Labor Cases (2)

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LABOR CASES

FIRST DIVISION

[G. R. No. 123938. May 21, 1998]

LABOR CONGRESS OF THE PHILIPPINES (LCP) for and in behalf of its members, ANA MARIE OCAMPO, MARY INTAL, ANNABEL CARESO, MARLENE MELQIADES, IRENE JACINTO, NANCY GARCIA, IMELDA SARMIENTO, LENITA VIRAY, GINA JACINTO, ROSEMARIE DEL ROSARIO, CATHERINE ASPURNA, WINNIE PENA, VIVIAN BAA, EMILY LAGMAN, LILIAN MARFIL, NANCY DERACO, JANET DERACO, MELODY JACINTO, CAROLYN DIZON, IMELDA MANALOTO, NORY VIRAY, ELIZA SALAZAR, GIGI MANALOTO, JOSEFINA BASILIO, MARY ANN MAYATI, ZENAIDA GARCIA, MERLY CANLAS, ERLINDA MANALANG, ANGELINA QUIAMBAO, LANIE GARCIA, ELVIRA PIEDRA, LOURDES PANLILIO, LUISA PANLILIO, LERIZA PANLILIO, ALMA CASTRO, ALDA DAVID, MYRA T. OLALIA, MARIFE PINLAC, NENITA DE GUZMAN, JULIE GACAD, EVELYN MANALO, NORA PATIO, JANETH CARREON, ROWENA MENDOZA, ROWENA MANALO, LENY GARCIA, FELISISIMA PATIO, SUSANA SALOMON, JOYDEE LANSANGAN, REMEDIOS AGUAS, JEANIE LANSANGAN, ELIZABETH MERCADO, JOSELYN MANALESE, BERNADETH RALAR, LOLITA ESPIRITU, AGNES SALAS, VIRGINIA MENDIOLA, GLENDA SALITA, JANETH RALAR, ERLINDA BASILIO, CORA PATIO, ANTONIA CALMA, AGNES CARESO, GEMMA BONUS, MARITESS OCAMPO, LIBERTY GELISANGA, JANETH MANARANG, AMALIA DELA CRUZ, EVA CUEVAS, TERESA MANIAGO, ARCELY PEREZ, LOIDA BIE, ROSITA CANLAS, ANALIZA ESGUERRA, LAILA MANIAGO, JOSIE MANABAT, ROSARIO DIMATULAC, NYMPA TUAZON, DAIZY TUASON, ERLINDA NAVARRO, EMILY MANARANG, EMELITA CAYANAN, MERCY CAYANAN, LUZVIMINDA CAYANAN, ANABEL MANALO, SONIA DIZON, ERNA CANLAS, MARIAN BENEDICTA, DOLORES DOLETIN, JULIE DAVID, GRACE VILLANUEVA, VIRGINIA MAGBAG, CORAZON RILLION, PRECY MANALILI, ELENA RONOZ, IMELDA MENDOZA, EDNA CANLAS and ANGELA CANLAS, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, EMPIRE FOOD PRODUCTS, its Proprietor/President & Manager, MR. GONZALO KEHYENG and MRS. EVELYN KEHYENG, respondents.

D E C I S I O N

DAVIDE, JR., J.:

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

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

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

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

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

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

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

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

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

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

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certification of the LCP Labor Congress parties jointly move for the direct certification of the LCP Labor Congress;

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

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

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

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

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

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

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

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

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

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

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

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

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

SO ORDERED. (Annex “G” of Petition)

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

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

Upon review of the minutes of the proceedings on record, however, it appears that complainant presented witnesses, namely, BENIGNO NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991, RECORD, p. 92, who adopted its POSITION PAPER AND CONSOLIDATED AFFIDAVIT, as Exhibit “A” and the annexes thereto as Exhibit “B”, “B-1” to “B-9”, inclusive. Minutes of the proceedings on record show that complainant further presented other witnesses, namely: ERLINDA BASILIO (13 March 1991, RECORD, p. 93; LOURDES PANTILLO, MARIFE PINLAC, LENIE GARCIA (16 April 1991, Record, p. 96, see back

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portion thereof; 2 May 1991, Record, p. 102; 16 May 1991, Record, p. 103; 11 June 1991, Record, p. 105). Formal offer of Documentary and Testimonial Evidence was made by complainant on June 24, 1991 (Record, p. 106-109)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

II

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

III

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

IV

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

We required respondents to file their respective Comments.

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

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

In its Manifestation and Motion in Lieu of Comment, the Office of the Solicitor General (OSG) sided with petitioners. It pointed out that the Labor Arbiter, in finding that petitioners

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

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

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

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

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

We find for petitioners.

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

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



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

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

After which, the NLRC observed and found:

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

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

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

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

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

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

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

“x x x x x

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

SO ORDERED.”

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

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

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

In finding that petitioner employees abandoned their work, the Labor Arbiter and the NLRC relied on the testimony of Security Guard Rolando Cairo that on January 21, 1991, petitioners


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refused to work. As a result of their failure to work, the cheese curls ready for repacking on said date were spoiled.

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

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

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

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

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

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

That petitioner employees are “pakyao” or piece workers does not imply that they are not regular employees entitled to reinstatement. Private respondent Empire Food Products, Inc. is a food and fruit processing company. In Tabas v. California Manufacturing Co., Inc. (169

SCRA 497), this Honorable Court held that the work of merchandisers of processed food, who coordinate with grocery stores and other outlets for the sale of the processed food is necessary in the day-to-day operation[s] of the company. With more reason, the work of processed food repackers is necessary in the day-to-day operation[s] of respondent Empire Food Products.[10]

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

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

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

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

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

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







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time[16] that petitioners worked for private respondents. Thus, while petitioners’ mode of compensation was on a “ per piece basis,” the status and nature of their employment was that of regular employees.

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

SEC. 8. Holiday pay of certain employees.-

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

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

2. EXEMPTED EMPLOYERS

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

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

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

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

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

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

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

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

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












8

Costs against private respondents.

SO ORDERED.

SECOND DIVISION

[G.R. No. 111042. October 26, 1999]

AVELINO LAMBO and VICENTE BELOCURA, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and J.C. TAILOR SHOP and/or JOHNNY CO, respondents.

D E C I S I O N

MENDOZA, J.:

This is a petition for certiorari to set aside the decision[1] of the National Labor Relations Commission (NLRC) which reversed the awards made by the Labor Arbiter in favor of petitioners, except one for P4,992.00 to each, representing 13th month pay.

The facts are as follows.

Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100 employees of private respondents, petitioners were paid on a piece-work basis, according to the style of suits they made. Regardless of the number of pieces they finished in a day, they were each given a daily pay of at least P64.00.

On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave pay, separation pay, 13th month pay, and attorney’s fees.

After hearing, Labor Arbiter Jose G. Gutierrez found private respondents guilty of illegal dismissal and accordingly ordered them to pay petitioners’ claims. The dispositive portion of the Labor Arbiter’s decision reads:

WHEREFORE, in the light of the foregoing, judgment is hereby rendered declaring the complainants to have been illegally dismissed and ordering the respondents to pay the complainants the following monetary awards:

AVELINO LAMBO VICENTE BELOCURA

I. BACKWAGES P64,896.00 P64,896.00

II. OVERTIME PAY 13,447.90 13,447.90

III. HOLIDAY PAY 1,399.30 1,399.30

IV. 13TH MONTH PAY 4,992.00 4,992.00

V. SEPARATION PAY 9,984.00 11,648.00

TOTAL P94,719.20 P96,383.20 = P191,102.40

Add: 10% Attorney’s Fees 19,110.24

GRAND TOTAL P210,212.64

= = = = = =

or a total aggregate amount of TWO HUNDRED TEN THOUSAND TWO HUNDRED TWELVE AND 64/100 (P210,212.64).

All other claims are dismissed for lack of merit.

SO ORDERED.[2]

On appeal by private respondents, the NLRC reversed the decision of the Labor Arbiter. It found that petitioners had not been dismissed from employment but merely threatened with a closure of the business if they insisted on their demand for a “straight payment of their minimum wage,” after petitioners, on January 17, 1989, walked out of a meeting with private respondents and other employees. According to the NLRC, during that meeting, the employees voted to maintain the company policy of paying them according to the volume of work finished at the rate of P18.00 per dozen of tailored clothing materials. Only petitioners allegedly insisted that they be paid the minimum wage and other benefits. The NLRC held petitioners guilty of abandonment of work and accordingly dismissed their claims except that for 13th month pay. The dispositive portion of its decision reads:

WHEREFORE, in view of the foregoing, the appealed decision is hereby vacated and a new one entered ordering respondents to pay each of the complainants their 13th month pay in the amount ofP4,992.00. All other monetary awards are hereby deleted.

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9

SO ORDERED.[3]

Petitioners allege that they were dismissed by private respondents as they were about to file a petition with the Department of Labor and Employment (DOLE) for the payment of benefits such as Social Security System (SSS) coverage, sick leave and vacation leave. They deny that they abandoned their work.

The petition is meritorious.

First. There is no dispute that petitioners were employees of private respondents although they were paid not on the basis of time spent on the job but according to the quantity and the quality of work produced by them. There are two categories of employees paid by results: (1) those whose time and performance are supervised by the employer. (Here, there is an element of control and supervision over the manner as to how the work is to be performed. A piece-rate worker belongs to this category especially if he performs his work in the company premises.); and (2) those whose time and performance areunsupervised. (Here, the employer’s control is over the result of the work. Workers on pakyao and takay basis belong to this group.) Both classes of workers are paid per unit accomplished. Piece-rate payment is generally practiced in garment factories where work is done in the company premises, while payment on pakyao and takay basis is commonly observed in the agricultural industry, such as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify. [4] Petitioners belong to the first category, i.e., supervised employees.

In determining the existence of an employer-employee relationship, the following elements must be considered: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct.[5] Of these elements, the most important criterion is whether the employer controls or has reserved the right to control the employee not only as to the result of the work but also as to the means and methods by which the result is to be accomplished.[6]

In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked in the company’s premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The mere fact that they were paid on a piece-rate basis does not negate their status as regular employees of private respondents. The term “wage” is broadly defined in Art. 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis. Payment by the piece is just a method of compensation and does not define the essence of the relations.[7] Nor does the fact that petitioners are not covered by the SSS affect the employer-employee relationship.

Indeed, the following factors show that petitioners, although piece-rate workers, were regular employees of private respondents: (1) within the contemplation of Art. 280 of the Labor Code, their work as tailors was necessary or desirable in the usual business of private respondents, which is engaged in the tailoring business; (2) petitioners worked for private respondents throughout the year, their employment not being dependent on a specific

project or season; and, (3) petitioners worked for private respondents for more than one year.[8]

Second. Private respondents contend, however, that petitioners refused to report for work after learning that the J.C. Tailoring and Dress Shop Employees Union had demanded their (petitioners’) dismissal for conduct unbecoming of employees. In support of their claim, private respondents presented the affidavits[9] of Emmanuel Y. Caballero, president of the union, and Amado Cabañero, member, that petitioners had not been dismissed by private respondents but that practically all employees of the company, including the members of the union had asked management to terminate the services of petitioners. The employees allegedly said they were against petitioners’ request for change of the mode of payment of their wages, and that when a meeting was called to discuss this issue, a petition for the dismissal of petitioners was presented, prompting the latter to walk out of their jobs and instead file a complaint for illegal dismissal against private respondents on January 17, 1989, even before all employees could sign the petition and management could act upon the same.

To justify a finding of abandonment of work, there must be proof of a deliberate and unjustified refusal on the part of an employee to resume his employment. The burden of proof is on the employer to show an unequivocal intent on the part of the employee to discontinue employment.[10] Mere absence is not sufficient. It must be accompanied by manifest acts unerringly pointing to the fact that the employee simply does not want to work anymore.[11]

Private respondents failed to discharge this burden. Other than the self-serving declarations in the affidavits of their two employees, private respondents did not adduce proof of overt acts of petitioners showing their intention to abandon their work. On the contrary, the evidence shows that petitioners lost no time in filing the case for illegal dismissal against private respondent. This fact negates any intention on their part to sever their employment relationship.[12] Abandonment is a matter of intention; it cannot be inferred or presumed from equivocal acts.[13]

Third. Private respondents invoke the compromise agreement,[14] dated March 2, 1993, between them and petitioner Avelino Lambo, whereby in consideration of the sum of P10,000.00, petitioner absolved private respondents from liability for money claims or any other obligations.

To be sure, not all quitclaims are per se invalid or against public policy. But those (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person or (2) where the terms of settlement are unconscionable on their face are invalid. In these cases, the law will step in to annul the questionable transaction. [15] However, considering that the Labor Arbiter had given petitioner Lambo a total award of P94,719.20, the amount of P10,000.00 to cover any and all monetary claims is clearly unconscionable. As we have held in another case,[16] the subordinate position of the individual employee vis-a-vis management renders him especially vulnerable to its blandishments, importunings, and even intimidations, and results in his improvidently waiving benefits to which he is clearly entitled. Thus, quitclaims, waivers or releases are looked upon with disfavor for being contrary to public policy and are ineffective to bar claims for the full measure of the workers’















10

legal rights.[17] An employee who is merely constrained to accept the wages paid to him is not precluded from recovering the difference between the amount he actually received and that amount which he should have received.

Fourth. The Labor Arbiter awarded backwages, overtime pay, holiday pay, 13th month pay, separation pay and attorney’s fees, corresponding to 10% of the total monetary awards, in favor of petitioners.

As petitioners were illegally dismissed, they are entitled to reinstatement with backwages. Considering that petitioners were dismissed from the service on January 17, 1989, i.e., prior to March 21, 1989,[18] the Labor Arbiter correctly applied the rule in the Mercury Drug case,[19] according to which the recovery of backwages should be limited to three years without qualifications or deductions. Any award in excess of three years is null and void as to the excess.[20]

The Labor Arbiter correctly ordered private respondents to give separation pay. Considerable time has lapsed since petitioners’ dismissal, so that reinstatement would now be impractical and hardly in the best interest of the parties. In lieu of reinstatement, separation pay should be awarded to petitioners at the rate of one month salary for every year of service, with a fraction of at least six (6) months of service being considered as one (1) year.[21]

The awards for overtime pay, holiday pay and 13th month pay are in accordance with our finding that petitioners are regular employees, although paid on a piece-rate basis.[22] These awards are based on the following computation of the Labor Arbiter:

AVELINO LAMBO

I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos.

P 64.00/day x 26 days =

1,664.00/mo. x 36 mos. = P 59,904.00

13th Mo. Pay:

P 1,664.00/yr. x 3 yrs. = 4, 992.00 P64,896.00

II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89

Jan. 17/86 - April 30/87 = 15 mos. & 12 days =

(15 mos. x 26 days + 12 days) = 402 days

*2 hours = 25%

402 days x 2 hrs./day = 804 hrs.

P 32.00/day ÷ 8 hrs. =

4.00/hr. x 25% =

1.00/hr. + P4.00/hr. =

5.00/hr. x 804 hrs. = P 4,020.00

May 1/87-Sept. 30/87 = 4 mos. & 26 days =



P 41.00/day ÷ 8 hrs. =

5.12/hr. x 25% =

1.28/hr. + P5.12/hr. =

6.40/hr. x 260 hrs. = P 1,664.00

Oct. 1/87-Dec. 13/87 = 2 mos. & 11 days =



P 49.00/day ÷ 8 hrs. =

6.12/hr. x 25% =

1.53/hr. + P6.12/hr. =

7.65/hr. x 126 hrs. = P963.90







11

Dec. 14/87 - Jan. 17/89 = 13 mos. & 2 days =



P 64.00/day ÷ 8 hrs. =

8.00/hr. x 25% =

2.00/hr. + P8.00/hr. =

10.00/hr. x 680 hrs. = P6,800.00 P13,447.90

III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89

Jan. 17/86 - April 30/87 = 12 RHs; 8 SHs

P 32.00/day x 200% =

64.00/day x 12 days = P768.00

32.00/day x 12 days = (384.00) P384.00

32.00/day x 30% =

9.60/day x 8 days = 76.80 460.80

May 1/87 - Sept. 30/87 = 3 RHs; 3 SHs

P 41.00/day x 200% =

82.00/day x 3 days = P246.00

41.00/day x 3 days = (123.00 ) P123.00

41.00/day x 30% =

12.30/day x 3 days = 36.90 159.90

Oct. 1/87 - Dec. 13/87 = 1 RH

P 49.00/day x 200% =

98.00/day x 1 day = P98.00

49.00/day x 1 day = (49.00) 49.00

Dec. 14/87 - Jan. 17/89 = 9 RHs; 8 SHs

P 64.00/day x 200% =

128.00/day x 9 days = P1,152.00

64.00/day x 9 days = (576.00) P 576.00

64.00/day x 30% =

19.20/day x 8 days = 153.60 729.60 1,399.30

IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89 = 3 yrs.

