ithout <ust cause by
servin& "ritten notice on the employee at least one month in advance or one#half month for every year of
service of the employee, "hichever "as lon&er.$A 'ailure to serve such "ritten notice entitled the employee
to compensation equivalent to his salaries or "a&es correspondin& to the required period of notice from the
date of termination of his employment.
6o"ever, there "as no similar "ritten notice requirement under the Termination Pay ,a" if the dismissal of
the employee "as for <ust cause. The Court, speakin& throu&h 8ustice 8-, /eyes, ruled in #*il. Re2nin% 'o. &.
GarciaK$3
M/epublicN Act 3A*), as amended by /epublic Act 3D2D, impliedly reco&ni:es the ri&ht of the employer
to dismiss his employees Fhired "ithout de.nite periodG "hether for <ust case, as therein de.ned or
enumerated, or "ithout it. IB t9ere 3e R"st a"se, t9e e2p.o?er is not reT"ired to serve an?
notie oB dis9arCe nor to dis3"rse ter2ination pa? to t9e e2p.o?ee. 555$)
Clearly, the Court, prior to the enactment of the ,abor Code, "as ill#receptive to the notion that termination
for <ust cause "ithout notice or hearin& violated the constitutional ri&ht to due process. 1onetheless, the
Court reco&ni:ed an a"ard of dama&es as the appropriate remedy. In Gal-i/ &. #N+,$$ the Court heldK
0f course, the employer's prero&ative to dismiss employees hired "ithout a de.nite period may be
"ith or "ithout cause. -ut if the manner in "hich such ri&ht is e5ercised is abusive, the employer
stands to ans"er to the dismissed employee for dama&es.$(
The Termination Pay ,a" "as amon& the repealed la"s "ith the enactment of the ,abor Code in 3HD(.
!i&ni.cantly, the ,abor Code, in its inception, did not require notice or hearin& before an employer could
terminate an employee for <ust cause. As 8ustice Mendo:a e5plainedK
>here the termination of employment "as for a <ust cause, no notice "as required to be &iven to the
employee. It "as only on !eptember (, 3H23 that notice "as required to be &iven even "here the
dismissal or termination of an employee "as for cause. This "as made in the rules issued by the then
Minister of ,abor and 4mployment to implement -.P. -l&. 3$A "hich amended the ,abor Code. And it
"as still much later "hen the notice requirement "as embodied in the la" "ith the amendment of
Art. )DDFbG by /.A. 1o. %D3* on March ), 3H2H.$*
It cannot be denied thou&h that the thinkin& that absence of notice or hearin& prior to termination constituted
a constitutional violation has &ained a <urisprudential foothold "ith the Court. 8ustice Puno, in his (i--entin%
!pinion, cites several cases in support of this theory, be&innin& "ith +atan%a- La%una 5aya,a- +u- 'o. &.
'ourt o. 6ppeal-$% "herein "e held that Bthe failure of petitioner to &ive the private respondent the bene.t
of a hearin& before he "as dismissed constitutes an infrin&ement on his constitutional ri&ht to due process of
la".$D
!till, this theory has been refuted, pellucidly and e=ectively to my mind, by 8ustice Mendo:a's disquisition
in $errano, thusK
555 There are three reasons "hy, on the other hand, violation by the employer of the notice
requirement cannot be considered a denial of due process resultin& in the nullity of the employee's
dismissal or layo=.
The .rst is that the +ue Process Clause of the Constitution is a limitation on &overnmental po"ers. It
does not apply to the e5ercise of private po"er, such as the termination of employment under the
,abor Code. This is plain from the te5t of Art. III, g3 of the Constitution, vi:.K B1o person shall be
deprived of life, liberty, or property "ithout due process of la". . . .B The reason is simpleK 0nly the
!tate has authority to take the life, liberty, or property of the individual. The purpose of the +ue
Process Clause is to ensure that the e5ercise of this po"er is consistent "ith "hat are considered
civili:ed methods.
The second reason is that notice and hearin& are required under the +ue Process Clause before the
po"er of or&ani:ed society are brou&ht to bear upon the individual. This is obviously not the case of
termination of employment under Art. )2$. 6ere the employee is not faced "ith an aspect of the
adversary system. The purpose for requirin& a $A#day "ritten notice before an employee is laid o= is
not to a=ord him an opportunity to be heard on any char&e a&ainst him, for there is none. The
purpose rather is to &ive him time to prepare for the eventual loss of his <ob and the +0,4 an
opportunity to determine "hether economic causes do e5ist <ustifyin& the termination of his
employment.
Pa&e #4% of #$%
555
The third reason "hy the notice requirement under Art. )2$ can not be considered a requirement of
the +ue Process Clause is that the employer cannot really be e5pected to be entirely an impartial
<ud&e of his o"n cause. This is also the case in termination of employment for a <ust cause under Art.
)2) Fi.e., serious misconduct or "illful disobedience by the employee of the la"ful orders of the
employer, &ross and habitual ne&lect of duties, fraud or "illful breach of trust of the employer,
commission of crime a&ainst the employer or the latter's immediate family or duly authori:ed
representatives, or other analo&ous casesG.$2
The Court in the landmark case of #eople &. ;arti$H clari.ed the proper dimensions of the -ill of /i&hts.
That the -ill of /i&hts embodied in the Constitution is not meant to be invoked a&ainst acts of private
individuals .nds support in the deliberations of the Constitutional Commission. True, the liberties
&uaranteed by the fundamental la" of the land must al"ays be sub<ect to protection. -ut protection
a&ainst "homP Commissioner -ernas in his sponsorship speech in the -ill of /i&hts ans"ers the query
"hich he himself posed, as follo"sK
B'irst, the &eneral reOections. The protection of fundamental liberties in the essence of
constitutional democracy. Protection a&ainst "homP Protection a&ainst the state. The -ill of
/i&hts &overns the relationship bet"een the individual and the state. Its concern is not the
relation bet"een individuals, bet"een a private individual and other individuals. >hat the -ill
of /i&hts does is to declare some forbidden :ones in the private sphere inaccessible to any
po"er holder.B F!ponsorship !peech of Commissioner -ernasL /ecord of the Constitutional
Commission, 9ol. 3, p. %D(L 8uly 3D,3H2%L Italics suppliedG(A
I do not doubt that requirin& notice and hearin& prior to termination for <ust cause is an admirable sentiment
borne out of basic equity and fairness. !till, it is not a constitutional requirement that can impose itself on the
relations of private persons and entities. !imply put, the -ill of /i&hts a=ords protection a&ainst possible
!tate oppression a&ainst its citi:ens, but not a&ainst an un<ust or repressive conduct by a private party
to"ards another.
8ustice Puno characteri:es the notion that constitutional due process limits &overnment action alone
as Spa--M ,B and adverts to nou&elle &a%ue theories "hich assert that private conduct may be restrained by
constitutional due process. 6is dissent alludes to the American e5perience makin& references to the post#Civil
>arJpre#>orld >ar II era "hen the ! !upreme Court seemed overly solicitous to the ri&hts of bi& business
over those of the "orkers.
Theories, no matter ho" entrancin&, remain theoretical unless adopted by le&islation, or more controversially,
by <udicial opinion. There "ere a fe" decisions of the ! !upreme Court that, ostensibly, imposed on private
persons the values of the constitutional &uarantees. 6o"ever, in decidin& the cases, the American 6i&h Court
found it necessary to link the actors to adequate elements of the B!tateB since the 'ourteenth Amendment
plainly be&ins "ith the "ords B1o !tate shallTB(3
More crucially to the American e5perience, it had become necessary to pass le&islation in order to compel
private persons to observe constitutional values. >hile the equal protection clause "as deemed su?cient by
the >arren Court to bar racial se&re&ation in public facilities, it necessitated enactment of the Civil /i&hts
Acts of 3H%( to prohibit se&re&ation as enforced by private persons "ithin their property. In this <urisdiction, I
have trust in the statutory re&ime that &overns the correction of private "ron&s. There are thousands of
statutes, some penal or re&ulatory in nature, that are the source of actionable claims a&ainst private persons.
There is even no stoppin& the !tate, throu&h the le&islative cauldron, from compellin& private individuals,
under pain of le&al sanction, into observin& the norms ordained in the -ill of /i&hts.
8ustice Pan&aniban's $eparate !pinion asserts that corporate behemoths and even individuals may no" be
sources of abuses and threats to human ri&hts and liberties.() The concern is not unfounded, but appropriate
remedies e5ist "ithin our statutes, and so resort to the constitutional trump card is not necessary. 4ven if "e
"ere to en&a&e the premise, the proper <uristic e5ercise should be to e5amine "hether an employer has
taken the attributes of the !tate so that it could be compelled by the Constitution to observe the proscriptions
of the -ill of /i&hts. -ut the strained analo&y simply does not square since the attributes of an employer are
starkly incon&ruous "ith those of the !tate. 4mployers plainly do not possess the a"esome po"ers and the
tremendous resources "hich the !tate has at its command.
The di=erences bet"een the !tate and employers are not merely literal, but e5tend to their very essences.
nlike the !tate, the rai-on ?etre of employers in business is to accumulate pro.ts. Perhaps the !tate and
the employer are similarly capacitated to inOict in<ury or discomfort on persons under their control, but the
same po"er is also possessed by a school principal, hospital administrator, or a reli&ious leader, amon& many
others. Indeed, the scope and reach of authority of an employer pales in comparison "ith that of the !tate.
There is no basis to conclude that an employer, or even the employer class, may be deemed a e .acto state
Pa&e #4) of #$%
and on that premise, compelled to observe the -ill of /i&hts. There is simply no ne5us in their functions,
dista= as they are, that renders it necessary to accord the same <urisprudential treatment.
It may be so, as alluded in the dissent of 8ustice Puno, that a conservative court system overly solicitous to
the concerns of business may consciously &ut a"ay at ri&hts or privile&es o"in& to the labor sector. This
certainly happened before in the nited !tates in the early part of the t"entieth century, "hen the
pro&ressive labor le&islation such as that enacted durin& President /oosevelt's 1e" +eal re&ime E most of
them addressin& problems of labor E "ere struck do"n by an arch#conservative Court.($ The preferred
rationale then "as to enshrine "ithin the constitutional order business prero&atives, renderin& them superior
to the e5press le&islative intent. Curiously, follo"in& its <udicial philosophy at the time the . !. !upreme
Court made due process &uarantee to"ards employers prevail over the police po"er to defeat the cause of
labor.((
0f course, this Court should not be insensate to the means and methods by "hich the entrenched po"erful
class may maneuver the socio#political system to ensure self#preservation. 6o"ever, the remedy to ri&ht"ard
<udicial bias is not left"ard <udicial bias. The more proper <udicial attitude is to &ive due respect to le&islative
prero&atives, re&ardless of the ideolo&ical sauce they are dipped in.
>hile the -ill of /i&hts maintains a position of primacy in the constitutional hierarchy, (* it has scope and
limitations that must be respected and asserted by the Court, even thou&h they may at times serve
some"hat bitter ends. The dissentin& opinions are palpably distressed at the e=ect of the (eci-ion, "hich "ill
undoubtedly provoke those reOe5ively sympathetic to the labor class. -ut hapha:ard le&al theory cannot be
used to <ustify the obverse result. The adoption of the dissentin& vie"s "ould &ive rise to all sorts of absurd
constitutional claims. An e5communicated Catholic mi&ht demand hisJher reinstatement into the &ood &races
of the Church and into communion on the &round that e5communication "as violative of the constitutional
ri&ht to due process. A celebrity contracted to endorse Pepsi Cola mi&ht sue in court to void a stipulation that
prevents himJher from sin&in& the praises of Coca Cola once in a "hile, on the &round that such stipulation
violates the constitutional ri&ht to free speech. An employee mi&ht sue to prevent the employer from readin&
out&oin& e#mail sent throu&h the company server usin& the company e#mail address, on the &round that the
constitutional ri&ht to privacy of communication "ould be breached.
The above concerns do not in any"ay serve to triviali:e the interests of labor. -ut "e must avoid overarchin&
declarations in order to <ustify an end result bene.cial to labor. I dread the doctrinal acceptance of the notion
that the -ill of /i&hts, on its o"n, a=ords protection and sanctuary not <ust from the acts of !tate but also
from the conduct of private persons. 1atural and <uridical persons "ould hesitate to interact for fear that a
misstep could lead to their bein& char&ed in court as a constitutional violator. Private institutions that thrive
on their e5clusivity, such as churches or cliquish &roups, could be forced to rene&e on their traditional tenets,
includin& vo"s of secrecy and the like, if deemed by the Court as inconsistent "ith the -ill of /i&hts. Indeed,
that fundamental ri&ht of all private persons to be let alone "ould be forever diminished because of a
questionable notion that contravenes "ith centuries of political thou&ht.
It is not di?cult to be enraptured by novel le&al ideas. Their characteri:ation is susceptible to the same
marketin& traps that hook consumers to ne" products. >ith the help of unique "rappin&, a catchy label, and
testimonials from professed e5perts from e5otic lands, a malodorous idea may &ain "ide acceptance, even
amon& those self#possessed "ith their o"n hei&htened senses of perception. ;et before "e <oin the mad rush
in order to proclaim a theory as Bbrilliant,B a ri&orous test must .rst be employed to determine "hether it
complements or contradicts our o"n system of la"s and <uristic thou&ht. >ithout such analysis, "e run the
risk of abne&atin& the doctrines "e have fostered for decades and the protections they may have implanted
into our "ay of life.
!hould the Court adopt the vie" that the -ill of /i&hts may be invoked to invalidate actions by private entities
a&ainst private individuals, the Court "ould open the Oood&ates to, and the docket "ould be s"amped "ith,
liti&ations of the scurrilous sort. 8ust as patriotism is the last refu&e of scoundrels, the broad constitutional
claim is the .nal resort of the desperate liti&ant.
'on-titutional #rotection o. La,or
The provisions of the 3H2D Constitution a?rm the primacy of labor and advocate a multi#faceted state policy
that a=ords, amon& others, full protection to labor. !ection 32, Article II thereof providesK
The !tate a?rms labor as a primary social economic force. It shall protect the ri&hts of "orkers and
promote their "elfare.
'urther, !ection $, Article YIII statesK
The !tate shall a=ord full protection to labor, local and overseas, or&ani:ed and unor&ani:ed, and
promote full employment and equal employment opportunities for all.
It shall &uarantee the ri&hts of all "orkers to self#or&ani:ation, collective bar&ainin& and ne&otiations,
Pa&e #4$ of #$%
and peaceful concerted activities, includin& the ri&ht to strike in accordance "ith la". They shall be
entitled to security to tenure, humane conditions of "ork, and a livin& "a&e. They shall also
participate in policy and decision#makin& processes a=ectin& their ri&hts and bene.ts as may be
provided by la".
The !tate shall promote the principle of shared responsibility bet"een "orkers and employers and the
preferential use of voluntary modes in settlin& disputes, includin& conciliation, and shall enforce their
mutual compliance there"ith to foster industrial peace.
The !tate shall re&ulate the relations bet"een "orkers and employers, reco&ni:in& the ri&ht of labor
to its <ust share in the fruits of production and the ri&ht of enterprises to reasonable returns on
investments, and to e5pansion and &ro"th.
The constitutional enshrinement of the &uarantee of full protection of labor is not novel to the 3H2D
Constitution. !ection %, Article YI9 of the 3H$* Constitution readsK
The !tate shall a=ord protection to labor, especially to "orkin& "omen, and minors, and shall re&ulate
the relations bet"een the lando"ner and tenant, and bet"een labor and capital in industry and in
a&riculture. The !tate may provide for compulsory arbitration.
!imilarly, amon& the principles and state policies declared in the 3HD$ Constitution, is that provided in
!ection H, Article II thereofK
The !tate shall a=ord full protection to labor, promote full employment and equality in employment,
ensure equal "ork opportunities re&ardless of se5, race or creed, and re&ulate the relations bet"een
"orkers and employers. The !tate shall assure the ri&hts of "orkers to self#or&ani:ation, collective
bar&ainin&, security of tenure, and <ust and humane conditions of "ork. The !tate may provide for
compulsory arbitration.
0n the other hand, prior to the 3HD$ Constitution, the ri&ht to security of tenure could only be found in
le&islative enactments and their respective implementin& rules and re&ulations. It "as only in the 3HD$
Constitution that security of tenure "as elevated as a constitutional ri&ht. The development of the concept of
security of tenure as a constitutionally reco&ni:ed ri&ht "as discussed by this Court in +#" 'reit 'orporation
&. NLR',(% to "itK
The enthronement of the "orker's ri&ht to security or tenure in our fundamental la" "as not achieved
overni&ht. 'or all its liberality to"ards labor, our 3H$* Constitution did not elevate the ri&ht as a
constitutional ri&ht. 'or a lon& time, the "orker's security of tenure had only the protective mantle of
statutes and their interpretative rules and re&ulations. It "as as uncertain protection that sometimes
yielded to the political permutations of the times. It took labor nearly four decades of s"eat and tears
to persuade our people thru their leaders, to e5alt the "orker's ri&ht to security of tenure as a
sacrosanct constitutional ri&ht. It "as Article II, section ) MHN of our 3HD$ Constitution that declared as
a policy that the !tate shall assure the ri&ht of "orker's to security tenure. The 3H2D Constitution is
even more solicitous of the "elfare of labor. !ection $ of its Article YIII mandates that the !tate shall
a=ord full protection to labor and declares that all "orkers shall be entitled to security of tenure.
Amon& the enunciated !tate policies are the
promotion of social <ustice and a <ust and dynamic social order. In contrast, the prero&ative of
mana&ement to dismiss a "orker, as an aspect of property ri&ht, has never been endo"ed "ith a
constitutional status.
