Republic of the Philippines Department of Labor and Employment NATIONAL LABOR RELATIONS COMMISSION Regional Arbitration Branch-National Capital

Region

MARIO, Complainant, -versusABC COMPANY, Respondent, x-----------------------------/

NLRC Case No. RAB-NCR-03-14728-11

POSITION PAPER
COMES NOW the Respondent, ABC COMPANY, through the undersigned counsel, most respectfully submits unto this Honorable Office this position paper and in support thereof, hereby states that: The Parties Respondent ABC COMPANY is a corporation duly organized, existing and operating under and in accordance with law since January 1975, with principal address at 1991 Taft Avenue, Pasay City, and duly represented by Mr. John Thomas, copy of the Secretarys Certificate and Board Resolution hereto marked and attached as Annex 1 and Annex 2, respectively. Complainant MARIO is a Filipino citizen, of legal age, married and a resident of 2001 Ortigas St, Pasay City, where he may be served with the processes of this Honorable Office. Statement of Facts/Case This is a complaint for payment of thirteenth (13th) month pay, service incentive leave and salary differentials for five (5) years.

ABC COMPANY (Company) is a domestic corporation engaged in the business of food processing, specifically, manufacturing meat products, including the packaging and distribution thereof. A copy of the formers Articles of Incorporation is hereto attached as Annex 3.

Page 1 of 12

The Company hired MARIO on January 3, 2006 under the terms and conditions laid down in the Contract of Employment hereto attached as Annex 4. Impressed with his credentials, the Company assigned him as the Taskmaster & General Plant Supervisor of the Meat Processing Division (MPD). As such, he undertook the following functions:

1. To work hand-in-hand with the Director of the MPD; 2. To distribute tasks among workers of the Division; 3. To check, supervise and monitor manpower workmanship as well as the operation of meat processing machinery and robotics; 4. To evaluate the performance of the machinery and manpower; 5. To recommend personnel actions such as: promotion, or disciplinary action; 6. To train qualified applicants as recommended by the Human Resource (HR) Department, supply them with sufficient technical skills for higher efficiency and decide whether to hire them as workers of the Division; 7. To orient and remind the workers of the safety precautions being implemented in the plant; 8. To recommend the purchase of parts, supplies and equipment; 9. To oversee the general operations of the Division and directly report or recommend necessary actions to the Director; and 10. To perform other tasks as may be required by the Director from time to time.

Since his employment, Mario was assigned in said position. The Company has not given him any promotion during his five (5) years of service because of the its observance of the rule of seniority. It prioritizes those who have served the Company for a longer period and those with higher credentials. Instead of promotion, the latter is giving Mario a decent salary increase on a yearly basis.

On July 14, 2011, the Director of the MPD received Marios resignation letter. The latter said that he wants to seek more fulfilling work opportunities and as well as for career growth. The Director accepted said resignation and notified the HR Director and the President of the same. Mario was also notified that by reason of the Company policy, his resignation will become effective fifteen (15) days after he tendered the letter. Despite such notice, Mario did not report to work on July 17, 2011 and thereafter. For the sake of maintaining the good relationship between Company and Mario even after the latters resignation, the former did not go after Mario despite lack of reasonable notice of his resignation and MPD Director and other senior staffs undertook the functions left by Mario.
Page 2 of 12

Few days after his resignation, Mario went to the office of the HR Director claiming for 13th month pay, service incentive leave and salary differentials for the last five (5) years. The HR Director, after consulting the Companys Legal Department, refused to grant said money claims. This has prompted Mario to file this instant labor case before this Honorable Office.

Discussion The Companys refusal to grant Marios claim for 13th month pay, service incentive leave and salary differentials for five (5) years are based on the following reasons:

Mario is a member of the Managerial Staff of the Meat Processing Division of ABC Company. While the Company does not deny the existence of Employer-Employee Relationship between it and Mario, the latter is, however, a member of the managerial staff of the formers MPD.

Article 82 of the Labor Code exempts managerial employees from the coverage of labor standards. Labor standards provide the working conditions of employees, including entitlement to overtime pay, service incentive leave pay and premium pay for working on rest days. Under this provision, managerial employees are "those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff."