P 64.00/day x 26 days =

1,664.00/yr. x 3 yrs. = 4,992.00

V. SEPARATION PAY: Sept. 10/85 - Jan. 17/92 = 6 yrs.

1,664.00/mo. x 6 yrs. = 9,984.00

TOTAL AWARD OF AVELINO LAMBO P94,719.20

= = = = = =

VICENTE BELOCURA

I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos.

Same computation as A. Lambo P64,896.00

12

II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89

Same computation as A. Lambo 13,447.90

III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89


IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89


V. SEPARATION PAY: March 3/85 - Jan. 17/92 = 7 yrs.

P1,664.00/mo. x 7 yrs. = 11,648.00

TOTAL AWARD OF VICENTE BELOCURA P96,383.20

= = = = =

SUMMARY


I. BACKWAGES P64,896.00 P64,896.00

II. OVERTIME PAY 13,447.90 13,447.90

III. HOLIDAY PAY 1,399.30 1,399.30

IV. 13TH MO. PAY 4,992.00 4,992.00

V. SEPARATION PAY 9,984.00 11,648.00

TOTAL P94,719.20 P96,383.20

= P191,102.40

ADD: 10% Attorney’s Fees 19,110.24

GRAND TOTAL P 210,212.64

= = = = = = =

Except for the award of attorney’s fees in the amount of P19,110.24, the above computation is affirmed. The award of attorney’s fees should be disallowed, it appearing that petitioners were represented by the Public Attorney’s Office. With regard to petitioner Avelino Lambo, the amount of P10,000.00 paid to him under the compromise agreement should be deducted from the total award of P94,719.20. Consequently, the award to each petitioner should be as follows:


I. BACKWAGES P64,896.00 P 64,896.00

II. OVERTIME PAY 13,447.90 13,447.90

III. HOLIDAY PAY 1,399.30 1,399.30

IV. 13TH MONTH PAY 4,992.00 4,992.00

V. SEPARATION PAY 9,984.00 11,648.00

P 94,719.20

Less 10,000.00

TOTAL P84,719.20 P96,383.20

GRAND TOTAL P181,102.40

= = = = = =

vvvvvvvvvv

WHEREFORE, the decision of the National Labor Relations Commission is SET ASIDE and another one is RENDERED ordering private respondents to pay petitioners the total amount of One Hundred Eighty-One Thousand One Hundred Two Pesos and 40/100 (P181,102.40), as computed above.

SO ORDERED.

13

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 156367 May 16, 2005

AUTO BUS TRANSPORT SYSTEMS, INC., petitioner, vs.ANTONIO BAUTISTA, respondent.

D E C I S I O N

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari assailing the Decision1 and Resolution2 of the Court of Appeals affirming the Decision3 of the National Labor Relations Commission (NLRC). The NLRC ruling modified the Decision of the Labor Arbiter (finding respondent entitled to the award of 13th month pay and service incentive leave pay) by deleting the award of 13th month pay to respondent.

THE FACTS

Since 24 May 1995, respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc. (Autobus), as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven percent (7%) of the total gross income per travel, on a twice a month basis.

On 03 January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without giving any warning.

Respondent averred that the accident happened because he was compelled by the management to go back to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived in Manila from Roxas, Isabela. Respondent further alleged that he was not allowed to work until he fully paid the amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged buses and that despite respondent’s pleas for reconsideration, the same was ignored by management. After a month, management sent him a letter of termination.

Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of 13th month pay and service incentive leave pay against Autobus.

Petitioner, on the other hand, maintained that respondent’s employment was replete with offenses involving reckless imprudence, gross negligence, and dishonesty. To support its claim, petitioner presented copies of letters, memos, irregularity reports, and warrants of arrest pertaining to several incidents wherein respondent was involved.

Furthermore, petitioner avers that in the exercise of its management prerogative, respondent’s employment was terminated only after the latter was provided with an opportunity to explain his side regarding the accident on 03 January 2000.

On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor Arbiter Monroe C. Tabingan promulgated a Decision,4 the dispositive portion of which reads:

WHEREFORE, all premises considered, it is hereby found that the complaint for Illegal Dismissal has no leg to stand on. It is hereby ordered DISMISSED, as it is hereby DISMISSED.

However, still based on the above-discussed premises, the respondent must pay to the complainant the following:

a. his 13th month pay from the date of his hiring to the date of his dismissal, presently computed at P78,117.87;

b. his service incentive leave pay for all the years he had been in service with the respondent, presently computed at P13,788.05.

All other claims of both complainant and respondent are hereby dismissed for lack of merit.5

Not satisfied with the decision of the Labor Arbiter, petitioner appealed the decision to the NLRC which rendered its decision on 28 September 2001, the decretal portion of which reads:

[T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly Sec. 3 provides:

"Section 3. Employers covered. – The Decree shall apply to all employers except to:

http://www.lawphil.net/judjuris/juri2005/may2005/gr_156367_2005.html#fnt5





14

xxx xxx xxx

e) employers of those who are paid on purely commission, boundary, or task basis, performing a specific work, irrespective of the time consumed in the performance thereof. xxx."

Records show that complainant, in his position paper, admitted that he was paid on a commission basis.

In view of the foregoing, we deem it just and equitable to modify the assailed Decision by deleting the award of 13th month pay to the complainant.

…

WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the award of 13th month pay. The other findings are AFFIRMED.6

In other words, the award of service incentive leave pay was maintained. Petitioner thus sought a reconsideration of this aspect, which was subsequently denied in a Resolution by the NLRC dated 31 October 2001.

Displeased with only the partial grant of its appeal to the NLRC, petitioner sought the review of said decision with the Court of Appeals which was subsequently denied by the appellate court in a Decision dated 06 May 2002, the dispositive portion of which reads:

WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit; and the assailed Decisionof respondent Commission in NLRC NCR CA No. 026584-2000 is hereby AFFIRMED in toto. No costs.7

Hence, the instant petition.

ISSUES

1. Whether or not respondent is entitled to service incentive leave;

2. Whether or not the three (3)-year prescriptive period provided under Article 291 of the Labor Code, as amended, is applicable to respondent’s claim of service incentive leave pay.

RULING OF THE COURT

The disposition of the first issue revolves around the proper interpretation of Article 95 of the Labor Code vis-à-visSection 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code which provides:

Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE

(a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.

Book III, Rule V: SERVICE INCENTIVE LEAVE

SECTION 1. Coverage. – This rule shall apply to all employees except:

…

(d) Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing work irrespective of the time consumed in the performance thereof; . . .

A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to employees classified as "field personnel." The phrase "other employees whose performance is unsupervised by the employer" must not be understood as a separate classification of employees to which service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those "whose actual hours of work in the field cannot be determined with reasonable certainty."8

The same is true with respect to the phrase "those who are engaged on task or contract basis, purely commission basis." Said phrase should be related with "field personnel," applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow.9 Hence, employees engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel.

Therefore, petitioner’s contention that respondent is not entitled to the grant of service incentive leave just because he was paid on purely commission basis is misplaced. What must be ascertained in order to resolve the issue of propriety of the grant of service incentive leave to respondent is whether or not he is a field personnel.





15

According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. This definition is further elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees Association10 which states that:

As a general rule, [field personnel] are those whose performance of their job/service is not supervised by the employer or his representative, the workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times, employees including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the employee. [Emphasis ours]

To this discussion by the BWC, the petitioner differs and postulates that under said advisory opinion, no employee would ever be considered a field personnel because every employer, in one way or another, exercises control over his employees. Petitioner further argues that the only criterion that should be considered is the nature of work of the employee in that, if the employee’s job requires that he works away from the principal office like that of a messenger or a bus driver, then he is inevitably a field personnel.

We are not persuaded. At this point, it is necessary to stress that the definition of a "field personnel" is not merely concerned with the location where the employee regularly performs his duties but also with the fact that the employee’s performance is unsupervised by the employer. As discussed above, field personnel are those who regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employee’s time and performance are constantly supervised by the employer.

As observed by the Labor Arbiter and concurred in by the Court of Appeals:

It is of judicial notice that along the routes that are plied by these bus companies, there are its inspectors assigned at strategic places who board the bus and inspect the passengers, the punched tickets, and the conductor’s reports. There is also the mandatory once-a-week car barn or shop day, where the bus is regularly checked as to its mechanical, electrical, and hydraulic aspects, whether or not there are problems thereon as reported by the driver and/or conductor. They too, must be at specific place as [sic] specified time, as they generally observe prompt departure and arrival from their point of origin to their point of destination. In each and every

depot, there is always the Dispatcher whose function is precisely to see to it that the bus and its crew leave the premises at specific times and arrive at the estimated proper time. These, are present in the case at bar. The driver, the complainant herein, was therefore under constant supervision while in the performance of this work. He cannot be considered a field personnel.11

We agree in the above disquisition. Therefore, as correctly concluded by the appellate court, respondent is not a field personnel but a regular employee who performs tasks usually necessary and desirable to the usual trade of petitioner’s business. Accordingly, respondent is entitled to the grant of service incentive leave.

The question now that must be addressed is up to what amount of service incentive leave pay respondent is entitled to.

The response to this query inevitably leads us to the correlative issue of whether or not the three (3)-year prescriptive period under Article 291 of the Labor Code is applicable to respondent’s claim of service incentive leave pay.

Article 291 of the Labor Code states that all money claims arising from employer-employee relationship shall be filed within three (3) years from the time the cause of action accrued; otherwise, they shall be forever barred.

In the application of this section of the Labor Code, the pivotal question to be answered is when does the cause of action for money claims accrue in order to determine the reckoning date of the three-year prescriptive period.

It is settled jurisprudence that a cause of action has three elements, to wit, (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff.12

To properly construe Article 291 of the Labor Code, it is essential to ascertain the time when the third element of a cause of action transpired. Stated differently, in the computation of the three-year prescriptive period, a determination must be made as to the period when the act constituting a violation of the workers’ right to the benefits being claimed was committed. For if the cause of action accrued more than three (3) years before the filing of the money claim, said cause of action has already prescribed in accordance with Article 291.13

Consequently, in cases of nonpayment of allowances and other monetary benefits, if it is established that the benefits being claimed have been withheld from the employee for a period longer than three (3) years, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount that can only be





16

demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within three (3) years before the filing of the complaint.14

It is essential at this point, however, to recognize that the service incentive leave is a curious animal in relation to other benefits granted by the law to every employee. In the case of service incentive leave, the employee may choose to either use his leave credits or commute it to its monetary equivalent if not exhausted at the end of the year.15 Furthermore, if the employee entitled to service incentive leave does not use or commute the same, he is entitled upon his resignation or separation from work to the commutation of his accrued service incentive leave. As enunciated by the Court in Fernandez v. NLRC:16

The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments, subject to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that "[e]very employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay." Service incentive leave is a right which accrues to every employee who has served "within 12 months, whether continuous or broken reckoned from the date the employee started working, including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contracts, is less than 12 months, in which case said period shall be considered as one year." It is also "commutable to its money equivalent if not used or exhausted at the end of the year." In other words, an employee who has served for one year is entitled to it. He may use it as leave days or he may collect its monetary value. To limit the award to three years, as the solicitor general recommends, is to unduly restrict such right.17 [Italics supplied]

Correspondingly, it can be conscientiously deduced that the cause of action of an entitled employee to claim his service incentive leave pay accrues from the moment the employer refuses to remunerate its monetary equivalent if the employee did not make use of said leave credits but instead chose to avail of its commutation. Accordingly, if the employee wishes to accumulate his leave credits and opts for its commutation upon his resignation or separation from employment, his cause of action to claim the whole amount of his accumulated service incentive leave shall arise when the employer fails to pay such amount at the time of his resignation or separation from employment.

Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can conclude that the three (3)-year prescriptive period commences, not at the end of the year when the employee becomes entitled to the commutation of his service incentive leave, but from the time when the employer refuses to pay its monetary equivalent after demand of commutation or upon termination of the employee’s services, as the case may be.

The above construal of Art. 291, vis-à-vis the rules on service incentive leave, is in keeping with the rudimentary principle that in the implementation and interpretation of the provisions of the Labor Code and its implementing regulations, the workingman’s welfare should be the primordial and paramount consideration.18 The policy is to extend the applicability of the decree to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection to labor.19

In the case at bar, respondent had not made use of his service incentive leave nor demanded for its commutation until his employment was terminated by petitioner. Neither did petitioner compensate his accumulated service incentive leave pay at the time of his dismissal. It was only upon his filing of a complaint for illegal dismissal, one month from the time of his dismissal, that respondent demanded from his former employer commutation of his accumulated leave credits. His cause of action to claim the payment of his accumulated service incentive leave thus accrued from the time when his employer dismissed him and failed to pay his accumulated leave credits.

Therefore, the prescriptive period with respect to his claim for service incentive leave pay only commenced from the time the employer failed to compensate his accumulated service incentive leave pay at the time of his dismissal. Since respondent had filed his money claim after only one month from the time of his dismissal, necessarily, his money claim was filed within the prescriptive period provided for by Article 291 of the Labor Code.

WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed Decision of the Court of Appeals in CA-G.R. SP. No. 68395 is hereby AFFIRMED. No Costs.

SO ORDERED.

FIRST DIVISION

ROQUE S. DUTERTE,

Petitioner,

- versus -

KINGSWOOD TRADING CO., INC., FILEMON LIM and NATIONAL LABOR RELATIONS COMMISSION,

Respondents.

G.R. No. 160325

Present:

PUNO, C.J., Chairperson, SANDOVAL-GUTIERREZ, CORONA, AZCUNA, and GARCIA, JJ.

Promulgated:

October 4, 2007







17

x------------------------------------------------------------------------------------x

D E C I S I O N

GARCIA, J.:

By this petition for review on certiorari, petitioner Roque S. Duterte seeks the review

and setting aside of the decision[1] dated June 20, 2003 of the Court of Appeals (CA) in CA-

G.R. SP No. 71729, as reiterated in its resolution[2] of October 5, 2003, affirming an earlier

resolution[3] of the National Labor Relations Commission (NLRC) which ruled that petitioner

was not illegally dismissed from employment due to disease under Article 284 of the Labor

Code.

The facts:

In September 1993, petitioner was hired as truck/trailer driver by respondent

Kingswood Trading Company, Inc. (KTC) of which co-respondent Filemon Lim is the President.

Petitioner was on the 6:00 a.m. – 6:00 p.m. shift. He averaged 21 trips per month,

getting P700 per trip. When not driving, petitioner was assigned to clean and maintain

respondent KTC’s equipment and vehicles for which he was paid P125 per day. Regularly,

petitioner would be seconded by respondent Filemon Lim to drive for one of KTC’s clients,

the Philippine National Oil Corporation, but always subject to respondents’ convenience.

On November 8, 1998, petitioner had his first heart attack and was confined for two

weeks at the Philippine Heart Center (PHC). This was confirmed by respondent KTC which

admitted that petitioner was declared on sick leave with corresponding notification.

A month later, petitioner returned to work armed with a medical certificate signed by

his attending physician at the PHC, attesting to petitioner’s fitness to work. However, said

certificate was not honored by the respondents who refused to allow petitioner to work.

In February 1999, petitioner suffered a second heart attack and was again confined at

the PHC. Upon release, he stayed home and spent time to recuperate.

In June 1999, petitioner attempted to report back to work but was told to look for

another job because he was unfit. Respondents refused to declare petitioner fit to work

unless physically examined by the company physician. Respondents’ promise to pay

petitioner his separation pay turned out to be an empty one. Instead, petitioner was

presented, for his signature, a document as proof of his receipt of the amount of P14,375.00

as first installment of his Social Security System (SSS) benefits. Having received no such

amount, petitioner refused to affix his signature thereon and instead requested for the

necessary documents from respondents to enable him to claim his SSS benefits, but the latter

did not heed his request.

On November 11, 1999, petitioner filed against his employer a complaint for illegal

dismissal and damages.