The unequivocal constitutional declaration that all "orkers shall be entitled to security of tenure
spurred our la"makers to stren&then the protective "alls around this hard earned ri&ht. The ri&ht "as
protected from undue infrin&ement both by our substantive and procedural la"s. Thus, the causes for
dismissin& employees "ere more de.ned and restrictedL on the other hand, the procedure of
termination "as also more clearly delineated. These substantive and procedural la"s must be strictly
complied "ith before a "orker can be dismissed from his employment.(D
It is quite apparent that the constitutional protection of labor "as entrenched more than ei&ht decades a&o,
yet such did not prevent this Court in the past from a?rmin& dismissals for <ust cause "ithout valid notice.
1or "as there any pretense made that this constitutional ma5im a=orded a laborer a positive ri&ht a&ainst
dismissal for <ust cause on the &round of lack of valid prior notice. As demonstrated earlier, it "as only after
the enactment of the ,abor Code that the doctrine relied upon by the dissentin& opinions became en &o%ue.
This point hi&hli&hts my position that the violation of the notice requirement has statutory moorin&s, not
constitutional.
It should be also noted that the 3H2D Constitution also reco&ni:es the principle of shared responsibility
bet"een "orkers and employers, and the ri&ht of enterprise to reasonable returns, e5pansion, and &ro"th.
>hatever perceived imbalance there mi&ht have been under previous incarnations of the provision have been
Pa&e #4( of #$%
obviated by !ection $, Article YIII.
In the case of ;anila #rince <otel &. G$"$,(2 "e a?rmed the presumption that all constitutional provisions are
self#e5ecutin&. >e reasoned that to declare other"ise "ould result in the pernicious situation "herein by
mere inaction and disre&ard by the le&islature, constitutional mandates "ould be rendered ine=ectual. Thus,
"e heldK
As a&ainst constitutions of the past, modern constitutions have been &enerally ed upon a di=erent
principle and have often become in e=ect e5tensive codes of la"s intended to operate directly upon
the people in a manner similar to that of statutory enactments, and the function of constitutional
conventions has evolved into one more like that of a le&islative body. 6ence, unless it is e5pressly
provided that a le&islative act is necessary to enforce a constitutional mandate, the presumption no"
is that all provisions of the constitution are self#e5ecutin&. If the constitutional provisions are treated
as requirin& le&islation instead of self#e5ecutin&, the le&islature "ould have the po"er to i&nore and
practically nullify the mandate of the fundamental la". This can be cataclysmic. That is "hy the
prevailin& vie" is, as it has al"ays been, that E
. . . in case of doubt, the Constitution should be considered self#e5ecutin& rather than non#self#
e5ecutin&. . . . nless the contrary is clearly intended, the provisions of the Constitution
should be considered self#e5ecutin&, as a contrary rule "ould &ive the le&islature discretion to
determine "hen, or "hether, they shall be e=ective. These provisions "ould be subordinated
to the "ill of the la"makin& body, "hich could make them entirely meanin&less by simply
refusin& to pass the needed implementin& statute.(H
In further discussin& self#e5ecutin& provisions, this Court stated thatK
In self#e5ecutin& constitutional provisions, the le&islature may still enact le&islation to facilitate the
e5ercise of po"ers directly &ranted by the constitution, further the operation of such a provision,
prescribe a practice to be used for its enforcement, provide a convenient remedy for the protection of
the ri&hts secured or the determination thereof, or place reasonable safe&uards around the e5ercise
of the ri&ht. The mere fact that le&islation may supplement and add to or prescribe a penalty for the
violation of a self#e5ecutin& constitutional provision does not render such a provision ine=ective in the
absence of such le&islation. The omission from a constitution of any e5press provision for a remedy
for enforcin& a ri&ht or liability is not necessarily an indication that it "as not intended to be self#
e5ecutin&. The rule is that a self#e5ecutin& provision of the constitution does not necessarily e5haust
le&islative po"er on the sub<ect, but any le&islation must be in harmony "ith the constitution, further
the e5ercise of constitutional ri&ht and make it more available. !ubsequent le&islation ho"ever does
not necessarily mean that the sub<ect constitutional provision is not, by itself, fully enforceable.*A
Thus, the constitutional mandates of protection to labor and security of tenure may be deemed as self#
e5ecutin& in the sense that these are automatically ackno"led&ed and observed "ithout need for any
enablin& le&islation. 6o"ever, to declare that the constitutional provisions are enou&h to &uarantee the full
e5ercise of the ri&hts embodied therein, and the reali:ation of ideals therein e5pressed, "ould be impractical,
if not unrealistic. The espousal of such vie" presents the dan&erous tendency of bein& overbroad and
e5a&&erated. The &uarantees of Bfull protection to laborB and Bsecurity of tenureB, "hen e5amined in
isolation, are facially unquali.ed, and the broadest interpretation possible su&&ests a blanket shield in favor
of labor a&ainst any form of removal re&ardless of circumstance. This interpretation implies an
unimpeachable ri&ht to continued employment#a utopian notion, doubtless#but still hardly "ithin the
contemplation of the framers. !ubsequent le&islation is still needed to de.ne the parameters of these
&uaranteed ri&hts to ensure the protection and promotion, not only the ri&hts of the labor sector, but of the
employers' as "ell. >ithout speci.c and pertinent le&islation, <udicial bodies "ill be at a loss, formulatin&
their o"n conclusion to appro5imate at least the aims of the Constitution.
ltimately, therefore, !ection $ of Article YIII cannot, on its o"n, be a source of a positive enforceable ri&ht to
stave o= the dismissal of an employee for <ust cause o"in& to the failure to serve proper notice or hearin&. As
manifested by several framers of the 3H2D Constitution, the provisions on social <ustice require le&islative
enactments for their enforceability. This is reOected in the record of debates on the social <ustice provisions of
the ConstitutionK
M!. M'4,ICITA! !.N ASI10K >e appreciate the concern of the Commissioner. -ut this Committee Mon
!ocial 8usticeN has actually become t9e Bor"2 a.read? oB a .ot oB speiM Crievanes and
speiM de2ands, s"9 t9at "nderstanda3.?, De 2a? 9ave 3een, at one ti2e or anot9er,
danCero"s.? treadinC into t9e B"ntions oB .eCis.ation. 0ur only plea to the Commission is to
focus our perspective on the matter of social <ustice and its ri&htful place in the Constitution. :9at
De envision 9ere is a 2andate speiM eno"C9 t9at Do".d Cive i2pet"s Bor stat"tor?
i2p.e2entation. :e Do".d a"tion o"rse.ves in ter2s oB t9e R"diio"s eNerise oB se.B*
ensors9ip aCainst treadinC into t9e B"ntions oB .eCis.ation. Femphasis suppliedG*3
Pa&e #4, of #$%
555
M',0/41^ +.N /47A,A+0K I notice that the 3H$* Constitution had only one section on social <usticeL
the same is true "ith the 3HD$ Constitution. -ut they seem to have stood us in &ood steadL and I a2
a .itt.e s"rprised D9?, despite t9at atte2pt at se.B*ensors9ip, t9ere are ertain provisions
9ere D9i9 are proper.? Bor .eCis.ation.*)
555
-I!60P MT40+0/0 !.N -ACA1IK MIN think the distinction that "as &iven durin& the presentation of the
provisions on the -ill of /i&hts by Commissioner -ernas is very apropos here. He spoEe oB se.B*
eNe"tinC riC9ts D9i9 3e.onC proper.? to t9e &i.. oB RiC9ts, and t9en 9e spoEe oB a neD
3od? oB riC9ts D9i9 are 2ore oB .ai2s and t9at t9ese 9ave o2e a3o"t .arCe.? t9ro"C9
t9e DorEs oB soia. p9i.osop9ers and t9en t9e tea9inC oB t9e Popes. T9e? Bo"s on t9e
o22on Cood and 9ene, it is not as eas? to pinpoint preise.? t9ese riC9ts nor t9e sit"s
oB t9e riC9ts. And yet, they e5ist in relation to the common &ood.*$
555
M!. MMI1+A ,^ M.N S4!A+AK I t9inE t9e nitt?*Critt? oB t9is Eind oB o..a3oration Di.. 3e .eBt
to .eCis.ationbut the important thin& no" is the conservation, utili:ation or ma5imi:ation of the very
limited resources. 555
M/ICA/+0 8.N /0M,0K The other problem is that, by and lar&e, &overnment services are ine?cient.
!o, this is a problem all by itself. 0n !ection 3H, "here the report says that people's or&ani:ations as
a principal means of empo"erin& the people to pursue and protect throu&h peaceful meansT, I do
not s"ppose t9at t9e Co22ittee Do".d .iEe to eit9er pree2pt or eN."de t9e .eCis.at"re,
3ea"se t9e onept oB a representative and de2orati s?ste2 rea..? is t9at t9e
.eCis.at"re is nor2a..? t9e prinipa. 2eans.
M4+M1+0 7.N 7A/CIAK T9at is orret. In Bat, peop.e annot even drea2 oB inU"eninC t9e
o2position or t9e 2e23ers9ip oB t9e .eCis.at"re, iB t9e? do not Cet orCaniQed. It is, in fact,
a reco&nition of the principle that unless a citi:enry is or&ani:ed and mobili:ed to pursue its ends
peacefully, then it cannot really participate e=ectively.*(
There is no pretense on the part of the framers that the provisions on !ocial 8ustice, particularly !ection $ of
Article YIII, are self#e5ecutory. !till, considerin& the rule that provisions should be deemed self#e5ecutin& if
enforceable "ithout further le&islative action, an e5amination of !ection $ of Article YIII is "arranted to
determine "hether it is complete in itself as a de.nitive la", or if it needs future le&islation for completion
and enforcement.** Particularly, "e should inquire "hether or not the provision voids the dismissal of a
laborer for <ust cause if no valid notice or hearin& is attendant.
Constitutional Commissioner 'r. 8oaquin 7. -ernas makes a si&ni.cant comment on !ection $, Article YIII of
the 3H2D ConstitutionK
The MclusterN of ri&hts &uaranteed in the second para&raph are the ri&ht Bto security of tenure,
humane conditions of "ork, and a livin& "a&e.B A&ain, althou&h these have been set apart by a
period F.G from the ne5t sentence and are therefore not modi.ed by the .nal phrase Bas may be
provided by la",B it is not t9e intention to p.ae t9ese 3e?ond t9e rea9 oB va.id .aDs. 555
Femphasis suppliedG*%
At present, the ,abor Code is the primary mechanism to carry out the Constitution's directives. This is clear
from Article $*D under Chapter 3 thereof "hich essentially restates the policy on the protection of labor as
"orded in the 3HD$ Constitution, "hich "as in force at the time of enactment of the ,abor Code. It crystalli:es
the fundamental la"'s policies on labor, de.nes the parameters of the ri&hts &ranted to labor such as the
ri&ht to security of tenure, and prescribes the standards for the enforcement of such ri&hts in concrete terms.
>hile not infallible, the measures provided therein tend to ensure the achievement of the constitutional aims.
The necessity for la"s concreti:in& the constitutional principles on the protection of labor is evident in the
reliance placed upon such la"s by the Court in resolvin& the issue of the validity of a "orker's dismissal. In
cases "here that "as the issue confrontin& the Court, it consistently reco&ni:ed the constitutional ri&ht to
security of tenure and employed the standards laid do"n by prevailin& la"s in determinin& "hether such
ri&ht "as violated.*2 The Court's reference to la"s other than the Constitution in resolvin& the issue of
dismissal is an implicit ackno"led&ment that the ri&ht to security of tenure, "hile reco&ni:ed in the
Constitution, cannot be implemented uniformly absent a la" prescribin& concrete standards for its
enforcement.
As discussed earlier, the validity of an employee's dismissal in previous cases "as e5amined by the Court in
accordance "ith the standards laid do"n by Con&ress in the Termination Pay ,a", and subsequently, the
Pa&e #%+ of #$%
,abor Code and the amendments thereto. At present, the validity of an employee's dismissal is "ei&hed
a&ainst the standards laid do"n in Article )DH, as "ell as Article )2) in relation to Article )DDFbG of the ,abor
Code, for a dismissal for <ust cause, and Article )2$ for a dismissal for an authori:ed cause.
5*e 9Nect o. $tatutory 7iolation
!. Notice an <earin%
There is no doubt that the dismissal of an employee even for <ust cause, "ithout prior notice or hearin&,
violates the ,abor Code. 6o"ever, does such violation necessarily void the dismissalP
-efore I proceed "ith my discussion on dismissals for <ust causes, a brief comment re&ardin& dismissals for
authori:ed cause under Article )2$ of the ,abor Code. >hile the <usticiable question in $errano pertained to a
dismissal for unauthori:ed cause, the rulin& therein "as crafted as de.nitive to dismissals for <ust cause.
6appily, the (eci-ion today does not adopt the same un"ise tack. It should be reco&ni:ed that dismissals for
<ust cause and dismissals for authori:ed cause are &overned by di=erent provisions, entail diver&ent
requisites, and animated by distinct rationales. The lan&ua&e of Article )2$ e5pressly e=ects the termination
for authori:ed cause to the service of "ritten notice on the "orkers and the Ministry of ,abor at least one F3G
month before the intended date of termination. This constitutes an eminent di=erence than dismissals for <ust
cause, "herein the causal relation bet"een the notice and the dismissal is not e5pressly stipulated. The
circumstances distin&uishin& <ust and authori:ed causes are too markedly di=erent to be sub<ected to the
same rules and reasonin& in interpretation.
!ince the present petition is limited to a question arisin& from a dismissal for <ust cause, there is no reason for
makin& any pronouncement re&ardin& authori:ed causes. !uch declaration "ould be merely o,iter, since they
are neither the la" of the case nor dispositive of the present petition. >hen the question becomes <usticiable
before this Court, "e "ill be confronted "ith an appropriate factual milieu on "hich "e can render a more
<udicious disposition of this admittedly important question.
+. (i-/i--al .or Ju-t 'au-e
There is no e5press provision in the ,abor Code that voids a dismissal for <ust cause on the &round that there
"as no notice or hearin&. nder !ection )DH, the employer is precluded from dismissin& an employee e5cept
for a <ust cause as provided in !ection )2), or an authori:ed cause under !ections )2$ and )2(. -ased on
readin& !ection )DH alone, the e5istence of <ust cause by itself is su?cient to validate the termination.
8ust cause is de.ned by Article )2), "hich unlike Article )2$, does not condition the termination on the
service of "ritten notices. !till, the dissentin& opinions propound that even if there is <ust cause, a
termination may be invalidated due to the absence of notice or hearin&. This vie" is anchored mainly on
constitutional moorin&s, the basis of "hich I had ar&ued a&ainst earlier. 'or determination no" is "hether
there is statutory basis under the ,abor Code to void a dismissal for <ust cause due to the absence of notice
or hearin&.
As pointed out by 8ustice Mendo:a in $errano, it "as only in 3H2H that the ,abor Code "as amended to
enshrine into statute the t"in requirements of notice and hearin&.*H !uch requirements are found in Article
)DD of the ,abor Code, under the headin& BMiscellaneous Provisions.B Prior to the amendment, the notice#
hearin& requirement "as found under the implementin& rules issued by the then Minister of ,abor in 3H23.
The present#day implementin& rules like"ise mandate that the standards of due process, includin& the
requirement of "ritten notice and hearin&, Bbe substantially observed.B%A
Indubitably, the failure to substantially comply "ith the standards of due process, includin& the notice and
hearin& requirement, may &ive rise to an actionable claim a&ainst the employer. nder Article )22, penalties
may arise from violations of any provision of the ,abor Code. The !ecretary of ,abor like"ise en<oys broad
po"ers to inquire into e5istin& relations bet"een employers and employees. !ystematic violations by
mana&ement of the statutory ri&ht to due process "ould fall under the broad &rant of po"er to the !ecretary
of ,abor to investi&ate under Article )D$.
6o"ever, the remedy of reinstatement despite termination for <ust cause is simply not authori:ed by the
,abor Code. 1either the ,abor Code nor its implementin& rules states that a termination for <ust cause is
voided because the requirement of notice and hearin& "as not observed. This is not simply an inadvertent
semantic failure, but a conscious e=ort to protect the prero&atives of the employer to dismiss an employee
for <ust cause. 1otably, despite the several pronouncements by this Court in the past equatin& the notice#
hearin& requirement in labor cases to a constitutional ma5im, neither the le&islature nor the e5ecutive has
adopted the same tack, even &uttin& the protection to provide that substantial compliance "ith due process
su?ces.
The ,abor Code si&ni.cantly eroded mana&ement prero&atives in the hirin& and .rin& of employees. >hereas
employees could be dismissed even "ithout <ust cause under the Termination Pay ,a"%3, the ,abor Code
a=ords "orkers broad security of tenure. !till, the la" reco&ni:es the ri&ht of the employer to terminate for
Pa&e #%# of #$%
<ust cause. The <ust causes enumerated under the ,abor Code h serious misconduct or "illful disobedience,
&ross and habitual ne&lect, fraud or "illful breach of trust, commission of a crime by the employee a&ainst
the employer, and other analo&ous causes h are characteri:ed by the harmful behavior of an employee
a&ainst the business or the person of the employer.
These <ust causes for termination are not ne&ated by the absence of notice or hearin&. An employee "ho tries
to kill the employer cannot be ma&ically absolved of trespasses <ust because the employer for&ot to serve
due notice. 0r a less e5treme e5ample, the &ross and habitual ne&lect of an employee "ill not be improved
upon <ust because the employer failed to conduct a hearin& prior to termination.
In fact, the practical purpose of requirin& notice and hearin& is to a=ord the employee the opportunity to
dispute the contention that there "as <ust cause in the dismissal. ;et it must be understood V iB a dis2issed
e2p.o?ee is deprived oB t9e riC9t to notie and 9earinC, and t9"s denied t9e opport"nit? to
present o"ntervai.inC evidene t9at disp"tes t9e MndinC oB R"st a"se, reinstate2ent Di.. 3e
va.id not 3ea"se t9e notie and 9earinC reT"ire2ent Das not o3served, 3"t 3ea"se t9ere Das
no R"st a"se in t9e dis2issa.. The opportunity to dispute the .ndin& of the <ust cause is readily available
before the ,abor Arbiter, and the subsequent levels of appellate revie". A&ain, as held in$erranoK
4ven in cases of dismissal under Art. )2), the purpose for the requirement of notice and hearin& is not to
comply "ith the +ue Process Clause of the Constitution. The time for notice and hearin& is at the trial sta&e.