The Implementing Rules of the Labor Code, Book III, Rule I, Sec. 2(c) define members of a managerial staff as those with the following duties and responsibilities: "(1) The primary duty consists of the performance of work directly related to management policies of the employer; (2) Customarily and regularly exercise discretion and independent judgment; "(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work
Page 3 of 12

along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute under general supervision special assignments and tasks; and "(4) Who do not devote more than 20 percent of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and (3) above." The functions of Mario enumerated in Annex 4 and reproduced in page 2 herein, clearly illustrates that Mario was a member of the managerial staff. His duties and responsibilities, particularly items 1, 2, 3, 4, 5, 6, 8 and 9, conform to the definition of a member of a managerial staff under the Implementing Rules. His duty to work hand-in-hand with the Division Director, to distribute tasks, and to train and decide whether to hire new applicants are responsibilities directly related with the management policies of the Division. His customary and regular exercise of discretion and independent judgment is illustrated, among others, by his duty of supervising the manpower, recommending personnel actions, and the generally supervising the operations of the plant. He is also directly and regularly assisting the Director of the MPD and executing under general supervision work along specialized or technical lines requiring special training, experience, or knowledge as illustrated by items 1 and 8 respectively. In Charlito Pearanda v. Banga Plywood Corporation, et.al., G.R. No. 159577, May 3, 2006, the Supreme Court held that petitioner is a member of the managerial staff of the respondent Corporation. Thus, pursuant to Article 82 of the Labor Code, the former is not entitled to Labor Standards provided by law. A portion of the decision reads as follows:
As shift engineer, petitioners duties and responsibilities were as follows: "1. To supply the required and continuous steam to all consuming units at minimum cost; "2. To supervise, check and monitor manpower workmanship as well as operation of boiler and accessories; "3. To evaluate performance of machinery and manpower; "4. To follow-up supply of waste and other materials for fuel; "5. To train new employees for effective and safety while working; "6. Recommend parts and supplies purchases; "7. To recommend personnel actions such as: promotion, or disciplinary action; "8. To check water from the boiler, feedwater and softener, regenerate softener if beyond hardness limit. "9. Implement Chemical Dosing. "10. Perform other task as required by the superior from time to time."

Page 4 of 12

The foregoing enumeration, particularly items 1, 2, 3, 5 and 7 illustrates that petitioner was a member of the managerial staff. His duties and responsibilities conform to the definition of a member of a managerial staff under the Implementing Rules. Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the operation of the machines and the performance of the workers in the engineering section. This work necessarily required the use of discretion and independent judgment to ensure the proper functioning of the steam plant boiler. As supervisor, petitioner is deemed a member of the managerial staff.

By reason of the foregoing, Mario is undeniably a member of the managerial staff. Hence, he is not entitled to service incentive leave pay as provided in Article 92, salary differentials consisting of overtime pay, holiday pay and other labor standards. ABC Company gives BONUS to its employees equivalent to their 13th month pay Since Mario is a member of the managerial staff of MPD or within the meaning of managerial employees under Article 82 of the Labor Code, it follows that the former is not entitled to 13th month pay.

The Supreme Court in Salafranca v. Philamlife, G.R. No. 121791, December 23, 1998, ruled that:
With respect to the issue that petitioner, being a managerial employee, is not entitled to thirteenth month pay, Memorandum Order No. 28, as implemented by the Revised Guidelines on the Implementation of the 13th Month Pay Law dated November 16, 1987, provides: Sec. 1 of Presidential Decree No. 851 is hereby modified to the extent that all employers are hereby required to pay all their rank and file employees a 13th month pay not later than December 24 of every year. Clearly, therefore, the foregoing exempts managerial employees from this benefit. Of course, this does not preclude an employer from granting other bonuses, in lieu of the 13th month pay, to managerial employees in its discretion.

Despite Marios non-entitlement to 13th month pay pursuant to the foregoing legal bases, the Company had still given him the same benefit since his employment. In fact, Mario received P144, 500.00 from the company by way of bonus for the last 5 years as evidenced by the payroll sheets and annual salary report signed by the complainant. Said documents are hereto attached as Annex 5 and 6, respectively.