18

In a decision[4] dated September 26, 2000, the labor arbiter found for the

petitioner. However, while categorically declaring that petitioner’s dismissal was illegal, the

labor arbiter, instead of applying Article 279[5] of the Labor Code on illegal dismissals, applied

Article 284 on Disease as ground for termination on the rationale that since the respondents

admitted that petitioner could not be allowed back to work because of the latter’s disease,

the case fell within the ambit of Article 284. We quote the fallo of the labor arbiter’s

decision:

WHEREFORE, in the light of the foregoing, judgment is hereby

rendered declaring complainant to have been terminated from employment on the ground that he has been suffering from a disease.

Respondents are hereby directed to pay complainant as

follows:

1. Separation pay equivalent to one-half (1/2) month salary for every year of service computed at six (6) years of service in the amount of Forty-Two Thousand (P42,000.00) Pesos.

2. Holiday pay for three (3) years in the

amount of Twenty-One Thousand (P21,000.00) Pesos; and

3. Service Incentive Leave pay for three

(3) years in the amount of Ten Thousand (P10,000.00) Pesos.

All other claims herein sought are hereby

denied for lack of merit and factual basis. SO ORDERED.

On respondents’ appeal, the NLRC, in its Resolution[6] of April 24, 2002, set aside the

labor arbiter’s decision, ruling that Article 284 of the Labor Code has no application to this

case, there being “no illegal dismissal to speak of.” The NLRC accordingly dismissed

petitioner’s complaint for illegal dismissal, thus:

WHEREFORE, the decision appealed from is VACATED and SET ASIDE.[7] A new one is hereby entered DISMISSING the instant case for lack of merit.

Therefrom, petitioner went on certiorari to the CA in CA-G.R. SP No. 71729. In the

herein assailed decision dated June 20, 2003, the CA upheld the NLRC Resolution, saying that

the Commission committed no grave abuse of discretion in holding that petitioner was not

illegally dismissed and could not be granted any relief. With his motion for a reconsideration

having been denied by the CA in its resolution of October 5, 2003, petitioner is now with this

Court via the present recourse.

We REVERSE.

At bottom, this case involves the simple issue of the legality of one’s termination from

employment made complicated, however, by over analysis. Simply put, the question at hand

pivots on who has the onus of presenting the necessary medical certificate to justify what

would otherwise be classified as legal or illegal, as the case may be, dismissal from the

service. The following may be another formulation of the issue: For purposes of Article 284 of

the Labor Code, would the dismissal of an employee on the ground of disease under the said

Article 284 still require the employer to present a certification from a competent public

health authority that the disease is of such a nature that it could not be cured within a period

of six months even with proper medical treatment? To both the NLRC and the CA, a dismissal

on the ground of disease under Article 284 of the Code is illegal only if the employee himself

presents the required certification from the proper health authority. Since, as in this case,

petitioner failed to produce such certification, his dismissal could not be illegal.

19

In the precise words of the NLRC which the CA effectively affirmed:

Neither can it be gainsaid that Article 284 of the Labor Code applies in the instant case since the complainant [petitioner] failed to establish that he is suffering from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees nor was he able to prove that his illness is of such nature or at such stage that it cannot be cured within a period of six months even with proper treatment.[8]

In order for the complainant to be covered by Article 284 of the Labor Code, he must first present a certification by a competent public health authority that his continued employment will result in the aforesaid consequences, but unfortunately for the complainant, we find none in the instant case. For the respondents to require the complainant to submit a medical certificate showing that he is already physically fit as a condition of his continued employment under the prevailing circumstance cannot be considered as neither harsh nor oppressive. xxx Prescinding from the above, there is no illegal dismissal to speak of. This finding is further strengthened by the fact that no termination letter or formal notice of dismissal was adduced to prove that complainant’s services have been terminated. Considering that no illegal dismissal took place, the complainant’s claim that his right to due process of law had been violated finds no application to the case at bar. (Emphasis added).

The Court disagrees with the NLRC and CA.

Article 284 of the Labor Code explicitly provides: Art. 284. DISEASE AS GROUND FOR TERMINATION. -- An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year.

Corollarily, in order to validly terminate employment on the basis of disease, Book VI, Rule I,

Section 8 of the Omnibus Implementing Rules of the Labor Code requires:

Disease as a ground for dismissal. -- Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall not terminate his employment unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such employee to his former position immediately upon the restoration of his normal health. (Book VI, Rule 1, Sec. 8 of the Implementing Rules)

In a very real sense, both the NLRC and the appellate court placed on the petitioner the

burden of establishing, by a certification of a competent public authority, that his ailment is

such that it cannot be cured within a period of six months even with proper medical

treatment. And pursuing their logic, petitioner could not claim having been illegally dismissed

due to disease, failing, as he did, to present such certification.

To be sure, the NLRC’s above posture is, to say the least, without basis in law and

jurisprudence. And when the CA affirmed the NLRC, the appellate court in effect placed on

the petitioner the onus of proving his entitlement to separation pay and thereby validated

herein respondents’ act of dismissing him from employment even without proof of existence

of a legal ground for dismissal.

The law is unequivocal: the employer, before it can legally dismiss its employee on the

ground of disease, must adduce a certification from a competent public authority that the

disease of which its employee is suffering is of such nature or at such a stage that it cannot

be cured within a period of six months even with proper treatment.

20

Here, the record does not contain the required certification. And when the respondents

asked the petitioner to look for another job because he was unfit to work, such unilateral

declaration, even if backed up by the findings of its company doctors, did not meet the

quantum requirement mandated by the law, i.e., there must be a certification by

a competent public authority.[9]

For sure, the posture taken by both the NLRC and the CA is inconsistent with this

Court’s pronouncement in Tan v. National Labor Relations Commission,[10] thus:

Consistent with the Labor Code state policy of affording protection to labor and of liberal construction of labor laws in favor of the working class, Sec. 8, Rule 1, Book VI, of the Omnibus Rules Implementing the Labor Code provides – Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall not terminate his employment, unless there is a certification by a competent public authority that the disease is of such nature or at such a stage, that it cannot be cured within a period of six (6) months even with proper medical treatment.. There is absolutely nothing on record to show that such a certification was ever obtained by [the employer] much less that one was issued by a competent public authority …[o]n the contrary, what appears on record is a Medical Certificate dated May 5, 1999 issued by Dr. Lenita C. de Castro certifying to the contrary, i.e., that [the employee] was in fact already fit to return to work. However, [the employer] did not accept the certificate and insisted that [the employee] present one issued by a government physician. For his failure to present such a certificate, [the employee] was penalized with dismissal. Obviously, the condition imposed by [the employer] finds no basis under the law. To reiterate, contrary to [the employer’s] insistence that [the employee] first obtain a medical certificate attesting that he was already cured of pulmonary tuberculosis, the abovequoted Sec. 9, Rule 1, Book VI, of the Omnibus Rules is clear that the burden is upon [the employer] not [the employee] to justify the dismissal with a certificate public authority that [the employee’s] disease is at such stage or of such nature that it cannot be cured within six (6) months even with proper medical treatment. For [the employer’s] blatant failure to present one, we can

only rule that [the employee’s] dismissal, like that of Garrido, is illegal, invalid and unjustified. (Emphasis and words in brackets supplied.)

In Triple Eight Integrated Services, Inc. v. NLRC,[11] the Court explains why the

submission of the requisite medical certificate is for the employer’s compliance, thus:

The requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employee’s illness and thus defeat the public policy on the protection of labor.

In thus ruling out an illegal dismissal situation in the instant case, the CA effectively

agreed with the NLRC’s view that the fact of dismissal must be evidenced by positive and

overt acts, citing Veterans Phil. Scout Security Agency v. NLRC.[12] Said case, however, is not

on all fours with the present one. In Veterans, the employer offered the complainant-

employee a monthly cash allowance and other benefit pending a new assignment. Therein,

the employee was not forthrightly nor constructively dismissed. In fact, the employee

in Veterans was found to be in bad faith as he filed his complaint for illegal dismissal the day

immediately after he accepted the company’s offer of employment benefits. Hence, the

Court’s ruling in Veterans that the fact of dismissal must be evidenced by positive and overt

acts indicating the intention to dismiss. These considerations do not obtain here. Petitioner

was not allowed back to work. Neither did he receive any monetary assistance from his

employer, and, worse, respondents refused to give him the necessary documents to enable

him to claim his SSS benefits.

Much was made by the NLRC – and the CA – about petitioner’s refusal to comply with

respondents’ order to submit a medical certificate – irresistibly implying that such refusal is

what constrained them to refuse to take petitioner back in.

21

We are not persuaded.

Even assuming, in gratia argumenti, that petitioner committed what may be considered

an act of insubordination for refusing to present a medical certificate, such offense, without

more, certainly did not warrant the latter’s placement in a floating status, a veritable

dismissal, and deprived of his only source of livelihood.

We are not unmindful of the connection between the nature of petitioner’s disease and

his job as a truck/trailer driver. We are also fully aware that petitioner’s job places at stake

the safety of the public. However, we do not agree with the NLRC that petitioner was validly

dismissed because his continued employment was prohibited by the basic legal mandate that

reasonable diligence must be exercised to prevent prejudice to the public, which justified

respondents in refusing work to petitioner. Petitioner could have been admitted back to

work performing other tasks, such as cleaning and maintaining respondent company’s

machine and transportation assets.

As a final consideration, the Court notes that the NLRC, as sustained by the CA,

considered the petitioner as a field worker and, on that basis, denied his claim for benefits

under Articles 94[13] to 95[14] of the Labor Code, such as holiday pay and service incentive

leave pay. Article 82 of the Code lists personnel who are not entitled to the benefits

aforementioned.[15] Among the excluded group are “field personnel,” referring to non-

agricultural employees who regularly perform their duties away from the principal place of

business or branch office of the employer and whose actual hours of work in the field cannot

be determined with reasonable certainty. As a general proposition,

field personnel are those whose job/service are not or cannot be effectively monitored by

the employer or his representative, their workplace being away from the principal office

and whose hours and days of work cannot be determined with reasonable certainty. Field

personnel are paid specific amount for rendering specific service or performing specific

work.

If required to be at specific places at specific times, employees, including drivers,

cannot be said to be field personnel despite the fact that they are performing work away

from the principal office of the employer. Thus, to determine whether an employee is a field

employee, it is also necessary to ascertain if actual hours of work in the field can be

determined with reasonable certainty by the employer. In so doing, an inquiry must be

made as to whether or not the employee’s time and performance are constantly supervised

by the employer.[16]

Guided by the foregoing norms, petitioner was definitely a regular employee of

respondent company and not its field personnel, as the term is used in the Labor Code. As it

were, he was based at the principal office of the respondent company. His actual work

hours, i.e., from 6:00 a.m. to 6:00 p.m., were ascertainable with reasonable certainty. He

averaged 21 trips per month. And if not driving for the company, he was paid P125.00

per day for cleaning and maintaining KTC’s equipment. Not falling under the category of field

personnel, petitioner is consequently entitled to both holiday pay and service incentive leave

pay, as mandated by Articles 94 and 95 of the Labor Code.

All told, we rule and so hold that petitioner’s dismissal did not comply with both the

substantive and procedural aspects of due process. Clearly, his dismissal is

tainted with invalidity.[17]

WHEREFORE, the assailed decision of the CA in CA-G.R. SP No.

71729 is REVERSED and SET ASIDE. Respondents are declared guilty of illegal dismissal and

are ordered to pay petitioner separation pay

equivalent to one (1) month pay for every year of service, in lieu of his reinstatement,

plus his full backwages from the time his employment was terminated up to the time this

22

Decision becomes final. For this purpose, let this case be REMANDED to the labor arbiter for

the computation of petitioner’s separation pay, backwages and other monetary awards due

him.

Costs against respondents.

SO ORDERED.

FIRST DIVISION

[G.R. No. 119205. April 15, 1998]

SIME DARBY PILIPINAS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (2ND DIVISION) and SIME DARBY SALARIED EMPLOYEES ASSOCIATION (ALU-TUCP), respondents.

D E C I S I O N

BELLOSILLO, J.:

Is the act of management in revising the work schedule of its employees and discarding their paid lunch break constitutive of unfair labor practice?

Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires, tubes and other rubber products. Sime Darby Salaried Employees Association (ALU-TUCP), private respondent, is an association of monthly salaried employees of petitioner at its Marikina factory. Prior to the present controversy, all company factory workers in Marikina including members of private respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30 minute paid “on call” lunch break.

On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its monthly salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance Department working on shifts, a change in work schedule effective 14 September 1992 thus –

TO: ALL FACTORY-BASED EMPLOYEESRE: NEW WORK SCHEDULE

Effective Monday, September 14, 1992, the new work schedule factory office will be as follows:

7:45 A.M. – 4:45 P.M. (Monday to Friday)

7:45 A.M. – 11:45 P.M. (Saturday).

Coffee break time will be ten minutes only anytime between:

9:30 A.M. –10:30 A.M. and

2:30 P.M. –3:30 P.M.

Lunch break will be between:

12:00 NN –1:00 P.M. (Monday to Friday).

Excluded from the above schedule are the Warehouse and QA employees who are on shifting. Their work and break time schedules will be maintained as it is now.[1]

Since private respondent felt affected adversely by the change in the work schedule and discontinuance of the 30-minute paid “on call” lunch break, it filed on behalf of its members a complaint with the Labor Arbiter for unfair labor practice, discrimination and evasion of liability pursuant to the resolution of this Court in Sime Darby International Tire Co., Inc. v. NLRC.[2] However, the Labor Arbiter dismissed the complaint on the ground that the change in the work schedule and the elimination of the 30-minute paid lunch break of the factory workers constituted a valid exercise of management prerogative and that the new work schedule, break time and one-hour lunch break did not have the effect of diminishing the benefits granted to factory workers as the working time did not exceed eight (8) hours.

The Labor Arbiter further held that the factory workers would be justly enriched if they continued to be paid during their lunch break even if they were no longer “on call” or required to work during the break. He also ruled that the decision in the earlier Sime Darby case[3] was not applicable to the instant case because the former involved discrimination of certain employees who were not paid for their 30-minute lunch break while the rest of the factory workers were paid; hence, this Court ordered that the discriminated employees be similarly paid the additional compensation for their lunch break.

Private respondent appealed to respondent National Labor Relations Commission (NLRC) which sustained the Labor Arbiter and dismissed the appeal.[4] However, upon motion for reconsideration by private respondent, the NLRC, this time with two (2) new commissioners replacing those who earlier retired, reversed its arlier decision of 20 April

http://sc.judiciary.gov.ph/jurisprudence/1998/apr1998/119205.htm#_edn4




23

1994 as well as the decision of the Labor Arbiter.[5] The NLRC considered the decision of this Court in the Sime Darby case of 1990 as the law of the case wherein petitioner was ordered to pay “the money value of these covered employees deprived of lunch and/or working time breaks.” The public respondent declared that the new work schedule deprived the employees of the benefits of time-honored company practice of providing its employees a 30-minute paid lunch break resulting in an unjust diminution of company privileges prohibited by Art. 100 of the Labor Code, as amended. Hence, this petition alleging that public respondent committed grave abuse of discretion amounting to lack or excess of jurisdiction: (a) in ruling that petitioner committed unfair labor practice in the implementation of the change in the work schedule of its employees from 7:45 a.m. – 3:45 p.m. to 7:45 a.m. – 4:45 p.m. with one-hour lunch break from 12:00 nn to 1:00 p.m.; (b) in holding that there was diminution of benefits when the 30-minute paid lunch break was eliminated; (c) in failing to consider that in the earlier Sime Darby case affirming the decision of the NLRC, petitioner was authorized to discontinue the practice of having a 30-minute paid lunch break should it decide to do so; and (d) in ignoring petitioner’s inherent management prerogative of determining and fixing the work schedule of its employees which is expressly recognized in the collective bargaining agreement between petitioner and private respondent.

The Office of the Solicitor General filed in lieu of comment a manifestation and motion recommending that the petition be granted, alleging that the 14 August 1992 memorandum which contained the new work schedule was not discriminatory of the union members nor did it constitute unfair labor practice on the part of petitioner.

We agree, hence, we sustain petitioner. The right to fix the work schedules of the employees rests principally on their employer. In the instant case petitioner, as the employer, cites as reason for the adjustment the efficient conduct of its business operations and its improved production.[6] It rationalizes that while the old work schedule included a 30-minute paid lunch break, the employees could be called upon to do jobs during that period as they were “on call.” Even if denominated as lunch break, this period could very well be considered as working time because the factory employees were required to work if necessary and were paid accordingly for working. With the new work schedule, the employees are now given a one-hour lunch break without any interruption from their employer. For a full one-hour undisturbed lunch break, the employees can freely and effectively use this hour not only for eating but also for their rest and comfort which are conducive to more efficiency and better performance in their work. Since the employees are no longer required to work during this one-hour lunch break, there is no more need for them to be compensated for this period. We agree with the Labor Arbiter that the new work schedule fully complies with the daily work period of eight (8) hours without violating the Labor Code.[7] Besides, the new schedule applies to all employees in the factory similarly situated whether they are union members or not.[8]

Consequently, it was grave abuse of discretion for public respondent to equate the earlier Sime Darby case[9] with the facts obtaining in this case. That ruling in the former case is not applicable here. The issue in that case involved the matter of granting lunch breaks to certain employees while depriving the other employees of such breaks. This Court affirmed

in that case the NLRC’s finding that such act of management was discriminatory and constituted unfair labor practice.

