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FIRST DIVISION

ARTICLE XIV — Retirement Gratuity

G.R. No. L-50999 March 23, 1990

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

JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, petitioners,
vs
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR
ARBITER FLAVIO AGUAS, and F.E. ZUELLIG (M), INC., respondents.

MEDIALDEA, J.:

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

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

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

The antecedent facts are as follows:
Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig) filed with
the Department of Labor (Regional Office No. 4) an application seeking clearance to
terminate the services of petitioners Jose Songco, Romeo Cipres, and Amancio
Manuel (hereinafter referred to as petitioners) allegedly on the ground of
retrenchment due to financial losses. This application was seasonably opposed by
petitioners alleging that the company is not suffering from any losses. They alleged
further that they are being dismissed because of their membership in the union. At the
last hearing of the case, however, petitioners manifested that they are no longer
contesting their dismissal. The parties then agreed that the sole issue to be resolved
is the basis of the separation pay due to petitioners. Petitioners, who were in the
sales force of Zuellig received monthly salaries of at least P40,000. In addition, they
received commissions for every sale they made.
The collective Bargaining Agreement entered into between Zuellig and F.E. Zuellig
Employees Association, of which petitioners are members, contains the following
provision (p. 71, Rollo):

In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules Implementing the
Labor Code provide:
xxx
Sec. 9(b). Where the termination of employment is due to retrechment initiated
by the employer to prevent losses or other similar causes, or where the
employee suffers from a disease and his continued employment is prohibited by
law or is prejudicial to his health or to the health of his co-employees, the
employee shall be entitled to termination pay equivalent at least to his one month
salary, or to one-half month pay for every year of service, whichever is higher, a
fraction of at least six (6) months being considered as one whole year.
xxx

LABOR LAW I CASES (Arts.97-102) |1

Sec. 10. Basis of termination pay. — The computation of the termination pay of
an employee as provided herein shall be based on his latest salary rate, unless
the same was reduced by the employer to defeat the intention of the Code, in
which case the basis of computation shall be the rate before its deduction.
(Emphasis supplied)

services rendered or to be rendered, and includes the fair and reasonable value,
as determined by the Secretary of Labor, of board, lodging, or other facilities
customarily furnished by the employer to the employee. 'Fair reasonable value'
shall not include any profit to the employer or to any person affiliated with the
employer.

On June 26,1978, the Labor Arbiter rendered a decision, the dispositive portion of
which reads (p. 78, Rollo):

Zuellig argues that if it were really the intention of the Labor Code as well as its
implementing rules to include commission in the computation of separation pay, it
could have explicitly said so in clear and unequivocal terms. Furthermore, in the
definition of the term "wage", "commission" is used only as one of the features or
designations attached to the word remuneration or earnings.

RESPONSIVE TO THE FOREGOING, respondent should be as it is hereby,
ordered to pay the complainants separation pay equivalent to their one month
salary (exclusive of commissions, allowances, etc.) for every year of service that
they have worked with the company.
SO ORDERED.
The appeal by petitioners to the National Labor Relations Commission was dismissed
for lack of merit.
Hence, the present petition.
On June 2, 1980, the Court, acting on the verified "Notice of Voluntary Abandonment
and Withdrawal of Petition dated April 7, 1980 filed by petitioner Romeo Cipres,
based on the ground that he wants "to abide by the decision appealed from" since he
had "received, to his full and complete satisfaction, his separation pay," resolved to
dismiss the petition as to him.
The issue is whether or not earned sales commissions and allowances should be
included in the monthly salary of petitioners for the purpose of computation of their
separation pay.
The petition is impressed with merit.
Petitioners' position was that in arriving at the correct and legal amount of separation
pay due them, whether under the Labor Code or the CBA, their basic salary, earned
sales commissions and allowances should be added together. They cited Article 97(f)
of the Labor Code which includes commission as part on one's salary, to wit;
(f) 'Wage' paid to any employee shall mean the remuneration or earnings,
however designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece, or commission basis, or other method
of calculating the same, which is payable by an employer to an employee under
a written or unwritten contract of employment for work done or to be done, or for

Insofar as the issue of whether or not allowances should be included in the monthly
salary of petitioners for the purpose of computation of their separation pay is
concerned, this has been settled in the case of Santos v. NLRC, et al., G.R. No.
76721, September 21, 1987, 154 SCRA 166, where We ruled that "in the computation
of backwages and separation pay, account must be taken not only of the basic salary
of petitioner but also of her transportation and emergency living allowances." This
ruling was reiterated in Soriano v. NLRC, et al., G.R. No. 75510, October 27, 1987,
155 SCRA 124 and recently, in Planters Products, Inc. v. NLRC, et al., G.R. No.
78524, January 20, 1989.
We shall concern ourselves now with the issue of whether or not earned sales
commission should be included in the monthly salary of petitioner for the purpose of
computation of their separation pay.
Article 97(f) by itself is explicit that commission is included in the definition of the term
"wage". It has been repeatedly declared by the courts that where the law speaks in
clear and categorical language, there is no room for interpretation or construction;
there is only room for application (Cebu Portland Cement Co. v. Municipality of Naga,
G.R. Nos. 24116-17, August 22, 1968, 24 SCRA 708; Gonzaga v. Court of Appeals,
G.R.No. L-2 7455, June 28,1973, 51 SCRA 381). A plain and unambiguous statute
speaks for itself, and any attempt to make it clearer is vain labor and tends only to
obscurity. How ever, it may be argued that if We correlate Article 97(f) with Article XIV
of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections
9(b) and 10 of the Implementing Rules, there appears to be an ambiguity. In this
regard, the Labor Arbiter rationalized his decision in this manner (pp. 74-76, Rollo):
The definition of 'wage' provided in Article 96 (sic) of the Code can be correctly
be (sic) stated as a general definition. It is 'wage ' in its generic sense. A careful
perusal of the same does not show any indication that commission is part of
salary. We can say that commission by itself may be considered a wage. This is
not something novel for it cannot be gainsaid that certain types of employees like

LABOR LAW I CASES (Arts.97-102) |2

agents, field personnel and salesmen do not earn any regular daily, weekly or
monthly salaries, but rely mainly on commission earned.
Upon the other hand, the provisions of Section 10, Rule 1, Book VI of the
implementing rules in conjunction with Articles 273 and 274 (sic) of the Code
specifically states that the basis of the termination pay due to one who is sought
to be legally separated from the service is 'his latest salary rates.
x x x.
Even Articles 273 and 274 (sic) invariably use 'monthly pay or monthly salary'.
The above terms found in those Articles and the particular Rules were
intentionally used to express the intent of the framers of the law that for purposes
of separation pay they mean to be specifically referring to salary only.
.... Each particular benefit provided in the Code and other Decrees on Labor has
its own pecularities and nuances and should be interpreted in that light. Thus, for
a specific provision, a specific meaning is attached to simplify matters that may
arise there from. The general guidelines in (sic) the formation of specific rules for
particular purpose. Thus, that what should be controlling in matters concerning
termination pay should be the specific provisions of both Book VI of the Code
and the Rules. At any rate, settled is the rule that in matters of conflict between
the general provision of law and that of a particular- or specific provision, the
latter should prevail.
On its part, the NLRC ruled (p. 110, Rollo):
From the aforequoted provisions of the law and the implementing rules, it could
be deduced that wage is used in its generic sense and obviously refers to the
basic wage rate to be ascertained on a time, task, piece or commission basis or
other method of calculating the same. It does not, however, mean that
commission, allowances or analogous income necessarily forms part of the
employee's salary because to do so would lead to anomalies (sic), if not absurd,
construction of the word "salary." For what will prevent the employee from
insisting that emergency living allowance, 13th month pay, overtime, and
premium pay, and other fringe benefits should be added to the computation of
their separation pay. This situation, to our mind, is not the real intent of the Code
and its rules.
We rule otherwise. The ambiguity between Article 97(f), which defines the term 'wage'
and Article XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code
and Sections 9(b) and 10 of the Implementing Rules, which mention the terms "pay"
and "salary", is more apparent than real. Broadly, the word "salary" means a

recompense or consideration made to a person for his pains or industry in another
man's business. Whether it be derived from "salarium," or more fancifully from "sal,"
the pay of the Roman soldier, it carries with it the fundamental idea of compensation
for services rendered. Indeed, there is eminent authority for holding that the words
"wages" and "salary" are in essence synonymous (Words and Phrases, Vol. 38
Permanent Edition, p. 44 citing Hopkins vs. Cromwell, 85 N.Y.S. 839,841,89 App. Div.
481; 38 Am. Jur. 496). "Salary," the etymology of which is the Latin word "salarium," is
often used interchangeably with "wage", the etymology of which is the Middle English
word "wagen". Both words generally refer to one and the same meaning, that is, a
reward or recompense for services performed. Likewise, "pay" is the synonym of
"wages" and "salary" (Black's Law Dictionary, 5th Ed.). Inasmuch as the words
"wages", "pay" and "salary" have the same meaning, and commission is included in
the definition of "wage", the logical conclusion, therefore, is, in the computation of the
separation pay of petitioners, their salary base should include also their earned sales
commissions.
The aforequoted provisions are not the only consideration for deciding the petition in
favor of the petitioners.
We agree with the Solicitor General that granting, in gratia argumenti, that the
commissions were in the form of incentives or encouragement, so that the petitioners
would be inspired to put a little more industry on the jobs particularly assigned to
them, still these commissions are direct remuneration services rendered which
contributed to the increase of income of Zuellig . Commission is the recompense,
compensation or reward of an agent, salesman, executor, trustees, receiver, factor,
broker or bailee, when the same is calculated as a percentage on the amount of his
transactions or on the profit to the principal (Black's Law Dictionary, 5th Ed., citing
Weiner v. Swales, 217 Md. 123, 141 A.2d 749, 750). The nature of the work of a
salesman and the reason for such type of remuneration for services rendered
demonstrate clearly that commission are part of petitioners' wage or salary. We take
judicial notice of the fact that some salesmen do not receive any basic salary but
depend on commissions and allowances or commissions alone, are part of
petitioners' wage or salary. We take judicial notice of the fact that some salesman do
not received any basic salary but depend on commissions and allowances or
commissions alone, although an employer-employee relationship exists. Bearing in
mind the preceeding dicussions, if we adopt the opposite view that commissions, do
not form part of wage or salary, then, in effect, We will be saying that this kind of
salesmen do not receive any salary and therefore, not entitled to separation pay in
the event of discharge from employment. Will this not be absurd? This narrow
interpretation is not in accord with the liberal spirit of our labor laws and considering
the purpose of separation pay which is, to alleviate the difficulties which confront a
dismissed employee thrown the the streets to face the harsh necessities of life.