Then that is the time "e speak of notice and hearin& as the essence of procedural due process. Thus,
compliance by the employer "ith the notice requirement before he dismisses an employee does not foreclose
the ri&ht of the latter to question the le&ality of his dismissal. As Art. )DDFbG provides, BAny decision taken by
the employer shall be "ithout pre<udice to the ri&ht of the "orker to contest the validity or le&ality of his
dismissal by .lin& a complaint "ith the re&ional branch of the 1ational ,abor /elations Commission.%)
The ,abor Code presents no te5tually demonstrable commitment to invalidate a dismissal for <ust cause due
to the absence of notice or hearin&. This is not surprisin&, as such remedy "ill not restore the employer or
employee into equity. Absent a sho"in& of inte&ral causation, the mutual inOiction of "ron&s does not ne&ate
either in<ury, but instead enforces t"o independent ri&hts of relief.
5*e (a/a%e-? (i/en-ion-
6war .or (a/a%e- ;u-t <a&e $tatutory +a-i-
The Court has &rappled "ith the problem of "hat should be the proper remedial relief of an employee
dismissed "ith <ust cause, but not a=orded either notice or hearin&. In a lon& line of cases, be&innin&
"ith =enp*il 'orp. &. NLR'%$ and up until $errano in )AAA, the Court had deemed an indemni.cation a"ard
as su?cient to ans"er for the violation by the employer a&ainst the employee. 6o"ever, the doctrine "as
modi.ed in $errano.
I disa&ree "ith $errano insofar as it held that employees terminated for <ust cause are to be paid back"a&es
from the time employment "as terminated Buntil it is determined that the termination is for <ust cause
because the failure to hear him before he is dismissed renders the termination of his employment "ithout
le&al e=ect.B%( Article )DH of the ,abor Code clearly authori:es the payment of back"a&es only if an
employee is un<ustly dismissed. A dismissal for <ust cause is obviously antithetical to an un<ust dismissal. An
a"ard for back"a&es is not clearly "arranted by the la".
5*e "/propriety o. 6war .or $eparation #ay
The formula of one month's pay for every year served does have statutory basis. It is found thou&h in the
,abor Code thou&h, not the Civil Code. 4ven then, such computation is made for separation pay under the
,abor Code. -ut separation pay is not an appropriate as a remedy in this case, or in any case "herein an
employee is terminated for <ust cause. As 8ustice 9itu& noted in his separate opinion in $errano, an employee
"hose employment is terminated for a <ust cause is not entitled to the payment of separation
bene.ts.%* !eparation pay is traditionally a monetary a"ard paid as an alternative to reinstatement "hich
can no lon&er be e=ected in vie" of the lon& passa&e of time or because of the realities of the
situation.%% 6o"ever, under !ection D, /ule 3, -ook 9I of the 0mnibus /ules Implementin& the ,abor Code,
BMtNhe separation from "ork of an employee for a <ust cause does not entitle him to the termination pay
provided in the Code.B%D1either does the ,abor Code itself provide instances "herein separation pay is
"arranted for dismissals "ith <ust cause. !eparation pay is "arranted only for dismissals for authori:ed
causes, as enumerated in Article )2$ and )2( of the ,abor Code.
5*e "/propriety o. 9quity 6war-
Admittedly, the Court has in the past authori:ed the a"ard of separation pay for duly terminated employees
as a measure of social <ustice, provided that the employee is not &uilty of serious misconduct reOectin& on
moral character.%2 This doctrine is inapplicable in this case, as the A&abons are &uilty of abandonment, "hich
is the deliberate and un<usti.ed refusal of an employee to resume his employment. Abandonment is
Pa&e #%5 of #$%
tantamount to serious misconduct, as it constitutes a "illful breach of the employer#employee relationship
"ithout cause.
The a"ard of separation pay as a measure of social <ustice has no statutory basis, but clearly emanates from
the Court's so#called Bequity <urisdiction.B The Court's equity <urisdiction as a basis for a"ard, no matter "hat
form it may take, is like"ise un"arranted in this case. 4asy resort to equity should be avoided, as it should
yield to positive rules "hich pre#empt and prevail over such persuasions.%H Abstract as the concept is, it does
not admit to de.nite and ob<ective standards.
I consider the pronouncement re&ardin& the proper monetary a"ards in such cases as =enp*il 'orp. &.
NLR',DA Reta,D3and to a de&ree, even $errano as premised in part on equity. This decision is premised in
part due to the absence of cited statutory basis for these a"ards. In these cases, the Court deemed an
indemnity a"ard proper "ithout e5actly sayin& "here in statute could such a"ard be derived at. Perhaps,
equity or social <ustice can be invoked as basis for the a"ard. 6o"ever, this sort of arbitrariness,
indeterminacy and <udicial usurpation of le&islative prero&atives is precisely the source of my discontent.
!ocial <ustice should be the aspiration of all that "e do, yet I think it the more mature attitude to consider
that it ebbs and Oo"s "ithin our statutes, rather than vie" it as an independent source of fundin&.
6rticle 288 o. t*e La,or 'oe a- a $ource o. Lia,ility
Another putative source of liability for failure to render the notice requirement is Article )22 of the ,abor
Code, "hich statesK
Article )22 statesK
Penalties. E 45cept as other"ise provided in this Code, or unless the acts complained of hin&es on a
question of interpretation or implementation of ambi&uous provisions of an e5istin& collective
bar&ainin& a&reement, any violation of the provisions of this Code declared to be unla"ful or penal in
nature shall be punished "ith a .ne of not less than 0ne Thousand Pesos FP3,AAA.AAG nor more than
Ten Thousand Pesos FP3A,AAA.AAG, or imprisonment of not less than three months nor more than three
years, or both such .ne and imprisonment at the discretion of the court.
It is apparent from the provision that the penalty arises due to contraventions of the provisions of the ,abor
Code. It is also clear that the provision comes into play re&ardless of "ho the violator may be. 4ither the
employer or the employee may be penali:ed, or perhaps even o?cials tasked "ith implementin& the ,abor
Code.
6o"ever, it is apparent that Article )22 is a penal provisionL hence, the prescription for penalties such as .ne
and imprisonment. The Article is also e5plicit that the imposition of .ne or imprisonment is at the Bdiscretion
of the court.B Thus, the proceedin&s under the provision is penal in character. The criminal case has to be
instituted before the proper courts, and the ,abor Code violation sub<ect thereof duly proven in an adversarial
proceedin&. 6ence, Article )22 cannot apply in this case and serve as basis to impose a penalty on /iviera
6omes.
I also maintain that under Article )22 the penalty should be paid to the !tate, and not to the person or
persons "ho may have su=ered in<ury as a result of the violation. A penalty is a sum of money "hich the la"
requires to be paid by "ay of punishment for doin& some act "hich is prohibited or for not doin& some act
"hich is required to be done.D) A penalty should be distin&uished from dama&es "hich is the pecuniary
compensation or indemnity to a person "ho has su=ered loss, detriment, or in<ury, "hether to his person,
property, or ri&hts, on account of the unla"ful act or omission or ne&li&ence of another. Article )22 clearly
serves as a punitive .ne, rather than a compensatory measure, since the provision penali:es an act that
violates the ,abor Code even if such act does not cause actual in<ury to any private person.
Independent of the employee's interests protected by the ,abor Code is the interest of the !tate in seein& to
it that its re&ulatory la"s are complied "ith. Article )22 is intended to satiate the latter interest. 1othin& in
the lan&ua&e of Article )22 indicates an intention to compensate or remunerate a private person for in<ury he
may have sustained.
It should be noted thou&h that in $errano, the Court observed that since the promul&ation of =enp*il 'orp. &.
NLR'D$ in 3H2H, B.nes imposed for violations of the notice requirement have varied from P3,AAA.AA
to P),AAA.AA to P*,AAA.AA toP3A,AAA.AA.BD( Interestin&ly, this ran&e is the same ran&e of the penalties
imposed by Article )22. These B.nesB adverted to in $errano "ere paid to the dismissed employee. The use of
the term B.nes,B as "ell as the terminolo&y employed a fe" other cases,D* may have left an erroneous
impression that the a"ard implemented be&innin& "ith =enp*il "as based on Article )22 of the ,abor Code.
;et, an e5amination of =enp*il reveals that "hat the Court actually a"arded to the employee "as an
BindemnityB, dependent on the facts of each case and the &ravity of the omission committed by the employer.
There is no mention in =enp*il of Article )22 of the ,abor Code, or indeed, of any statutory basis for the
a"ard.
Pa&e #%1 of #$%
5*e #roper +a-i-8 9/ployer?- Lia,ility uner t*e 'i&il 'oe
As earlier stated, =enp*il allo"ed the payment of indemnity to the employee dismissed for <ust cause is
dependent on the facts of each case and the &ravity of the omission committed by the employer. 6o"ever, I
considered =enp*il Oa"ed insofar as it is silent as to the statutory basis for the indemnity a"ard. This failure,
to my mind, renders it un"ise for to reinstate the =enp*il rule, and foster the impression that it is the <udicial
business to invent a"ards for dama&es "ithout clear statutory basis.
T9e proper .eCa. 3asis Bor 9o.dinC t9e e2p.o?er .ia3.e Bor 2onetar? da2aCes to t9e e2p.o?ee
dis2issed Bor R"st a"se is t9e Civi. Code. T9e aDard oB da2aCes s9o".d 3e 2eas"red aCainst t9e
.oss or inR"r? s"Oered 3? t9e e2p.o?ee 3? reason oB t9e e2p.o?erAs vio.ation or, in ase oB
no2ina. da2aCes, t9e riC9t vindiated 3? t9e aDard. T9is is t9e proper paradiC2 a"t9oriQed 3?
o"r .aD, and desiCned to o3tain t9e Bairest possi3.e re.ieB.
nder !ection )3DF(G of the ,abor Code, the ,abor Arbiter has <urisdiction over claims for actual, moral,
e5emplary and other forms of dama&es arisin& from the employer#employee relations. It is thus the duty of
,abor Arbiters to ad<udicate claims for dama&es, and they should disabuse themselves of any inhibitions if it
does appear that an a"ard for dama&es is "arranted. As triers of facts in a speciali:ed .eld, they should
attune themselves to the particular conditions or problems attendant to employer#employee relationships,
and thus be in the best possible position as to the nature and amount of dama&es that may be "arranted in
this case.
The dama&es referred under !ection )3DF(G of the ,abor Code are those available under the Civil Code. It is
but proper that the Civil Code serve as the basis for the indemnity, it bein& the la" that re&ulates the private
relations of the members of civil society, determinin& their respective ri&hts and obli&ations "ith reference to
persons, thin&s, and civil acts.D% 1o matter ho" impressed "ith the public interest the relationship bet"een a
private employer and employee is, it still is ultimately a relationship bet"een private individuals. 1otably,
even thou&h the ,abor Code could very "ell have provided set rules for dama&es arisin& from the employer#
employee relationship, referral "as instead made to the concept of dama&es as enumerated and de.ned
under the Civil Code.
7iven the lon& controversy that has do&&ed this present issue re&ardin& dismissals for <ust cause, it is "ise to
lay do"n standards that "ould &uide the proper a"ard of dama&es under the Civil Code in cases "herein the
employer failed to comply "ith statutory due process in dismissals for <ust cause.
4ir-t. I believe that it can be maintained as a &eneral rule, that failure to comply "ith the statutory
requirement of notice automatically &ives rise to nominal dama&es, at the very least, even if the dismissal
"as sustained for <ust cause.
1ominal dama&es are ad<udicated in order that a ri&ht of a plainti= "hich has been violated or invaded by
another may be vindicated or reco&ni:ed "ithout havin& to indemnify the plainti= for any loss su=ered by
him.DD 1ominal dama&es may like"ise be a"arded in every obli&ation arisin& from la", contracts, quasi#
contracts, acts or omissions punished by la", and quasi#delicts, or "here any property ri&ht has been
invaded.
Clearly, the bare act of failin& to observe the notice requirement &ives rise to nominal dama&es assessable
a&ainst the employer and due the employee. The ,abor Code indubitably entitles the employee to notice
even if dismissal is for <ust cause, even if there is no apparent intent to void such dismissals de.ciently
implemented. It has also been held that one's employment, profession, trade, or callin& is a Bproperty ri&htB
and the "ron&ful interference there"ith &ives rise to an actionable "ron&.D2
In +etter +uilin%-, "nc. &. NLR',DH the Court ruled that the "hile the termination therein "as for <ust and
valid cause, the manner of termination "as done in complete disre&ard of the necessary procedural
safe&uards.2A The Court found nominal dama&es as the proper form of a"ard, as it "as purposed to
vindicate the ri&ht to procedural due process violated by the employer.23 A similar holdin& "as maintained
in "ran &. NLR'2) and ;alaya $*ippin% &. NLR'.2$ The doctrine has e5press statutory basis, duly reco&ni:es
the e5istence of the ri&ht to notice, and vindicates the violation of such ri&ht. It is sound, lo&ical, and should
be adopted as a &eneral rule.
The assessment of nominal dama&es is left to the discretion of the court, 2( or in labor cases, of the ,abor
Arbiter and the successive appellate levels. The authority to nominate standards &overnin& the a"ard of
nominal dama&es has clearly been dele&ated to the <udicial branch, and it "ill serve &ood purpose for this
Court to provide such &uidelines. Considerin& that the a=ected ri&ht is a property ri&ht, there is <usti.cation in
basin& the amount of nominal dama&es on the particular characteristics attachin& to the claimant's
employment. 'actors such as len&th of service, positions held, and received salary may be considered to
obtain the proper measure of nominal dama&es. After all, the de&ree by "hich a property ri&ht should be
vindicated is a=ected by the estimable value of such ri&ht.
At the same time, it should be reco&ni:ed that nominal dama&es are not meant to be compensatory, and
Pa&e #%4 of #$%
should not be computed throu&h a formula based on actual losses. Consequently, nominal dama&es usually
limited in pecuniary value.2* This fact should be impressed upon the prospective claimant, especially one
"ho is contemplatin& seekin& actualJcompensatory dama&es.
$econ. Actual or compensatory dama&es are not available as a matter of ri&ht to an employee dismissed for
<ust cause but denied statutory due process. They must be based on clear factual and le&al bases,2% and
correspond to such pecuniary loss su=ered by the employee as duly proven. 2D 4vidently, there is less de&ree
of discretion to a"ard actual or compensatory dama&es.
I reco&ni:e some inherent di?culties in establishin& actual dama&es in cases for terminations validated for
<ust cause. The dismissed employee retains no ri&ht to continued employment from the moment <ust cause
for termination e5ists, and such time most likely "ould have arrived even before the employer is liable to
send the .rst notice. As a result, an a"ard of back"a&es dis&uised as actual dama&es "ould almost never be
<usti.ed if the employee "as dismissed for <ust cause. The possible e5ception "ould be if it can be proven the
&round for <ust cause came into bein& only after the dismissed employee had stopped receivin& "a&es from
the employer.
;et it is not impossible to establish a case for actual dama&es if dismissal "as for <ust cause. Particularly
actionable, for e5ample, is if the notices are not served on the employee, thus hamperin& hisJher
opportunities to obtain ne" employment. 'or as lon& as it can be demonstrated that the failure of the
employer to observe procedural due process mandated by the ,abor Code is the pro5imate cause of
pecuniary loss or in<ury to the dismissed employee, then actual or compensatory dama&es may be a"arded.
5*ir. If there is a .ndin& of pecuniary loss arisin& from the employer violation, but the amount cannot be
proved "ith certainty, then temperate or moderate dama&es are available under Article )))( of the Civil
Code. A&ain, su?cient discretion is a=orded to the ad<udicator as re&ards the proper a"ard, and the a"ard
must be reasonable under the circumstances.22 Temperate or nominal dama&es may yet prove to be a
plausible remedy, especially "hen common sense dictates that pecuniary loss "as su=ered, but incapable of
precise de.nition.
4ourt*. Moral and e5emplary dama&es may also be a"arded in the appropriate circumstances. As pointed out
by the(eci-ion, moral dama&es are recoverable "here the dismissal of the employee "as attended by bad
faith, fraud, or "as done in a manner contrary to morals, &ood customs or public policy, or the employer
committed an act oppressive to labor.2H 45emplary dama&es may avail if the dismissal "as e=ected in a
"anton, oppressive or malevolent manner.
6ppropriate 6war o. (a/a%e- to t*e 6%a,on-
The records indicate no proof e5ists to <ustify the a"ard of actual or compensatory dama&es, as it has not
been established that the failure to serve the second notice on the A&abons "as the pro5imate cause to any
loss or in<ury. In fact, there is not even any sho"in& that such violation caused any sort of in<ury or discomfort
to the A&abons. 1or do they assert such causal relation. Thus, the only appropriate a"ard of dama&es is
nominal dama&es. Considerin& the circumstances, I a&ree that an a"ard of 'ifteen Thousand Pesos
FP3*,AAA.AAG each for the A&abons is su?cient.
All premises considered, I 90T4 toK
F3G +41; the P4TITI01 for lack of merit, and A''I/M the (eci-ion of the Court of Appeals dated )$
8anuary )AA$, "ith the M0+I'ICATI01 that in addition, /iviera 6omes be
0/+4/4+ to pay the petitioners the sum of 'ifteen Thousand Pesos FP3*,AAA.AAG each, as nominal
dama&es.