The case before us does not pertain to any controversy involving discrimination of employees but only the issue of whether the change of work schedule, which management deems necessary to increase production, constitutes unfair labor practice. As shown by the records, the change effected by management with regard to working time is made to apply to all factory employees engaged in the same line of work whether or not they are members of private respondent union. Hence, it cannot be said that the new scheme adopted by management prejudices the right of private respondent to self-organization.

Every business enterprise endeavors to increase its profits. In the process, it may devise means to attain that goal. Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to exercise what are clearly management prerogatives.[10] Thus, management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay off of workers and discipline, dismissal and recall of workers.[11] Further, management retains the prerogative, whenever exigencies of the service so require, to change the working hours of its employees. So long as such prerogative is exercised in good faith for the advancement of the employer’s interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold such exercise.[12]

While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every dispute will be automatically decided in favor of labor. Management also has right which, as such, are entitled to respect and enforcement in the interest of simple fair play. Although this Court has inclined more often than not toward the worker and has upheld his cause in his conflicts with the employer, such as favoritism has not blinded the Court to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine.[13]

WHEREFORE, the Petition is GRANTED. The Resolution of the National Labor Relations Commission dated 29 November 1994 is SET ASIDE and the decision of the Labor Arbiter dated 26 November 1993 dismissing the complaint against petitioner for unfair labor practice is AFFIRMED.

SO ORDERED.

FIRST DIVISION MANILA JOCKEY CLUB G.R. No. 167760EMPLOYEES LABOR UNION-PTGWO,










24

Petitioner, Present:

PUNO, C.J., Chairperson, SANDOVAL-GUTIERREZ, - versus - CORONA,

AZCUNA, and GARCIA, JJ.

MANILA JOCKEY CLUB, INC., Promulgated: Respondent. March 7, 2007x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N GARCIA, J.:

Challenged in this petition for review under Rule 45 of the Rules of Court is the

decision[1] dated December 17, 2004 of the Court of Appeals (CA), as reiterated in its

resolution[2] of April 4, 2005, dismissing the petition for review of herein petitioner in CA-G.R.

SP No. 69240, entitled Manila Jockey Club Employees Labor Union- PTGWO v. Manila Jockey

Club, Inc.

The facts:

Petitioner Manila Jockey Club Employees Labor Union-PTGWO and respondent Manila

Jockey Club, Inc., a corporation with a legislative franchise to conduct, operate and maintain

horse races, entered into a Collective Bargaining Agreement (CBA) effective January 1,

1996 to December 31, 2000. The CBA governed the economic rights and obligations of

respondent’s regular monthly paid rank-and-file employees.[3] In the CBA, the parties agreed

to a 7-hour work schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. on

a work week of Monday to Saturday, as contained under Section 1, Article IV, [4] of the same

CBA, to wit:

Section 1. Both parties to this Agreement agree to observe the seven-hour work schedule herewith scheduled to be from 9:00 a.m. to 12:00 noon and 1:00 p.m. to 5 p.m. on work week of Monday to Saturday. All work performed in excess of seven (7) hours work schedule and on days not included within the work week shall be considered overtime and paid as such. Except those monthly compensation which includes work performed during Saturday, Sunday, and Holiday when races are held at the Club.

xxx xxx xxx

Accordingly, overtime on an ordinary working day shall be remunerated in an amount equivalent to the worker's regular basic wage plus twenty five percent (25%) thereof. Where the employee is permitted or suffered to work on legally mandated holidays or on his designated rest day which is not a legally mandated holiday, thirty percent (30%) shall be added to his basic wage for a seven hour work; while work rendered in excess of seven hours on legally mandated holidays and rest days not falling within the aforestated categories day shall be additionally compensated for the overtime work equivalent to his rate for the first seven hours on a legally mandated holiday or rest day plus thirty percent (30%) thereof.

The CBA likewise reserved in respondent certain management prerogatives, including the

determination of the work schedule, as provided under Section 2, Article XI:

Section 2. The COMPANY shall have exclusive control in the management of the offices and direction of the employees. This shall

http://sc.judiciary.gov.ph/jurisprudence/2007/march2007/167760.htm#_ftn4




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include, but shall not be limited to, the right to plan, direct and control office operations, to hire, assign and transfer employees from one job to another or from one department to another; to promote, demote, discipline, suspend, discharge or terminate employees for proper cause and/or in accordance with law, to relieve employees from duty because of lack of work or for other legitimate reasons; or to introduce new or improved methods or facilities; or to change existing methods or facilities to change the schedules of work; and to make and enforce rules and regulations to carry out the functions of management, provided, however, that the COMPANY will not use these rights for the purpose of discrimination against any employee because of his membership in the UNION. Provided, further, that the prerogatives provided for under this Section shall be subject to, and in accordance with pertinent directives, proclamations and their implementing rules and regulations.

On April 3, 1999, respondent issued an inter-office memorandum declaring that,

effective April 20, 1999, the hours of work of regular monthly-paid employees shall be

from 1:00 p.m. to 8:00 p.m. when horse races are held, that is, every Tuesday and Thursday.

The memorandum, however, maintained the 9:00 a.m. to 5:00 p.m. schedule for non-race

days.

On October 12, 1999, petitioner and respondent entered into an Amended and

Supplemental CBA retaining Section 1 of Article IV and Section 2 of Article XI,supra, and

clarified that any conflict arising therefrom shall be referred to a voluntary arbitrator for

resolution.

Subsequently, before a panel of voluntary arbitrators of the National Conciliation

and Mediation Board (NCMB), petitioner questioned the above office memorandum as

violative of the prohibition against non-diminution of wages and benefits guaranteed under

Section 1, Article IV, of the CBA which specified the work schedule of respondent's

employees to be from 9:00 a.m. to 5:00 p.m. Petitioner claimed that as a result of the

memorandum, the employees are precluded from rendering their usual overtime work from

5:00 p.m. to 9:00 p.m.

The NCMB’s panel of voluntary arbitrators, in a decision dated October 18, 2001,

upheld respondent's prerogative to change the work schedule of regular monthly-paid

employees under Section 2, Article XI, of the CBA. Petitioner moved for reconsideration but

the panel denied the motion.

Dissatisfied, petitioner then appealed the panel’s decision to the CA in CA-G.R. SP

No. 69240. In the herein assailed decision of December 17, 2004, the CA upheld that of the

panel and denied petitioner’s subsequent motion for reconsideration via its equally

challenged resolution of April 4, 2005.

Hence, petitioner’s present recourse, raising the following issues:

I

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT MJCI DID NOT RELINQUISH PART OF ITS MANAGEMENT PREROGATIVE WHEN IT STIPULATED A WORK SCHEDULE IN THE CBA.

II

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT MJCI DID NOT VIOLATE THE NON-

26

DIMINUTION PROVISION CONTAINED IN ARTICLE 100 OF THE LABOR CODE.

We DENY.

Respondent, as employer, cites the change in the program of horse races as

reason for the adjustment of the employees’ work schedule. It rationalizes that when the

CBA was signed, the horse races started at 10:00 a.m. When the races were moved to 2:00

p.m., there was no other choice for management but to change the employees' work

schedule as there was no work to be done in the morning. Evidently, the adjustment in the

work schedule of the employees is justified.

We are not unmindful that every business enterprise endeavors to increase

profits. As it is, the Court will not interfere with the business judgment of an employer in

the exercise of its prerogative to devise means to improve its operation, provided that it

does not violate the law, CBAs, and the general principles of justice and fair play. We have

thus held that management is free to regulate, according to its own discretion and

judgment, all aspects of employment, including hiring, work assignments, working

methods, time, place and manner of work, processes to be followed, supervision of workers,

working regulations, transfer of employees, work supervision, layoff of workers and

discipline, dismissal, and recall of workers.[5]

While it is true that Section 1, Article IV of the CBA provides for a 7-hour work

schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. from Mondays to

Saturdays, Section 2, Article XI, however, expressly reserves on respondent the prerogative

to change existing methods or facilities to change the schedules of work. As aptly ruled by

the CA:

x x x. Such exact language lends no other meaning but that while respondent may have allowed the initial determination of the work schedule to be done through collective bargaining, it expressly retained the prerogative to change it.

Moreover, it cannot be said that in agreeing to Section 1 of Article IV, respondent already waived that customary prerogative of management to set the work schedule. Had that been the intention, Section 2 of Article XI would not have made any reference at all to the retention by respondent of that prerogative. The CBA would have instead expressly prohibited respondent from exercising it. x x x As it were, however, the CBA expressly recognized in respondent the prerogative to change the work schedule. This effectively rules out any notion of waiver on the part of respondent of its prerogative to change the work schedule.

The same provision of the CBA also grants respondent the prerogative to relieve

employees from duty because of lack of work. Petitioner’s argument, therefore, that the

change in work schedule violates Article 100 of the Labor Code because it resulted in the

diminution of the benefit enjoyed by regular monthly-paid employees of rendering overtime

work with pay, is untenable. Section 1, Article IV, of the CBA does not guarantee overtime

work for all the employees but merely provides that "all work performed in excess of seven

(7) hours work schedule and on days not included within the work week shall be considered

overtime and paid as such."

Respondent was not obliged to allow all its employees to render

overtime work everyday for the whole year, but only those employees

whose services were needed after their regular working hours and only

upon the instructions of management. The overtime pay was not

given to each employee consistently, deliberately and unconditionally,


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but as a compensation for additional services rendered. Thus, overtime

pay does not fall within the definition of benefits under Article 100 of the Labor Code

on prohibition against elimination or diminution of benefits.

While the Constitution is committed to the policy of social justice and the protection of

the working class, it should not be presumed that every labor dispute will be automatically

decided in favor of labor. The partiality for labor has not in any way diminished our belief

that justice in every case is for the deserving, to be dispensed in the light of the established

facts and the applicable law and doctrine.[6]

WHEREFORE, the instant petition is DENIED and the assailed decision and resolution of

the CA are AFFIRMED.

Costs against petitioner.

SO ORDERED.

THIRD DIVISION

[G.R. No. 100701. March 28, 2001]

PRODUCERS BANK OF THE PHILIPPINES, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and PRODUCERS BANK EMPLOYEES ASSOCIATION,[1] respondents.

D E C I S I O N

GONZAGA-REYES, J.:

Before us is a special civil action for certiorari with prayer for preliminary injunction and/or restraining order seeking the nullification of (1) the decision of public respondent in NLRC-NCR Case No. 02-00753-88, entitled “Producers Bank Employees Association v. Producers Bank of the Philippines,” promulgated on 30 April 1991, reversing the Labor Arbiter’s dismissal of private respondent’s complaint and (2) public respondent’s resolution dated 18 June 1991 denying petitioner’s motion for partial reconsideration.

The present petition originated from a complaint filed by private respondent on 11 February 1988 with the Arbitration Branch, National Capital Region, National Labor Relations Commission (NLRC), charging petitioner with diminution of benefits, non-compliance with Wage Order No. 6 and non-payment of holiday pay. In addition, private respondent prayed for damages.[2]

On 31 March 1989, Labor Arbiter Nieves V. de Castro found private respondent’s claims to be unmeritorious and dismissed its complaint.[3] In a complete reversal, however, the NLRC[4] granted all of private respondent’s claims, except for damages.[5] The dispositive portion of the NLRC’s decision provides –

WHEREFORE, premises considered, the appealed Decision is, as it is hereby, SET ASIDE and another one issued ordering respondent-appellee to pay complainant-appellant:

1. The unpaid bonus (mid-year and Christmas bonus) and 13th month pay;

2. Wage differentials under Wage Order No. 6 for November 1, 1984 and the corresponding adjustment thereof; and

3. Holiday pay under Article 94 of the Labor Code, but not to exceed three (3) years.

The rest of the claims are dismissed for lack of merit.

SO ORDERED.

Petition filed a Motion for Partial Reconsideration, which was denied by the NLRC in a Resolution issued on 18 June 1991. Hence, recourse to this Court.

Petitioner contends that the NLRC gravely abused its discretion in ruling as it did for the succeeding reasons stated in its Petition –

1. On the alleged diminution of benefits, the NLRC gravely abused its discretion when (1) it contravened the Supreme Court decision in Traders Royal Bank v. NLRC, et al., G.R. No. 88168, promulgated on August 30, 1990, (2) its ruling is not justified by law and Art. 100 of the Labor Code, (3) its ruling is contrary to the CBA, and (4) the so-called “company practice invoked by it has no legal and moral bases” (p. 2, Motion for Partial Reconsideration, Annex “H”);


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2. On the alleged non-compliance with Wage Order No. 6, the NLRC again gravely abused its discretion when it patently and palpably erred in holding that it is “more inclined to adopt the stance of appellant (private respondent UNION) in this issue since it is more in keeping with the law and its implementing provisions and the intendment of the parties as revealed in their CBA” without giving any reason or justification for such conclusions as the stance of appellant (private respondent UNION) does not traverse the clear and correct finding and conclusion of the Labor Arbiter.

Furthermore, the petitioner, under conservatorship and distressed, is exempted under Wage Order No. 6.

Finally, the “wage differentials under Wage Order No. 6 for November 1, 1984 and the corresponding adjustment thereof” (par. 2, dispositive portion, NLRC Decision), has prescribed (p. 12, Motion for Partial Reconsideration, Annex “H”).

3. On the alleged non-payment of legal holiday pay, the NLRC again gravely abused its discretion when it patently and palpably erred in approving and adopting “the position of appellant (private respondent UNION)” without giving any reason or justification therefor which position does not squarely traverse or refute the Labor Arbiter’s correct finding and ruling (p. 18, Motion for Partial Reconsideration, Annex “H”).[6]

On 29 July 1991, the Court granted petitioner’s prayer for a temporary restraining order enjoining respondents from executing the 30 April 1991 Decision and 18 June 1991 Resolution of the NLRC.[7]

Coming now to the merits of the petition, the Court shall discuss the issues ad seriatim.

Bonuses

As to the bonuses, private respondent declared in its position paper[8] filed with the NLRC that –

1. Producers Bank of the Philippines, a banking institution, has been providing several benefits to its employees since 1971 when it started its operation. Among the benefits it had been regularly giving is a mid-year bonus equivalent to an employee’s one-month basic pay and a Christmas bonus equivalent to an employee’s one whole month salary (basic pay plus allowance);

2. When P.D. 851, the law granting a 13th month pay, took effect, the basic pay previously being given as part of the Christmas bonus was applied as compliance to it (P.D. 851), the allowances remained as Christmas bonus;

3. From 1981 up to 1983, the bank continued giving one month basic pay as mid-year bonus, one month basic pay as 13th month pay but the Christmas bonus was no longer based on the allowance but on the basic pay of the employees which is higher;

4. In the early part of 1984, the bank was placed under conservatorship but it still provided the traditional mid-year bonus;

5. By virtue of an alleged Monetary Board Resolution No. 1566, the bank only gave a one-half (1/2) month basic pay as compliance of the 13th month pay and none for the Christmas bonus. In a tabular form, here are the bank’s violations:

YEAR MID-YEAR BONUS CHRISTMAS BONUS 13TH MO. PAYprevious years one mo. basic one mo. basic one mo. basic

1984 [one mo. basic] - none - one-half mo. basic1985 one-half mo. basic - none - one-half mo. basic1986 one-half mo. basic one-half mo. basic one mo. basic1987 one-half mo. basic one-half mo. basic one mo. basic

Private respondent argues that the mid-year and Christmas bonuses, by reason of their having been given for thirteen consecutive years, have ripened into a vested right and, as such, can no longer be unilaterally withdrawn by petitioner without violating Article 100 of Presidential Decree No. 442[9] which prohibits the diminution or elimination of benefits already being enjoyed by the employees. Although private respondent concedes that the grant of a bonus is discretionary on the part of the employer, it argues that, by reason of its long and regular concession, it may become part of the employee’s regular compensation.[10]

On the other hand, petitioner asserts that it cannot be compelled to pay the alleged bonus differentials due to its depressed financial condition, as evidenced by the fact that in 1984 it was placed under conservatorship by the Monetary Board. According to petitioner, it sustained losses in the millions of pesos from 1984 to 1988, an assertion which was affirmed by the labor arbiter. Moreover, petitioner points out that the collective bargaining agreement of the parties does not provide for the payment of any mid-year or Christmas bonus. On the contrary, section 4 of the collective bargaining agreement states that –

Acts of Grace. Any other benefits or privileges which are not expressly provided in this Agreement, even if now accorded or hereafter accorded to the employees, shall be deemed purely acts of grace dependent upon the sole judgment and discretion of the BANK to grant, modify or withdraw.[11]

A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employer’s business and made possible the realization of profits. It is an act of generosity granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits.[12] The granting of a bonus is a management prerogative, something given in addition

29

to what is ordinarily received by or strictly due the recipient. [13] Thus, a bonus is not a demandable and enforceable obligation,[14] except when it is made part of the wage, salary or compensation of the employee.[15]

However, an employer cannot be forced to distribute bonuses which it can no longer afford to pay. To hold otherwise would be to penalize the employer for his past generosity. Thus, in Traders Royal Bank v. NLRC,[16] we held that –

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

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

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

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

This doctrine was reiterated in the more recent case of Manila Banking Corporation v. NLRC[17] wherein the Court made the following pronouncements –

By definition, a “bonus” is a gratuity or act of liberality of the giver which the recipient has no right to demand as a matter of right. It is something given in addition to what is ordinarily received by or strictly due the recipient. The granting of a bonus is basically a management prerogative which cannot be forced upon the employer who may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employee’s basic salaries or wages, especially so if it is incapable of doing so.

xxx xxx xxx

Clearly then, a bonus is an amount given ex gratia to an employee by an employer on account of success in business or realization of profits. How then can an employer be made liable to pay additional benefits in the nature of bonuses to its employees when it has been operating on considerable net losses for a given period of time?