LABOR LAW I CASES (Arts.97-102) |3

78763.Additionally. ACCORDINGLY. July 12. NLRC.1987. 71812. LABOR LAW I CASES (Arts.R. the petition is hereby GRANTED. the workingman's welfare should be the primordial and paramount consideration. what should be taken into account is the average commissions earned during their last year of employment. in carrying out and interpreting the Labor Code's provisions and its implementing regulations. SO ORDERED. G. in Soriano v.. et al.152 SCRA 140. The case is remanded to the Labor Arbiter for the proper computation of said separation pay. NLRC. et al. Applying this by analogy.R. since the commissions in the present case were earned by actual market transactions attributable to petitioners. supra. and Article 1702 of the Civil Code which provides that "in case of doubt. The decision of the respondent National Labor Relations Commission is MODIFIED by including allowances and commissions in the separation pay of petitioners Jose Songco and Amancio Manuel. July 30. all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. G. NLRC. No. The final consideration is. these should be included in their separation pay. In the computation thereof. Manila Electric Company v. No.. We held that: The commissions also claimed by petitioner ('override commission' plus 'net deposit incentive') are not properly includible in such base figure since such commissions must be earned by actual market transactions attributable to petitioner. in resolving the issue of the salary base that should be used in computing the separation pay.97-102) |4 . This kind of interpretation gives meaning and substance to the liberal and compassionate spirit of the law as provided for in Article 4 of the Labor Code which states that "all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing rules and regulations shall be resolved in favor of labor" (Abella v.1989).

one of several fishing vessels owned and operated by private respondent De Guzman Fishing Enterprises which is primarily engaged in the fishing business with port and office at Camaligan. NATIONAL LABOR RELATIONS COMMISSION and DE GUZMAN FISHING ENTERPRISES and/or ARSENIO DE GUZMAN. and no criminal charges were formally filed against them. Camarines Sur. they received thirteen percent (13%) of the proceeds of the sale of the fish-catch if the total proceeds exceeded the cost of crude oil consumed during the fishing trip. president of private respondent. petitioners appealed to the National Labor Relations Commission. From the adverse decision against them. Laurente Bautu. JOSE PARMA. to proceed to the police station at Camaligan. mode of payment of compensation for services rendered by the fishermen-crew members. The patron/pilot. thru its operations manager. Petitioners denied the charge claiming that the same was a countermove to their having formed a labor union and becoming members of Defender of Industrial Agricultural Labor Organizations and General Workers Union (DIALOGWU) on September 3. PHILIP CERVANTES and ELEUTERIO BARBIN. Notwithstanding. C. 1985. Petitioners rendered service aboard said fishing vessel in various capacities. on the manner the fishing operations were conducted. emergency cost of living allowance and service incentive pay. among others. de Guzman. For services rendered in the conduct of private respondent's regular business of "trawl" fishing. the Labor Arbiter scheduled the case for joint hearing furnishing the parties with notice and summons. Camarines Sur. they received ten percent (10%) of the total proceeds of the sale. vs. Regional Arbitration Branch No. as follows: Alipio Ruga and Jose Parma patron/pilot. 1 On September 11. private respondent refused to allow petitioners to return to the fishing vessel to resume their work on the same day. and the circumstances leading to their dismissal. petitioners individually filed their complaints for illegal dismissal and non-payment of 13th month pay. On December 27.J. On September 22. private respondent. JAIME BARBIN. Albay. 1983 upon arrival at the fishing port. 1990 ALIPIO R.00 per week. the pilot/captain of the 7/B Sandyman II. LABOR LAW I CASES (Arts. Conrado S. no witnesses were presented to prove the charge against petitioners. Labor Arbiter Asisclo S. cashier of private respondent. one of the petitioners herein. 1983. submitted its position paper denying the employer-employee relationship between private respondent and petitioners on the theory that private respondent and petitioners were engaged in a joint venture. Nicanor Francisco. master fisherman. whether or not they were illegally dismissed from their employment. after the case was submitted for resolution. LAURENTE BAUTU. 1983. During the investigation. 2 They uniformly contended that they were arbitrarily dismissed without being given ample time to look for a new job. second fisherman. respondents.97-102) |5 . Eladio Calderon. On May 30. second fisherman. NICANOR FRANCISCO. Alipio Ruga. 1984. 1449-83 to 1456-83. No. Coralde rendered a joint decision 5 dismissing all the complaints of petitioners on a finding that a "joint fishing venture" and not one of employer-employee relationship existed between private respondent and petitioners. docketed as Cases Nos. Philip Cervantes and Eleuterio Barbin. As agreed upon. petitioners were paid on percentage commission basis in cash by one Mrs. Legaspi City. Jaime Barbin. De Guzman Fishing Enterprises.00 per week while the assistant engineer. for investigation on the report that they sold some of their fish-catch at midsea to the prejudice of private respondent. chief engineer. and fisherman-winchman received a minimum income of P260. V. RUGA. after two (2) previously scheduled joint hearings were postponed due to the absence of private respondent. L-72654-61 January 22. 1983. September 11. Pilar de Guzman. testified. 3 After the parties failed to reach an amicable settlement.: The issue to be resolved in the instant case is whether or not the fishermen-crew members of the trawl fishing vessel 7/B Sandyman II are employees of its owneroperator. On October 24. fishermen. FERNAN.THIRD DIVISION G. 4 On March 31.R. chief engineer and master fisherman received a minimum income of P350. 1983. with the then Ministry (now Department) of Labor and Employment. the National Labor Relations Commission promulgated its resolution 6 affirming the decision of the labor arbiter that a "joint fishing venture" relationship existed between private respondent and petitioners. petitioners. Records show that the petitioners were the fishermen-crew members of 7/B Sandyman II. ELADIO CALDERON. and if so. petitioners were told by Jorge de Guzman. second engineer. otherwise. 1983.

exempting De Guzman Fishing Enterprises. the idea being that its power be exercised according to justice and equity and substantial merits of the controversy. except for Laurente Bautu. supra. Arsenio de Guzman. In applying to the case at bar the doctrine in Pajarillo vs. To stress that there is an employer-employee relationship between them and private respondent. that public respondent ignored the evidence of petitioners that private respondent controlled the fishing operations. and its operations manager. 1984 only on July 3. who spend one (1) whole week or more 7 in the open sea performing their job to earn a living to support their families. or seven (7) days after receipt of the decision. Inc. that public respondent did not take into account established jurisprudence that the relationship between the fishing boat operators and their crew is one of direct employer and employee. their appeal with the NLRC through registered mail. 115 SCRA 347 (1982). Case No. or on June 25. We have consistently ruled that in determining the existence of an employeremployee relationship. through its operations manager. the elements that are generally considered are the following (a) the selection and engagement of the employee. did not control the conduct of the fishing operations and the pilot and crew members shared in the catch. that they were not allowed to join other outfits even the other vessels owned by private respondent without the permission of the operations manager. vs. no undue sympathy is to be accorded to any claim of a procedural misstep.1984 by their non-lawyer representative during the arbitration proceedings. petitioners claim that public respondent exceeded its jurisdiction and/or abused its discretion when it added facts not contained in the records when it stated that the pilot-crew members do not receive compensation from the boat-owners except their share in the catch produced by their own efforts. Fundamental considerations of substantial justice persuade Us to decide the instant case on the merits rather than to dismiss it on a mere technicality." Circumstances peculiar to some extent to fishermen-crew members of a fishing vessel regularly engaged in trawl fishing. 708 (De Guzman Fishing Enterprises vs. Firestone Tire and Rubber Co. (b) the payment of wages. of the Philippines. Records reveal that petitioners were informed of the labor arbiter's decision of March 31. thus "the well-settled doctrine is that in labor cases before this Tribunal. as in the case at bar. that there is no employer-employee relationship between the boat- owner and the pilot and crew members when the boat-owner supplies the boat and equipment while the pilot and crew members contribute the corresponding labor and the parties get specific shares in the catch for their respective contribution to the venture. that they were compensated on percentage commission basis of the gross sales of the fish-catch which were delivered to them in cash by private respondent's cashier. Conrado de Guzman. NLRC. the information as to the adverse decision against them would not reach them within such time frame as would allow them to faithfully abide by the 10-calendar day appeal period.97-102) |6 . the direction of the fishing vessel. 17 SCRA 1014 (1966). and that they have to follow company policies. As adverted to earlier. which were communicated to the patron/pilot by radio (single side band). convince Us to adopt a more liberal attitude in applying to petitioners the 10-calendar day rule in the filing of appeals with the NLRC from the decision of the labor arbiter. that private respondent. the Solicitor General pointed out that the boat-owners in the Pajarillo case.Hence. petitioners invite attention to the following: that they were directly hired by private respondent through its general manager. and (d) the employer's power to control the employee with LABOR LAW I CASES (Arts. as in the case of petitioners herein. impress upon Us that in the ordinary course of events. rules and regulations imposed on them by private respondent. from compulsory coverage of the SSS on the ground that there is no employer-employee relations between the boat-owner and the fishermen-crew members following the doctrine laid down inPajarillo vs. they had been employed by private respondent from 8 to 15 years in various capacities. we exercise the prerogative accorded to this Court enunciated in Firestone Filipinas Employees Association. the Solicitor General claims that the ruling of public respondent that a "joint fishing venture" exists between private respondent and petitioners rests on the resolution of the Social Security System (SSS) in a 1968 case. 61 SCRA 340 (1974). Inc. SSS. vs. the circumstances peculiar to petitioners' occupation as fishermen-crew members. the instant petition. Jose Dialogo who received the decision eight (8) days earlier. supervised and controlled the conduct of their fishing operations as to the fixing of the schedule of the fishing trips. that. 1984. et al. the volume or number of tubes of the fish-catch the time to return to the fishing port. Pilar de Guzman. This peculiar circumstance and the fact that their representative is a non-lawyer provide equitable justification to conclude that there is substantial compliance with the ten-calendar day rule of filing of appeals with the NLRC when petitioners filed on July 10. SSS). 1984. Petitioners assail the ruling of the public respondent NLRC that what exists between private respondent and petitioners is a joint venture arrangement and not an employer-employee relationship. who during the pendency of the case understandably have to earn a living by seeking employment elsewhere. SSS.. (c) the power of dismissal. We rule in favor of petitioners. Mrs. private respondent herein. In so doing. Disputing the finding of public respondent that a "joint fishing venture" exists between private respondent and petitioners. Aside from seeking the dismissal of the petition on the ground that the decision of the labor arbiter is now final and executory for failure of petitioners to file their appeal with the NLRC within 10 calendar days from receipt of said decision pursuant to the doctrine laid down in Vir-Jen Shipping and Marine Services.