F)G 60,+ that henceforth, dismissals for <ust cause may not be invalidated due to the failure to
observe the due process requirements under the ,abor Code, and that the only indemnity a"ard
available to the employee dismissed for <ust cause are dama&es under the Civil Code as duly proven.
Any and all previous rulin&s and statements of the Court inconsistent "ith this holdin& are no"
deemed I10P4/ATI94.
DANTE O. TIN0A
6--ociate Ju-tice
0.R. No. #4(#,% Ma? #), 5++%
LOPEH SU0AR CORPORATION, petitioner,
vs.
LEONITO 0. FRANCO, RO0ELIO R. PA&ALAN, ROMEO T. PERRIN and EDUARDO T.
CANDELARIO,respondents.
Pa&e #%% of #$%
+ 4 C I ! I 0 1
CALLE<O, SR., J.!
This is a petition for revie" on certiorari of the +ecision3 of the Court of Appeals FCAG in CA#7./. !P 1o.
(HH%(, "hich a?rmed the decision of the 1ational ,abor /elations Commission F1,/CG in 1,/C Case 1o. 9#
A3$2#HD, "hich, in turn, reversed the decision of the ,abor Arbiter in /A- Case 1os. A%#A3#3AA(D#H%, A%#%(#
3A3%(#H% and A%#AD#3A)H)#H%.
The Antecedents
Private respondents ,eonito 7. 'ranco, /o&elio /. Pabalan, /omeo T. Perrin and 4duardo T. Candelario "ere
supervisory employees of the ,ope: !u&ar Corporation Fthe Corporation, for brevityG. 'ranco "as barely )A
years old "hen he "as employed in 3HD( as 'uel#in#Char&e. 6is co#employee, Pabalan, "as about )2 years
old "hen he "as hired by the Corporation as !hift !upervisor in the !u&ar !tora&e +epartment in 3HD*. ) 0n
the other hand, Perrin and Candelario "ere employed in 3HD* and 3HD%, respectively, as Planter !ervice
/epresentatives FP!/sG, "ho rose from the ranks and, by 3HH(, occupied supervisory positions in the
CorporationIs Cane Marketin& !ection.$
'ranco supervised the fuel tenders, monitored fuel and lubricant requirements of the central, as "ell as those
of the planters "ho ordered their requirements from the central. 6e also ensured the adequate supply of oil
products. 'or his part, Pabalan supervised the delivery of su&ar and molasses to and from the stora&e durin&
his shiftL he like"ise supervised the re&ular, contractual and casual employees "ho "ere en&a&ed in handlin&
su&ar. Perrin and Candelario, on the other hand, "ere tasked to convince planters to mill their canes usin& the
services of the Corporation, provide technical assistance to planters, and attend to their various needs.(
-y 3HH(, the supervisory employees of the Corporation, spearheaded by 'ranco, Pabalan, Perrin and
Candelario, decided to form a labor union called ,ope: !u&ar Corporation !upervisorIs Association. 0n
+ecember )H, 3HH(, the +epartment of ,abor and 4mployment F+0,4G in Iloilo City, /e&ional 0?ce 1o. 9I,
issued a Certi.cate of /e&istration* to the union. +urin& its or&ani:ational meetin&, 'ranco "as elected
president and Pabalan as treasurer. Perrin and Candelario, on the other hand, "ere amon& its active
members. 0ut of the 3A2 members, 3A* had a&reed to authori:e the check#o=% of union dues a&ainst their
salaries even before any Collective -ar&ainin& A&reement FC-AG had been e5ecuted by the union and
mana&ement.
In 8anuary 3HH*, the o?cers of the union and the mana&ement held a meetin&, "hich led to the submission
of the unionIs proposals for a C-A on 8uly )(, 3HH*.D
Meantime, on Au&ust 2, 3HH*, the CorporationIs president issued a Memorandum2 to the vice#president and
department heads for the adoption of a special retirement pro&ram for supervisory and middle level
mana&ers. 6e emphasi:ed that the mana&ement shall have the .nal say on "ho "ould be covered, and that
the pro&ram "ould be irrevocable once approved.
In a ,etterH dated Au&ust 3(, 3HH*, the Corporation requested for more time to study the unionIs proposals
for a C-A. The union "as made to understand that the mana&ementIs counter#proposals "ould be presented
durin& their conference on Au&ust $A, 3HH*.
Perrin and Candelario "ere on leave "hen they "ere invited by 8uan Masa, 8r., the head of the Cane Marketin&
!ection, to the 1ortheast -each /esort in 4scalante, 1e&ros 0ccidental. The latter informed them that they
"ere all included in the special retirement pro&ram and "ould receive their respective notices of dismissal
shortly.3A
True enou&h, Masa, Pabalan, 'ranco, Perrin and Candelario received copies of the Memorandum dated Au&ust
)*, 3HH* from the CorporationIs 9ice#President for Administration and 'inance, informin& them that they "ere
included in the Bspecial retirement pro&ramB for supervisors and middle level mana&ersL hence, their
employment "ith the Corporation "as to be terminated e=ective !eptember )H, 3HH*, and they "ould be
paid their salaries until !eptember )D, 3HH*, thusK
In line "ith the memorandum of the President dated Au&ust 2, 3HH*, announcin& the adoption of a
special retirement pro&ram for the supervisors and the middle level mana&ers, and our earlier
discussion "ith you, "e "ish to formali:e our advice that you are one of the employees "ho "ill be
covered by the Pro&ram. ;our inclusion in the Pro&ram is primarily due to the fact that our study of
our current or&ani:ational set#up reveals that the or&ani:ation is presently over#sta=MedN. There are
actually duplication of functions and responsibilities, and some duties could actually be performed by
<ust one person. Mana&ement therefore had no choice but to reduce the present number of
employees and you "ere selected as amon& those "ho "ill be separated from the service.
As stated in the memorandum, you "ill be entitled to a separation packa&e equivalent to t"o months
pay for every year of service, in addition to the conversion of your unusedJearned sick leave and
Pa&e #%) of #$%
vacation leave credits and pro#rated 3$th month pay. This &enerous non#precedent settin& separation
packa&e, "hich is t"ice "hat the la" provides, is bein& o=ered in consideration of your acceptance of
your separation, thereby relievin& the company from the trouble of any court liti&ation.33
The private respondents received their respective separation pays and e5ecuted their respective /elease
>aiver and Suitclaim3) after receivin& their clearances from the Corporation.
0n Au&ust $3, 3HH*, the mana&ement "rote the union that its proposals for a C-A had been referred to its
counsel.
Thereafter, the private respondents .led separate complaints a&ainst the corporation "ith the 1,/C for ille&al
dismissal, unfair labor practice, reinstatement and dama&es.3$
In their position paper, the private respondents claimed that they "ere made to understand that their
employment "as terminated on the &round of redundancyL ho"ever, they "ere not informed of the criteria,
&uidelines or standard in the implementation of the special retirement pro&ram. They "ere thus led to
conclude that their dismissal "as capricious. They pointed out that Perrin and Candelario, "ho had been "ith
the corporation for already )A years, "ere included in the special pro&ram, "hile others "ho had been
employed "ith the corporation for only one to si5 years had been retained. Moreover, one year before the
pro&ram "as implemented, the Corporation hired t"o more P!/s, thus increasin& their numberL and even
after the termination of Perrin and CandelarioIs employment, the Corporation hired t"o more on a contractual
basis. Candelario "as then rehired on a contractual basis only until 8anuary 3HH% "hen the complaint "as
.led a&ainst the Corporation. 'ranco, on the other hand, had re<ected a similar o=er to "ork on a contractual
basis.
The private respondents also alle&ed that their inclusion in the said pro&ram "as resorted to in order to
intimidate the union and its members from pursuin& their ob<ective of institutionali:in& a collective bar&ainin&
mechanism for supervisory employees in the company, thus, abortin& the birth of a labor or&ani:ation
capable of bar&ainin& "ith the mana&ement on the terms and conditions of employment. The complainants
averred that for all intents and purposes, Bthe collective bar&ainin& process M"asN over, havin& failed to
pro&ress beyond the proposal sta&e, a pathetic end for an enterprise that started "ith such &reat enthusiasm
from 3A* of the 3A2 supervisors.B3(
They further averred that the connection bet"een the untimely demise of the ne&otiations and the dismissal
of $) employees, "ho "ere o?cers and members of the union, "as too obvious to be i&nored considerin&
further that the claim of redundancy "as untenable. The complainants also averred that they "ere all in their
late (As, and had served the petitioner for about )A yearsL althou&h still in their productive years, their
prospects for other employment "ere very slim.3*
In its position paper, the Corporation maintained that the termination of the employment of the complainants
"as in response to the challen&es brou&ht about by the 7eneral A&reement on Tari= and Trade F7ATTG, the
A'TA and other international trade a&reements, "hich &reatly a=ected the local su&ar industry. The
respondent summari:ed its position, thusK
3).A ComplainantsI separation from employment "as made pursuant to a le&itimate e5ercise by the
Company of its prero&atives to adopt measures to cut cost and to maintain its pro.tability and
competitiveness.
3$.A The inclusion of the complainants in the special retirement or ri&ht si:in& pro&ram has nothin& to
do "ith their e5ercise of their ri&ht to self#or&ani:ationL hence, there is no unfair labor practice bein&
committed by the Company.
3(.A ComplainantsI separation from service "as done in &ood faith and in complete compliance "ith
procedural and substantive le&al requirementsL hence, le&al and <usti.ed.
3*.A Complainants are barred by the release "aiver and quitclaim that they have e5ecuted in favor of
the Company from further contestin& the validity of their separation from service.3%
The Corporation also averred that in 8uly 3HH*, it commissioned !ycip, 7orres, 9elayo and Company F!79G to
conduct a study of the Corporation and its operations to identify chan&es that could be implemented to
achieve cost e=ectiveness and &lobal competitiveness.
In their /eply#A?davit, the complainants averred that they si&ned their respective /elease >aiver and
Suitclaim because their employer had driven them to the "all, and found themselves in no position to resist,
as they "ere no lon&er employed. They insisted that it "as Ba case of adherence, not of choice.B They averred
that they did not relent on their claim, nor did they "aive any of their ri&hts.
They further emphasi:ed that no"here in the !79 study "as it recommended that they be dismissed from
employment, or that their positions be abolished. In the case of the !u&ar and Molasses !tora&e +epartment
F!M!+G, for instance, the recommendation to save cost "as not implementedL instead Pabalan and another
Pa&e #%$ of #$%
shift supervisor "ho "as also a union o?cer F-iteraG, "ere dismissed, and replacements "ere hired on
+ecember 3, 3HH%. As to the Cane Marketin& +epartment "here Perrin and Candelario "ere assi&ned as
P!/s, the study, in fact, recommended the stren&thenin& of the said unitL the respondent dismissed such
employees "ho had been employed from 3$ to )* years. The private respondents pointed out that this "as
an evidence of the CorporationIs intention to contract out the "ork of the P!/s, considerin& further that those
"ho had been employed for only one to si5 years "ere retained.3D
0n 'ebruary )%, 3HHD, the ,abor Arbiter rendered <ud&ment in favor of the Corporation and ordered the
dismissal of the complainants. Accordin& to the ,abor Arbiter, there "as a real and factual basis to declare
redundancy, thusK
T -ased on this study, the position and functions of fuel#in#char&e, held by complainant 'ranco, are
basically the same as that of 'uel Tenders and therefore his activities could "ell be done by e5istin&
'uel Tenders "ho "ould be directly under the 7eneral >arehouse !upervisor. In the case of
complainant Pabalan, "hose position "as !hift#in#Char&eJ!upervisor, it "as observed that his tasks
could be mer&ed in the functions of the Property >arehouse !upervisor. >ith respect to complainants
Perrin and Candelario, "ho "ere PlantersI !ervice /epresentatives, it "as observed that the <ob "as
more complementary to the marketin& aspect, "herein they are tasked to maintain &ood and
harmonious relations "ith the companyIs su&ar planters, to ensure continued patrona&e of the millIs
services. It "as found that these P!/ functions could "ell be handled by a&ents or consultants, "ho
"ould be paid on commission basis.32
The ,abor Arbiter noted that the complainants received their separation pay and other monetary bene.ts
from the Corporation, and thereafter, voluntarily e5ecuted their respective +eeds of /elease >aiver and
Suitclaim3H in its favor.
The complainants appealed to the 1,/C "hich rendered <ud&ment on +ecember H, 3HHD &rantin& their
appeal and reversin& the decision of the ,abor Arbiter. The 1,/C ruled that there "as no factual and le&al
basis for the termination of the employment of the private respondents based on retrenchment or
redundancy, and that the +eeds of /elease >aiver and Suitclaim e5ecuted by the complainants "ere
ine=ective. The Corporation .led a motion for reconsideration of the decision, "hich "as denied by the 1,/C.
nsatis.ed, the Corporation .led a petition for certiorari "ith the CA, insistin& thatK
P-,IC /4!P01+41T C0MMITT4+ 7/A94 A-!4 0' +I!C/4TI01 >641 IT !4T A!I+4 A1+
094//,4+ T64 +4CI!I01 0' T64 ,A-0/ A/-IT4/ 01 T64 -A!I! 0' C0I1CI+41C4! A1+ -A!4,4!!
ACC!ATI01 0' -A+ 'AIT6, C0MP,4T4,; MI!APP/4CIATI17 T64 !-!TA1TIA, 49I+41C4 >6IC6
!PP0/T4+ T64 ,A-0/ A/-IT4/I! +4CI!I01.
P-,IC /4!P01+41T C0MMITT4+ 7/A94 A-!4 0' +I!C/4TI01 I1 094//I+I17 T64 ,47ITIMAT4
4Y4/CI!4 -; T64 P4TITI014/ 0' IT! MA1A74M41T P/4/07ATI94 0' /4+CI17 IT! >0/X '0/C4 T0
A++/4!! C//41T -!I14!! A1+ 4C010MIC /4A,ITI4!.
P-,IC /4!P01+41T C0MMITT4+ 7/A94 A-!4 0' +I!C/4TI01 I1 +I!/47A/+I17 -A!IC
P/I1CIP,4! 0' ,A> A1+ 8/I!P/+41C4 ,AI+ +0>1 -; T64 !P/4M4 C0/T T0 T64 4''4CT T6ATK
i. The matter of evaluatin& the merits of the issues presented in a labor case is primarily
addressed to the sound discretion of the ,abor Arbiter. Thus, "hen the decision of the ,abor
Arbiter is amply supported by substantial evidence, his .ndin&s and conclusions should not be
disturbed but must be accorded "ith respect by the 1,/C and even by the !upreme Court.
ii. The determination that a position is redundant and therefore le&ally terminable, is basically
an e5ercise of mana&ement prero&ative, and for as lon& as it is done in &ood faith, the
"isdom or soundness thereof is beyond the revie" po"er of the ,abor Arbiter nor of the 1,/C,
"hich by la" and <urisprudence are not vested "ith mana&erial functions.
iii Termination on &round of redundancy is anchored on the superOuity of a position and not on
the fact that actual loss is incurred by a company.
iv. A "aiver and quitclaim, "hen voluntarily and intelli&ently e5ecuted, is bindin& upon the employee, more
so if he is not <ust an ordinary employee.)A
0n April )2, )AAA, the CA rendered <ud&ment dismissin& the petition, on the &round that the 1,/C did not
commit &rave abuse of discretion in renderin& <ud&ment a&ainst the Corporation. The CorporationIs motion
for reconsideration thereof "as, like"ise, denied by the CA.
The Corporation, no" the petitioner, assails the rulin& of the CA, contendin& that the decision of the ,abor
Arbiter should prevail, as it is supported by substantial evidence and the la". The petitioner, thus, maintains
that the ,abor Arbiter correctly ruled that V
Pa&e #%( of #$%
F3G the separation of the /espondents from employment "as for a valid and authori:ed causeL
F)G the positions of the /espondents "ere redundantL
F$G there "as a real and factual basis to declare redundancyL
F(G there is no evidence to sho" that the ri&ht si:in& pro&ram "as deliberately intended to stiOe union
activitiesL
F*G the conOuence of events "as <ust a coincidenceL
F%G there is no evidence of deviousness in the ri&ht si:in& pro&ramL
FDG the /espondents received their individual separation bene.ts, and there is no evidence that either
moral or physical compulsion or both made them accept the bene.ts o=eredL and
F2G Petitioner Company has complied "ith the le&al requisites of terminatin& the employment of the
/espondents.)3
The petitioner further ar&ues that the decision of the 1,/C is essentially Oa"ed because the private
respondents "ere terminated on the &round of redundancy, and not retrenchment "hich is an entirely
di=erent concept. There is absolutely no evidence on record, save the bare alle&ations of the private
respondents that they "ere sin&led out as victims of retrenchment. The other redundant positions "ere,
like"ise, eliminated. It insists that unlike retrenchment, redundancy does not require business losses to be an
authori:ed cause for dismissal. Moreover, the la" does not &ive any criteria, &uidelines or standard for the
selection of employees "ho are to be dismissed on the &round of redundancy. It insists that Article )2$ of the
,abor Code merely requires that Bin case of termination due to the installation of labor#savin& devices or
redundancy, the "orker a=ected thereby shall be entitled to a separation pay equivalent to at least his one
F3G month pay or to, at least, one F3G month pay for every year of service, "hichever is hi&her.B
The petitioner further posits that the la" does not require a corporation to adopt radical cost#cuttin&
measures prior to a termination on the &round of redundancy. It avers that the mere fact that the termination
took place at a time "hen the private respondents had <ust or&ani:ed the union does not automatically
render their termination invalid. It theori:es that the union could have been or&ani:ed as levera&e to the
implementation of the redundancy pro&ram "hich the supervisory employees kne" "as forthcomin&. It
further claims that it is clearly not "ithin the discretion of the 1,/C to say that the termination "as
Bprematurely resorted to,B as such determination "as clearly "ithin the business discretion of the petitioner
corporation. It adds that, as evidenced by the &enerous separation packa&es &iven to the private
respondents, their "elfare "as amply considered by it.