Records bear out that petitioner Manilabank was already in dire financial straits in the mid-80’s. As early as 1984, the Central Bank found that Manilabank had been suffering financial losses. Presumably, the problems commenced even before their discovery in 1984. As earlier chronicled, the Central Bank placed petitioner bank under comptrollership in 1984 because of liquidity problems and excessive interbank borrowings. In 1987, it was placed under receivership and ordered to close operation. In 1988, it was ordered liquidated.

It is evident, therefore, that petitioner bank was operating on net losses from the years 1984, 1985 and 1986, thus, resulting to its eventual closure in 1987 and liquidation in 1988. Clearly, there was no success in business or realization of profits to speak of that would warrant the conferment of additional benefits sought by private respondents. No company should be compelled to act liberally and confer upon its employees additional benefits over and above those mandated by law when it is plagued by economic difficulties and financial losses. No act of enlightened generosity and self-interest can be exacted from near empty, if not empty coffers.

It was established by the labor arbiter[18] and the NLRC[19] and admitted by both parties[20] that petitioner was placed under conservatorship by the Monetary Board, pursuant to its authority under Section 28-A of Republic Act No. 265,[21] as amended by Presidential Decree No. 72,[22] which provides –

Sec. 28-A. Appointment of conservator. - Whenever, on the basis of a report submitted by the appropriate supervising and examining department, the Monetary Board finds that a bank is in a state of continuing inability or unwillingness to maintain a condition of solvency and liquidity deemed adequate to protect the interest of depositors and creditors, the Monetary Board may appoint a conservator to take charge of the assets, liabilities, and the management of that banking institution, collect all monies and debts due said bank and exercise all powers necessary to preserve the assets of the bank, reorganize the management thereof and restore its viability. He shall have the power to overrule or revoke the actions of the previous management and board of directors of the bank, any provision of law to the contrary notwithstanding, and such other powers as the Monetary Board shall deem necessary.

xxx xxx xxx

Under Section 28-A, the Monetary Board may place a bank under the control of a conservator when it finds that the bank is continuously unable or unwilling to maintain a condition of solvency or liquidity. In Central Bank of the Philippines v. Court of Appeals,[23] the Court declared that the order placing petitioner herein under conservatorship had long

30

become final and its validity could no longer be litigated upon. Also, in the same case, the Court found that sometime in August, 1983, some news items triggered a bank-run in petitioner which resulted in continuous over-drawings on petitioner’s demand deposit account with the Central Bank; the over-drawings reached P143.955 million by 17 January 1984; and as of 13 February 1990, petitioner had over-drawings of up to P1.233 billion, which evidences petitioner’s continuing inability to maintain a condition of solvency and liquidity, thus justifying the conservatorship. Our findings in the Central Bank case coincide with petitioner’s claims that it continuously suffered losses from 1984 to 1988 as follows -

YEAR NET LOSSES IN MILLIONS OF PESOS

1984 P 144.418

1985 P 144.940

1986 P 132.940

1987 P 84.182

January-February 1988 P 9.271

These losses do not include the interest expenses on the overdraft loan of the petitioner to the Central Bank, which interest as of July 31, 1987, amounted to P610.065 Million, and penalties on reserve deficiencies which amounted to P89.029 Million. The principal balance of the overdraft amounted to P971.632 Million as of March 16, 1988.[24]

Petitioner was not only experiencing a decline in its profits, but was reeling from tremendous losses triggered by a bank-run which began in 1983. In such a depressed financial condition, petitioner cannot be legally compelled to continue paying the same amount of bonuses to its employees. Thus, the conservator was justified in reducing the mid-year and Christmas bonuses of petitioner’s employees. To hold otherwise would be to defeat the reason for the conservatorship which is to preserve the assets and restore the viability of the financially precarious bank. Ultimately, it is to the employees’ advantage that the conservatorship achieve its purposes for the alternative would be petitioner’s closure whereby employees would lose not only their benefits, but their jobs as well.

13th Month Pay

With regard to the 13th month pay, the NLRC adopted the position taken by private respondent and held that the conservator was not justified in diminishing or not paying the 13th month pay and that petitioner should have instead applied for an exemption, in accordance with section 7 of Presidential Decree No. 851 (PD 851), as amended by Presidential Decree No. 1364, but that it did not do so. [25] The NLRC held that the actions of the conservator ran counter to the provisions of PD 851.

In its position paper,[26] private respondent claimed that petitioner made the following payments to its members –

YEAR MID-YEAR BONUS 13th MONTH PAY CHRISTMAS BONUS1984 1 month basic ½ month basic None1985 ½ month basic ½ month basic None1986 ½ month basic 1 month basic ½ month basic1987 ½ month basic 1 month basic ½ month basicHowever, in its Memorandum[27] filed before this Court, private respondent revised its claims as follows –YEAR MID-YEAR BONUS 13th MONTH PAY CHRISTMAS BONUS1984 1 month basic None ½ month basic1985 ½ month basic None ½ month basic1986 ½ month basic ½ month basic 1 month basic1987 ½ month basic ½ month basic 1 month basic1988 ½ month basic ½ month basic 1 month basicPetitioner argues that it is not covered by PD 851 since the mid-year and Christmas bonuses it has been giving its employees from 1984 to 1988 exceeds the basic salary for one month (except for 1985 where a total of one month basic salary was given). Hence, this amount should be applied towards the satisfaction of the 13th month pay, pursuant to Section 2 of PD 851.[28]

PD 851, which was issued by President Marcos on 16 December 1975, requires all employers to pay their employees receiving a basic salary of not more than P1,000 a month,[29] regardless of the nature of the employment, a 13 th month pay, not later than December 24 of every year.[30] However, employers already paying their employees a 13th month pay or its equivalent are not covered by the law. Under the Revised Guidelines on the Implementation of the 13th-Month Pay Law,[31] the term “equivalent” shall be construed to include Christmas bonus, mid-year bonus, cash bonuses and other payments amounting to not less than 1/12 of the basic salary. The intention of the law was to grant some relief – not to all workers – but only to those not actually paid a 13 th month salary or what amounts to it, by whatever name called. It was not envisioned that a double burden would be imposed on the employer already paying his employees a 13th month pay or its equivalent – whether out of pure generosity or on the basis of a binding agreement. To impose upon an employer already giving his employees the equivalent of a 13th month pay would be to penalize him for his liberality and in all probability, the employer would react by withdrawing the bonuses or resist further voluntary grants for fear that if and when a law is passed giving the same benefits, his prior concessions might not be given due credit.[32]

In the case at bar, even assuming the truth of private respondent’s claims as contained in its position paper or Memorandum regarding the payments received by its members in the form of 13th month pay, mid-year bonus and Christmas bonus, it is noted that, for each and every year involved, the total amount given by petitioner would still exceed, or at least be equal to, one month basic salary and thus, may be considered as an “equivalent” of the

31

13th month pay mandated by PD 851. Thus, petitioner is justified in crediting the mid-year bonus and Christmas bonus as part of the 13th month pay.

Wage Order No. 6

Wage Order No. 6, which came into effect on 1 November 1984, increased the statutory minimum wage of workers, with different increases being specified for agricultural plantation and non-agricultural workers. The bone of contention, however, involves Section 4 thereof which reads -

All wage increase in wage and/or allowance granted by employers between June 17, 1984 and the effectivity of this Order shall be credited as compliance with the minimum wage and allowance adjustments prescribed herein provided that where the increases are less than the applicable amount provided in this Order, the employer shall pay the difference. Such increases shall not include anniversary wage increases provided in collective bargaining agreements unless the agreement expressly provide otherwise.

On 16 November 1984, the parties entered into a collective bargaining agreement providing for the following salary adjustments –

Article VIII. Section 1. Salary Adjustments. – Cognizant of the effects of, among others, price increases of oil and other commodities on the employees’ wages and earnings, and the certainty of continued governmental or statutory actions adjusting employees’ minimum wages, earnings, allowances, bonuses and other fringe benefits, the parties have formulated and agreed on the following highly substantial packaged increases in salary and allowance which take into account and cover (a) any deflation in income of employees because of such price increases and inflation and (b) the expected governmental response thereto in the form of statutory adjustments in wages, allowances and benefits, during the next three (3) years of this Agreement:

(i) Effective March 1, 1984 – P225.00 per month as salary increase plus P100.00 per month as increase in allowance to employees within the bargaining unit on March 1, 1984.

(ii) Effective March 1, 1985 – P125.00 per month as salary increase plus P100.00 per month as increase in allowance to employees within the bargaining unit on March 1, 1985.

(iii) Effective March 1, 1986 – P125.00 per month as salary increase plus P100.00 per month as increase in allowance to employees within the bargaining unit on March 1, 1986.

In addition, the collective bargaining agreement of the parties also included a provision on the chargeability of such salary or allowance increases against government-ordered or legislated income adjustments –

Section 2. Pursuant to the MOLE Decision dated October 2, 1984 and Order dated October 24, 1984, the first-year salary and allowance increases shall be chargeable against adjustments under Wage Order No. 5, which took effect on June 16, 1984. The chargeability of the foregoing salary increases against government-ordered or legislated income adjustments subsequent to Wage Order No. 5 shall be determined on the basis of the provisions of such government orders or legislation.

Petitioner argues that it complied with Wage Order No. 6 because the first year salary and allowance increase provided for under the collective bargaining agreement can be credited against the wage and allowance increase mandated by such wage order. Under Wage Order No. 6, all increases in wages or allowances granted by the employer between 17 June 1984 and 1 November 1984 shall be credited as compliance with the wage and allowance adjustments prescribed therein. Petitioner asserts that although the collective bargaining agreement was signed by the parties on 16 November 1984, the first year salary and allowance increase was made to take effect retroactively, beginning from 1 March 1984 until 28 February 1985. Petitioner maintains that this period encompasses the period of creditability provided for under Wage Order No. 6 and that, therefore, the balance remaining after applying the first year salary and allowance increase in the collective bargaining agreement to the increase mandated by Wage Order No. 5, in the amount of P125.00, should be made chargeable against the increase prescribed by Wage Order No. 6, and if not sufficient, petitioner is willing to pay the difference.[33]

On the other hand, private respondent contends that the first year salary and allowance increases under the collective bargaining agreement cannot be applied towards the satisfaction of the increases prescribed by Wage Order No. 6 because the former were not granted within the period of creditability provided for in such wage order. According to private respondent, the significant dates with regard to the granting of the first year increases are 9 November 1984 – the date of issuance of the MOLE Resolution, 16 November 1984 – the date when the collective bargaining agreement was signed by the parties and 1 March 1984 – the retroactive date of effectivity of the first year increases. Private respondent points out that none of these dates fall within the period of creditability under Wage Order No. 6 which is from 17 June 1984 to 1 November 1984. Thus, petitioner has not complied with Wage Order No. 6.[34]

The creditability provision in Wage Order No. 6 is based on important public policy, that is, the encouragement of employers to grant wage and allowance increases to their employees higher than the minimum rates of increases prescribed by statute or administrative regulation. Thus, we held in Apex Mining Company, Inc. v. NLRC[35] that –

[t]o obliterate the creditability provisions in the Wage Orders through interpretation or otherwise, and to compel employers simply to add on legislated increases in salaries or allowances without regard to what is already being paid, would be to penalize employers who grant their workers more than the statutorily prescribed minimum rates of increases. Clearly, this would be counter-productive so far as securing the interest of labor is concerned. The creditability provisions in the Wage Orders prevent

32

the penalizing of employers who are industry leaders and who do not wait for statutorily prescribed increases in salary or allowances and pay their workers more than what the law or regulations require.

Section 1 of Article VIII of the collective bargaining agreement of the parties states that “…the parties have formulated and agreed on the following highly substantial packaged increases in salary and allowance which take into account and cover (a) any deflation in income of employees because of such price increases and inflation and (b) the expected governmental response thereto in the form of statutory adjustments in wages, allowances and benefits, during the next three (3) years of this Agreement…” The unequivocal wording of this provision manifests the clear intent of the parties to apply the wage and allowance increases stipulated in the collective bargaining agreement to any statutory wage and allowance adjustments issued during the effectivity of such agreement - from 1 March 1984 to 28 February 1987. Furthermore, contrary to private respondent’s contentions, there is nothing in the wording of Section 2 of Article VIII of the collective bargaining agreement that would prevent petitioner from crediting the first year salary and allowance increases against the increases prescribed by Wage Order No. 6.

It would be inconsistent with the abovestated rationale underlying the creditability provision of Wage Order No. 6 if, after applying the first year increase to Wage Order No. 5, the balance was not made chargeable to the increases under Wage Order No. 6 for the fact remains that petitioner actually granted wage and allowance increases sufficient to cover the increases mandated by Wage Order No. 5 and part of the increases mandated by Wage Order No. 6.

Holiday Pay

Article 94 of the Labor Code provides that every worker shall be paid his regular daily wage during regular holidays[36] and that the employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate. In this case, the Labor Arbiter found that the divisor used by petitioner in arriving at the employees’ daily rate for the purpose of computing salary-related benefits is 314. [37] This finding was not disputed by the NLRC.[38] However, the divisor was reduced to 303 by virtue of an inter-office memorandum issued on 13 August 1986, to wit -

To increase the rate of overtime pay for rank and filers, we are pleased to inform that effective August 18, 1986, the acting Conservator approved the use of 303 days as divisor in the computation of Overtime pay. The present Policy of 314 days as divisor used in the computation for cash conversion and determination of daily rate, among others, still remain, Saturdays, therefore, are still considered paid rest days.

Corollarily, the Acting Convservator also approved the increase of meal allowance from P25.00 to P30.00 for a minimum of four (4) hours of work for Saturdays.

Proceeding from the unambiguous terms of the above quoted memorandum, the Labor Arbiter observed that the reduction of the divisor to 303 was for the sole purpose of increasing the employees’ overtime pay and was not meant to replace the use of 314 as the divisor in the computation of the daily rate for salary-related benefits.[39]

Private respondent admits that, prior to 18 August 1986, petitioner used a divisor of 314 in arriving at the daily wage rate of monthly-salaried employees. Private respondent also concedes that the divisor was changed to 303 for purposes of computing overtime pay only. In its Memorandum, private respondent states that –

49. The facts germane to this issue are not debatable. The Memorandum Circular issued by the Acting Conservator is clear. Prior to August 18, 1986, the petitioner bank used a divisor of 314 days in arriving at the daily wage rate of the monthly-salaried employees. Effective August 18, 1986, this was changed. It adopted the following formula:

Basic salary x 12 months = Daily Wage Rate 303 days

50. By utilizing this formula even up to the present, the conclusion is inescapable that the petitioner bank is not actually paying its employees the regular holiday pay mandated by law. Consequently, it is bound to pay the salary differential of its employees effective November 1, 1974 up to the present.

xxx xxx xxx

54. Since it is a question of fact, the Inter-office Memorandum dated August 13, 1986 (Annex “E”) provides for a divisor of 303 days in computing overtime pay. The clear import of this document is that from the 365 days in a year, we deduct 52 rest days which gives a total of 313 days. Now, if 313 days is the number of working days of the employees then, there is a disputable presumption that the employees are paid their holiday pay. However, this is not so in the case at bar. The bank uses 303 days as its divisor. Hence, it is not paying its employees their corresponding holiday pay.[40]

In Union of Filipro Employees v. Vivar, Jr.[41] the Court held that “[t]he divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid employee’s salary and in the computation of his daily rate.” This was also our ruling in Chartered Bank Employees Association v. Ople,[42] as follows –

It is argued that even without 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 law. The petitioner contends otherwise.