the conduct of the fishing operations was monitored by private respondent thru the patron/pilot of 7/B Sandyman II who is responsible for disseminating the instructions to the crew members. Jaime Barbin started as a pilot of the motor boat until he was transferred as a master fisherman to the fishing vessel 7/B Sandyman II. Jose Parma was employed on September 29. 1968 until he was promoted as chief engineer of the fishing vessel. that they simply join every trip for which the pilots allow them. 1974 as patron/captain of the fishing vessel. which was given credence by public respondent.respect to the means and methods by which the work is to be accomplished. 708 exempting it from compulsory coverage of the SSS law is not supported by evidence on record. Eladio Calderon started as a mechanic on April 16. express or implied. 13 Clearly thus. without any reference to the owners of the vessel. on the other hand. . which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done. 1983 as assistant engineer. task. lodging. The conclusion of public respondent that there had been no change in the situation of the parties since 1968 when De Guzman Fishing Enterprises. that the boat-owners do not in any way control the crew-members with whom the former have no relationship whatsoever. 11 The case of Pajarillo vs. that petitioners get paid in the form of share in the fish-catch which the patron/pilot as head of the team distributes to his crew members in accordance with their own understanding 15 is not supported by recorded evidence. The claim of private respondent. 12 While performing the fishing operations. . The aforementioned circumstances obtaining in Pajarillo case do not exist in the instant case. that they go out to sea not upon directions of the boat-owners. While tenure or length of employment is not considered as the test of employment. or other facilities customarily furnished by the employer to the employee. not the actual exercise of the right. nevertheless the hiring of petitioners to perform work which is necessary or desirable in the usual business or trade of private respondent for a period of 8-15 years since 1968 qualify them as regular employees within the meaning of Article 281 of the Labor Code as they were indeed engaged to perform activities usually necessary or desirable in the usual fishing business or occupation of private respondent. as determined by the Secretary of Labor. to be under the control and supervision of private respondent's operations manager. 1974 as assistant engineer. but upon their own volition as to when. supra. Except that such claim LABOR LAW I CASES (Arts. piece or commission basis. From the four (4) elements mentioned. through its general manager. The test calls merely for the existence of the right to control the manner of doing the work. or for services rendered or to be rendered. as distinguished from the Pajarillo case where the crew members are under no obligation to remain in the outfit for any definite period as one can be the crew member of an outfit for one day and be the member of the crew of another vessel the next day. SSS. how long and where to go fishing. Records show that in the instant case. We have generally relied on the so-called right-of-control test 10 where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. where the Court found that the pilots therein are not under the order of the boatowners as regards their employment. Arsenio de Guzman. thus: (f) "Wage" paid to any employee shall mean the remuneration or earnings. 8 The employment relation arises from contract of hire. They are told to report their activities. were directly hired by private respondent. the patron/pilot of 7/B Sandyman II. Conrado de Guzman and have been under the employ of private respondent for a period of 8-15 years in various capacities. There is neither light of control nor actual exercise of such right on the part of the boat-owners in the Pajarillo case. otherwise only 10% of the proceeds of the sale.97-102) |7 . 1972 while Eleuterio Barbin was hired as winchman on April 15. 13% of the proceeds of the sale if the total proceeds exceeded the cost of the crude oil consumed during the fishing trip. 1976.e. invoked by the public respondent as authority for the ruling that a "joint fishing venture" existed between private respondent and petitioners is not applicable in the instant case. and its operations manager. or other method of calculating the same. private respondent herein. obtained a favorable judgment in Case No. capable of being expressed in terms of money. The conduct of the fishing operations was undisputably shown by the testimony of Alipio Ruga. Philip Cervantes was hired as winchman on August 1. and included the fair and reasonable value. the herein petitioners. 14 Aside from performing activities usually necessary and desirable in the business of private respondent. and the number of tubes of fish-catch in one day. . petitioners received instructions via a single-side band radio from private respondent's operations manager who called the patron/pilot in the morning. no actual employer-employee relation could exist. however designated. except for Laurente Bautu who was hired on August 3. It was erroneous for public respondent to apply the factual situation of the parties in the 1968 case to the instant case in the light of the changes in the conditions of employment agreed upon by the private respondent and petitioners as discussed earlier. and that they only share in their own catch produced by their own efforts. 9 In the absence of hiring. whether fixed or ascertained on a time. it must be noted that petitioners received compensation on a percentage commission based on the gross sale of the fish-catch i. Petitioner Alipio Ruga was hired on September 29. Matters dealing on the fixing of the schedule of the fishing trip and the time to return to the fishing port were shown to be the prerogative of private respondent. their position. of board. Such compensation falls within the scope and meaning of the term "wage" as defined under Article 97(f) of the Labor Code.

that while these fishermen crew members were paid in kind. including partnership. Court of Industrial Relations. repairs. InNegre vs. The lame excuse of private respondent that the non-filing of the criminal complaints against petitioners was for humanitarian reasons will not help its cause either. Agustin Abong.. and Simplicio Panganiban. claimed that he was not the employer of the fishermen crew members because of an alleged partnership agreement between him. owner of the fishing boat. if private respondent would outrightly exclude petitioners from the conduct of the business without first resorting to other measures consistent with the nature of a joint venture undertaking. the fact that on mere suspicion based on the reports that petitioners allegedly sold their fish-catch at midsea without the knowledge and consent of private respondent. WCC 135 SCRA 653 (1985). A joint venture. thru its agent. not industrial partners. loading of necessary provisions. 17 It would be inconsistent with the principle of parity of standing between the joint co-venturers as regards the conduct of business. SO ORDERED. Instead of arbitrary unilateral action. the alleged "partner" of Dr. Petitioners were arbitrarily dismissed notwithstanding that no criminal complaints were filed against them. petitioners were unjustifiably not allowed to board the fishing vessel on September 11.1985 is hereby REVERSED and SET ASIDE. in which each party has an equal proprietary interest in the capital or property contributed 16 and where each party exercises equal lights in the conduct of the business. presupposes generally a parity of standingbetween the joint co-venturers or partners. 112 SCRA 159 (1982). In that sense.e. The said ruling is premised on the principle that all these activities i. of the boat-owners. WCC. in view of the foregoing. also because they were subject to the control. we held that fishermen crew members who were recruited by one master fisherman locally known as "maestro" in charge of recruiting others to complete the crew members are considered employees.appears as an allegation in private respondent's position paper. In an earlier case of Abong vs. The virtual dismissal of petitioners from their employment was characterized by undue haste when less extreme measures consistent with the requirements of due process should have been first exhausted. as his team leader in charge of recruiting said fishermen to work for him. In Philippine Fishing Boat Officers and Engineers Union vs. Simplicio Panganiban. we held that the employer-employee relationship between the crew members and the owners of the fishing vessels engaged in deep sea fishing is merely suspended during the time the vessels are drydocked or undergoing repairs or being loaded with the necessary provisions for the next fishing trip. as financier. The questioned resolution of the National Labor Relations Commission dated May 30. private respondent should have discussed with an open mind the advantages and disadvantages of petitioners' action with its joint co-venturers if indeed there is a "joint fishing venture" between the parties. We have examined the jurisprudence on the matter and find the same to be supportive of petitioners' stand. Abong as employees of the latter. the petition is GRANTED. supervision and dismissal of the boatowner. Abong. But this was not done in the instant case. WHEREFORE. 54 SCRA 379 (1973) where petitioner therein.97-102) |8 . Furthermore. or by "pakiao basis" still that fact did not alter the character of their relationship with Dr. Even on the assumption that petitioners indeed sold the fish-catch at midsea the act of private respondent virtually resulting in their dismissal evidently contradicts private respondent's theory of "joint fishing venture" between the parties herein. No pronouncement as to costs. drydock. we affirmed the finding of the WCC that there existed an employeremployee relationship between the boat-owner and the fishermen crew members not only because they worked for and in the interest of the business of the boat-owner but LABOR LAW I CASES (Arts. there is nothing in the records showing such a sharing scheme as preferred by private respondent. the dismissal of petitioners was tainted with illegality. Dr. 1983 to resume their activities without giving them the opportunity to air their side on the accusation against them unmistakably reveals the disciplinary power exercised by private respondent over them and the corresponding sanction imposed in case of violation of any of its rules and regulations. Private respondent is ordered to reinstate petitioners to their former positions or any equivalent positions with 3-year backwages and other monetary benefits under the law. form part of the regular operation of the company fishing business.