Even assuming that Mario is not a member of the managerial staff, the Companys refusal to grant his claim for 13th month pay is still justified. ABC Company,
Page 5 of 12

since its establishment in 1975 and prior to the enactment of Presidential Decree No. 851 (PD 851), has been giving its employees bonuses equivalent to or more than their one month salary. The giving of such bonus is not a mere practice nor based on any factor such as company productivity but rather reduced in writing in every contract of employment signed by our employees whether rank-and-file, supervisory or managerial employees. Mario, in signing his Employment Contract attached herein as Annex 4, agreed with the said terms. Said payment of bonus is provided under Roman Numeral III or Salary, under the paragraph on Bonus. As can be gleaned in said attachment, the payment of the same is without any condition other than that the employee must have worked with the company for at least one (1) month for the last year.

PD 851 provides, among others, that:

Section 2. Employers already paying their employees a 13th-month pay or its equivalent are not covered by this Decree.

The Rules and Regulations Implementing PD. 851 further provides, among others, that:
Section 3. Employers covered The Decree shall apply to all employers except to: xxx (c) Employers already paying their employees 13-month pay or more in a calendar year of its equivalent at the time of this issuance; xxx

In the case of Philippine Airlines v. NLRC, et.al., G.R. No. 114280, July 26, 1996, the Supreme Court ruled in favor of the payment of 13th month pay in addition to the bonuses by reason of some facts peculiar in said case which are absent in the instant case. Nevertheless, the Court, regarding the interpretation of PD 851, had ruled as follows:
Although P.D. 851 as amended by Memorandum Order No. 28 requires all employers to pay all their rank and file employees a thirteenth month pay, the rule is subject to certain exceptions. Excluded from the coverage are "employers already paying their employees a thirteenth month pay or more in a calendar year or its equivalent at the time of the issuance of the law. Construing the term "its equivalent", the same was defined as inclusive of "Christmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting to not less [than] 1/12th of the basic salary but shall not include cash and stock dividend, cost of living allowances and all other allowances regularly enjoyed by the employee, as well as non-monetary benefits. When an employer pays less than 1/12th of the employee's basic salary, the employer shall pay the difference.

Page 6 of 12

Hence, pursuant to the foregoing laws and jurisprudence, the bonus granted by the Company to its employees is already the equivalent of the 13th month pay provided under PD 851.

As regards the payment of said bonus, the employees payroll attached herein as Annex 5 clearly indicates that Mario has been paid his bonuses from June 2006 up to June 2011. Hence, his claim for 13th month pay was denied by the Company and further claim for said benefit before any tribunal shall be denied.

ABC Company gives Vacation Leave with Pay to its employees equivalent to Service Incentive Leave To reiterate, Mario, being a member of the managerial staff of MPD, is not entitled to the labor standards provided by law pursuant to Article 82 of the Labor Code. Such labor standard benefits include service incentive leave which Mario was claiming from the Company.

Had Mario been within the coverage of Article 82 of the Labor Code, his claim for service incentive leave is still untenable. The company since its establishment has been granting its employees vacation leave with pay to its employees equivalent to six (6) days. Article 95 of the Labor Code provides:
Right to service incentive leave. (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. (b) This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying vacation leave with pay of at least five days x x x

The Company, as already stated, has been giving all its employees, whether under a written or unwritten contract and regardless of the status of their employment, not only five (5) but six (6) days of vacation leave with pay and the same may be converted into cash if the employee wishes not to utilize the said benefit. For Marios part, such benefit is clearly stated in the Contract of Employment hereto attached as Annex 4. For the years 2006 to 2010, Mario received Php31, 200.00 for his vacation leave pay including those which were converted into cash. Hence, any further claim on the formers part of non-payment of service incentive leave should be denied.

Mario received his correct salary for the last five (5) years
Page 7 of 12

Marios claim for salary differential is likewise untenable. Before his resignation, he was receiving his salary twice a month, on the 15th and last day of each month as agreed upon in his Contract of Employment. Since he was a member of the managerial staff of MPD, his salary is higher than, in fact twice as much as, the minimum wage required by Wage Order Nos. NCR-12 to NCR-16, which were the prevailing Wage Orders in NCR during his employment. Attached hereto are the payroll sheets and annual salary report signed by Mario showing his receipt of such correct salaries including his other monetary claims marked as Annex 5 and 6 respectively. Attached also hereto as Annex 7 is the Compliance Certificate issued by DOLE-NCR, acting on an employees complaint and after conducting an inspection, showing that the Company is complying with its obligations to its employees.