Thus, the petitioner concludes, there "as patent partiality and bias on the part of the 1,/C "hen it
s"eepin&ly declared that the dismissal of the private respondents B"as ille&al and "ithout valid and
authori:ed cause.B))
T9e R".inC oB t9e Co"rt
The petition is denied for lack of merit.
In the main, the issues in this case are factual. nder /ule (* of the /ules of Court, only questions of la" may
be raised in this CourtL such factual issues may be considered and resolved only "hen the .ndin&s of facts
and the conclusions of the ,abor Arbiter are inconsistent "ith those of the 1,/C and the CA.
1evertheless, "e have meticulously revie"ed the records in this case and .nd that the 1,/C did not commit
any &rave abuse of its discretion amountin& to lack or e5cess of <urisdiction in renderin& its decision in favor
of the private respondents. The CA acted in accord "ith the evidence on record and case la" "hen it
dismissed the petitionerIs petition for certiorari and a?rmed the assailed decision and resolution of the 1,/C.
>e reiterate that it is the burden of the petitioner, as employer, to prove the factual and le&al basis for the
dismissal of its employees on the &round of redundancy.
In 6-ian 6lco*ol 'orporation &. National La,or Relation- 'o//i--ion,)$ the Court ruled that redundancy
e5ists "hen the service capability of the "ork force is in e5cess of "hat is reasonably needed to meet the
demands on the enterprise. The Court proceeded to e5pound, as follo"sK
A redundant position is one rendered superOuous by any number of factors, such as over#hirin& of
"orkers, decreased volume of business, droppin& of a particular product line previously manufactured
by the company or phasin& out of a service activity priorly undertaken by the business. nder these
conditions, the employer has no le&al obli&ation to keep in its payroll more employees than are
necessary for the operation of its business.)(
Contrary to the petitionerIs claim, the employer must comply "ith the follo"in& requisites to ensure the
validity of the implementation of a redundancy pro&ramK F3G a "ritten notice served on both the employees
Pa&e #%, of #$%
and the +epartment of ,abor and 4mployment at least one month prior to the intended date of retrenchmentL
F)G payment of separation pay equivalent to at least one month pay or at least one month pay for every year
of service, "hichever is hi&herL F$G &ood faith in abolishin& the redundant positionsL and F(G fair and
reasonable criteria in ascertainin& "hat positions are to be declared redundant and accordin&ly abolished.)*
The Court emphasi:ed in the earlier case of #anlilio &. National La,or Relation- 'o//i--ion )% that it is
imperative for the employer to have fair and reasonable criteria in implementin& its redundancy pro&ram,
such as but not limited to FaG preferred statusL FbG e?ciencyL and FcG seniority.)D
The &eneral rule is that the characteri:ation by an employer of an employeeIs services as no lon&er
necessary or sustainable is an e5ercise of business <ud&ment on the part of the employer. The "isdom or
soundness of such characteri:ation or decision is not, as a &eneral rule, sub<ect to discretionary revie" on the
part of the ,abor Arbiter, the 1,/C and the CA.)2 !uch characteri:ation may, ho"ever, be re<ected if the
same is found to be in violation of the la" or is arbitrary or malicious.)H
In (an%an &. National La,or Relation- 'o//i--ion,$A the Court ruled that the hirin&, .rin& or demotion of
employees is a mana&ement prero&ative, but is sub<ect to limitations stated in the collective bar&ainin&
a&reement, if any, or &eneral principles of fair play and <ustice. Indeed, the Court "ill not hesitate to strike
do"n a redundancy pro&ram structured by a corporation to do"nsi:e its personnel, solely for the purpose of
"eakenin& the union leadership, thereby preventin& it from securin& reasonable terms and conditions of
employment in their C-A "ith the employer.
In this case, "e a&ree "ith the rulin& of the CA that the petitioner ille&ally dismissed the private respondents
from their employment by includin& them in its special retirement pro&ram, thus, debilitatin& the union,
renderin& it pliant by decapacitatin& its leadership. As such, the so#called Bdo"nsi:in&B of the Cane Marketin&
+epartment and !M!+ based on the !79 !tudy /eport "as a farce V capricious and arbitrary.
The Court a&rees "ith the private respondentsI averments in their position paper, as follo"sK
Complainants are not in a position to anticipate ho" respondent "ill present its case for redundancy
particularMlyN because no standard, criteria or &uidelines for the selection of dismissed employees "as
made kno"n to them, and all that they "ere told "as that Byou "ere selected as amon& those "ho
"ill be separated from the serviceLB nonetheless, this early, it is possible to point out certain facts
"hich thro" li&ht on the plausibility or "ant of it, of the &round relied upon.
3. 1o contin&ency has occurred, of the kind mentioned by the !upreme Court in the >iltshire case,
Fover#hirin& of "orkers, decreased volume of business or droppin& of a particular service lineG "hich
"ould e5plain the dismissal on the &round of redundancyL over#hirin& of "orkers cannot conceivably
occur in the level of the supervisorsL on the other hand, it "ould have required an event of
cataclysmic proportion to <ustify the dismissal for redundancy of a full one#third of the supervisors in
an establishment, and if such an event "ere to occur it "ould have resulted in tremendous losses
"hich is not true here because the dismissal is not on account of or to prevent lossesL
). In no other cate&ory of employees did positions suddenly become redundant e5cept amon& the
supervisors "ho have <ust or&ani:ed themselves into a labor union and "ere "orkin& for their .rst#
ever C-A in the establishmentL
$. The dismissal came at the precise time "hen the ,ope: !u&ar Central !upervisors Association
F,!CAG had presented its C-A proposals and "as e5pectin& the companyIs reply as mandated by la"L
in fact, the reply "as overdue, bein& required to be submitted by mana&ement "ithin ten F3AG days
from receipt of the union proposalL there is no better proof that the dismissals have served their
hidden purpose than that the C-A ne&otiation has ended to all intents and purpose, before
mana&ement could even present its counterproposal. Certainly, it "ould be farfetched to say that the
remainin& union o?cers and members have abandoned its ob<ective of havin& a C-A for reasons
other than the fear of su=erin& the fate of those "ho had been dismissed.
The absence of criteria, &uidelines, or standard for selection of dismissed employees renders the
dismissals "himsical, capricious and vindictiveL in the case of the complainants 'ranco and Pabalan,
"ho are the nion President and Treasurer, respectively, the reason for their inclusion is obvious.
Additionally, it must be mentioned that in the case of Pabalan, there "ere three shift supervisors, one
for each 2#hour shift before the Bpro&ramB "as implemented, namely, Pabalan, -itera and ,ope:L
Pabalan and -itera Fa union directorG "ere terminated, leavin& ,ope: alone, "ho "orked on 3)#hour
shift duty "ith 6enry 9illa, department head "ho "as forced to perform the "ork of shift supervisorL
Pabalan "as o=ered to be rehired as an employee of -7,A!, a labor#only contractor but he refusedL
an employee, 4u&enio -olanos "as assi&ned from another department to do the "ork of shift
supervisor and three of them F,ope:, 9illa and -olanosG no" divide shift duties amon& themselves.
There is no e5planation "hy amon& the shift supervisors it "as Pabalan and -itera "ho "ere included
in the pro&ram.
Pa&e #)+ of #$%
In the case of complainants MPNerrin and Candelario, both Planter !ervice /epresentatives, the
manipulation is even more apparentL one year before the Bpro&ramB "as instituted, t"o ne" P!/s
"ere hired F,abrador and CambateG brin&in& to si5 the total number of P!/sL after the termination of
MPNerrin and Candelario, "ho have served for nearly )A years, t"o ne" P!/s "ere hired F0ropel and
8eresG on contractual basis and "hose compensation is based on pakiaoL additionally, Candelario "as
hired after his dismissal under the same arran&ement as 0ropel and 8eres, "hich lasted only up to
8anuary 3HH% "hen mana&ement learned of the .lin& of the .rst of these casesL MPNerrin, on his part,
"as o=ered the same arran&ement but he refused.
(. The rehirin& of dismissed employees throu&h a labor#only contractor e5poses the Bpro&ramB as a
circumvention of the la". This is true in the case of the follo"in& supervisors "ho "ere terminated
"ith complainant but "ere subsequently employed to do e5actly the same "ork, but as employees of
-7,A!, a labor#only contractor "hich supplies laborers to respondent ,!CK
A. 8uanito ,anos, !upervisor, 4lectrical +epartment.
-. /aymundo ,lenos, Community +evelopment 0?cer.
C. 8oseph 1icolas, !upervisor, /efri&eration and Air Conditionin&.
The above re#hirin& in addition to other circumstances earlier mentioned, such as the hirin& of ) men
P!/s after Candelario and MPNerrin "ere terminatedL the short#lived rehirin& of the former and the
o=er to hire the latter "hich he refused, all indicate that there "as no redundancy.
1one of the "ork has been phased out or rendered obsolete by any event that took place. As to
duplication of functions, it must be mentioned that the positions of complainants have e5isted for a
lon& time <ud&in& from their years of service "ith respondentL the observation of the !upreme Court
in the >iltshire case to the e=ect that in a "ell#or&ani:ed establishment, duplication of functions is
hardly to be e5pected is pertinent.$3
'oremost, the petitioner failed to formulate fair and reasonable criteria in ascertainin& "hat positions "ere
declared redundant and accordin&ly obsolete, such as preferred status, e?ciency or seniority. It, like"ise,
failed to formulate fair and reasonable parameters to determine "ho amon& the supervisors and middle#level
mana&ers should be BretiredB for redundancy. sin& the !79 report as anchor, the petitioner came out "ith a
special retirement pro&ram for its 3A2 supervisors and middle#level mana&ers, makin& it clear that its
decision to eliminate them "as .nal and irrevocable. Moreover, the private respondents "ere not properly
apprised of the e5istence of the special retirement pro&ram, as "ell as the criteria for the selection of the
supervisors to be Bretired,B and those to be retained or transferred or demoted.
Contrary to its submissions, the petitioner do"nsi:ed the Cane Marketin& +epartment by eliminatin& private
respondents Perrin and CandelarioL and 'ranco and Candelario from the !u&ar and Molasses !tora&e
+epartment, respectively, "ithout due re&ard to the !79 report. The follo"in& recommendations relatin& to
the !u&ar and Molasses !tora&e +epartment "ere madeK
/4C0MM41+ATI01!
ZZZZZZZZZZZZZZZZZ
).( !u&ar and Molasses !tora&e
).(.3 /enovate old bulk "arehouse to improve ventilation, li&htin& and ra" su&ar handlin&
).(.) Install a conveyorJscale before ba& se"in& of re.ned su&ar to check "ei&ht conformity
).(.$ /enovate ba&&in& room of re.ned su&ar to enforce strict hy&ieneJsanitation
).(.( Install a markin& mechanism that "ould indicate production date on ba&&ed re.ned
su&ar
).(.* Conduct "eekly checks and ad<ustment on the ba& se"in& and conveyor equipment $)
The do"nsi:in& of personnel "as not amon& the fore&oin& recommendations, and yet this "as "hat the
petitioner did, throu&h its special retirement pro&ram, by includin& private respondents 'ranco and Pabalan,
Pa&e #)# of #$%
thereby terminatin& their employment. It is too much of a coincidence that the t"o private respondents "ere
active members of the union.
0n the other hand, the follo"in& recommendations "ere made relatin& to the Cane Marketin& +epartmentK
CA14 MA/X4TI17 A1+ T/A1!P0/T
3.A Cane Marketin&
3.3.3 45pand !CIs farm leasin& operations Fby %,)H) hectaresG
3.3.) 4stablish cane supply plannin& system
3.3.$ -eef up !CIs cane marketin& e=orts by hirin& more e=ective P!/s to replace ine=ective P!/s
3.3.( Acquire % motorcycles instead of second#hand <eeps
3.3.* Apply marketin& techniques used by other companiesJindustries.$$
As can be &leaned from the above, the report recommended the bee.n& up of the petitionerIs planter service
representative force, "hile eliminatin& those "ho "ere ine=ective. There is no sho"in& in the record that
respondents Perrin and Candelario "ere eliminated solely because they "ere ine?cient. 1either is there any
substantial evidence on record that the private respondentsI performance had been deterioratin&L on the
contrary, they had been so far so e?cient that they had been &iven promotions from time to time durin& their
employment. ;et, the petitioner eliminated private respondents Perrin and Candelario and retained three
P!/s, namely, +anilo 9illanueva, /oberto Combate and +anilo ,abrador, "ho "ere employed "ith the
petitioner from one to three years and transferred /aymundo de la /osa, "ho had been "orkin& there for only
si5 years.$( A&ain, it is too much of a coincidence that 'ranco and Pabalan, the President and Treasurer,
respectively, of the union, "ere included in the special retirement pro&ram.
>e a&ree "ith the .ndin&s of the CA that the private respondents "ere unilaterally included in the said
pro&ram for the follo"in& reasonsK
As evidenced by various documents attached to the a?davit of ,eonito 'ranco and /o&elio Pabalan,
as "ell as supportin& a?davits of complainants, the supervisory employees of ,!C or&ani:ed a labor
union called ,ope: !u&ar Corporation !upervisorIs Associations "hich "as issued a certi.cate of
re&istration by the +0,4 /e&ional 0?ce 1o. 9I, Iloilo City on +ecember )H, 3HH(. Complainant 'ranco
"as elected President and complainant, Pabalan, Treasurer, durin& the or&ani:ational meetin&.
Complainants MPNerrin and Candelario are active union members. Mana&ement "as duly informed
about this fact and in 8anuary 3HH* a conference "as conducted bet"een the union and mana&ement
"here the status of the union "as clari.ed and some problems in the "orkplace "ere discussed. The
mana&ement "as also informed subsequently that 3A* out of 3A2 supervisory employees have <oined
the union and authori:ed check#o= of the union dues startin& March 3HH*. The check#o= "as
e=ected.
0n 8uly )(, 3HH*, the union formally submitted its C-A proposal to respondent "ith request for a reply
in ten F3AG days pursuant to the ,abor Code. The mana&ement in a letter e5pressed "illin&ness to
meet the union panel on Au&ust $A, 3HH*, "hich the latter understood to mean that the mana&ement
"ould present its counter#proposal durin& the said conference.
To the surprise of the complainants, they received instead on Au&ust )%, 3HH* a letter of termination
statin& that, in accordance "ith the Bspecial retirement pro&ramB of respondent, their services "ill be
terminated e=ective !eptember )D, 3HH*. The letter also stated that accordin& to a study conducted
by the respondent of its or&ani:ational set#up, it is over#sta=ed and there are duplications of functions
"hich left it no choice but to reduce personnel.
As to the C-A counter#proposal, the mana&ement "rote the union on Au&ust $3, 3HH* that the matter
"as referred to its e5ternal counsel for appropriate disposition Bin the li&ht of the recent development
in this company.B
The special retirement pro&ram a=ected $) employees or rou&hly one#third of the supervisory
personnel. They included the union President and Treasurer and ma<ority of the -oard of +irectors and
active union members. 1o clari.cation "as made as to ho" the terminated employees "ere chosen,
and no &uidelines, criteria or standard "as sho"n to lend coherence to the pro&ram.
As may be e5pected, the dismissals &enerated a &eneral perception that mana&ement "as sendin& a
stron& messa&e that all employees hold their position at its pleasure, and that it "as "ithin its po"er
to dismiss anyone anytime. >ith the dismissal of the union o?cers and "ith the membership no"
e=ectively threatened, the union virtually collapsed as an or&ani:ation. 0ut of fear, no one "ould
even assume the position of union President. An indication of this sad state of a=airs into "hich the
union has fallen is that nothin& came out of its C-A proposal. It has been a year and three months as
Pa&e #)5 of #$%
of this "ritin& since the respondent informed the union that its proposal had been referred to the
companyIs e5ternal counsel, but no counter#proposal has been submitted and no sin&le conference
has been held since then.$*
>hile it may be true that the private respondents si&ned separate +eeds of /elease >aiver and Suitclaim
and received separation pay, nonetheless, "e .nd and so hold that the 1,/C did not err in nullifyin& the
decision of the ,abor Arbiter, thusK
The /elease >aiver and Suitclaim "ere not veri.ed by the complainants. Bnder prevailin&
<urisprudence, the fact that an employee has si&ned a satisfaction receipt of his claims does not
necessarily result in the "aiver thereof. The la" does not consider as valid any a&reement "hereby a
"orker a&rees to receive less compensation than "hat he is entitled to recover. A deed of release or
quitclaim cannot bar an employee from demandin& bene.ts to "hich he is le&ally entitled. >e have
herefore F-icB e5plained that the reason "hy quitclaims are commonly fro"ned upon as contrary to
public policy and "hy they are held to be ine=ective to bar claims for the full measures of the
"orkersI le&al ri&hts is the fact the employer and the employee obviously do not stand on the same
footin&. The employer drove the employees to the "all. The latter must have to &et hold of the
money. -ecause out of <ob, they had to face the harsh necessities of life. 5 5 5B FMarcos vs. 1,/C, 7./.
1o. 333D((, !eptember 2, 3HH*G$%
Private respondents 'ranco and Pabalan protested the termination of their employment. Private respondents
Candelario and Perrin "ere shocked "hen, althou&h they "ere on leave, they "ere invited to the 1ortheast
-each /esort by 8uan Masa, 8r., the head of the Cane Marketin& +epartment, on Au&ust )*, 3HH%, only to be
told that, after spendin& a considerable number of years under the petitionerIs employ, they "ere suddenly
out of <obs. The private respondents had no other recourse but to e5ecute the said /elease >aiver and
Suitclaim because the petitioner made it clear in its Memorandum dated Au&ust 2, 3HH* that it had the .nal
say on "ho "ould be included in its special retirement pro&ram. Their dismissal from the petitioner
corporation "as a .ait acco/pli, solely because they or&ani:ed a union that "ould bar&ain for reasonable
terms and conditions of employment sou&ht to be included in a C-A. In .ne, the private respondents "ere left
to fend for themselves, "ith no source of income from then onL prospects for ne" <obs "ere dim. Their backs
a&ainst the "all, the private respondents "ere forced to si&n the said documents and receive their separation
pay.