3027). It is axiomatic that once the CIR had acquired jurisdiction over a case. Always bearing in mind the deep-rooted principle that the factual findings of the Court of Industrial Relations should not be disturbed. and that 103 members of the Union are listed in Exhibits B. The finding of fact made by the CIR became final and conclusive. to resolve legal question involved. at the rate of P540. the petitioners have always observed the provisions of Comm. no deductions for meals could be made by the aforesaid petitioners from their wages or salaries. 740-V) against the States Marine Corporation. the respondent union had a total membership of 159. the respondent union filed with the Court of Industrial Relations (CIR).R. 444. It was abundantly shown that there were 56 members who signed Exhibits A.97-102) |9 . Act No. the companies filed the present writ of certiorari. employing therein several steamships of Philippine registry. dated March 8. — The respondent court erred in holding that it had jurisdiction over case No. 602 is the general rule. the herein petitioners have bound themselves to supply the crew with provisions and with such "daily subsistence as shall be mutually agreed upon" between the master and the crew. 40 O. his services were terminated. depending upon the margin of profits they could realize and other factors or circumstances of the business. INC. B-1 to B-35. The fact that only 7 claimed for overtime pay and only 7 witnesses testified. 740-V. the petitioners dismissed said captain who now claims for reinstatement and the payment of back wages from December 25. Inc. therefore. the LABOR LAW I CASES (Arts. On September 12. 1. Against this order. 6. who were presumed interested in or would be benefited by the outcome of the case (NAMARCO v. notwithstanding the fact that it does not apply to those who provide means of transportation. that the shipowners and operators in Cebu were paying the salaries of their officers and men. until the case is terminated (Manila Hotel Emp. F. that the work on board a vessel is one of comparative ease. Manila Hotel Company. respondent. L-17804. the herein petitioners did not file a motion for reconsideration or a petition for certiorari. CIR. vacation leave and overtime pay. F-1 and K-2 to K-3. They had a collective bargaining contract with the respondent Cebu Seamen's Association. 1952. INC. 1953. Act No. the petitioner Royal Line. and the court declared itself with jurisdiction to take cognizance of the case.. that inasmuch as in the shipping articles. that the petitioners threatened or coerced them to accept a reduction of salaries. working with the herein petitioners. 740-V. furnished the employees should be deducted from the daily wages. it continues to have that jurisdiction. that after the Minimum Wage Law had taken effect. averred that very much below 30 of the men and officers in their employ were members of the respondent union. which We are not now authorized to alter or modify. 3. correct.. 1954). does not warrant the conclusion that the employees who had some dispute with the present petitioners were less than 30. that as regards the claim for overtime pay.40 for every meal. et al. (Order of the CIR. Inc. A-I to A-8. Inc. The Union alleged that the officers and men working on board the petitioners' vessels have not been paid their sick leave. Annex D. — The CIR erred in holding that inasmuch as with regard to meals furnished to crew members of a vessel. later amended on May 4. petitioners.EN BANC G. the Congress had in mind that the amount of P. L-12444 February 28. Third assignment of error. So that at the time of the filing of the petition. the different issues are taken up. likewise belies the contention of herein petitioner in this regard. The ruling of the CIR. that Captain Asensi was not dismissed for alleged union activities. A decision was rendered on February 21. but with the expiration of the terms of the contract between said officer and the petitioners. having been denied. that petitioners have suffered financial losses in the operation of their vessels and that there is no law which provides for the payment of sick leave or vacation leave to employees or workers of private firms. 1963 STATES MARINE CORPORATION and ROYAL vs. 1952. The petitioners' shipping companies. to pay the sum of P. answering. LINE.. section 3(f) of Act No. No. 1963). p. (Eight-Hour Labor Law). 1957 in favor of the respondent union. monthly. while the masters and officers were not required to pay their meals and that because Captain Carlos Asensi had refused to yield to the general reduction of salaries. 602 (Minimum Wage Law). — The CIR erred in holding.G. No.: Petitioners States Marine Corporation and Royal Line. respondent Union had more than thirty members actually working with the companies. First assignment of error. a petition (Case No. were less than thirty (30) in number. observed by other shipowners. the petitioners required their employees on board their vessels. Second assignment of error. were engaged in the business of marine coastwise transportation. PAREDES.00. CEBU SEAMEN'S ASSOCIATION. The motion for reconsideration thereof. with respect to the question of jurisdiction is. in the order they are raised in the brief for the petitioners. which section 19 thereof is the exception. J. Jan.40 per meal. Association v. that in enacting Rep. if supported by substantial evidence. 2. notwithstanding the fact that those who had dispute with the petitioners. by including as party respondent. The CIR made a finding that at the time of the filing of the petition in case No.

It is. However. without prejudice to the parties adducing other evidence to prove their case not covered by this stipulation of facts. shorter working hours and better working conditions nor justify an employer in violating any other labor law applicable to his employees. therefore. After this date. because they hold on to their work and duties. that since the beginning of the operation of the petitioner's business. however. in lieu of such subsistence the crew may reserve the right to demand at the time of execution of these articles that adequatedaily rations be furnished each member of the crew. and during the duration of the contract "the master of the vessel will provide each member of the crewsuch daily subsistence as shall be mutually agreed daily upon between said master and crew. it would appear that there exists a contradiction between the provisions of section 3(f) and section 19 of Rep. that in fixing the minimum wage of employees. apparent that. but from a careful examination of the same. This was the situation before August 4." (Sec. in reducing the wage now paid to any of his employees in excess of the minimum wage established under this Act. in view of the above provisions. therefore. or in reducing supplements furnished on the date of enactment.A. marine engineers and unlicensed crew members in question. whether members of the crew or deck officers or engineers. Act No. states — SEC. 1951. no rate for meals should have been provided. or in reducing LABOR LAW I CASES (Arts. f. new Civil Code). is illegal and same should be reimbursed to the employee concerned. but no such deductions were made from the salaries of the deck officers and engineers in all the boats of the petitioners. all the crew of their vessels have been signing "shipping articles" in which are stated opposite their names. the query converges on the legality of such deductions. and not "supplements" which. the companies began deducting the cost of meals from the wages or salaries of crew members. otherwise. the salaries or wages they would receive. At first blush. the said master hereby agrees to pay to the said crew. — The CIR erred in declaring that the deduction for costs of meals from the wages or salaries after August 4. within the meaning and contemplation of section 19. the petitioners bound themselves to supply the crew with ship's provisions. par. 1702. the respondent CIR should resolve the same in favor of the safety and decent living laborers (Art. 1951. par.97-102) |10 . provides as follows — (f) Until and unless investigations by the Secretary of Labor on his initiative or on petition of any interested party result in a different determination of the fair and reasonable value." (Sec. as they should be harmonized. it is evident that Section 3(f) constitutes the general rule.. shipping articles). It was shown by substantial evidence. 19. the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this Honorable Court. 602. because it is provided therein: "Nothing in this Act shall deprive an employee of the right to such fair wage . regardless of "the stress and strain concomitant of a bad weather. in spite of said section 3. and to supply them with provisions as provided herein . All seamen. All the shipping articles signed by the master and the crew members. were mere "facilities" which should be deducted from wages. have been furnished free meals by the ship owners or operators. the men who compose the complement of a vessel are provided with free meals by the shipowners. contained. the two provisions could. In other words.— Nothing in this Act shall deprive an employee of the right to seek fair wages. but merely facilities. 602. It is argued that the food or meals given to the deck officers. Congress took into account the meals furnished by employers and that in fixing the rate of forty centavos per meal. daily subsistence or daily rations. of the Minimum Wage Law. Fourth assignment of error.. Relations to other labor laws and practices. And even if there is such a conflict. claims that same are illegal and reimbursement should be made. which include food. There is no conflict. among others. [b].ñët We hold that such deductions are not authorized. 8. 602). No. however.. (R.. 4. according to said section 19. the sums against their names respectively expressed in the contract. should not be deducted from such wages. Wherefore.. section 3(f) governs." Section 3. when the Minimum Wage Law became effective. or. (f) of Act No. set opposite the names of the crew members. par. 8. a stipulation. while section 19 is the exception. While the petitioners herein contend that the deductions are legal and should not be reimbursed to the respondent union. Under the existing laws. that "in consideration of which services to be duly performed. shipping articles). and the furnishing of housing shall be valued at not more than twenty centavos daily for agricultural workers and not more than forty centavos daily for other employees covered by this Act. the latter. par. if there are no supplements given. unmindful of the dangers that lurk ahead in the midst of the high seas. section 19. as wages. the furnishing of meals shall be valued at not more than thirty centavos per meal for agricultural employees and not more than fortycentavos for any other employees covered by this Act. In the coastwise business of transportation of passengers and freight. aside from the payment of the respective salaries or wages. same law. [e]. 1äwphï1. operators or agents.cost of said meals may not be legally deducted from the wages or salaries of the aforesaid crew members by the herein petitioners. Petitioners maintain. the lawmakers had in mind that the latter amount should be deducted from the daily wage.

00 monthly (after deducting the cost of his meals at P. however. Upon the effectivity of the Minimum Wage Law.— The CIR erred in holding that Severino Pepito. Severino Pepito was found by the CIR to have worked overtime and had not been paid for such services. July 19. Considering. No. the provisions of sec. The order CIR to the company to continue granting this privilege. The shipping companies argue that the furnishing of meals to the crew before the effectivity of Rep. Act No. while the deck officers and marine engineers receiving higher pay and provided with better victuals.00 monthly minimum wage. respondents are hereby ordered to reinstate him to his former job without back salary but under the same terms and conditions of employment existing prior to his layoff. 51 O. Act No. Fifth. 2[g]). aside from their regular salary. The testimonies of boatswains of other vessels(M/V Iruna and M/V Princesa). in basing its finding ofthe alleged overtime. Such interpretation does not conform with the avowed intention of Congress in enacting the said law. the deductions therein made for the meals given after August 4. which overtime work totalled to 6 hours a day. he could not leave and could not completely rest.supplements furnished on the date of enactment. fixed in accordance with the Minimum Wage Law. 3432. the two terms are defined as follows — "Supplements". v. it is a facility. notwithstanding the provisions of section 1. and in ordering the herein petitioners to pay him. with no deduction for meals. 444. 8. a great and unjust discrimination obtaining in the present case (Pambujan Sur United Mine Workers v. would receive only P86. they form part of the wage and when furnished by the employer are deductible therefrom. had rendered overtime work. on the other hand. constitute extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. as definitely found by the respondent court that the meals were freely given to crew members prior to August 4.G. of C. when it stated that "wage" includes the fair and reasonable value of boards customarily furnished by the employer to the employees. that privilege was stopped by the company. 1953.. In short. Inc. who were assigned outside of the City limits. 1955). therefore. May 31. find no application in his case. 1952. This statement was not rebutted by the petitioners. which would be very much less than the P122. Eighth assignment of error. The criterion is not so much with the kind of the benefit or item (food. "Facilities". 27. was upheld by this Court. are items of expense necessary for the laborer's and his family's existence and subsistence so that by express provision of law (Sec.. One should not overlook a fact fully established. 1955. 602. is supplement. et al. The CIR held — Finding that the claims of Captain Carlos Asensi for back salaries from the time of his alleged lay-off on March 20.97-102) |11 . L9742. the same is hereby dismissed. 1. is of no moment.. lodging. without loss of seniority and other benefits already acquired by him prior to March 20. 1955. bonus or sick leave) given. should be returned to them. and the operator of the coastwise vessels affected should continue giving the same benefit. since if they are not so furnished. of Comm. Aside from the above. as captain of a vessel belonging to another shipping firm in the City of Cebu. on the uncorroborated testimony of said Severino Pepito. which states "When the work is not continuous.00.40 per meal).— The CIR erred in ordering petitioners to reinstate Capt. the laborer would spend and pay for them just the same. after said date. 1951. but its purpose. and during the time he was not working.. a certain percentage of their daily wage. Oct. 1951. 1951. because of the place and nature of his work. v. CIR. however. a boatsman. 1952. This pictures in no uncertain terms. L-7177. 444. This Court is empowered to reduce the punishment meted out to an erring employee (Standard Vacuum Oil Co. and of which he has not been paid as yet. is not supported by the evidence on record. Carlos Asensi to his former position. Severino Pepito categorically stated that he worked during the late hours of the evening and during the early hours of the day when the boat docks and unloads. Nobody working with him on the same boat "M/V Adriana" contrawise. In the case of Cebu Autobus Company v. as allowance for food. Instead of benefiting him. And considering the established fact that the work of Severino Pepito was continuous. that only unlicensed crew members were made to pay for their meals or food. L-7349. were not. Considering.. If We are to follow the theory of the herein petitioners. before August 4. he did other jobs such as removing rusts and cleaning the vessel. therefore. while they were on the high seas "not as part of their wages but as a necessary matter in the maintenance of the health and efficiency of the crew personnel during the voyage". considering the fact that said officer had been employed since January 9.A." In the case of Atok-Big Wedge Assn. and when said benefit or privilege is part of the laborers' basic wages. Sixth and Seventh assignments of error. the benefit or privilege given to the employee which constitutes an extra remuneration above and over his basic or ordinary earning or wage. who used to receive a monthly wage of P100. are incompetent and unreliable. United Cebu Autobus Employees Assn. LABOR LAW I CASES (Arts. the law will adversely affect said crew member. because such circumstance was already taken into consideration by Congress. Atok-Big Wedge Co. the company used to pay to its drivers and conductors. the time during which the laborer is not working and can leave his working place and can rest completely shall not be counted". then a crew member. that Captain Asensi had been laid-off for a long time and that his failure to report for work is not sufficient cause for his absolute dismissal.