As regards holiday, rest day and overtime pay, Mario, being a member of the managerial staff, is likewise exempted from said benefits pursuant to Article 98 of the Labor Code. Despite such exemption, the Company is still generous enough to give Mario overtime and holiday pay in certain circumstances during his employment as evidenced by Annex 5 and 6.

Money Claims for the Fourth and Fifth Year Had Prescribed.

As regards the fourth and fifth year salary differentials and other money claims of
the complainant, the action has already prescribed. Under Article 291 of the Labor Code, money claims arising from an employer-employee relationship must be filed within three (3) years from the time the cause of action accrued. Thus, salary differentials and other money claims, if any, can only be recovered from July 18, 2008 up to the time of resignation.

The Supreme Court, in the case of St. Michael Academy, et.al. v. NLRC, G.R. No. 119512, July 13, 1998, ruled as follows:
Under Article 291 of the Labor Code, money claims arising from an employer-employee relationship must be filed within three (3) years from the time the cause of action accrued. Thus, salary differential can only be recovered from July 1989 with respect to private respondents Bolosio and Delorino, and from November 1989 with respect to private respondents Rebadulla, Oserraos, Daclag and Aleria, that is, three (3) years before they filed their individual complaints on July 9, 1992 and November 5, 1992, respectively. But as aforestated, petitioner school complied with the minimum wage requirement starting January 1990,
Page 8 of 12

hence, no salary differential can be recovered from that instant up to the time of their resignation. Thus, Bolosio can recover salary differential from July 1989 to December 1989; Delorino is entitled to salary differential from July 1989 to December 1989 and May 1991; and Rebadulla, Oserraos, Daclag and Aleria can recover salary differential from November 1989 to December 1989. As for Golo, it appears that she was fully compensated for her services.

Prayer

WHEREFORE, premises considered, Respondent ABC Company respectfully pray that captioned case be dismissed for utter lack of merit.

Other reliefs and remedies just and equitable in the premises are prayed for. City of Makati, Philippines, September 25, 2011.

2nd Floor, CDT Place, 2322 Chino Roces Ave, Makati City, 1231 Philippines Roll of Attorneys No. 51000 IBP Lifetime No. 05000; 05.01.2010; Makati City P.T.R. No. ACF 0260392; 07.03.10; Makati City MCLE Compliance No. II-0005000

NIO CARLO C. BAUTISTA

2nd Floor, CDT Place, 2322 Chino Roces Ave, Makati City, 1231 Philippines Roll of Attorneys No. 51001 IBP Lifetime No. 05001; 05.01.2010; Makati City P.T.R. No. ACF 0260393; 07.03.10; Makati City MCLE Compliance No. II-0005001

CECILIA BERGADO

2nd Floor, CDT Place, 2322 Chino Roces Ave, Makati City, 1231 Philippines Roll of Attorneys No. 51004 IBP Lifetime No. 05004; 05.01.2010; Makati City P.T.R. No. ACF 0260396; 07.03.10; Makati City MCLE Compliance No. II-0005004

JO CRISTINE BERNARDO

2nd Floor, CDT Place, 2322 Chino Roces Ave, Makati City, 1231 Philippines Roll of Attorneys No. 51002 IBP Lifetime No. 05002; 05.01.2010; Makati City P.T.R. No. ACF 0260394; 07.03.10; Makati City MCLE Compliance No. II-0005002 Page 9 of 12

ARCHIE G. CARLOS

2nd Floor, CDT Place, 2322 Chino Roces Ave, Makati City, 1231 Philippines Roll of Attorneys No. 51003 IBP Lifetime No. 05003; 05.01.2010; Makati City P.T.R. No. ACF 0260395; 07.03.10; Makati City MCLE Compliance No. II-0005003

ROMEO CRUZ, JR.