33

One strong argument in favor of the petitioner’s stand is the fact that the Chartered Bank, in computing overtime compensation for its employees, employs a “divisor” of 251 days. The 251 working days divisor is the result of subtracting all Saturdays, Sundays and the ten (10) legal holidays form the total number of calendar days in a year. If the employees are already paid for all non-working days, the divisor should be 365 and not 251.

Apparently, the divisor of 314 is arrived at by subtracting all Sundays from the total number of calendar days in a year, since Saturdays are considered paid rest days, as stated in the inter-office memorandum. Thus, the use of 314 as a divisor leads to the inevitable conclusion that the ten legal holidays are already included therein.

We agree with the labor arbiter that the reduction of the divisor to 303 was done for the sole purpose of increasing the employees’ overtime pay, and was not meant to exclude holiday pay from the monthly salary of petitioner’s employees. In fact, it was expressly stated in the inter-office memorandum - also referred to by private respondent in its pleadings - that the divisor of 314 will still be used in the computation for cash conversion and in the determination of the daily rate. Thus, based on the records of this case and the parties’ own admissions, the Court holds that petitioner has complied with the requirements of Article 94 of the Labor Code.

Damages

As to private respondent’s claim for damages, the NLRC was correct in ruling that there is no basis to support the same.

WHEREFORE, for the reasons above stated, the 30 April 1991 Decision of public respondent in NLRC-NCR Case No. 02-00753-88, entitled “Producers Bank Employees Association v. Producers Bank of the Philippines,” and its 18 June 1991 Resolution issued in the same case are hereby SET ASIDE, with the exception of public respondent’s ruling on damages.

SO ORDERED.


Manila

THIRD DIVISION

G.R. No. 144664 March 15, 2004

ASIAN TRANSMISSION CORPORATION, petitioner, vs.The Hon. COURT OF APPEALS, Thirteenth Division, HON. FROILAN M. BACUNGAN as Voluntary Arbitrator, KISHIN A. LALWANI, Union, Union representative to the Panel Arbitrators; BISIG NG ASIAN TRANSMISSION LABOR UNION (BATLU); HON. BIENVENIDO T.

LAGUESMA in his capacity as Secretary of Labor and Employment; and DIRECTOR CHITA G. CILINDRO in her capacity as Director of Bureau of Working Conditions, respondents.

D E C I S I O N

CARPIO-MORALES, J.:

Petitioner, Asian Transmission Corporation, seeks via petition for certiorari under Rule 65 of the 1995 Rules of Civil Procedure the nullification of the March 28, 2000 Decision1 of the Court of Appeals denying its petition to annul 1) the March 11, 1993 "Explanatory Bulletin"2 of the Department of Labor and Employment (DOLE) entitled "Workers’ Entitlement to Holiday Pay on April 9, 1993, Araw ng Kagitingan and Good Friday", which bulletin the DOLE reproduced on January 23, 1998, 2) the July 31, 1998 Decision3 of the Panel of Voluntary Arbitrators ruling that the said explanatory bulletin applied as well to April 9, 1998, and 3) the September 18, 19984 Resolution of the Panel of Voluntary Arbitration denying its Motion for Reconsideration.

The following facts, as found by the Court of Appeals, are undisputed:

The Department of Labor and Employment (DOLE), through Undersecretary Cresenciano B. Trajano, issued an Explanatory Bulletin dated March 11, 1993 wherein it clarified, inter alia, that employees are entitled to 200% of their basic wage on April 9, 1993, whether unworked, which[,] apart from being Good Friday [and, therefore, a legal holiday], is also Araw ng Kagitingan [which is also a legal holiday]. The bulletin reads:

"On the correct payment of holiday compensation on April 9, 1993 which apart from being Good Friday is alsoAraw ng Kagitingan, i.e., two regular holidays falling on the same day, this Department is of the view that the covered employees are entitled to at least two hundred percent (200%) of their basic wage even if said holiday is unworked. The first 100% represents the payment of holiday pay on April 9, 1993 as Good Friday and the second 100% is the payment of holiday pay for the same date as Araw ng Kagitingan.

Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy Thursday and Araw ng Kagitingan x x x x

Despite the explanatory bulletin, petitioner [Asian Transmission Corporation] opted to pay its daily paid employees only 100% of their basic pay on April 9, 1998. Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested.

In accordance with Step 6 of the grievance procedure of the Collective Bargaining Agreement (CBA) existing between petitioner and BATLU, the controversy was submitted for voluntary arbitration. x x x x On July 31, 1998,the Office of the Voluntary Arbitrator rendered a decision directing petitioner to pay its covered employees "200% and not just 100% of their regular

34

daily wages for the unworked April 9, 1998 which covers two regular holidays, namely, Araw ng Kagitignan and Maundy Thursday." (Emphasis and underscoring supplied)

Subject of interpretation in the case at bar is Article 94 of the Labor Code which reads:

ART. 94. Right to holiday pay. - (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers;

(b) The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate; and

(c) As used in this Article, "holiday" includes: New Year’s Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth and thirtieth of December and the day designated by law for holding a general election,

which was amended by Executive Order No. 203 issued on June 30, 1987, such that the regular holidays are now:

1. New Year’s Day January 1

2. Maundy Thursday Movable Date

3. Good Friday Movable Date

4. Araw ng Kagitingan April 9 (Bataan and Corregidor Day)

5. Labor Day May 1

6. Independence Day June 12

7. National Heroes Day Last Sunday of August

8. Bonifacio Day November 30

9. Christmas Day December 25

10. Rizal Day December 30

In deciding in favor of the Bisig ng Asian Transmission Labor Union (BATLU), the Voluntary Arbitrator held that Article 94 of the Labor Code provides for holiday pay for every regular holiday, the computation of which is determined by a legal formula which is not changed by the fact that there are two holidays falling on one day, like on April 9, 1998 when it was Araw ng Kagitingan and at the same time was Maundy Thursday; and that that the law, as amended, enumerates ten regular holidays for every year should not be interpreted as authorizing a reduction to nine the number of paid regular holidays "just because April 9 (Araw ng Kagitingan) in certain years, like 1993 and 1998, is also Holy Friday or Maundy Thursday."

In the assailed decision, the Court of Appeals upheld the findings of the Voluntary Arbitrator, holding that the Collective Bargaining Agreement (CBA) between petitioner and BATLU, the law governing the relations between them, clearly recognizes their intent to consider Araw ng Kagitingan and Maundy Thursday, on whatever date they may fall in any calendar year, as paid legal holidays during the effectivity of the CBA and that "[t]here is no condition, qualification or exception for any variance from the clear intent that all holidays shall be compensated."5

The Court of Appeals further held that "in the absence of an explicit provision in law which provides for [a] reduction of holiday pay if two holidays happen to fall on the same day, any doubt in the interpretation and implementation of the Labor Code provisions on holiday pay must be resolved in favor of labor."

By the present petition, petitioners raise the following issues:

I

WHETHER OR NOT THE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN ERRONEOUSLY INTERPRETING THE TERMS OF THE COLLECTIVE BARGAINING AGREEMENT BETWEEN THE PARTIES AND SUBSTITUTING ITS OWN JUDGMENT IN PLACE OF THE AGREEMENTS MADE BY THE PARTIES THEMSELVES

II

WHETHER OR NOT THE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN HOLDING THAT ANY DOUBTS ABOUT THE VALIDITY OF THE POLICIES ENUNCIATED IN THE EXPLANATORY BULLETIN WAS LAID TO REST BY THE REISSUANCE OF THE SAID EXPLANATORY BULLETIN

III

WHETHER OR NOT THE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN UPHOLDING THE VALIDITY OF THE EXPLANATORY BULLETIN EVEN WHILE

35

ADMITTING THAT THE SAID BULLEITN WAS NOT AN EXAMPLE OF A JUDICIAL, QUASI-JUDICIAL, OR ONE OF THE RULES AND REGULATIONS THAT [Department of Labor and Employment] DOLE MAY PROMULGATE

IV

WHETHER OR NOT THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) BY ISSUING EXPLANATORY BULLETIN DATED MARCH 11, 1993, IN THE GUISE OF PROVIDING GUIDELINES ON ART. 94 OF THE LABOR CODE, COMMITTED GRAVE ABUSE OF DISCRETION, AS IT LEGISLATED AND INTERPRETED LEGAL PROVISIONS IN SUCH A MANNER AS TO CREATE OBLIGATIONS WHERE NONE ARE INTENDED BY THE LAW

V

WHETHER OR NOT THE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN SUSTAINING THE SECRETARY OF THE DEPARTMENT OF LABOR IN REITERATING ITS EXPLANATORY BULLETIN DATED MARCH 11, 1993 AND IN ORDERING THAT THE SAME POLICY OBTAINED FOR APRIL 9, 1998 DESPITE THE RULINGS OF THE SUPREME COURT TO THE CONTRARY

VI

WHETHER OR NOT RESPONDENTS’ ACTS WILL DEPRIVE PETITIONER OF PROPERTY WITHOUT DUE PROCESS BY THE "EXPLANATORY BULLETIN" AS WELL AS EQUAL PROTECTION OF LAWS

The petition is devoid of merit.

At the outset, it bears noting that instead of assailing the Court of Appeals Decision by petition for review oncertiorari under Rule 45 of the 1997 Rules of Civil Procedure, petitioner lodged the present petition for certiorari under Rule 65.

[S]ince the Court of Appeals had jurisdiction over the petition under Rule 65, any alleged errors committed by it in the exercise of its jurisdiction would be errors of judgment which are reviewable by timely appeal and not by a special civil action of certiorari. If the aggrieved party fails to do so within the reglementary period, and the decision accordingly becomes final and executory, he cannot avail himself of the writ of certiorari, his predicament being the effect of his deliberate inaction.

The appeal from a final disposition of the Court of Appeals is a petition for review under Rule 45 and not a special civil action under Rule 65 of the Rules of Court, now Rule 45 and Rule 65, respectively, of the 1997 Rules of Civil Procedure. Rule 45 is clear that the decisions, final orders or resolutions of the Court of Appeals in any case, i.e., regardless of the nature of the

action or proceeding involved, may be appealed to this Court by filing a petition for review, which would be but a continuation of the appellate process over the original case. Under Rule 45 the reglementary period to appeal is fifteen (15) days from notice of judgment or denial of motion for reconsideration.

x x x

For the writ of certiorari under Rule 65 of the Rules of Court to issue, a petitioner must show that he has no plain, speedy and adequate remedy in the ordinary course of law against its perceived grievance. A remedy is considered "plain, speedy and adequate" if it will promptly relieve the petitioner from the injurious effects of the judgment and the acts of the lower court or agency. In this case, appeal was not only available but also a speedy and adequate remedy.6

The records of the case show that following petitioner’s receipt on August 18, 2000 of a copy of the August 10, 2000 Resolution of the Court of Appeals denying its Motion for Reconsideration, it filed the present petition for certiorari on September 15, 2000, at which time the Court of Appeals decision had become final and executory, the 15-day period to appeal it under Rule 45 having expired.

Technicality aside, this Court finds no ground to disturb the assailed decision.

Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall afford protection to labor.7 Its purpose is not merely "to prevent diminution of the monthly income of the workers on account of work interruptions. In other words, although the worker is forced to take a rest, he earns what he should earn, that is, his holiday pay."8 It is also intended to enable the worker to participate in the national celebrations held during the days identified as with great historical and cultural significance.

Independence Day (June 12), Araw ng Kagitingan (April 9), National Heroes Day (last Sunday of August), Bonifacio Day (November 30) and Rizal Day (December 30) were declared national holidays to afford Filipinos with a recurring opportunity to commemorate the heroism of the Filipino people, promote national identity, and deepen the spirit of patriotism. Labor Day (May 1) is a day traditionally reserved to celebrate the contributions of the working class to the development of the nation, while the religious holidays designated in Executive Order No. 203 allow the worker to celebrate his faith with his family.

As reflected above, Art. 94 of the Labor Code, as amended, affords a worker the enjoyment of ten paid regular holidays.9 The provision is mandatory,10 regardless of whether an employee is paid on a monthly or daily basis.11Unlike a bonus, which is a management prerogative,12 holiday pay is a statutory benefit demandable under the law. Since a worker is entitled to the enjoyment of ten paid regular holidays, the fact that two holidays fall on the

36

same date should not operate to reduce to nine the ten holiday pay benefits a worker is entitled to receive.

It is elementary, under the rules of statutory construction, that when the language of the law is clear and unequivocal, the law must be taken to mean exactly what it says.13 In the case at bar, there is nothing in the law which provides or indicates that the entitlement to ten days of holiday pay shall be reduced to nine when two holidays fall on the same day.

Petitioner’s assertion that Wellington v. Trajano14 has "overruled" the DOLE March 11, 1993 Explanatory Bulletin does not lie. In Wellington, the issue was whether monthly-paid employees are entitled to an additional day’s pay if a holiday falls on a Sunday. This Court, in answering the issue in the negative, observed that in fixing the monthly salary of its employees, Wellington took into account "every working day of the year including the holidays specified by law and excluding only Sunday." In the instant case, the issue is whether daily-paid employees are entitled to be paid for two regular holidays which fall on the same day.15

In any event, Art. 4 of the Labor Code provides that all doubts in the implementation and interpretation of its provisions, including its implementing rules and regulations, shall be resolved in favor of labor. For the working man’s welfare should be the primordial and paramount consideration.16

Moreover, Sec. 11, Rule IV, Book III of the Omnibus Rules to Implement the Labor Code provides that "Nothing in the law or the rules shall justify an employer in withdrawing or reducing any benefits, supplements or payments for unworked regular holidays as provided in existing individual or collective agreement or employer practice or policy."17

From the pertinent provisions of the CBA entered into by the parties, petitioner had obligated itself to pay for the legal holidays as required by law. Thus, the 1997-1998 CBA incorporates the following provision:

ARTICLE XIVPAID LEGAL HOLIDAYS

The following legal holidays shall be paid by the COMPANY as required by law:

1. New Year’s Day (January 1st)

2. Holy Thursday (moveable)

3. Good Friday (moveable)

4. Araw ng Kagitingan (April 9th)

5. Labor Day (May 1st)

6. Independence Day (June 12th)

7. Bonifacio Day [November 30]

8. Christmas Day (December 25th)

9. Rizal Day (December 30th)

10. General Election designated by law, if declared public non-working holiday

11. National Heroes Day (Last Sunday of August)

Only an employee who works on the day immediately preceding or after a regular holiday shall be entitled to the holiday pay.

A paid legal holiday occurring during the scheduled vacation leave will result in holiday payment in addition to normal vacation pay but will not entitle the employee to another vacation leave.

Under similar circumstances, the COMPANY will give a day’s wage for November 1st and December 31st whenever declared a holiday. When required to work on said days, the employee will be paid according to Art. VI, Sec. 3B hereof.18

WHEREFORE, the petition is hereby DISMISSED.

SO ORDERED.

FIRST DIVISIONG.R. No. 118506. April 18, 1997]

NORMA MABEZA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, PETER NG/HOTEL SUPREME, respondents.

D E C I S I O N

KAPUNAN, J.:

This petition seeking the nullification of a resolution of public respondent National Labor Relations Commission dated April 28, 1994 vividly illustrates why courts should be ever

37

vigilant in the preservation of the constitutionally enshrined rights of the working class. Without the protection accorded by our laws and the tempering of courts, the natural and historical inclination of capital to ride roughshod over the rights of labor would run unabated.

The facts of the case at bar, culled from the conflicting versions of petitioner and private respondent, are illustrative.