The ruling is in conformity with the evidence. the admission of the three wage orders have not altered the decision reached in this case. law and equity. the petition is dismissed. IN VIEW HEREOF. 1956. 16. No. Annex 'G').97-102) |12 . 1952. Jan. supported by an affidavit. and in overruling petitioner's motion for reconsideration. it having been found and held that the meals or food in question are not facilities but supplements. 30. — The CIR erred in denying a duly verified motion for new trial. At any rate. while the case was pending decision.Katipunan Labor Union. It is alleged that they would inevitably affect the defense of the petitioners. Ninth and Tenth assignments of error. dealing as they do. with costs against the petitioners. as amended. the WAS could have intervened in the manner provided by law to express its views on the matter. states that the movants have a good and valid defense and the same is based on three orders of the WAS (Wage Administration Service). 1957). are irrelevant to the present issue. L-9666. LABOR LAW I CASES (Arts. The original petition in the CIR having been filed on Sept. Decision." (p. 12. dated November 6. with the evaluation of meals and facilities. The motion for new trial. G. Act 103. it was not explained why the proper move was not taken to introduce them before the decision was promulgated.R. The said wage orders. The motion for new trial is without merit. Having the said wage Orders in their possession. This step taken is in consonance with section 12 of Comm.

Dolina completed the 500 flying hours requirement. his performance and the result of his medical examination as submitted by the Medical Sub-Department. the parties signed an agreement before the Undersecretary of Labor. his appointment was again extended to 31 October 1976. he was still short of the minimum flying time requirement such that his appointment was again extended up to 30 April 1976. Dolina completed the course. Dolina is hereby rendered moot and academic. RB-IV9319-77 which ordered petitioner to restore private respondent Dolina to its payroll. short of the minimum 500 flying hours required for regularization as First Officer. and to pay his salaries from 1 April 1979 "until this case is finally resolved" [Rollo. Dolina not qualified for regular employment in the Company. Rollo. Dolina had only logged eighty four (84) hours and fifty five (55) minutes flying time. No. and thus on 31 March 1976 he applied for regularization as First Officer. 2 The order of Regional Director Vicente Leogardo for the reinstatement with backwages of Mr. p. xxx xxx xxx [NLRC Decision.97-102) |13 . On 17 August 1976. pending the resolution of petitioner's appeal. Petitioner appealed the order lifting Dolina's suspension to the Secretary of Labor. 33]. On 9 October 1974. RELATIONS COMMISSION INC. the Board recommended the termination of the complainant pursuant to which PAL filed a clearance application [Rollo. 71]. The pertinent facts are as follows: Private respondent Dolina was admitted to the Philippine Airlines (PAL) Aviation School for training as a pilot beginning 16 January 1973. On 23 September 1976.R. IV lifted the preventive suspension. On 25 January 1974. pp. Rollo. Dolina countered with a complaint for illegal dismissal on 6 October 1976 [Rollo. 34] for Dolina's termination. NATIONAL LABOR DOLINA. 1989 PHILIPPINE vs." On 31 October 1975. the Civil Aeronautics Administration issued him a license as Commercial Pilot and PAL then extended him a temporary appointment for six (6) months as Limited First Officer. on 2 March 1977. Dolina took a psychological examination wherein his "Adaptability Rating" was found to be "unacceptable" [Annex xxx xxx xxx b. pp.After thorough evaluation of the candidate's past records. he shall be considered in the payroll effective 1 October 1976. A. and undertook an equipment qualification course up to 4 October 1974. During this third extension of his appointment. To enable him to complete the requirement. the Board finds Mr. p. 55159 December 22. p. 25-26]. petitioner and ARMANDO CORTES. Pending his physical examination by the chief Flight Surgeon. The issue of termination and damages was referred to the Executive Labor Arbiter for compulsory arbitration [Rollo. 35].. Conformably. 8. However. The training agreement bound PAL to provide regular and permanent employment to Dolina upon completion of the training course. Armando Dolina against the Philippine Airlines. Armando Dolina . which examination revealed the following: G. Petitioner contends that public respondent NLRC gravely abused its discretion considering that in the same decision public respondent affirmed the decision of the Labor Arbiter in toto granting respondent's application for clearance to dismiss the private respondent. J. In the meantime Dolina was placed under preventive suspension effective 1 October 1976. respondents. the terms of which are as follows: AGREEMENT The undersigned parties hereby agree to the following: 1 While pending final resolution of the complaint of Mr. his employment was extended for another six months which appointment was described as "permanent. 3-4.: Petitioner impugns in this petition for certiorari that part of the public respondent National Labor Relations Commission's (NLRC) decision in NLRC Case No. AIRLINES. LABOR LAW I CASES (Arts. and ordered petitioner to reinstate Dolina to his former position with full backwages from 1 October 1976 up to actual reinstatement.THIRD DIVISION "L" to the Petition. On 26 January 1977 the Officer-in-Charge of the Department of Labor Regional Office No. When his appointment was due to expire on 30 April 1975. 116]. when his appointment was again due to expire. p. complainant was again subjected to an examination and interview by the Pilot Acceptance Qualifications Board as part of the regularization process. p.

this petition. As things stand. 1367 dated May 1. However the respondent is ordered to restore the complainant to its payroll and to pay his salaries from 1 April 1979 until this case is finally resolved. including the situation of the subject thereof and the parties to LABOR LAW I CASES (Arts. PAL contends that said stipulation refers only to the resolution of the case by arbitration and said arbitration of the case was terminated when the Labor Arbiter rendered its decision dated 23 March 1979. p. perforce the claim for moral damages is denied. Hence. p. PAL contends that inasmuch as the respondent Commission acting en banc had affirmed in toto the decision of the Labor Arbiter granting petitioner the clearance for the dismissal of private respondent Dolina. Italics supplied] IN VIEW OF ALL THE FOREGOING. The above contentions call for the proper interpretation of the agreement between the parties. 12. therefore. must be restored to the payroll and paid for his Public respondent NLRC on the other hand contends that arbitration is a continuing process from the time the case is referred by the Secretary of Labor to the Arbitration Branch until the final judgment is had on appeal. the Decision appealed from should be as it is hereby affirmed in toto. Due to the adverse stand of the Solicitor General. contending that the Labor Arbiter's decision was not yet final because of his timely appeal. PAL opposed the motion claiming that it was no longer obliged to return Dolina to its payroll since the decision of the Labor Arbiter dated 23 March 1979 in its favor was a final resolution of the case by arbitration [Annex "N" to the Petition. 10-11. salaries from 1 April 1979. p. On 23 March 1979. the same should be as it is hereby GRANTED. [NLRC Decision. 97]. Since the Labor Arbiter's decision in favor of petitioner did not finally resolve the case in view of the timely appeal by private respondent from said decision. 1978. PAL argues that the arbitration of the case is limited to and comprises merely the proceedings before the Labor Arbiter such that when the latter renders a decision. Rollo. No. the date he was dropped from the respondent's payroll. pp. 85]. The Court issued a temporary restraining order on 10 October 1980. 1. 137]. we are not in accord with the discontinuation of the payment of complainant's salaries. 32-33. Be that as it may. public respondent NLRC submitted its own Comment. Rollo. the Acting Secretary of Labor issued an order finding that the propriety of the suspension had been rendered moot and academic by the above agreement and referred the case for compulsory arbitration to the Executive Labor Arbiter [Annex "J" to the Petition. PAL removed Dolina from its payroll effective 1 April 1979. public respondent NLRC rendered its decision containing the assailed portion to wit: xxx xxx xxx In fine it is our considered view that the respondent's application for clearance to dismiss the complainant has sufficiently surmounted the test of validity. the dispositive portion of which reads as follows: SO ORDERED. p. Dolina then appealed the Labor Arbiter's decision to the public respondent NLRC on 29 April 1979 and there filed a motion praying that PAL be ordered to return him to PAL's payroll. Consequently. the main issue is still being litigated. Rollo. By virtue of the above decision. on 30 May 1977.97-102) |14 ." SO ORDERED. specifically the third stipulation containing the clause "pending final resolution of the case by arbitration. it is an act of grave abuse of discretion amounting to lack of jurisdiction on its part to order petitioner to pay private respondent's salaries from 1 April 1979 until the case is finally terminated. [Decision of Labor Arbiter. Since the termination is upheld. Subsequently. this office is devoid of jurisdiction to entertain said claim. On 8 February 1980. Private respondent Dolina failed to file his comment and the Solicitor General submitted his own Comment supporting the stand of petitioner." It is a basic rule in interpretation of contracts that the circumstances under which an instrument was made. The issue before the Court is whether or not the NLRC committed grave abuse of discretion in holding that private respondent Dolina was entitled to his salaries from 1 April 1979 "until this case is finally resolved. pp. it is our considered opinion that there is merit on the application for clearance. xxx xxx xxx WHEREFORE. arbitration of the dispute is terminated . Besides pursuant to P. with a prayer for a temporary restraining order. the case was not yet finally terminated by arbitration and Dolina is entitled to be placed in petitioner's payroll until the complaint is finally resolved. p.D. The agreement of the parties stipulated in no uncertain terms that the complainant [Dolina] is to be carried in respondent's payroll until this case is finally resolved. The complainant. the oppositor's TERMINATION IS IN ORDER.3 The parties shall consider this arrangement pending final resolution of the case by arbitration. the Labor Arbiter rendered its decision. Rollo. and therefore.