IN LI0HT OF ALL THE FORE0OIN0, the petition is +41I4+ for lack of merit.
SO ORDERED.
0.R. No. #%#(4, <"ne 51, 5++%
0 L M 'PHIL.-, INC., #etitioner,
vs.
:ILLIE &ATOMALA@UE, Re-ponent.
+ 4 C I ! I 0 1
CARPIO MORALES, J.!
Culled from the records of the case are the follo"in& facts material to the appeal of petitioner.
!ometime in 'ebruary 3HH), Abdul A:i: Abdullah Al Muhaimid 1a<ad Car Maintenance Association FAbdul
A:i:G, a !audi Arabian entity based in /iyadh, hired respondent, >illie -atomalaque, as a car painter at a
monthly salary of !_$DA.AA3for a t"o#year period) throu&h its a&ent, petitioner 7@M FPhil.G, Inc.
In accordance "ith the employment contract, respondent started "orkin& for Abdul A:i: on March 3A,
3HH)$ at a monthly salary of !_$DA.AA( "hich accordin& to him "as equivalent to 3,)AA !audi riyals.*
0n 8une D, 3HH(% respondent "as repatriated and on 8anuary $, 3HH* he .led a complaintD a&ainst petitioner,
Abdul A:i:, and Country 4mpire Insurance Company "ith the Philippine 0verseas 4mployment
Administration2 for non#payment and underpayment of salaries and dama&es.1a&&p*i1.0wO
In his Complaint#A?davit respondent claimed that for the .rst four months of employment, he received a
monthly salary of HAA !audi riyals,H and for the .fth month F8uly 3HH)G up to the end of the 3)th month
F'ebruary 3HH$G, he received a monthly salary of DAA !audi riyalsL3A that after a one#year stint "ith Abdul
A:i:, the "orkshop "here he "as "orkin& "as sold but the ne" o"ner did not hire himL33 that for eleven
months he "as <oblessL3) that Abdul A:i: hired him a&ain and started "orkin& for it in 'ebruary 3HH( for
"hich he "as paid 3,)AA !audi riyalsL3$ and that he resi&ned in May 3HH( since he "as not paid his salary for
the months of March and April 3HH(,3( "hich )#month salary, "as, ho"ever, used to purchase his airline
ticket on his repatriation to the Philippines.
/espondent thus prayed in his Complaint#A?davit for the a"ard to him of dama&es arisin& from the follo"in&K
Pa&e #)1 of #$%
a. 1on#payment of "a&es for 33 months from April 3HH$ to 8anuary 3HH(L
b. 1on#payment of salaries for the months of March and April 3HH(L
c. 1on#payment of salary di=erentials int F -ic G the amount of !/*AA per month for seven
2ont9s deducted from his salary startin& the *th month of his "ork or 8uly 3HH) up to 'ebruary
3HH$ or the totla F-icG amount of !/$,*AAL
d. moral and e5emplary dama&es of P*A,AAA.AAL
e. other <ust and equitable remedies are prayed for.3* F4mphasis and underscorin& suppliedG
Amon& other claims, petitioner denied respondentIs claim that he "as underpaid, it maintainin& that he "as
paid his salaries in full.3%
-y +ecision3D of 8uly )), 3HH%, ,abor Arbiter 'atima 8ambaro#'ranco credited respondentIs complaint for
underpayment of salaries durin& the .rst year of his contract but denied his other claims in this "iseK
After due consideration, this 0?ce .nds the complaint for underpayment of salaries and "a&es meritorious.
>ell#settled is the rule that in cases of non#payment and underpayment of salaries and "a&es, the employer
has the burden of proof to sho" that the "orkerJemployee has been paid all his salaries and "a&es since it
has in its possession the proof of payment such as payrolls andJor vouchers F!ambalonay vs. 8ose Cuevas,
1,/C 1o. /- I9 V 32%((D, 'ebruary 3$, 3H2AG and in the absence of proof to the contrary, it is deemed that
no payment has been made.
In the case at bar, e5cept for their bare alle&ation that complainantIs salaries "as not underpaid, no evidence
"as adduced to sho" that complainantIs salaries and "a&es "ere fully paid constrainin& the undersi&ned to
&rant the claim of the complainant as sho"n in the computation belo", to "itK
A&reed !alary V !/3,)AA
!alary /eceived V !/HAA for * months
V !/DAA for 2 months
!alary di=erential
!/3,)AA V !/HAA Z !/$AA 5 * mos. Z !/3,*AA
!/3,)AA V !/DAA Z !/*AA 5 2 mos. Z !/(,AAA
!/*,*AA
The claim for the non#payment of salaries for eleven F33G months FApril 3HH$ to 8anuary 3HH(G is, ho"ever,
untenable. The records sho" that complainant "as repatriated on 8une D, 3HH(, more than t"o F)G years from
his deployment on March H, 3HH). >hile he claims for underpayment of salaries and "a&es for thirteen F3$G
months, he did not claim for ille&al dismissal, althou&h he claims for the payment of salaries from April 3HH$
to 8anuary 3HH(.32 This 0?ce is in a quandary "hy complainant stayed at the <obsite for eleven F33G months,
"ithout "ork, yet there "as no complaint lod&ed in the ,aborJConsulate 0?ce in !audi Arabia. The
undersi&ned opines that if complainant really felt a&&rieved, then he could have easily .led a complaint at
the <obsite. 6o"ever, complainant did nothin& to vindicate his ri&ht, in fact, he stayed on until 8une 3HH(.
nder these circumstances, this 0?ce &ives more credence to the respondentsI assertion that complainant
completed his ) years FsicG contract and even e5tended for another ) months before his repatriation. It is
"orthy to note that complainant never claimed that he "as constructively dismissed renderin& his claim for
payment of the une5pired portion of the contract untenable.
The claim for refund of transportation e5penses is like"ise, not allo"able in the absence of proof that the
repatriation cost "as actually shouldered by him. Fnderscorin& suppliedG
The labor arbiter thus disposed as follo"sK
>64/4'0/4, in vie" of the fore&oin&, respondents 7 @ M FPhils.G, Inc., Abdul A:i: Abdullah Al Muhaimid
1a<ad Car Maintenance Association and Country 4mpire Insurance Company are hereby ordered to pay <ointly
and severally complainant >illie -atomalaque the amount of 'I94 T60!A1+ 'I94 61+/4+ !A+I /I;A,!
FSR%,%++ G or in Philippine currency at the prevailin& rate of e5chan&e as certi.ed to by the Central -ank at
the time of payment,representin& his underpayment of salaries and "a&es.
Pa&e #)4 of #$%
All other claims are dismissed for lack of merit.
!0 0/+4/4+.3H F4mphasis and underscorin& suppliedG
Petitioner appealed)A the labor arbiterIs decision to the 1ational ,abor /elation Commission F1,/CG "hich, by
/esolution)3 of 'ebruary 33, 3HHH, a?rmed the same.
A&&rieved, petitioner, via a petition for certiorari)) under /ule %*, brou&ht the case to the Court of Appeals
"hich docketed it as CA#7./. 1o. *)H)A. -y the assailed decision)$ of April )D, )AA3, the Court of Appeals
dismissed petitionerIs petition, it holdin& that the 1,/C committed no error much less any &rave abuse of
discretion.
PetitionerIs motion for reconsideration)( havin& been denied by the Court of Appeals, by /esolution)* of
8anuary 2, )AA), it lod&ed the present petition.)%
Petitioner maintains that respondent had been paid his salaries in full and it "as incumbent upon him to
prove other"ise.
PetitionerIs claim fails.
It is settled that as a &eneral rule, a party "ho alle&es payment as a defense has the burden of provin& it.)D
!peci.cally "ith respect to labor cases, the burden of provin& payment of monetary claims rests on the
employer, the rationale bein&
that the pertinent personnel .les, payrolls, records, remittances and other similar documents E "hich "ill
sho" that overtime, di=erentials, service incentive leave and other claims of "orkers have been paid E are
not in the possession of the "orker but in the custody and absolute control of the employer.)2
Aside, ho"ever, from its bare alle&ation that its principal Abdul A:i: had fully paid respondentIs salaries,
petitioner did not present any evidence, e.&., payroll or payslips, to support its defense of payment. Petitioner
thus failed to dischar&e theonu- pro,ani.
Petitioner, as the recruiter and a&ent of Abdul A:i:, is thus solidarily liable "ith the latter for the unpaid
"a&es of respondent. This Court, throu&h 8ustice Irene Cortes, in Royal 'rown "nternationale &.
NLR')H e5plains the basis thereofK
TPetitioner conveniently overlooks the fact that it had voluntarily assumed solidary liability under the various
contractual undertakin&s it submitted to the -ureau of 4mployment !ervices. In applyin& for its license to
operate a private employment a&ency for overseas recruitment and placement, petitioner "as required to
submit, amon& others, a document or veri.ed undertakin& "hereby it assumed all responsibilities for the
proper use of its license and the i/ple/entation o. t*e contract- o. e/ploy/ent wit* t*e worker- it recruited
and deployed for overseas employmentM!ection )FeG, /ule 9, -ook I, /ules to Implement the ,abor Code
F3HD%GN. It "as also required to .le "ith the -ureau a formal appointment or a&ency contract e5ecuted by the
forei&n#based employer in its favor to recruit and hire personnel for the former, "hich contained a provision
empo"erin& it to -ue an ,e -ue 3ointly an -oliarily wit* t*e .orei%n principal .or any o. t*e &iolation- o.
t*e recruit/ent a%ree/ent an t*e contract- o. e/ploy/ent M!ection 3A FaG F)G, /ule 9, -ook I of the /ules to
Implement the ,abor Code F3HD%GN. Petitioner "as required as "ell to post such cash and surety bonds as
determined by the !ecretary of ,abor to &uarantee compliance "ith prescribed recruitment procedures, rules
and re&ulations, and terms and conditions of employment as appropriate M!ection 3 of Pres. +ec. 3(3) F3HD2G
amendin& Article $3 of the ,abor CodeN.
These ontrat"a. "ndertaEinCs onstit"te t9e .eCa. 3asis Bor 9o.dinC petitioner, and ot9er private
e2p.o?2ent or rer"it2ent aCenies, .ia3.e Roint.? and severa..? Dit9 its prinipa., the forei&n#
based employer, for all claims .led by recruited "orkers "hich may arise in connection "ith the
implementation of the service a&reements or employment contracts M$ee Ambraque International Placement
and !ervices v. 1,/C, 7./. 1o. DDHDA, 8anuary )2, 3H22, 3*D !C/A ($3L Catan v. 1,/C, 7./. 1o. DD)DH, April
3*, 3H22, 3%A !C/A %H3L Al&a Moher International Placement !ervices v. Atien:a, 7./. 1o. D(%3A, !eptember
$A, 3H22N$A F4mphasis and underscorin& suppliedL italics in the ori&inalG
Petitioner ar&ues, ho"ever, that the fore&oin& rule has no application in the case at bar because it applies
only to one "hich raises the issue of non#payment but not one "hich raises issues of
underpayment,$3 hence, the burden "as on respondent to sho" that he "as indeed underpaid.$)
Petitioner does not persuade.
0n repeated occasions, this Court ruled that the debtor has the burden of sho"in& "ith le&al certainty that
the obli&ation has been dischar&ed by payment.$$ To dischar&e means to e5tin&uish an obli&ation,$( and in
contract la" dischar&e occurs either "hen the parties have performed their obli&ations in the contract, or
"hen an event the conduct of the parties, or the operation of la" releases the parties from
performin&.$* Thus, a party "ho alle&es that an obli&ation has been e5tin&uished must prove facts or acts
Pa&e #)% of #$%
&ivin& rise to the e5tinction.
The fact of underpayment does not shift the burden of evidence to the plainti=#herein respondent because
partial payment does not e5tin&uish the obli&ation.$% 0nly "hen the debtor introduces evidence that the
obli&ation has been e5tin&uished does the burden of evidence shift to the creditor "ho is then under a duty of
producin& evidence to sho" "hy payment does not e5tin&uish the obli&ation.
The lack of merit of petitionerIs petition not"ithstandin&, this Court .nds that the appellate courtIs a?rmance
of the a"ard to respondent of salaries for a 3$#month period, as reOected in the computation of salary
di=erential in the decision of the labor arbiter, calls for modi.cation. /espondent himself alle&ed in his
Complaint#A?davit havin& been underpaid for 3) months $D albeit, oddly enou&h, in the above#quoted prayer
of his said Complaint#A?davit, he prayed for salary di=erential in the amount of B!/*AA per month
for seven MDN monthsT startin& the *th month of his "ork or 8uly 3HH) up to 'ebruary 3HH$ or Ma totalN
amount of !/$,*AA.B
/espondent bein& entitled to a monthly salary of !_$DA.AA,$2 its equivalent of 3,)AA !audi riyals of "hich
has not been disputed, and his alle&ation that he received a monthly salary of HAA !audi riyals for the .rst (
months and DAA !audi riyals for the *th month until the end of the 3)th month not havin& been successfully
refuted, he is entitled to SR%,5++,$Hnot !/*,*AA, representin& the total de.cient payment of his salaries for
a 3)#month period.
:HEREFORE, the +ecision of the Court of Appeals in C.A. 7./. !P. 1o. *)H)A is AFFIRMED Dit9 t9e
MODIFICATION that respondent, >illie -atomalaque, is only entitled to *,)AA !audi riyals, instead of *,*AA
!audi riyals. Costs a&ainst petitioner.
SO ORDERED.
0.R. No. #%$5#4 <"ne $, 5++%
PHILIPPINE 0LO&AL COMMUNICATIONS, INC., petitioner,
vs.
RICARDO DE 7ERA, respondent.
+ 4 C I ! I 0 1
0ARCIA, J.:
-efore us is this appeal by "ay of a petition for revie" on certiorari from the 3) !eptember )AA)
+ecision3 and the 3$ 'ebruary )AA$ /esolution) of the Court of Appeals in CA#7./. !P 1o. %*3D2, upholdin&
the .ndin& of ille&al dismissal by the 1ational ,abor /elations Commission a&ainst petitioner.
As culled from the records, the pertinent facts areK
Petitioner Philippine 7lobal Communications, Inc. FPhilComG, is a corporation en&a&ed in the business of
communication services and allied activities, "hile respondent /icardo +e 9era is a physician by profession
"hom petitioner enlisted to attend to the medical needs of its employees. At the cru5 of the controversy is +r.
+e 9eraIs status &i- a &i- petitioner "hen the latter terminated his en&a&ement.
It appears that on 3* May 3H23, +e 9era, &ia a letter dated 3* May 3H23,$ o=ered his services to the
petitioner, therein proposin& his plan of "orks required of a practitioner in industrial medicine, to include the
follo"in&K
3. Application of preventive medicine includin& periodic check#up of employeesL
). 6oldin& of clinic hours in the mornin& and afternoon for a total of .ve F*G hours daily for
consultation services to employeesL
$. Mana&ement and treatment of employees that may necessitate hospitali:ation includin&
emer&ency cases and accidentsL
(. Conduct pre#employment physical check#up of prospective employees "ith no additional medical
feeL
*. Conduct home visits "henever necessaryL
%. Attend to certain medical administrative function such as accomplishin& medical forms, evaluatin&
conditions of employees applyin& for sick leave of absence and subsequently issuin& proper
certi.cation, and all matters referred "hich are medical in nature.
The parties a&reed and formali:ed respondentIs proposal in a document denominated as RETAINERSHIP
CONTRACT("hich "ill be for a period of one year sub<ect to rene"al, it bein& made clear therein that
Pa&e #)) of #$%
respondent "ill cover Bthe retainership the Company previously had "ith +r. X. 4ulauB and that respondentIs
Bretainer feeB "ill be at P(,AAA.AA a month. !aid contract "as rene"ed yearly. * The retainership arran&ement
"ent on from 3H23 to 3HH( "ith chan&es in the retainerIs fee. 6o"ever, for the years 3HH* and 3HH%,
rene"al of the contract "as only made verbally.
The turnin& point in the partiesI relationship surfaced in +ecember 3HH% "hen Philcom, thru a letter% bearin&
on the sub<ect boldly "ritten as BT4/MI1ATI01 V /4TAI14/!6IP C01T/ACTB, informed +e 9era of its decision
to discontinue the latterIs BretainerIs contract "ith the Company e=ective at the close of business hours of
+ecember $3, 3HH%B because mana&ement has decided that it "ould be more practical to provide medical
services to its employees throu&h accredited hospitals near the company premises.
0n )) 8anuary 3HHD, +e 9era .led a complaint for ille&al dismissal before the 1ational ,abor /elations
Commission F1,/CG, alle&in& that that he had been actually employed by Philcom as its company physician
since 3H23 and "as dismissed "ithout due process. 6e averred that he "as desi&nated as a Bcompany
physician on retainer basisB for reasons alle&edly kno"n only to Philcom. 6e like"ise professed that since he
"as not conversant "ith labor la"s, he did not &ive much attention to the desi&nation as any"ay he "orked
on a full#time basis and "as paid a basic monthly salary plus frin&e bene.ts, like any other re&ular employees
of Philcom.
0n )3 +ecember 3HH2, ,abor Arbiter /amon 9alentin C. /eyes came out "ith a decisionD dismissin& +e
9eraIs complaint for lack of merit, on the rationale that as a Bretained physicianB under a valid contract
mutually a&reed upon by the parties, +e 9era "as an Bindependent contractorB and that he B"as not
dismissed but rather his contract "ith MP6I,C0MN ended "hen said contract "as not rene"ed after +ecember
$3, 3HH%B.