Petitioner Norma Mabeza contends that around the first week of May, 1991, she and her co-employees at the Hotel Supreme in Baguio City were asked by the hotel's management to sign an instrument attesting to the latter's compliance with minimum wage and other labor standard provisions of law.[1] The instrument provides:[2]

JOINT AFFIDAVIT

We, SYLVIA IGANA, HERMINIGILDO AQUINO, EVELYN OGOY, MACARIA JUGUETA, ADELAIDA NONOG, NORMA MABEZA, JONATHAN PICART and JOSE DIZON, all of legal ages (sic), Filipinos and residents of Baguio City, under oath, depose and say:

1. That we are employees of Mr. Peter L. Ng of his Hotel Supreme situated at No. 416 Magsaysay Ave., Baguio City;

2. That the said Hotel is separately operated from the Ivy's Grill and Restaurant;

3. That we are all (8) employees in the hotel and assigned in each respective shifts;

4. That we have no complaints against the management of the Hotel Supreme as we are paid accordingly and that we are treated well.

5. That we are executing this affidavit voluntarily without any force or intimidation and for the purpose of informing the authorities concerned and to dispute the alleged report of the Labor Inspector of the Department of Labor and Employment conducted on the said establishment on February 2, 1991.

IN WITNESS WHEREOF, we have hereunto set our hands this 7th day of May, 1991 at Baguio City, Philippines.

(Sgd.) (Sgd.) (Sgd.)SYLVIA IGAMA HERMINIGILDO AQUINO EVELYN OGOY

(Sgd) (Sgd.) (Sgd.)MACARIA JUGUETA ADELAIDA NONOG NORMA MABEZA

(Sgd) (Sgd.) JONATHAN PICART JOSE DIZON

SUBSCRIBED AND SWORN to before me this 7th day of May, 1991, at Baguio City, Philippines.

Asst. City Prosecutor

Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to swear to the veracity and contents of the affidavit as instructed by management. The affidavit was nevertheless submitted on the same day to the Regional Office of the Department of Labor and Employment in Baguio City.

As gleaned from the affidavit, the same was drawn by management for the sole purpose of refuting findings of the Labor Inspector of DOLE (in an inspection of respondent's establishment on February 2, 1991) apparently adverse to the private respondent.[3]

After she refused to proceed to the City Prosecutor's Office - on the same day the affidavit was submitted to the Cordillera Regional Office of DOLE - petitioner avers that she was ordered by the hotel management to turn over the keys to her living quarters and to remove her belongings from the hotel premises.[4] According to her, respondent strongly chided her for refusing to proceed to the City Prosecutor's Office to attest to the affidavit.[5] She thereafter reluctantly filed a leave of absence from her job which was denied by management. When she attempted to return to work on May 10, 1991, the hotel's cashier, Margarita Choy, informed her that she should not report to work and, instead, continue with her unofficial leave of absence. Consequently, on May 13, 1991, three days after her attempt to return to work, petitioner filed a complaint for illegal dismissal before the Arbitration Branch of the National Labor Relations Commission - CAR Baguio City. In addition to her complaint for illegal dismissal, she alleged underpayment of wages, non-payment of holiday pay, service incentive leave pay, 13th month pay, night differential and other benefits. The complaint was docketed as NLRC Case No. RAB-CAR-05-0198-91 and assigned to Labor Arbiter Felipe P. Pati.

Responding to the allegations made in support of petitioner's complaint for illegal dismissal, private respondent Peter Ng alleged before Labor Arbiter Pati that petitioner "surreptitiously left (her job) without notice to the management" [6] and that she actually abandoned her work. He maintained that there was no basis for the money claims for underpayment and other benefits as these were paid in the form of facilities to petitioner and the hotel's other employees.[7] Pointing to the Affidavit of May 7, 1991, the private respondent asserted that his employees actually have no problems with management. In a supplemental answer submitted eleven (11) months after the original complaint for illegal dismissal was filed, private respondent raised a new ground, loss of confidence, which was supported by a criminal complaint for Qualified Theft he filed before the prosecutor's office of the City of Baguio against petitioner on July 4, 1991.[8]









38

On May 14, 1993, Labor Arbiter Pati rendered a decision dismissing petitioner's complaint on the ground of loss of confidence. His disquisitions in support of his conclusion read as follows:

It appears from the evidence of respondent that complainant carted away or stole one (1) blanket, 1 piece bedsheet, 1 piece thermos, 2 pieces towel (Exhibits '9', '9-A,' '9-B,' '9-C' and '10' pages 12-14 TSN, December 1, 1992).

In fact, this was the reason why respondent Peter Ng lodged a criminal complaint against complainant for qualified theft and perjury. The fiscal's office finding a prima facie evidence that complainant committed the crime of qualified theft issued a resolution for its filing in court but dismissing the charge of perjury (Exhibit '4' for respondent and Exhibit 'B-7' for complainant). As a consequence, complainant was charged in court for the said crime (Exhibit '5' for respondent and Exhibit 'B-6' for the complainant).

With these pieces of evidence, complainant committed serious misconduct against her employer which is one of the just and valid grounds for an employer to terminate an employee (Article 282 of the Labor Code as amended).[9]

On April 28, 1994, respondent NLRC promulgated its assailed Resolution[10] affirming the Labor Arbiter's decision. The resolution substantially incorporated the findings of the Labor Arbiter.[11] Unsatisfied, petitioner instituted the instant special civil action for certiorari under Rule 65 of the Rules of Court on the following grounds:[12]

1. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN ITS FAILURE TO CONSIDER THAT THE ALLEGED LOSS OF CONFIDENCE IS A FALSE CAUSE AND AN AFTERTHOUGHT ON THE PART OF THE RESPONDENT-EMPLOYER TO JUSTIFY, ALBEIT ILLEGALLY, THE DISMISSAL OF THE COMPLAINANT FROM HER EMPLOYMENT;

2. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN ADOPTING THE RULING OF THE LABOR ARBITER THAT THERE WAS NO UNDERPAYMENT OF WAGES AND BENEFITS ON THE BASIS OF EXHIBIT "8" (AN UNDATED SUMMARY OF COMPUTATION PREPARED BY ALLEGEDLY BY RESPONDENT'S EXTERNAL ACCOUNTANT) WHICH IS TOTALLY INADMISSIBLE AS AN EVIDENCE TO PROVE PAYMENT OF WAGES AND BENEFITS;

3. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN FAILING TO CONSIDER THE EVIDENCE ADDUCED BEFORE THE LABOR ARBITER

AS CONSTITUTING UNFAIR LABOR PRACTICE COMMITTED BY THE RESPONDENT.

The Solicitor General, in a Manifestation in lieu of Comment dated August 8, 1995 rejects private respondent's principal claims and defenses and urges this Court to set aside the public respondent's assailed resolution.[13]

We agree.

It is settled that in termination cases the employer bears the burden of proof to show that the dismissal is for just cause, the failure of which would mean that the dismissal is not justified and the employee is entitled to reinstatement.[14]

In the case at bar, the private respondent initially claimed that petitioner abandoned her job when she failed to return to work on May 8, 1991. Additionally, in order to strengthen his contention that there existed sufficient cause for the termination of petitioner, he belatedly included a complaint for loss of confidence, supporting this with charges that petitioner had stolen a blanket, a bedsheet and two towels from the hotel.[15] Appended to his last complaint was a suit for qualified theft filed with the Baguio City prosecutor's office.

From the evidence on record, it is crystal clear that the circumstances upon which private respondent anchored his claim that petitioner "abandoned" her job were not enough to constitute just cause to sanction the termination of her services under Article 283 of the Labor Code. For abandonment to arise, there must be concurrence of two things: 1) lack of intention to work;[16] and 2) the presence of overt acts signifying the employee's intention not to work.[17]

In the instant case, respondent does not dispute the fact that petitioner tried to file a leave of absence when she learned that the hotel management was displeased with her refusal to attest to the affidavit. The fact that she made this attempt clearly indicates not an intention to abandon but an intention to return to work after the period of her leave of absence, had it been granted, shall have expired.

Furthermore, while absence from work for a prolonged period may suggest abandonment in certain instances, mere absence of one or two days would not be enough to sustain such a claim. The overt act (absence) ought to unerringly point to the fact that the employee has no intention to return to work,[18] which is patently not the case here. In fact, several days after she had been advised to take an informal leave, petitioner tried to resume working with the hotel, to no avail. It was only after she had been repeatedly rebuffed that she filed a case for illegal dismissal. These acts militate against the private respondent's claim that petitioner abandoned her job. As the Solicitor General in his manifestation observed:

Petitioner's absence on that day should not be construed as abandonment of her job. She did not report because the cashier told her not to report anymore, and that private respondent Ng did not want to see her in the hotel premises. But two days later or on the 10th of May, after realizing that she had to clarify her











39

employment status, she again reported for work. However, she was prevented from working by private respondents.[19]

We now come to the second cause raised by private respondent to support his contention that petitioner was validly dismissed from her job.

Loss of confidence as a just cause for dismissal was never intended to provide employers with a blank check for terminating their employees. Such a vague, all-encompassing pretext as loss of confidence, if unqualifiedly given the seal of approval by this Court, could readily reduce to barren form the words of the constitutional guarantee of security of tenure. Having this in mind, loss of confidence should ideally apply only to cases involving employees occupying positions of trust and confidence or to those situations where the employee is routinely charged with the care and custody of the employer's money or property. To the first class belong managerial employees, i.e., those vested with the powers or prerogatives to lay down management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions; and to the second class belong cashiers, auditors, property custodians, etc., or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property. Evidently, an ordinary chambermaid who has to sign out for linen and other hotel property from the property custodian each day and who has to account for each and every towel or bedsheet utilized by the hotel's guests at the end of her shift would not fall under any of these two classes of employees for which loss of confidence, if ably supported by evidence, would normally apply. Illustrating this distinction, this Court, in Marina Port Services, Inc. vs. NLRC,[20] has stated that:

To be sure, every employee must enjoy some degree of trust and confidence from the employer as that is one reason why he was employed in the first place. One certainly does not employ a person he distrusts. Indeed, even the lowly janitor must enjoy that trust and confidence in some measure if only because he is the one who opens the office in the morning and closes it at night and in this sense is entrusted with the care or protection of the employer's property. The keys he holds are the symbol of that trust and confidence.

By the same token, the security guard must also be considered as enjoying the trust and confidence of his employer, whose property he is safeguarding. Like the janitor, he has access to this property. He too, is charged with its care and protection.

Notably, however, and like the janitor again, he is entrusted only with the physical task of protecting that property. The employer's trust and confidence in him is limited to that ministerial function. He is not entrusted, in the Labor Arbiter's words, 'with the duties of safekeeping and safeguarding company policies, management instructions, and company secrets such as operation devices.' He is not privy to these confidential matters, which are shared only in the higher echelons of management. It is the persons on such levels who, because they discharge these sensitive duties, may be considered holding

positions of trust and confidence. The security guard does not belong in such category.[21]

More importantly, we have repeatedly held that loss of confidence should not be simulated in order to justify what would otherwise be, under the provisions of law, an illegal dismissal. "It should not be used as a subterfuge for causes which are illegal, improper and unjustified. It must be genuine, not a mere afterthought to justify an earlier action taken in bad faith."[22]

In the case at bar, the suspicious delay in private respondent's filing of qualified theft charges against petitioner long after the latter exposed the hotel's scheme (to avoid its obligations as employer under the Labor Code) by her act of filing illegal dismissal charges against the private respondent would hardly warrant serious consideration of loss of confidence as a valid ground for dismissal. Notably, the Solicitor General has himself taken a position opposite the public respondent and has observed that:

If petitioner had really committed the acts charged against her by private respondents (stealing supplies of respondent hotel), private respondents should have confronted her before dismissing her on that ground. Private respondents did not do so. In fact, private respondent Ng did not raise the matter when petitioner went to see him on May 9, 1991, and handed him her application for leave. It took private respondents 52 days or up to July 4, 1991 before finally deciding to file a criminal complaint against petitioner, in an obvious attempt to build a case against her.

The manipulations of private respondents should not be countenanced.[23]

Clearly, the efforts to justify petitioner's dismissal - on top of the private respondent's scheme of inducing his employees to sign an affidavit absolving him from possible violations of the Labor Code - taints with evident bad faith and deliberate malice petitioner's summary termination from employment.

Having said this, we turn to the important question of whether or not the dismissal by the private respondent of petitioner constitutes an unfair labor practice.

The answer in this case must inevitably be in the affirmative.

The pivotal question in any case where unfair labor practice on the part of the employer is alleged is whether or not the employer has exerted pressure, in the form of restraint, interference or coercion, against his employee's right to institute concerted action for better terms and conditions of employment. Without doubt, the act of compelling employees to sign an instrument indicating that the employer observed labor standards provisions of law when he might have not, together with the act of terminating or coercing those who refuse to cooperate with the employer's scheme constitutes unfair labor practice. The first act clearly preempts the right of the hotel's workers to seek better terms and conditions of employment through concerted action.






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We agree with the Solicitor General's observation in his manifestation that "[t]his actuation... is analogous to the situation envisaged in paragraph (f) of Article 248 of the Labor Code"[24] which distinctly makes it an unfair labor practice "to dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony"[25] under the Labor Code. For in not giving positive testimony in favor of her employer, petitioner had reserved not only her right to dispute the claim and proffer evidence in support thereof but also to work for better terms and conditions of employment.

For refusing to cooperate with the private respondent's scheme, petitioner was obviously held up as an example to all of the hotel's employees, that they could only cause trouble to management at great personal inconvenience. Implicit in the act of petitioner's termination and the subsequent filing of charges against her was the warning that they would not only be deprived of their means of livelihood, but also possibly, their personal liberty.

This Court does not normally overturn findings and conclusions of quasi-judicial agencies when the same are ably supported by the evidence on record. However, where such conclusions are based on a misperception of facts or where they patently fly in the face of reason and logic, we will not hesitate to set aside those conclusions. Going into the issue of petitioner's money claims, we find one more salient reason in this case to set things right: the labor arbiter's evaluation of the money claims in this case incredibly ignores existing law and jurisprudence on the matter. Its blatant one-sidedness simply raises the suspicion that something more than the facts, the law and jurisprudence may have influenced the decision at the level of the Arbiter.

Labor Arbiter Pati accepted hook, line and sinker the private respondent's bare claim that the reason the monetary benefits received by petitioner between 1981 to 1987 were less than minimum wage was because petitioner did not factor in the meals, lodging, electric consumption and water she received during the period in her computations. [26] Granting that meals and lodging were provided and indeed constituted facilities, such facilities could not be deducted without the employer complying first with certain legal requirements. Without satisfying these requirements, the employer simply cannot deduct the value from the employee's wages. First, proof must be shown that such facilities are customarily furnished by the trade. Second, the provision of deductible facilities must be voluntarily accepted in writing by the employee. Finally, facilities must be charged at fair and reasonable value.[27]

These requirements were not met in the instant case. Private respondent "failed to present any company policy or guideline to show that the meal and lodging . . . (are) part of the salary;"[28] he failed to provide proof of the employee's written authorization; and, he failed to show how he arrived at the valuations.[29]

Curiously, in the case at bench, the only valuations relied upon by the labor arbiter in his decision were figures furnished by the private respondent's own accountant, without corroborative evidence. On the pretext that records prior to the July 16, 1990 earthquake were lost or destroyed, respondent failed to produce payroll records, receipts and other relevant documents, where he could have, as has been pointed out in the Solicitor General's

manifestation, "secured certified copies thereof from the nearest regional office of the Department of Labor, the SSS or the BIR."[30]

More significantly, the food and lodging, or the electricity and water consumed by the petitioner were not facilities but supplements. A benefit or privilege granted to an employee for the convenience of the employer is not a facility. The criterion in making a distinction between the two not so much lies in the kind (food, lodging) but the purpose. [31] Considering, therefore, that hotel workers are required to work different shifts and are expected to be available at various odd hours, their ready availability is a necessary matter in the operations of a small hotel, such as the private respondent's hotel.

It is therefore evident that petitioner is entitled to the payment of the deficiency in her wages equivalent to the full wage applicable from May 13, 1988 up to the date of her illegal dismissal.

Additionally, petitioner is entitled to payment of service incentive leave pay, emergency cost of living allowance, night differential pay, and 13th month pay for the periods alleged by the petitioner as the private respondent has never been able to adduce proof that petitioner was paid the aforestated benefits.