1371.R. Amalgamated Association v. Seattle. 442. In lieu of reinstatement and the payment of his backwages. This is understandable for it concerns the safety of its properties. 99 SCRA 668. Law Union and Rock. This is clearly an absurdity which could not have been contemplated by the parties. in ordering the continued payment of Dolina's salaries from 1 April 1979 until the case is finally resolved. 340 U.it. the safety of the lives and properties of its passengers. In affirming the Labor Arbiter's decision granting the termination clearance. Thus. No. arbitration is the reference of a dispute to an impartial third person. it is Our considered view that the respondent's application for clearance to dismiss the complainant has sufficiently surmounted the test of validity. may be considered so that the intention of the contracting parties may be judged correctly [Art. 1980. We can only say that for exercising extraordinary diligence in the selection of its pilots. it is the Labor Arbiter who is clothed with the authority to conduct compulsory arbitration on cases involving termination disputes [Article 217. the case was finally resolved by arbitration. 23 Wash. 42 Phil. which we do not find here. This is contrary to the age-old rule of "a fair day's wage for a fair day's labor" which continues to govern the relation between labor and capital and remains a basic factor in determining employees' wages [Durabilt Recapping Plant & Co. for as long as one of the parties appeal to the NLRC and until the case is finally resolved by this Court.] In the instant case. In entering into the agreement. if there is no work performed by the employee there can be no wage or pay unless the laborer was able. Ins. of any showing that its standards are unreasonable and discriminatory. The NLRC's order would result in compensating Dolina for services no longer rendered and when he is no longer in PAL's employ. Rules of Court. G. Section 11. upholding the validity of Dolina's dismissal. the NLRC en banc merely reviews the Labor Arbiter's decision for errors of fact or law and no longer duplicates the proceedings before the Labor Arbiter. such that when the latter rendered his decision. Wisconsin Employees' Relations Board. 62 P 135. by stipulation of the parties. the clause "pending final resolution of the case by arbitration" should be understood to be limited only to the proceedings before the Labor Arbiter. 52 LRA 369 (1920). including appeal.R. G. 383-410. September 21. Co. National Labor Relations Commission. 154 SCRA 166].97-102) |15 .95 L. compulsory arbitration is deemed terminated because by then the hearing and determination of the controversy has ended. 1987. In labor cases.. Rule 130. the proceeding is referred to as compulsory arbitration. In view of the above finding of valid dismissal. Where the employee's dismissal was for a just cause. 1. 76746. chosen by the parties or appointed by statutory authority to hear and decide the case in controversy [Chan Linte v. For if it were so. the stipulation in the 2 March 1977 agreement that Dolina shag be included in the payroll of PAL until final resolution of the case by arbitration was intended to supersede the order of the Regional Director which. So that. however. L-40258. We join the public in commending it.R. xxx xxx xxx In fine. as amended]. the NLRC in effect ordered the payment of backwages to Dolina notwithstanding its finding of a valid dismissal. Moreover. the NLRC held that: With respect to the issue of whether or not the complainant's [Dolina] dismissal was sufficiently grounded. private respondent was included in petitioner's payroll.S. compulsory arbitration is the process of settlement of labor disputes by a government agency which has the authority to investigate and to make an award which is binding on all the parties [See Wood v. willing and ready to work but was prevented by management or was illegally locked out. suspended or dismissed. it would neither be fair nor just to allow the employee to recover something he has not earned and could not have earned [Santos v. Civil Code of the Philippines. September 11. Ed. 1987. and above all. Lim v. No. 381 (1951)]. which by law it is committed to transport safely. the NLRC had no authority to order the continued payment of Dolina's salaries from 1 April 1979 until the case is finally resolved. In its broad sense. therefore. was rendered moot and academic. 152 SCRA 328]. Neither can proceedings on appeal before the NLRC en banc be considered as part of the arbitration proceeding. When the Labor Arbiter renders his decision. Pres. Court of Appeals. backwages in general are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal [New Manila Candy LABOR LAW I CASES (Arts. In the absence. the parties could not have intended to include in the clause "final resolution of the case by arbitration" the whole adjudicatory process. This is clearly untenable. G. When the consent of one of the parties is enforced by statutory provisions. without having to perform any work for the petitioner. even proceedings on certiorari before this Court would be embraced by the term "arbitration" and private respondent will continue to receive monthly salary without rendering any service to the petitioner regardless of the outcome of the proceedings before the Labor Arbiter. We cannot disturb them. v. More important. Under the Labor Code. National Labor Relations Commission. 548 (1921)]. Decree No. effective from the time he was preventively suspended until final resolution of the case by arbitration. is the fact that the NLRC's order for the continued payment of Dolina's salaries is inconsistent with its affirmance of the Labor Arbiter's decision In the first place. Any appeal raised by an aggrieved party from the Labor Arbiter's decision is already beyond the scope of arbitration since in the appeal stage. July 27. No. we are not persuaded that the respondent [herein petitioner PAL] is under obligation to employ him as regular employee simply because he was certified physically fit and technically to proficient by the CAA. 76721.

R. G.Workers Union (NACONWA-PAFLU) v. National Labor Relations Commission. NLRC's order for continued payment of Dolina's salary from 1 April 1979 up to the final resolution of the case would place Dolina in a better position than those workers who were found to have been illegally dismissed by their employer. supra. November 7. the backwages that can be recovered by the worker is limited to three years [Mercury Drug Co. in protecting the rights of the laborer. G. G. National Labor Relations Commission. the NLRC chose not to adhere with fidelity to this doctrine. RB-IV-9319-77 requiring petitioner to restore private respondent to its payroll and ordering the payment of his salaries from 1 April 1979 until the case is finally resolved is hereby declared NULL and VOID and SET ASIDE. Durabilt Recapping Plant & Co. Chong Guan Trading v. June 30.. The temporary Restraining Order issued by the Court on 10 October 1980 is made PERMANENT. 81471. No. No. the Court holds that respondent NLRC's order for the continued payment of Dolina's salaries from "l April 1979 until the case is finally resolved" is contrary to law and established jurisprudence and the NLRC acted in excess of its jurisdiction in issuing the assailed order. No.R. v. Ople. Inc. v. Inc. No. authorizes neither oppression nor self-destruction of the employer [Colgate Palmolive Philippines. Considering the foregoing. 1989 the Court held as an act without or in excess of jurisdiction the portion of the Labor Arbiter's award. that part of the dispositive portion of the decision of the National Labor Relations Commission in NLRC CASE NO.1987] while Dolina. In this case. G.. November 29. 1974.1988. v. Zamora. This Court has reiterated time and again that the law. there is no factual or legal basis for ordering the payment of backwages. October 30. G. For in the latter case. National Labor Relations Commission. the dismissal was for a just cause. supra]. for being without basis either in law or contract. v. G. 73681. 56 SCRA 694.R. L-23357. there is in this case an excess of jurisdiction on the part of the NLRC in ordering the continued payment of Dolina's salaries "from 1 April 1979 until the case is finally resolved. can recover approximately ten years backwages. Philippine Airlines. Court of Industrial Relations. In the recent case of Llora Motors. 1989.R." WHEREFORE. 1978.97-102) |16 . which required the employer to pay to its employee an amount equivalent to a half month's pay for every year of service as retirement benefits. v.. Inc. Santos v. Minister of Labor. Court of Industrial Relations. G. L-48237. Where.R. whose dismissal was found to be valid. 1983. G. Madrigal & Co. LABOR LAW I CASES (Arts. v. 82895. SO ORDERED.R. Similarly. Secondly. L29728. Inc. The order of the NLRC for the continued payment of Dolina's salaries would allow the latter to unjustly enrich himself at the expense of the petitioner. No. June 30. R. L-49023. Madrigal & Co. 86 SCRA 37. Inc. as in this case. 126 SCRA 223. which corresponds to the period from 1 April 1979 until "final resolution" of the instant case.163 SCRA 323]. April 26. Inc. Drilon. No. 64809. National Labor Relations Commission. April 30. No. v.R. No.