0n +e 9eraIs appeal to the 1,/C, the latter, in a decision2 dated )$ 0ctober )AAA, reversed Fthe "ord used is
Bmodi.edBG that of the ,abor Arbiter, on a .ndin& that +e 9era is PhilcomIs Bre&ular employeeB and
accordin&ly directed the company to reinstate him to his former position "ithout loss of seniority ri&hts and
privile&es and "ith full back"a&es from the date of his dismissal until actual reinstatement. >e quote the
dispositive portion of the decisionK
>64/4'0/4, the assailed decision is modi.ed in that respondent is ordered to reinstate complainant to his
former position "ithout loss of seniority ri&hts and privile&es "ith full back"a&es from the date of his
dismissal until his actual reinstatement computed as follo"sK
-ack"a&esK
aG -asic !alary
'rom +ec. $3, 3HH% to Apr. 3A, )AAA Z $H.$$ mos.
P((,(AA.AA 5 $H.$$ mos. P3,D*A,32*.AA
bG
3$th Month PayK
3J3) of P3,D*A,32*.AA
3(*,2(2.D*
cG
Travellin& allo"anceK
P3,AAA.AA 5 $H.$$ mos.
$H,$$A.AA
7/A1+ T0TA, P3,H$*,$%$.D*
The decision stands in other aspects.
!0 0/+4/4+.
>ith its motion for reconsideration havin& been denied by the 1,/C in its order of )D 'ebruary
)AA3,H Philcom then "ent to the Court of Appeals on a petition for certiorari, thereat docketed as CA*0.R. SP
No. )%#$(, imputin& &rave abuse of discretion amountin& to lack or e5cess of <urisdiction on the part of the
1,/C "hen it reversed the .ndin&s of the labor arbiter and a"arded thirteenth month pay and travelin&
allo"ance to +e 9era even as such a"ard had no basis in fact and in la".
0n 3) !eptember )AA), the Court of Appeals rendered a decision,3A modifyin& that of the 1,/C by deletin&
the a"ard of travelin& allo"ance, and orderin& payment of separation pay to +e 9era in lieu of reinstatement,
thusK
:HEREFORE, premises considered, the assailed <ud&ment of public respondent, dated )$ 0ctober )AAA,
is MODIFIED. The a"ard of travelin& allo"ance is deleted as the same is hereby +4,4T4+. Instead of
reinstatement, private respondent shall be paid separation pay computed at one F3G month salary for every
year of service computed from the time private respondent commenced his employment in 3H23 up to the
Pa&e #)$ of #$%
actual payment of the back"a&es and separation pay. The a"ards of back"a&es and 3$th month pay !TA1+.
!0 0/+4/4+.
In time, Philcom .led a motion for reconsideration but "as denied by the appellate court in its resolution of 3$
'ebruary )AA$.33
6ence, PhilcomIs present recourse on its main submission that #
T64 C0/T 0' APP4A,! 4//4+ I1 !!TAI1I17 T64 +4CI!I01 0' T64 1ATI01A, ,A-0/ /4,ATI01!
C0MMI!!I01 A1+ /41+4/I17 T64 S4!TI014+ +4CI!I01 A1+ /4!0,TI01 I1 A >A; T6AT I! 10T I1
ACC0/+ >IT6 T64 'ACT! A1+ APP,ICA-,4 ,A>! A1+ 8/I!P/+41C4 >6IC6 +I!TI17I!6 ,47ITIMAT4 80-
C01T/ACTI17 A7/44M41T! '/0M T64 4MP,0;4/#4MP,0;44 /4,ATI01!6IP.
>e 0RANT.
nder /ule (* of the /ules of Court, only questions of la" may be revie"ed by this Court in decisions
rendered by the Court of Appeals. There are instances, ho"ever, "here the Court departs from this rule and
revie"s .ndin&s of fact so that substantial <ustice may be served. The e5ceptional instances are "hereK
B555 555 555 F3G the conclusion is a .ndin& &rounded entirely on speculation, surmise and con<ectureL F)G the
inference made is manifestly mistakenL F$G there is &rave abuse of discretionL F(G the <ud&ment is based on a
misapprehension of factsL F*G the .ndin&s of fact are conOictin&L F%G the Court of Appeals "ent beyond the
issues of the case and its .ndin&s are contrary to the admissions of both appellant and appelleesL FDG the
.ndin&s of fact of the Court of Appeals are contrary to those of the trial courtL F2G said .ndin&s of facts are
conclusions "ithout citation of speci.c evidence on "hich they are basedL FHG the facts set forth in the
petition as "ell as in the petitionerIs main and reply briefs are not disputed by the respondentsL and F3AG the
.ndin&s of fact of the Court of Appeals are premised on the supposed absence of evidence and contradicted
by the evidence on record.B3)
As "e see it, the partiesI respective submissions revolve on the primordial issue of "hether an employer#
employee relationship e5ists bet"een petitioner and respondent, the e5istence of "hich is, in itself, a
question of fact3$ "ell "ithin the province of the 1,/C. 1onetheless, &iven the reality that the 1,/CIs
.ndin&s are at odds "ith those of the labor arbiter, the Court, consistent "ith its rulin& in Ji/ene0 &-. National
La,or Relation- 'o//i--ion,3( is constrained to look deeper into the attendant circumstances obtainin& in
this case, as appearin& on record.
In a lon& line of decisions,3* the Court, in determinin& the e5istence of an employer#employee relationship,
has invariably adhered to the four#fold test, to "itK M3N the selection and en&a&ement of the employeeL M)N the
payment of "a&esL M$N the po"er of dismissalL and M(N the po"er to control the employeeIs conduct, or the
so#called Bcontrol testB, considered to be the most important element.
Applyin& the four#fold test to this case, "e initially .nd that it "as respondent himself "ho sets the
parameters of "hat his duties "ould be in o=erin& his services to petitioner. This is borne by no less than his
3* May 3H23 letter3% "hich, in full, readsK
BMay 3*, 3H23
Mrs. Adela ,. 9icente
9ice President, Industrial /elations
PhilCom, Paseo de /o5as
Makati, Metro Manila
M a d a m K
I shall have the time and e=ort for the position of Company physician "ith your corporation if you
deemed it necessary. I have the necessary quali.cations, trainin& and e5perience required by
such position and I am con.dent that I can serve the best interests of your employees, medically.
My plan of "orks and tar&ets shall cover the duties and responsibilities required of a practitioner
in industrial medicine "hich includes the follo"in&K
3. Application of preventive medicine includin& periodic check#up of employeesL
). 6oldin& of clinic hours in the mornin& and afternoon for a total of .ve F*G hours daily
for consultation services to employeesL
Pa&e #)( of #$%
$. Mana&ement and treatment of employees that may necessitate hospitali:ation
includin& emer&ency cases and accidentsL
(. Conduct pre#employment physical check#up of prospective employees "ith no
additional medical feeL
*. Conduct home visits "henever necessaryL
%. Attend to certain medical administrative functions such as accomplishin& medical
forms, evaluatin& conditions of employees applyin& for sick leave of absence and
subsequently issuin& proper certi.cation, and all matters referred "hich are medical in
nature.
0n the sub<ect of compensation for the services that I propose to render to the corporation, you
may state an o=er based on your belief that I can very "ell qualify for the <ob havin& "orked "ith
your or&ani:ation for sometime no".
I shall be very &rateful for "hatever kind attention you may e5tend on this matter and hopin&
that it "ill merit acceptance, I remain
9ery truly yours,
Fsi&nedG
/ICA/+0 9. +4 94/A, M.+.B
!i&ni.cantly, the fore&oin& letter "as substantially the basis of the labor arbiterIs .ndin& that there e5isted
no employer#employee relationship bet"een petitioner and respondent, in addition to the follo"in& factual
settin&sK
The fact that the complainant "as not considered an employee "as reco&ni:ed by the complainant himself in
a si&ned letter to the respondent dated April )3, 3H2) attached as Anne5 7 to the respondentIs /eply and
/e<oinder. Suotin& the pertinent portion of said letterK
QTo carry out your memo e=ectively and to provide a systematic and "orkable time schedule "hich "ill serve
the best interests of both the present and absent employee, may I propose an e5tended t"o#hour service
F3KAA#$KAA P.M.G durin& "hich period I can devote ample time to both &roups dependin& upon the ur&ency of
the situation. I shall read<ust my private schedule to be available for the herein proposed e5tended hours,
should you consider this proposal.
As re&ards compensation for the additional time and services that I shall render to the employees, it is
dependent on your evaluation of the merit of my proposal and your con.dence on my ability to carry out
e?ciently said proposal.I
The tenor of this letter indicates that the complainant "as proposin& to e5tend his time "ith the respondent
and seekin& additional compensation for said e5tension. This sho"s that the respondent P6I,C0M did not
have control over the schedule of the complainant as it MisN the complainant "ho is proposin& his o"n
schedule and askin& to be paid for the same. This is proof that the complainant understood that his
relationship "ith the respondent P6I,C0M "as a retained physician and not as an employee. If he "ere an
employee he could not ne&otiate as to his hours of "ork.
The complainant is a +octor of Medicine, and presumably, a "ell#educated person. ;et, the complainant, in
his position paper, is claimin& that he is not conversant "ith the la" and did not &ive much attention to his
<ob title# on a Qretainer basisI. -ut the same complainant admits in his a?davit that his service for the
respondent "as covered by a retainership contract M"hichN "as rene"ed every year from 3H2) to 3HH(. pon
readin& the contract dated !eptember %, 3H2), si&ned by the complainant himself FAnne5 QCI of /espondentIs
Position PaperG, it clearly states that is a retainership contract. The retainer fee is indicated thereon and the
duration of the contract for one year is also clearly indicated in para&raph * of the /etainership Contract. The
complainant cannot claim that he "as una"are that the QcontractI "as &ood only for one year, as he si&ned
the same "ithout any ob<ections. The complainant also accepted its rene"al every year thereafter until 3HH(.
As a literate person and educated person, the complainant cannot claim that he does not kno" "hat contract
he si&ned and that it "as rene"ed on a year to year basis.3D
The labor arbiter added the inicia, not disputed by respondent, that from the time he started to "ork "ith
petitioner, he never "as included in its payrollL "as never deducted any contribution for remittance to the
Pa&e #), of #$%
!ocial !ecurity !ystem F!!!GL and "as in fact sub<ected by petitioner to the ten F3A[G percent "ithholdin& ta5
for his professional fee, in accordance "ith the 1ational Internal /evenue Code, matters "hich are simply
inconsistent "ith an employer#employee relationship. In the precise "ords of the labor arbiterK
B555 555 555 After more than ten years of services to P6I,C0M, the complainant "ould have noticed that no
!!! deductions "ere made on his remuneration or that the respondent "as deductin& the 3A[ ta5 for his
fees and he surely "ould have complained about them if he had considered himself an employee of P6I,C0M.
-ut he never raised those issues. An ordinary employee "ould consider the !!! payments important and thus
make sure they "ould be paid. The complainant never bothered to ask the respondent to remit his !!!
contributions. This clearly sho"s that the complainant never considered himself an employee of P6I,C0M and
thus, respondent need not remit anythin& to the !!! in favor of the complainant.B32
Clearly, the elements of an employer#employee relationship are "antin& in this case. >e may add that the
records are replete "ith evidence sho"in& that respondent had to bill petitioner for his monthly professional
fees.3H It simply runs a&ainst the &rain of common e5perience to ima&ine that an ordinary employee has yet
to bill his employer to receive his salary.
>e note, too, that the po"er to terminate the partiesI relationship "as mutually vested on both. 4ither may
terminate the arran&ement at "ill, "ith or "ithout cause.)A
'inally, remarkably absent from the partiesI arran&ement is the element of control, "hereby the employer has
reserved the ri&ht to control the employee not only as to the result of the "ork done but also as to the means
and methods by "hich the same is to be accomplished.)3
6ere, petitioner had no control over the means and methods by "hich respondent "ent about performin& his
"ork at the company premises. 6e could even embark in the private practice of his profession, not to
mention the fact that respondentIs "ork hours and the additional compensation therefor "ere ne&otiated
upon by the parties.)) In .ne, the parties themselves practically a&reed on every terms and conditions of
respondentIs en&a&ement, "hich thereby ne&ates the element of control in their relationship. 'or sure,
respondent has never cited even a sin&le instance "hen petitioner interfered "ith his "ork.
;et, despite the fore&oin&, all of "hich are e5tant on record, both the 1,/C and the Court of Appeals ruled
that respondent is petitionerIs re&ular employee at the time of his separation.
Partly says the appellate court in its assailed decisionK
-e that as it may, it is admitted that private respondentIs "ritten Qretainer contractI "as rene"ed annually
from 3H23 to 3HH( and the alle&ed Qrene"alI for 3HH* and 3HH%, "hen it "as alle&edly terminated, "as
verbal.
Article )2A of the ,abor code F-icG providesK
QThe provisions of "ritten a&reement to the contrary notDit9standinC and reCard.ess oB t9e ora.
aCree2ents oB t9e parties, an employment shall be deemed to be re&ular "here the employee has been
en&a&ed to perform in the usual business or trade of the employer, e5cept "here the employment has been
.5ed for a speci.c pro<ect or undertakin& the completion or termination of "hich has been determined at the
time of the en&a&ement of the employee or "here the "ork or services to be performed is seasonal in nature
and the employment is for the duration of the season.I
QAn e2p.o?2ent s9a.. 3e dee2ed to 3e as"a. iB it is not overed 3? t9e preedinC paraCrap9!
Provided, T9at, an? e2p.o?ee D9o 9as rendered at .east one '#- ?ear oB servie, "hether such is
continuous or broken, s9a.. 3e onsidered a reC".ar Dit9 respet to t9e ativit? in D9i9 9e is
e2p.o?ed and his employment shall continue "hile such activity e5ists.I
Parenthetically, the position of company physician, in the case of petitioner, is usually necessary and
desirable because the need for medical attention of employees cannot be foreseen, hence, it is necessary to
have a physician at hand. In fact, the importance and desirability of a physician in a company premises is
reco&ni:ed by Art. 3*D of the ,abor Code, "hich requires the presence of a physician dependin& on the
number of employees and in the case at bench, in petitionerIs case, as found by public respondent, petitioner
employs more than *AA employees.
7oin& back to Art. )2A of the ,abor Code, it "as made therein clear that the provisions of a "ritten
a&reement to the contrary not"ithstandin& or the e5istence of a mere oral a&reement, if the employee is
en&a&ed in the usual business or trade of the employer, more so, that he rendered service for at least one
year, such employee shall be considered as areC".ar employee. Private respondent herein has been "ith
petitioner since 3H23 and his employment "as not for a speci.c pro<ect or undertakin&, the period of "hich
"as pre#determined and neither the "ork or service of private respondent seasonal. F4mphasis by the CA
itselfG.
>e disa&ree to the fore&oin& ratiocination.
Pa&e #$+ of #$%
The appellate courtIs premise that re&ular employees are those "ho perform activities "hich are desirable
and necessary for the business of the employer is not determinative in this case. 'or, "e take it that any
a&reement may provide that one party shall render services for and in behalf of another, no matter ho"
necessary for the latterIs business, even Dit9o"t 3einC 9ired as an e2p.o?ee. This set#up is precisely
true in the case of an independent contractorship as "ell as in an a&ency a&reement. Indeed, Article )2A of
the ,abor Code, quoted by the appellate court, is not the yardstick for determinin& the e5istence of an
employment relationship. As it is, the provision merely distin&uishes bet"een t"o F)G kinds of employees, i.e.,
re&ular and casual. It does not apply "here, as here, the very e5istence of an employment relationship is in
dispute.)$
-uttressin& his contention that he is a re&ular employee of petitioner, respondent invokes Article 3*D of the
,abor Code, and ar&ues that he satis.es all the requirements thereunder. The provision relied upon readsK
A/T. 3*D. 9/er%ency /eical an ental -er&ice-. V It shall be the duty of every employer to furnish his
employees in any locality "ith free medical and dental attendance and facilities consistin& ofK
FaG The services of a full#time re&istered nurse "hen the number of employees e5ceeds .fty F*AG but
not more than t"o hundred F)AAG e5cept "hen the employer does not maintain ha:ardous
"orkplaces, in "hich case the services of a &raduate .rst#aider shall be provided for the protection of
the "orkers, "here no re&istered nurse is available. The !ecretary of ,abor shall provide by
appropriate re&ulations the services that shall be required "here the number of employees does not
e5ceed .fty F*AG and shall determine by appropriate order ha:ardous "orkplaces for purposes of this
ArticleL
FbG The services of a full#time re&istered nurse, a part#time physician and dentist, and an emer&ency
clinic, "hen the number of employees e5ceeds t"o hundred F)AAG but not more than three hundred
F$AAGL and
FcG The services of a full#time physician, dentist and full#time re&istered nurse as "ell as a dental
clinic, and an in.rmary or emer&ency hospital "ith one bed capacity for every one hundred F3AAG
employees "hen the number of employees e5ceeds three hundred F$AAG.
In cases of ha:ardous "orkplaces, no employer shall en&a&e the services of a physician or dentist "ho cannot
stay in the premises of the establishment for at least t"o F)G hours, in the case of those en&a&ed on part#time
basis, and not less than ei&ht F2G hours in the case of those employed on full#time basis. >here the
undertakin& is nonha:ardous in nature, the physician and dentist may be en&a&ed on retained basis, sub<ect
to such re&ulations as the !ecretary of ,abor may prescribe to insure immediate availability of medical and
dental treatment and attendance in case of emer&ency.