However, the claims covering the period of October 1987 up to the time of filing the case on May 13, 1988 are barred by prescription as P.D. 442 (as amended) and its implementing rules limit all money claims arising out of employer-employee relationship to three (3) years from the time the cause of action accrues.[32]

We depart from the settled rule that an employee who is unjustly dismissed from work normally should be reinstated without loss of seniority rights and other privileges. Owing to the strained relations between petitioner and private respondent, allowing the former to return to her job would only subject her to possible harassment and future embarrassment. In the instant case, separation pay equivalent to one month's salary for every year of continuous service with the private respondent would be proper, starting with her job at the Belfront Hotel.

In addition to separation pay, backwages are in order. Pursuant to R.A. 6715 and our decision in Osmalik Bustamante, et al. vs. National Labor Relations Commission,[33]petitioner is entitled to full backwages from the time of her illegal dismissal up to the date of promulgation of this decision without qualification or deduction.

Finally, in dismissal cases, the law requires that the employer must furnish the employee sought to be terminated from employment with two written notices before the same may be legally effected. The first is a written notice containing a statement of the cause(s) for dismissal; the second is a notice informing the employee of the employer's decision to terminate him stating the basis of the dismissal. During the process leading to the second notice, the employer must give the employee ample opportunity to be heard and defend himself, with the assistance of counsel if he so desires.

Given the seriousness of the second cause (qualified theft) of the petitioner's dismissal, it is noteworthy that the private respondent never even bothered to inform petitioner of the











41

charges against her. Neither was petitioner given the opportunity to explain the loss of the articles. It was only almost two months after petitioner had filed a complaint for illegal dismissal, as an afterthought, that the loss was reported to the police and added as a supplemental answer to petitioner's complaint. Clearly, the dismissal of petitioner without the benefit of notice and hearing prior to her termination violated her constitutional right to due process. Under the circumstances, an award of One Thousand Pesos (P1,000.00) on top of payment of the deficiency in wages and benefits for the period aforestated would be proper.

WHEREFORE, premises considered, the RESOLUTION of the National Labor Relations Commission dated April 24, 1994 is REVERSED and SET ASIDE, with costs. For clarity, the economic benefits due the petitioner are hereby summarized as follows:

1) Deficiency wages and the applicable ECOLA from May 13, 1988 up to the date of petitioner's illegal dismissal;

2) Service incentive leave pay; night differential pay and 13th month pay for the same period;

3) Separation pay equal to one month's salary for every year of petitioner's continuous service with the private respondent starting with her job at the Belfront Hotel;

4) Full backwages, without qualification or deduction, from the date of petitioner's illegal dismissal up to the date of promulgation of this decision pursuant to our ruling in Bustamante vs. NLRC.[34]

5) P1.000.00.

SO ORDERED.


Manila

EN BANC

G.R. No. L-7349 July 19, 1955

ATOK-BIG WEDGE MUTUAL BENEFIT ASSOCIATION, petitioner, vs.ATOK-BIG WEDGE MINING COMPANY, INCORPORATED, respondents.

Pablo C. Sanidad for petitioner.Roxas and Sarmiento for respondents.

REYES, J. B. L., J.:

On September 4, 1950, the petitioner labor union, the Atok-Big Wedge Mutual Benefit Association, submitted to the Atok-Big Wedge Mining Co., Inc. (respondent herein) several demands, among which was an increase of P0.50 in daily wage. The matter was referred by the mining company to the Court of Industrial Relations for arbitration and settlement (Case No. 523-V). In the course of conciliatory measures taken by the Court, some of the demands were granted, and others (including the demand for increased wages) rejected, and so, hearings proceeded and evidence submitted on the latter. On July 14, 1951, the Court rendered a decision (Record, pp. 25-32) fixing the minimum wage at P2.65 a day with the rice ration, or P3.20 without rice ration; denying the deduction from such minimum wage, of the value of housing facilities furnished by the company to the laborers, as well as the efficiency bonus given to them by the company; and ordered that the award be made effective retroactively from the date of the demand, September 4, 1950, as agreed by the parties. From this decision, the mining company appealed to this Court (G.R. No. L-5276).

Subsequently, an urgent petition was presented in Court on October 15, 1952 by the Atok-Big Wedge Mining Company for authority to stop operations and lay off employees and laborers, for the reason that due to the heavy losses, increased taxes, high cost of materials, negligible quantity of ore deposits, and the enforcement of the Minimum Wage Law, the continued operation of the company would lead to its immediate bankruptcy and collapse (Rec. pp. 100-109). To avert the closure of the company and the consequent lay-off of hundreds of laborers and employees, the Court, instead of hearing the petition on the merits, convened the parties for voluntary conciliation and mediation. After lengthy discussions and exchange of views, the parties on October 29, 1952 reached an agreement effective from August 4, 1952 to December 31, 1954 (Rec. pp. 18-23). The Agreement in part provides:

I

That the petitioner, Atok-Big Wedge Mining Company, Incorporated, agrees to abide by whatever decision that the Supreme Court may render with respect to Case No. 523-V (G.R. 5276) and Case No. 523-1 (10) (G.R. 5594).

III

That the petitioner, Atok-Big Wedge Mining Company, Incorporated, and the respondent, Atok-Big Wedge Mutual Benefit Association, agree that the following facilities heretofore given or actually being given by the petitioner to its workers and laborers, and which constitute as part of their wages, be valued as follows:

Rice ration P.55 per dayHousing facility 40 per dayAll other facilities such as recreation facilities, 85 per day


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medical treatment to dependents of laborers, school facilities, rice ration during off-days, water, light, fuel, etc., equivalent to at least

It is understood that the said amount of facilities valued at the abovementioned prices, may be charged in full or partially by the Atok-Big Wedge Mining Company, Inc., against laborer or employee, as it may see fit pursuant to the exigencies of its operation.

The agreement was submitted to the Court for approval and on December 26, 1952, was approved by the Court in an order giving it effect as an award or decision in the case (Rec., p. 24).

Later, Case No. G.R. No. L-5276 was decided by this Court (promulgated March 3, 1953), affirming the decision of the Court of Industrial Relations fixing the minimum cash wage of the laborers and employees of the Atok-Big Wedge Mining Co. at P3.20 cash, without rice ration, or P2.65, with rice ration. On June 13, 1953, the labor union presented to the Court a petition for the enforcement of the terms of the agreement of October 29, 1952, as allegedly modified by the decision of this Court in G.R. No. L-5276 and the provisions of the Minimum Wage Law, which has since taken effect, praying for the payment of the minimum cash wage of P3.45 a day with rice ration, or P4.00 without rice ration, and the payment of differential pay from August 4, 1952, when the award became effective. The mining company opposed the petition claiming that the Agreement of October 29, 1952 was entered into by the parties with the end in view that the company's cost of production be not increased in any way, so that it was intended to supersede whatever decision the Supreme Court would render in G.R. No. L-5276 and the provisions of the Minimum Wage Law with respect to the minimum cash wage payable to the laborers and employees. Sustaining the opposition, the Court of Industrial Relations, in an order issued on September 22, 1953 (Rec. pp. 44-49), denied the petition, upon the ground that when the Agreement of the parties of October 29, 1952 was entered into by them, they already knew the decision of said Court (although subject to appeal to the Supreme Court) fixing the minimum cash wage at P3.20 without rice ration, or P2.65 with rice ration, as well as the provisions of the Minimum Wage Law requiring the payment of P4 minimum daily wage in the provinces effective August 4, 1952; so that the parties had intended to be regulated by their Agreement of October 29, 1952. On the same day, the Court issued another order (Rec. pp. 50-55), denying the claim of the labor union for payment of an additional 50 per cent based on the basic wage of P4 for work on Sundays and holidays, holding that the payments being made by the company were within the requirements of the law. Its motion for the reconsideration of both orders having been denied, the labor union filed this petition for review by certiorari.

The first issue submitted to us arises from an apparent contradiction in the Agreement of October 29, 1952. By paragraph III thereof, the parties by common consent evaluated the facilities furnished by the Company to its laborers (rice rations, housing, recreation, medical treatment, water, light, fuel, etc.) at P1.80 per day, and authorized the company to have such value "charge in full or partially — against any laborer or employee as it may see fit"; while in

paragraph I, the Company agreed to abide by the decision of this Court (pending at the time the agreement was had) in G.R. No. L-5594; and as rendered, the decision was to the effect that the Company could deduct from the minimum wage only the value of the rice ration.

It is contended by the petitioner union that the two provisions should be harmonized by holding paragraph III (deduction of all facilities) to be merely provisional, effective only while this Court had not rendered its decision in G.R. No. L-5594; and that the terms of said paragraph should be deemed superseded by the decision from the time the latter became final, some four or five months after the agreement was entered into; in consequence, (it is claimed), the laborers became entitled by virtue of said decision to the prevailing P4.00 minimum wage with no other deduction than that of the rice ration, or a net cash wage of P3.45.

This contention, in our opinion, is untenable. The intention of the parties could not have been to make the arrangement in paragraph III a merely provisional arrangement pending the decision of the Supreme Court for "this agreement" was expressly made retroactive and effective as of August 4, 1952, and to be in force up to and including December 31, 1954" (Par. IV). When concluded on October 29, 1952, neither party could anticipate the date when the decision of the Supreme Court would be rendered; nor is any reason shown why the parties should desire to limit the effects of the decision to the period 1952-1954 if it was to supersede the agreement of October 29, 1952.

To ascertain the true import of paragraph I of said Agreement providing that the respondent company agreed to abide by whatever decision the Supreme Court would render in G.R. No. L-5276, it is important to remember that, as shown by the records, the agreement was prompted by an urgent petition filed by the respondent mining company to close operations and lay-off laborers because of heavy losses and the full enforcement of the Minimum Wage Law in the provinces, requiring it to pay its laborers the minimum wage of P4; to avoid such eventuality, through the mediation of the Court of Industrial Relations, a compromise was reached whereby it was agreed that the company would pay the minimum wage fixed by the law, but the facilities then being received by the laborers would be evaluated and charged as part of the wage, but without in any way reducing the P2.00 cash portion of their wages which they were receiving prior to the agreement (hearing of Oct. 28, 1952, CIR, t.s.n. 47). In other words, while it was the objective of the parties to comply with the requirements of the Minimum Wage Law, it was also deemed important that the mining company should not have to increase the cash wages it was then paying its laborers, so that its cost of production would not also be increased, in order to prevent its closure and the lay-off of employees and laborers. And as found by the Court below in the order appealed from (which finding is conclusive upon us), "it is this eventuality that the parties did not like to happen, when they have executed the said agreement" (Rec. p. 49). Accordingly, after said agreement was entered into, the Company started paying its laborers a basic cash or "take-home" wage of P2.20 (Rec. p. 9), representing the difference between P4 (minimum wage) and P1.80 (value of all facilities).

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With this background, the provision to abide by our decision in G.R. No. L-5276 can only be interpreted thus: That the company agreed to pay whatever award this Court would make in said case from the date fixed by the decision (which was that of the original demand, September 4, 1950) up to August 3, 1952 (the day previous to the effectivity of the Compromise Agreement) and from August 4, 1954 to December 31, 1954, they are to be bound by their agreement of October 29, 1952.

This means that during the first period (September 4, 1950 to August 3, 1952), only rice rations given to the laborers are to be regarded as forming part of their wage and deductible therefrom. The minimum wage was then fixed (by the Court of Industrial Relations, and affirmed by this Court) at P3.20 without rice ration, or P2.65 with rice ration. Since the respondent company had been paying its laborers the basic cash or "take-home" wage of P2 prior to said decision and up to August 3, 1952, the laborers are entitled to a differential pay of P0.65 per working day from September 4, 1950 (the date of the effectivity of the award in G.R. L-5276) up to August 3, 1952.

From August 4, 1952, the date when the Agreement of the parties of October 29, 1952 became effective (which was also the date when the Minimum Wage Law became fully enforceable in the provinces), the laborers should be paid a minimum wage of P4 a day. From this amount, the respondent mining company is given the right to charge each laborer "in full or partially", the facilities enumerated in par. III of the Agreement; i.e., rice ration at P0.55 per day, housing facility at P0.40 per day, and other facilities "constitute part of his wages". It appears that the company had actually been paying its laborers the minimum wage of P2.20 since August 4, 1952; hence they are not entitled to any differential pay from this date.

Petitioner argues that to allow the deductions stipulated in the Agreement of October 29, 1952 from the minimum daily wage of P4 would be a waiver of the minimum wage fixed by the law and hence null and void, since Republic Act No. 602, section 20, provides that "no agreement or contract, oral or written, to accept a lower wage or less than any other under this Act, shall be valid". An agreement to deduct certain facilities received by the laborers from their employer is not a waiver of the minimum wage fixed by the law. Wage, as defined by section 2 of Republic Act No. 602, "includes the fair and reasonable value as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee." Thus, the law permits the deduction of such facilities from the laborer's minimum wage of P4, as long as their value is "fair and reasonable". It is not here claimed that the valuations fixed in the Agreement of October 29, 1952 are not fair and reasonable. On the contrary, the agreement expressly states that such valuations:

"have been arrived at after careful study and deliberation by both representatives of both parties, with the assistance of their respective counsels, and in the presence of the Honorable Presiding Judge of the Court of Industrial Relations" (Rec. p. 2).

Neither is it claimed that the parties, with the aid of the Court of Industrial Relations in a dispute pending before it, may not fix by agreement the valuation of such facilities, without referring the matter to the Department of Labor.

Petitioner also argues that to allow the deductions of the facilities appearing in the Agreement referred to, would be contrary to the mandate of section 19 of the law, that "nothing in this Act . . . justify an employer . . . in reducing supplements furnished on the date of enactment.

The meaning of the term "supplements" has been fixed by the Code of Rules and Regulations promulgated by the Wage Administration Office to implement the Minimum Wage Law (Ch. 1, [c]), as:

extra renumeration or benefits received by wage earners from their employees and include but are not restricted to pay for vacation and holidays not worked; paid sick leave or maternity leave; overtime rate in excess of what is required by law; sick, pension, retirement, and death benefits; profit-sharing; family allowances; Christmas, war risk and cost-of-living bonuses; or other bonuses other than those paid as a reward for extra output or time spent on the job.

"Supplements", therefore, constitute extra renumeration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. Facilities, on the other hand, are items of expense necessary for the laborer's and his family's existence and subsistence, so that by express provision of the law (sec. 2 [g]) they form part of the wage and when furnished by the employer are deductible therefrom since if they are not so furnished, the laborer would spend and pay for them just the same. It is thus clear that the facilities mentioned in the agreement of October 29, 1952 do not come within the term "supplements" as used in Art. 19 of the Minimum Wage Law.

For the above reasons, we find the appeal from the Order of the Court a quo of September 22, 1953 denying the motion of the petitioner labor union for the payment of the minimum wage of P3.45 per day plus rice ration, or P4 without rice ration, to be unmeritorious and untenable.

The second question involved herein relates to the additional compensation that should be paid by the respondent company to its laborers for work rendered on Sundays and holidays. It is admitted that the respondent company is paying an additional compensation of 50 per cent based on the basic "cash portion" of the laborer's wage of P2.20 per day; i.e., P1.10 additional compensation for each Sunday or holiday's work. Petitioner union insists, however, that this 50 per cent additional compensation should be computed on the minimum wage of P400 and not on the "cash portion" of the laborer's wage of P2.20, under the provisions of the Agreement of October 29, 1952 and the Minimum Wage Law.

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SEC. 4. Commonwealth Act No. 444 (otherwise known as the Eight Hour Labor Law) provides:

No person, firm, or corporations, business establishment or place or center of labor shall compel an employee or laborer to work during Sundays and holidays, unless he is paid an additional sum of at least twenty-five per centum of his regular renumeration:

The minimum legal additional compensation for work on Sundays and legal holidays is, therefore, 25 per cent of the laborer's regular renumeration. Under the Minimum Wage Law, this minimum additional compensation is P1 a day (25 per cent of P4, the minimum daily wage).

While the respondent company computes the additional compensation given to its laborers for work on Sundays and holidays on the "cash portion" of their wages of P2.20, it is giving them 50 per cent thereof, or P1.10 a day. Considering that the minimum additional compensation fixed by the law is P1 (25 per cent of P4), the compensation being paid by the respondent company to its laborers is even higher than such minimum legal additional compensation. We, therefore, see no error in the holding of the Court a quo that the respondent company has not violated the law with respect to the payment of additional compensation for work rendered by its laborers on Sundays and legal holidays.

Finding no reason to sustain the present petition for review, the same is, therefore, dismissed, with costs against the petitioner Atok-Big Wedge Mutual Benefit Association.

Bengzon, Acting C.J., Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo, Labrador, and Concepcion, JJ.,concur.

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