That is the principle we uphold today. 1995. Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-hires. namely: (a) the "dislocation factor" and (b) limited tenure. 1996. The School grants foreign-hires certain benefits not accorded localhires. The compensation scheme is simply the School's adaptive measure to remain competitive on an international level in terms of attracting competent professionals in the field of international education. is a domestic educational institution established primarily for dependents of foreign diplomatic personnel and other temporary residents. such personnel being exempt from otherwise applicable laws and regulations attending their employment. 2000 INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE). J. respondents.97-102) |17 . Where is one's home economy? c.3 When negotiations for a new collective bargaining agreement were held on June 1995. That is a principle long honored in this jurisdiction. Inc. vs. TRAJANO in his capacity as the Acting Secretary of Labor and Employment. That is a principle that rests on fundamental notions of justice. petitioner. The point is that employees should be given equal pay for work of equal value. taxes. issued an Order resolving the parity and representation issues in favor of the School. and take the risk of deviating from a promising career path — all for the purpose of pursuing his profession as an educator. the School hires both foreign and local teachers as members of its faculty.1âwphi1. On September 7.: Receiving salaries less than their counterparts hired abroad. That the local-hires are paid more than their colleagues in other schools is. Accordingly. pursuant to Presidential Decree 732. LABOR LAW I CASES (Arts. except laws that have been or will be enacted for the protection of employees. The School employs four tests to determine whether a faculty member should be classified as a foreign-hire or a local hire: a. Trajano. petitioner International School Alliance of Educators. To which country does one owe economic allegiance? A foreign-hire would necessarily have to uproot himself from his home country. Should the answer to any of these queries point to the Philippines. 128845 d. otherwise. QUISUMBING in his capacity as the Secretary of Labor and Employment. from Philippine or other nationalities. The School explains: KAPUNAN.1avvphi1 These include housing. of course. mostly Filipinos..nêt Private respondent International School. cry discrimination. Crescenciano B. Because of a limited tenure. transportation. leave his family and friends.R. as well as the question of whether foreign-hires should be included in the appropriate bargaining unit. LEONARDO A. We agree. BRIAN MACCAULEY in his capacity as the Superintendent of International School-Manila. INC. and home leave travel allowance. The School justifies the difference on two "significant economic disadvantages" foreign-hires have to endure. Was the individual hired abroad specifically to work in the School and was the School responsible for bringing that individual to the Philippines?2 June 1. petitioner filed a notice of strike. DR. HON. eventually caused a deadlock between the parties.FIRST DIVISION G. effective means of transportation. allowance for the education of one's children. he or she is deemed a foreign-hire. 1 To enable the School to continue carrying out its educational program and improve its standard of instruction. On June 10. the foreign hire is confronted again with the same economic reality after his term: that he will eventually and inevitably return to his home country where he will have to confront the uncertainty of obtaining suitable employment after along period in a foreign land. CRESENCIANO B. No. adequate insurance against illness and death. contested the difference in salary rates between foreign and local-hires. "a legitimate labor union and the collective bargaining representative of all faculty members"4 of the School. The new foreign hire is faced with economic realities: decent abode for oneself and/or for one's family. (the School. beside the point. the faculty member is classified as a local hire. HON. for short). the DOLE Acting Secretary. and of course the primary benefit of a basic salary/retirement compensation. shipping costs. The failure of the National Conciliation and Mediation Board to bring the parties to a compromise prompted the Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute. and INTERNATIONAL SCHOOL. This issue. Section 2(c) of the same decree authorizes the School to employ its own teaching and management personnel selected by it either locally or abroad. but this time in a foreign land. the local-hires of private respondent School. classifying the same into two: (1) foreign-hires and (2) local-hires. What is one's domicile? b.

The international character of the School requires the hiring of foreign personnel to deal with different nationalities and different cultures. among the student population. We agree that certain amenities have to be provided to these people in order to entice them to render their services in the Philippines and in the process remain competitive in the international market. having no amenities of their own in the Philippines and have to be given a good compensation package in order to attract them to join the teaching faculty of the School.Then DOLE Secretary Leonardo A. The 25% differential is reflective of the agreed value of system displacement and contracted status of the OSRS as differentiated from the tenured status of Locally Recruited Staff (LRS). 10 i. and observe honesty and good faith. Truth to tell.6 The Acting secretary upheld the point-of-hire classification for the distinction in salary rates: The Principle "equal pay for equal work" does not find applications in the present case. reduce social." The very broad Article 19 of the Civil Code requires every person. The compensation package given to local-hires has been shown to apply to all. Verily. these provisions demonstrate the parties' recognition of the difference in the status of two types of employees. Social. there are foreigners who have been hired locally and who are paid equally as Filipino local hires. A classification is reasonable if it is based on substantial distinctions and apply to all members of the same class. with nationalities other than Filipino. there is a substantial distinction between foreign hires and local hires. Petitioner now seeks relief in this Court. numbering 38 in all.97-102) |18 .. International law. To apply parity therefore. the difference in their salaries. 12 the International Covenant on Economic. the former enjoying only a limited tenure. under terms and conditions that are consistent with accepted international practice. Quisumbing subsequently denied petitioner's motion for reconsideration in an Order dated March 19. in wages and other benefits would also require parity in other terms and conditions of employment which include the employment which include the employment contract. The Union cannot also invoke the equal protection clause to justify its claim of parity.5 The Acting Secretary of Labor found that these nonFilipino local-hires received the same benefits as the Filipino local-hires. and political inequalities. Our Constitution and laws reflect the policy against these evils. 14 the Convention against Discrimination in Education. based on the test of what is reasonable. 1997.9 likewise proscribes discrimination. we took note of the fact that foreign hires have limited contract of employment unlike the local hires who enjoy security of tenure. Appendix C of said CBA further provides: The new salary schedule is deemed at equity with the Overseas Recruited Staff (OSRS) salary schedule. who have been hired locally and classified as local hires. Superintendent of the School has the discretion to recruit and hire expatriate teachers from abroad. regardless of race. which springs from general principles of law. 13 the International Convention on the Elimination of All Forms of Racial Discrimination. Furthermore. [to] act with justice. A perusal of the parties' 1992-1995 CBA points us to the conditions and provisions for salary and professional compensation wherein the parties agree as follows: All members of the bargaining unit shall be compensated only in accordance with Appendix C hereof provided that the To our mind.7 We cannot agree. That public policy abhors inequality and discrimination is beyond contention. We also take cognizance of the existence of a system of salaries and benefits accorded to foreign hired personnel which system is universally recognized. give everyone his due. 111) Concerning Discrimination in Respect of LABOR LAW I CASES (Arts. "in the exercise of his rights and in the performance of his duties. and Cultural Rights. Petitioner claims that the point-of-hire classification employed by the School is discriminatory to Filipinos and that the grant of higher salaries to foreign-hires constitutes racial discrimination. General principles of law include principles of equity. economic. It is an established principle of constitutional law that the guarantee of equal protection of the laws is not violated by legislation or private covenants based on reasonable classification. the general principles of fairness and justice. 11 The Universal Declaration of Human Rights. The Constitution 8 in the Article on Social Justice and Human Rights exhorts Congress to "give highest priority to the enactment of measures that protect and enhance the right of all people to human dignity. The School disputes these claims and gives a breakdown of its faculty members. hence. 15 the Convention (No.e.

inequality and discrimination by the employer are all the more reprehensible. National Labor Relations Commission. Remuneration which provides all workers. The dislocation factor and limited tenure affecting foreign-hires are adequately compensated by certain benefits accorded them which are not enjoyed by local-hires. The Constitution 18 also directs the State to promote "equality of employment opportunities for all. which they perform under similar working conditions." In Songco v. the International Covenant on Economic. the "dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the distinction in salary rates. The Philippines. in spite of its primordial obligation to promote and ensure equal employment opportunities. Both groups have similar functions and responsibilities. LABOR LAW I CASES (Arts. where the relations between capital and labor are often skewed in favor of capital. race or creed." or more fancifully from "sal." the pay of the Roman soldier. which ensure. (Emphasis supplied. xxx xxx xxx The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal truism of "equal pay for equal work. effort and responsibility." These conditions are not restricted to the physical workplace — the factory. Notably. The employer in this case has failed to discharge this burden. In the workplace. supra. The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the distinction in salary rates without violating the principle of equal work for equal pay. The employer has discriminated against that employee. Article 135. The School contends that petitioner has not adduced evidence that local-hires perform work equal to that of foreign-hires.) While we recognize the need of the School to attract foreign-hires. If the employer pays one employee less than the rest. This presumption is borne by logic and human experience. as a minimum. particularly in terms of wages. the office or the field — but include as well the manner by which employers treat their employees. The local-hires perform the same services as foreign-hires and they ought to be paid the same salaries as the latter. it carries with it the fundamental idea of compensation for services rendered. under similar conditions. closes its eyes to unequal and discriminatory terms and conditions of employment.) as "a reward or recompense for services performed. There is no evidence here that foreign-hires perform 25% more efficiently or effectively than the local-hires. "Salary" is defined in Black's Law Dictionary (5th ed. Article 248 declares it an unfair labor practice for an employer to discriminate in regard to wages in order to encourage or discourage membership in any labor organization. in particular: a." Similarly. 20 Discrimination. through its Constitution. the presumption is that these employees perform equal work. If an employer accords employees the same position and rank. with: (i) Fair wages and equal remuneration for work of equal value without distinction of any kind. prohibits and penalizes 21 the payment of lesser compensation to a female employee as against a male employee for work of equal value. Whether it be derived from "salarium. provides: The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just and favourable conditions of work. Social. 24 we said that: "salary" means a recompense or consideration made to a person for his pains or industry in another man's business. for example. it is not for that employee to explain why he receives less or why the others receive more. the very antithesis of fairness and justice. For the same reason. in particular women being guaranteed conditions of work not inferior to those enjoyed by men. and Cultural Rights. the Labor Code 19 provides that the State shall "ensure equal work opportunities regardless of sex. The Constitution 17 specifically provides that labor is entitled to "humane conditions of work. the Philippine Legal Encyclopedia states that "salary" is the "[c]onsideration paid at regular intervals for the rendering of services. its "international character" notwithstanding. 23 The Court finds this argument a little cavalier. is frowned upon by the Labor Code. has incorporated this principle as part of its national laws. should be paid similar salaries. in Article 7 thereof. skill. That would be adding insult to injury." It would be an affront to both the spirit and letter of these provisions if the State.97-102) |19 ." Persons who work with substantially equal qualifications. it is for the employer to explain why the employee is treated unfairly. salaries should not be used as an enticement to the prejudice of local-hires." Similarly. with equal pay for equal work. 22 This rule applies to the School.Employment and Occupation 16 — all embody the general principle against discrimination.