2nd Floor, CDT Place, 2322 Chino Roces Ave, Makati City, 1231 Philippines Roll of Attorneys No. 51005 IBP Lifetime No. 05005; 05.01.2010; Makati City P.T.R. No. ACF 0260397; 07.03.10; Makati City MCLE Compliance No. II-0005005

TEDDY DE LEON

2nd Floor, CDT Place, 2322 Chino Roces Ave, Makati City, 1231 Philippines Roll of Attorneys No. 51006 IBP Lifetime No. 05006; 05.01.2010; Makati City P.T.R. No. ACF 0260398; 07.03.10; Makati City MCLE Compliance No. II-0005006

WAYNE S. DE VERA

2nd Floor, CDT Place, 2322 Chino Roces Ave, Makati City, 1231 Philippines Roll of Attorneys No. 51007 IBP Lifetime No. 05007; 05.01.2010; Makati City P.T.R. No. ACF 0260399; 07.03.10; Makati City MCLE Compliance No. II-0005009

ERNEL ESGUERRA

2 Floor, CDT Place, 2322 Chino Roces Ave, Makati City, 1231 Philippines Roll of Attorneys No. 51010 IBP Lifetime No. 05010; 05.01.2010; Makati City P.T.R. No. ACF 0260400; 07.03.10; Makati City MCLE Compliance No. II-0005010 2 Floor, CDT Place, 2322 Chino Roces Ave, Makati City, 1231 Philippines Roll of Attorneys No. 51011 IBP Lifetime No. 05011; 05.01.2010; Makati City P.T.R. No. ACF 0260401; 07.03.10; Makati City MCLE Compliance No. II-0005011
nd

nd

FITZ MACARIOLA

ROGELIO MARFIL

Page 10 of 12

2nd Floor, CDT Place, 2322 Chino Roces Ave, Makati City, 1231 Philippines Roll of Attorneys No. 51012 IBP Lifetime No. 05012; 05.01.2010; Makati City P.T.R. No. ACF 02603402; 07.03.10; Makati City MCLE Compliance No. II-0005012

AIZA GAIL MENDIOLA

2nd Floor, CDT Place, 2322 Chino Roces Ave, Makati City, 1231 Philippines Roll of Attorneys No. 51013 IBP Lifetime No. 05013; 05.01.2010; Makati City P.T.R. No. ACF 0260403; 07.03.10; Makati City MCLE Compliance No. II-0005013

MAXIMO PASCUA

2nd Floor, CDT Place, 2322 Chino Roces Ave, Makati City, 1231 Philippines Roll of Attorneys No. 51014 IBP Lifetime No. 05014; 05.01.2010; Makati City P.T.R. No. ACF 0260404; 07.03.10; Makati City MCLE Compliance No. II-0005014

MICHIE ROO

Page 11 of 12

VERIFICATION AND CERTIFICATION OF NON-FORUM SHOPPING I, John Thomas, of legal age, after having been duly sworn in accordance with law, depose and state that: 1. I am the duly authorized representative for the respondent company in the abovestated case; 2. I caused the preparation of the foregoing complaint; 3. I have read the contents thereof and the facts stated therein are true and correct of my personal knowledge and/or on the basis of copies of documents and records in my possession; 4. I have not commenced any other action or proceeding involving the same issues in the Supreme Court, the Court of Appeals, or any other tribunal or agency; 5. To the best of my knowledge and belief, no such action or proceeding is pending in the Supreme Court, the Court of Appeals, or any other tribunal or agency; 6. If I should thereafter learn that a similar action or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals, or any other tribunal or agency, I undertake to report that fact within five (5) days therefrom to this Honorable Court.

IN WITNESS WHEREOF, I have hereunto affixed my signature on this 25th day of September, 2011 in Makati City. John Thomas Affiant

SUBSCRIBED AND SWORN to before me this 25th day of September 2011 at Makati City, affiant exhibiting to me his Community Tax Certificate No19375643 issued on 3rd day of May 2011 at Makati City. JO CRISTINE BERNARDO

2nd Floor, CDT Place, 2322 Chino Roces Ave, Makati City, 1231 Philippines Roll of Attorneys No. 51004 IBP Lifetime No. 05004; 05.01.2010; Makati City P.T.R. No. ACF 0260396; 07.03.10; Makati City MCLE Compliance No. II-0005004

Doc. No. 123; Page No. 2; Book No. 342; Series of 2011.
Page 12 of 12