6ad only respondent read carefully the very statutory provision invoked by him, he "ould have noticed that in
non#ha:ardous "orkplaces, the employer may en&a&e the services of a physician Bon retained basis.B As
correctly observed by the petitioner, "hile it is true that the provision requires employers to en&a&e the
services of medical practitioners in certain establishments dependin& on the number of their employees,
nothin& is there in the la" "hich says that medical practitioners so en&a&ed be actually hired as
employees,)( addin& that the la", as "ritten, only requires the employer Bto retainB, not employ, a part#time
physician "ho needed to stay in the premises of the non#ha:ardous "orkplace for t"o F)G hours.)*
/espondent takes no issue on the fact that petitionerIs business of telecommunications is not ha:ardous in
nature. As such, "hat applies here is the last para&raph of Article 3*D "hich, to stress, provides that the
employer may en&a&e the services of a physician and dentist Bon retained basisB, sub<ect to such re&ulations
as the !ecretary of ,abor may prescribe. The successive BretainershipB a&reements of the parties de.nitely
hue to the very statutory provision relied upon by respondent.
+eeply embedded in our <urisprudence is the rule that courts may not construe a statute that is free from
doubt. >here the la" is clear and unambi&uous, it must be taken to mean e5actly "hat it says, and courts
have no choice but to see to it that the mandate is obeyed.)% As it is, Article 3*D of the ,abor Code clearly
and unequivocally allo"s employers in non#ha:ardous establishments to en&a&e Bon retained basisB the
service of a dentist or physician. 1o"here does the la" provide that the physician or dentist so en&a&ed
thereby becomes a re&ular employee. The very phrase that they may be en&a&ed Bon retained basisB, revolts
a&ainst the idea that this en&a&ement &ives rise to an employer#employee relationship.
>ith the reco&nition of the fact that petitioner consistently en&a&ed the services of respondent on a retainer
basis, as sho"n by their various Bretainership contractsB, so can petitioner put an end, "ith or "ithout cause,
to their retainership a&reement as therein provided.)D
>e note, ho"ever, that even as the contracts entered into by the parties invariably provide for a %A#day
notice requirement prior to termination, the same "as not complied "ith by petitioner "hen it terminated on
3D +ecember 3HH% the verbally#rene"ed retainership a&reement, e=ective at the close of business hours of
$3 +ecember 3HH%.
Pa&e #$# of #$%
-e that as it may, the record sho"s, and this is admitted by both parties,)2 that e5ecution of the 1,/C
decision had already been made at the 1,/C despite the pendency of the present recourse. 'or sure,
accounts of petitioner had already been &arnished and released to respondent despite the previous !tatus
Suo 0rder)H issued by this Court. To all intents and purposes, therefore, the %A#day notice requirement has
become moot and academic if not "aived by the respondent himself.
:HEREFORE, the petition is 7/A1T4+ and the challen&ed decision of the Court of Appeals /494/!4+ and
!4T A!I+4. The )3 +ecember 3HH2 decision of the labor arbiter is /4I1!TAT4+.
1o pronouncement as to costs.
!0 0/+4/4+.
0.R. No. #%4,(% A"C"st 54, 5++4
=AR ASIA, INC. andFor CELESTINO S. &ARETTO, petitioners,
vs.
MARIO CORONA, RIC=Y HEP0ANO, <OHNNY COLLADOS, CONSTANTINO LA0ARAS, RANEL
&ALANSA0, ARNOLD A7ILA, PETER ARCENAL, ARNOLD CA&AHU0, &ERNARD &ETE, RUPERTO
RESTAURO, :ILLY CRUH, RANDY &ASNILLO, ARMAN &ASTE, ERNESTO ESPINA, PATRICIO A0UDELA,
IRENEO &AN0OY, PALERMO AUTENTICO, 0EOR0E TA0AYTAY, &ENITO MATU0AS, and :ILFREDO
ESPINA, respondents.
+ 4 C I ! I 0 1
This is a petition for revie" on certiorari under /ule (* of the /ules of Court assailin& the 'ebruary )2, )AA)
+ecision3 of the Court of Appeals) in CA#7./. !P 1o. *DHD), and its Au&ust H, )AA) /esolution denyin&
petitionersI motion for reconsideration.
The undisputed facts are as follo"sK
/espondents, re&ular employees of petitioner XA/ A!IA, Inc., an automotive dealer in +avao City, .led on
!eptember )(, 3HHD a complaint$ for underpayment of "a&es and attorneyIs fees before -ranch YI, /e&ional
Arbitration -ranch of +avao City. They claimed that they "ere not paid their cost of livin& allo"ance FC0,AG,
as mandated by the /e&ional Tripartite and >a&es Productivity -oard F/T>P-G YI >a&e 0rder 1o. $, for the
months of +ecember 3HH$ and +ecember 3HH(, and prayed that petitioner be ordered to pay the same "ith
3[ interest per month, as "ell as attorneyIs fees equivalent to 3A[ of the total monetary a"ard.
Petitioner company and its president Celestino -arretto countered that the complaint "as false and maliciousL
that respondents had already been paid their C0,A for the said periodsL and that respondents scared o=
potential customers and caused a substantial reduction in the income of the petitioner company estimated
at, more or less, P3,AAA,AAA.AA "hen they picketed and put up streamers "ith insultin& and dero&atory
slo&ans. Petitioners presented in evidence the payrolls for +ecember 3HH$ and +ecember 3HH( sho"in& that
the respondents ackno"led&ed in "ritin& the receipt of their C0,A, and the a?davits of 4rmina +aray and
Cristina Arana, cashiers of XA/ A!IA, refutin& respondentsI claim that they "ere made to si&n blank pieces of
paper.
0n Au&ust $3, 3HH2, the ,abor Arbiter rendered a decision in favor of petitioners, the dispositive portion of
"hich readsK
>64/4'0/4, <ud&ment is hereby renderedK
3. 0rderin& the complainants <ointly and severally to pay respondents the sum of P*A,AAA.AA
representin& attorneyIs fee of respondentsL
). 0rderin& complainants <ointly and severally to pay respondent Celestino !. -arretto the sum of
P3*A,AAA.AA in concept of moral dama&esL
$. 0rderin& the complainants <ointly and severally to pay respondents the sum of P*,AAA.AA as
liti&ation e5penses.
!0 0/+4/4+.(
/espondents appealed to the 1,/C, "hich a?rmed the decision of the ,abor Arbiter but deleted the a"ard of
moral dama&es, attorneyIs fees, and liti&ation e5penses for lack of su?cient basis in a /esolution* dated
Au&ust )$, 3HHH.
Pa&e #$5 of #$%
/espondents .led a petition for certiorari "ith the Court of Appeals, "hich reversed the decision of the 1,/C
and ordered petitioner company to pay the respondents the P)*.AA per day C0,A for the period +ecember 3
to $3, 3HH(, plus interest thereon at the rate of 3[ per month computed from the time the same "as
"ithheld from respondents up to the time they "ere actually paid the respective sums due them.
In support of its decision, the appellate court statedK%
As aforesaid, the claim for the +ecember A3 to $3, 3HH$ C0,A had already prescribed at the time the
complaint for underpayment "as .led "ith the labor arbiter. 6o"ever, there appears to be insu?cient
evidence in the records to <ustify a .ndin& that C0,A for the period +ecember A3 to $3, 3HH( had already
been paid. The +ecember A3 to 3* and 3% to $3, 3HH( payroll adduced as evidence of payment does not
meet the Bsubstantial evidenceB test. The same does not bear the si&natures of the respondent companyIs
employees ackno"led&in& receipt of the same amount. Moreover, the same "as si&ned by 4rmina I. +aray,
the paymaster and private respondent Celestino !. -arretto, the president cum C.4.0. of respondent company
and the same "as not covered by any a?davit of either si&natory that the required C0,A had already been
actually paid, the payroll presented bein& merely the copy approved for payment, and not the copy disclosin&
actual payment.
6ence this petition for revie" based on the follo"in& &roundsK
3. I1 IT! A!!AI,4+ +4CI!I01, T64 6010/A-,4 C0/T 0' APP4A,! MA+4 A MI!APP/4641!I01 0'
'ACT! A1+ IT P/4MI!4+ IT! 'I1+I17 0' 'ACT 01 A !PP0!4+ A-!41C4 0' 49I+41C4 -T T6I! I!
C01T/A+ICT4+ -; T64 49I+41C4 01 /4C0/+ C01!I+4/I17 T6ATK
a. T64 P/4!I+41T A1+ C40 4Y4CT4+ T64 P0!ITI01 PAP4/ 1+4/ 0AT6 >64/4 T64
PA;/0,, 49I+41CI17 PA;M41T 0' T64 +4C4M-4/ 3HH( C0,A, >6IC6 64 A,!0 !I714+,
>A! A114Y4+ A1+ ATTAC64+, 641C4 T64/4 >A! 10 144+ '0/ 6IM T0 MAX4 A !4PA/AT4
A''I+A9ITL
b. T64 PA;MA!T4/ C4/TI'I4+ I1 4AC6 PA74 0' T64 PA;/0,, T6AT !64 6A+ ACTA,,; PAI+
T64 AM01T! T0 T64 P4/!01! ,I!T4+ I1 T64 +4C4M-4/ 3HH( PA;/0,, T6AT I1C,+4+
64/4I1 /4!P01+41T!. 641C4, T64 PA;/0,, I! 10T M4/4,; A1 APP/09A, '0/ PA;M41T
-T I! A1 49I+41C4 T6AT ACTA, PA;M41T >A! MA+4.
c. T64 ,A-0/ A/-IT4/ C01+CT4+ A C,A/I'ICAT0/; 64A/I17 >64/4I1 T64 CA!6I4/! 0'
P4TITI014/, 014 0' >60M >A! T64 PA;MA!T4/ /4'4//4+ T0 A-094, C01'I/M4+ T6AT
T64; 6A94 ACTA,,; PAI+ T64 /4!P01+41T! T64I/ A,,474+ 1PAI+ C0,A.
). T64 6010/A-,4 C0/T 0' APP4A,! 4YC44+4+ T64 ,IMIT! 0' IT! P0>4/ T0 /49I4> T64 ACT!
0' T64 ,A-0/ A/-IT4/ A1+ T64 1,/C -; 10T C01'I1I17 IT!4,' I1 +4T4/MI1I17 >64T64/ T64
!AI+ SA!I#8+ICIA, -0+I4! ,ACX4+ 0/ ACT4+ I1 4YC4!! 0' 8/I!+ICTI01 0/ C0MMITT4+ 7/A94
A-!4 0' +I!C/4TI01 -T P/0C44+4+ T0 I1SI/4 01 T64 C0//4CT14!! 0' T64 49A,ATI01 0'
49I+41C4 -; T64 !AI+ A741CI4! >6IC6 I! -4;01+ T64 0''IC4 0' A1 4YT/A0/+I1A/; >/IT
0' '9R5"!R6R".D
In support of the .rst assi&ned error, petitioners ar&ue that the factual .ndin&s of the Court of Appeals are in
conOict "ith the evidence on record and those of the ,abor Arbiter and the 1,/C. They contend that the
proceedin&s and pleadin&s before the ,abor Arbiter and the 1,/C sho"ed that the respondents have
abandoned their claim for non#payment of the +ecember 3HH( C0,A. They insist that in their position paper
and Memorandum on Appeal, the respondents only demanded the payment of the +ecember 3HH$ C0,A but
not the +ecember 3HH( C0,A. They further insist that there is su?cient evidence that the respondents had
already been paid their C0,A.
Anent the second assi&ned error, petitioners ar&ue that the respondents havin& .led a petition
for certiorari under /ule %* of the /ules of Court, the Court of Appeals should have limited the e5ercise of its
<udicial revie" to issues of "ant of <urisdiction andJor &rave abuse of discretion on the part of the ,abor
Arbiter and the 1,/C, instead of evaluatin& the correctness and su?ciency of the evidence upon "hich the
labor tribunals based their decisions.
The issue is simpleK "hether or not the petitioner company paid the respondents the C0,A for +ecember
3HH$ and +ecember 3HH( as mandated by /T>P- YI >a&e 0rder 1o. $.
>e .nd merit in the petition.
A close scrutiny of the payroll for the +ecember 3HH$ C0,A2 readily disclose the si&natures of the
respondents opposite their printed names and the numeric value of P%*(.AA. /espondentsI averment that the
petitioner company harassed them into si&nin& the said payroll "ithout &ivin& them its cash equivalent
cannot be &iven credence. Their self#servin& and unsubstantiated declarations cannot overturn the
evidentiary "ei&ht of the si&natures. The alle&ations of harassment are inadmissible as self#servin&
Pa&e #$1 of #$%
statements and therefore cannot be repositories of truth. 6e "ho asserts not he "ho denies must proveL
unfortunately, the respondents miserably failed to dischar&e this burden. >e also a&ree "ith the observation
of the ,abor Arbiter that in 3HH$ there "as no labor dispute since the labor unrest took place only in the later
part of 3HHD. 6ence, there "as no reason for mana&ement to harass its employees.
More importantly, the unreasonable len&th of time in pursuin& respondentsI claim for the +ecember 3HH$
C0,A militates a&ainst its &rant. Article )H3 of the ,abor Code requires that all money claims arisin& from
employer#employee relations shall be .led "ithin $ years from the time that the cause of action accruedL
other"ise they shall be barred forever. In the present case, the respondents .led the complaint for
underpayment of "a&e on !eptember )(, 3HHD. Thus, the action for the payment of the +ecember 3HH$
C0,A has already prescribed.
>ith respect to the +ecember 3HH( C0,A, "e .nd that the respondents alle&ed its non#payment only in the
complaint. !ubsequent pleadin&s reveal that they opted to pursue their demand only for +ecember 3HH$
C0,A and fore&o that of the +ecember 3HH(. 4ven assumin& that the ne&lect by the respondents in assertin&
their claim for the +ecember 3HH( C0,A does not amount to an abandonment on the &round that they should
not be deprived of their ri&htful monetary claims if they "ere so entitled, still the paucity of evidence to
substantiate their bare assertions ne&ates such an a"ard.
The payrollsH for +ecember 3 to 3*, 3HH( and +ecember 3% to $3, 3HH( indicate an allo"ance of P$)D.AA for
each period, or a total of P%*(.AA for the entire month. 6o"ever, a casual observation of the payroll for the
+ecember 3HH$ C0,A "ill also sho" that the respondents si&ned for the amount of P%*(.AA. Also, the
allo"ances appearin& in the t"o separate payslips3A for +ecember 3 to 3*, 3HH( and +ecember 3% to $3,
3HH( sum up to a total of P%*(.AA. Althou&h the numeric .&ures in the +ecember 3HH( payroll and the
payslips for the same period "ere denominated merely as allo"ances "hile those in the +ecember 3HH$
payroll "ere speci.cally identi.ed as C0,A, the fact that they add up to the same .&ure, i.e., P%*(.AA, is not
a coincidence. >hether desi&nated merely as an allo"ance or C0,A, it is unmistakable that they all represent
the cost of livin& allo"ance for the &iven periods under /T>P- YI >a&e 0rder 1o. $.
Moreover, the a?davits of 4rmina +aray and Cristita Arana, "hose verity "e .nd no reason to suspect,
con.rmed the truthfulness of the entries in the payrolls and a?rmed the receipt by the respondents of their
full compensation. 4ntries in the payroll, bein& entries in the course of business, en<oy the presumption of
re&ularity under /ule 3$A, !ection ($ of the /ules of Court. It is therefore incumbent upon the respondents to
adduce clear and convincin& evidence in support of their claim. nfortunately, respondentsI naked assertions
"ithout proof in corroboration "ill not su?ce to overcome the disputable presumption.
In disputin& the probative value of the payrolls for +ecember 3HH(, the appellate court observed that the
same contain only the si&natures of 4rmina +aray and Celestino -arreto, the paymaster and the president,
respectively. It further opined that the payrolls presented "ere only copies of the approved payment, and not
copies disclosin& actual payment.
The +ecember 3HH( payrolls33 contain a computation of the amounts payable to the employees for the &iven
period, includin& a breakdo"n of the allo"ances and deductions on the amount due, but the si&natures of the
respondents are conspicuously missin&. Ideally, the si&natures of the respondents should appear in the
payroll as evidence of actual payment. 6o"ever, the absence of such si&natures does not necessarily lead to
the conclusion that the +ecember 3HH( C0,A "as not received. It appears that the payslips3) for the same
period bear the si&natures of the respondents plus a certi.cation that they received the full compensation for
the services rendered. >hile ordinarily a payslip is only a statement of the &ross monthly income of the
employee, his si&nature therein coupled by an ackno"led&ement of full compensation alter the le&al
comple5ion of the document. The payslip becomes a substantial proof of actual payment. Moreover, there is
no hard#and#fast rule requirin& that the employeeIs si&nature in the payroll is the only acceptable proof of
payment. -y implication, the respondents, in si&nin& the payslips "ith their ackno"led&ement of full
compensation, unquali.edly admitted the receipt thereof, includin& the C0,A for +ecember 3HH(. The Court
of Appeals erred "hen it placed undue reliance on the unsi&ned payrolls and disre&arded the si&ned payslips.
'actual .ndin&s by quasi#<udicial a&encies, such as the 1ational ,abor /elations Commission, "hich have
acquired e5pertise because their <urisdiction is con.ned to speci.c matters, are &enerally accorded not only
respect but even .nality.3$
:HEREFORE, based on the fore&oin&, the petition is 7/A1T4+. The 'ebruary )2, )AA) decision of the Court
of Appeals in CA#7./. !P 1o. *DHD) is /494/!4+ and !4T A!I+4. The +ecision of the 1,/C dated Au&ust )$,
3HHH dismissin& respondentsI claims of unpaid C0,A for +ecember 3HH$ and +ecember 3HH(, and deletin&
the a"ards for moral dama&es, attorneyIs fees and liti&ation e5penses for lack of su?cient basis, is
A''I/M4+.
1o pronouncement as to costs.
SO ORDERED.
Pa&e #$4 of #$%
Pa&e #$% of #$%

Cases 270-311 Labor

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Cases 270-311 Labor

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G.R. No.

L-4148 July 16, 1952

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