transportation." 25 "to afford labor full protection. Foreign-hires have limited tenure. taxes. 30 The basic test of an asserted bargaining unit's acceptability is whether or not it is fundamentally the combination which will best assure to all employees the exercise of their collective bargaining rights.27 These relations are not merely contractual but are so impressed with public interest that labor contracts. 31 It does not appear that foreign-hires have indicated their intention to be grouped together with local-hires for purposes of collective bargaining.1avvphi1 We agree. The collective bargaining history in the School also shows that these groups were always treated separately. The Constitution enjoins the State to "protect the rights of workers and promote their welfare. The Orders of the Secretary of Labor and Employment dated June 10. transportation. taxes and home leave travel allowances. foreign-hires are accorded certain benefits not granted to localhires. These benefits.such as housing. shipping costs. indicate to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law. (3) prior collective bargaining history. The practice of the School of according higher salaries to foreign-hires contravenes public policy and. and home leave travel allowance. comprised of all or less than all of the entire body of employees. LABOR LAW I CASES (Arts. Although foreign-hires perform similar functions under the same working conditions as the local-hires. 1996 and March 19. or similarity of compensation and working conditions (Substantial Mutual Interests Rule). A bargaining unit is "a group of employees of a given employer. must yield to the common good. and (4) similarity of employment status. local-hires enjoy security of tenure. are reasonably related to their status as foreign-hires. such as housing. There is no reasonable distinction between the services rendered by foreign-hires and local-hires. we find the point-of-hire classification employed by respondent School to justify the distinction in the salary rates of foreign-hires and local hires to be an invalid classification. To include foreign-hires in a bargaining unit with local-hires would not assure either group the exercise of their respective collective bargaining rights.97-102) |20 . such as substantial similarity of work and duties." 26 The State. 1997. does not deserve the sympathy of this Court. are hereby REVERSED and SET ASIDE insofar as they uphold the practice of respondent School of according foreign-hires higher salaries than local-hires. that foreign-hires do not belong to the same bargaining unit as the local-hires. certainly. The petition is hereby GRANTED IN PART. the petition is GIVEN DUE COURSE. consistent with equity to the employer. has the right and duty to regulate the relations between labor and capital." 29 The factors in determining the appropriate collective bargaining unit are (1) the will of the employees (Globe Doctrine). therefore. WHEREFORE. and justify the exclusion of the former from the latter. 28 Should such contracts contain stipulations that are contrary to public policy. SO ORDERED. however. shipping costs. In this case. courts will not hesitate to strike down these stipulations. (2) affinity and unity of the employees' interest. collective bargaining agreements included.

EN BANC
G.R. No. L-5276

March 3, 1953

ATOK-BIG
WEDGE
MINING
CO.,
INC., petitioner,
vs.
ATOK-BIG WEDGE MUTUAL BENEFIT ASSOCIATION, respondent.
Vicente Hilado, Pedro Lopez and Artemio
Sanidad, Ayson and Casia for respondent.

A.

Almendral

for

petitioner.

LABRADOR, J.:
This is an appeal by certiorari against a decision of the Court of Industrial Relations.
On September 4, 1950, demand was submitted to petitioner by respondent union
through its officers for various concession, among which were (a) an increase of
P0.50 in wages, (b) commutation of sick and vacation leave if not enjoyed during the
year, (c) various privileges, such as free medical care, medicine, and hospitalization,
(d) right to a closed shop, check off, etc., (e) no dismissal without prior just cause and
with a prior investigation, etc. Some of the demands, were granted by the petitioner,
and the other were rejected, and so hearings were held and evidence submitted on
the latter. After the hearing the respondent court rendered a decision, the most
important provisions of which were those fixing the minimum wage for the laborers at
P3.20, declaring that additional compensation representing efficiency bonus should
not be included as part of the wage, and making the award effective from September
4, 1950. It is against these portion of the decision that this appeal is taken.
On the issue of the wage, it is contended by petitioner that as the respondent court
found that the laborer and his family at least need the amount of P2.58 for food, this
should be the basis for the determination of his wage, not what he actually spends;
that it is not justifiable to fix a wage higher than that provided by Republic Act No.
602; and that respondent union made the demand in accordance with a pernicious
practice of claiming more after an original demand is granted. The respondent court
found that P2.58 is the minimum amount actually needed by the laborer and his
family. That does not mean that it is his actual expense. A person's needs increase as
his means increase. This is true not only as to food but as to everything else —
education, clothing, entertainment, etc. The law guarantees the laborer a fair and just
wage. The minimum must be fair and just. The "minimum wage" can by no means
imply only the actual minimum. Some margin or leeway must be provided, over and
above the minimum, to take care of contingencies such as increase of prices of
commodities and desirable improvement in his mode of living. Certainly, the amount
of P0.22 a day (difference between P2.80 fixed and P2.58 actual) is not excessive for
this purpose. That the P3 minimum wage fixed in the law is still far below what is

considered a fair and just minimum is shown by the fact that this amount is only for
the year after the law takes effect, as thereafter the law fixes it at P4. Neither may it
be correctly contended that the demand for increase is due to an alleged pernicious
practice. Frequent demands for increase are indicative of a healthy spirit of
wakefulness to the demands of a progressing and an increasingly more expensive
world. We, therefore, find no reason or ground for disturbing the finding contained in
the decision fixing the amount of P3.20 as the minimum wage.
It is next contended that the efficiency bonus paid the laborer should have been
included in his (minimum) wage, in the same manner as the value of living quarters.
Whether or not bonus forms part of wages depends upon the circumstances or
condition for its payment. If it is an additional compensation which the employer
promised and agreed to give without any conditions imposed for its payment, such as
success of business or greater production or output, then it is part of the wage. But if
it is paid only if profits are realized or a certain amount of productivity achieved, it
cannot be considered part of the wages. In the case at bar, it is not payable to all but
to laborers only. It is also paid on the basis of actual production or actual work
accomplished. If the desired goal of production is not obtained or the amount of actual
work accomplished, the bonus does not accrue. It is evidence that under the
circumstances it is paid only when the labor becomes more efficient or more
productive. It is only an inducement for efficiency, a prize therefor, not a part of the
wage.
The last question raised in the appeal is the grant of the increase from September 4,
1950, the date of the presentation of the original demand, instead of from April 5,
1951, the date of the amended demand. The decision states:
Both parties agreed that any award should be retroactive to the date of the
presentation of the demand, which is September 4, 1950. (Annex A, p. 5.)
The terms of the stipulation are clearly against petitioner's contention. There being no
question as to its (agreement) existence, the same must be given force and effect.
The petition is hereby dismissed, with costs.

EN BANC
G.R. No. L-23542

January 2, 1968

LABOR LAW I CASES (Arts.97-102) |21

JUANA T. VDA. DE RACHO, plaintiff-appellee,
vs.
MUNICIPALITY OF ILAGAN, defendant-appellant.
BENGZON, J.P., J.:
Plaintiff Juana T. Vda. de Racho and the decedent, Manuel Racho, were spouses and
had five minor children. On July 1, 1954 the decedent was appointed as market
cleaner in the Municipality of Ilagan, Isabela, at the rate of P660.00 per annum
(P55.00 monthly) which amount he received up to June 30, 1958. On July 1, 1958,
decedent's salary was increased to P720.00 per annum (P60.00 monthly) by virtue of
a promotional appointment extended to him by the Municipal Mayor. He received this
amount until January 6, 1960 when he tendered his resignation effective July 7, 1960.
Decedent was then paid the money value of his accumulated leaves from January 7,
1960 to May 23, 1960 at the rate of P60.00 a month.

should have been implemented — or at least steps to implement it should have been
taken — right then. To excuse the defendant municipality now would be to permit it to
benefit from its non-feasance. It would also make the effectivity of the law dependent
upon the will and initiative of said municipality without statutory sanction. Defendant's
remedy, therefore, is not to seek an excuse from implementing the law but, as the
lower court suggested, to upgrade and improve its tax collection machinery with a
view towards realizing more revenues. Or, it could for the present forego all nonessential expenditures.
WHEREFORE, the appealed judgment is, as it is hereby affirmed. No costs. So
ordered.

On October 5, 1960, decedent died intestate at Ilagan. Plaintiff then filed on
December 9, 1960 a claim for salary differentials with the Regional Office of the
Department of Labor which dropped the case later for lack of jurisdiction.
Based on the foregoing facts, the Court of First Instance of Isabela, in an action
brought on December 5, 1961, by plaintiff, in her own behalf and as guardian ad
litem of her minor children, ruled that defendant Municipality of Ilagan must pay
P1,766.00 to plaintiff representing the wage differentials and adjusted terminal leave
of the decedent from December 9, 1957 1 to May 23, 1960, based on the monthly
wage rate of P120.00 pursuant to the Minimum Wage Law.
Defendant municipality immediately appealed the case to Us on the sole submission
that its shortage and lack of available funds and expected revenue validly exempted it
from complying with the Minimum Wage Law.
The appeal must be dismissed. We have already answered the question posed
in Rivera vs. Colago, L-12323, February 24, 1961, wherein We ruled that lack of
funds of a municipality does not excuse it from paying the statutory minimum wages
to its employees, which, after all, is a mandatory statutory obligation of the
municipality. To uphold such defense of lack of available funds would render the
Minimum Wage Law futile and defeat its purpose. This also disposes of the
implication appellant is trying to make that its duty to pay minimum wages is not a
statutory obligation which would command preference in the municipal budget and
appropriation ordinance.2
Moreover, We cannot sanction appellant's proposition that it would eventually and
gradually implement the Minimum Wage Law, "if and when its revenues can afford."
The law — insofar as it affects government employees — took effect in 1952. 3 It
LABOR LAW I CASES (Arts.97-102) |22

SECOND DIVISION
G.R. No. 144619 November 11, 2005
C.
PLANAS
COMMERCIAL
and/or
MARCIAL
COHU, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division), ALFREDO
OFIALDA, DIOLETO MORENTE and RUDY ALLAUIGAN, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a petition for review on certiorari filed by C. Planas Commercial and/or
Marcial Cohu, (petitioners) assailing the Decision of the Court of Appeals (CA) dated
January 19, 20001 which affirmed in toto the decision of the National Labor Relations
Commission (NLRC) and the Resolution dated August 15, 20002 denying petitioners’
motion for reconsideration.
On September 14, 1993, Dioleto Morente, Rudy Allauigan and Alfredo Ofialda (private
respondents) together with 5 others3 filed a complaint for underpayment of wages,
nonpayment of overtime pay, holiday pay, service incentive leave pay and premium
pay for holiday and rest day and night shift differential against petitioners with the
Arbitration Branch of the NLRC. The case was docketed as NLRC Case No. 00-0905804-93.4
In their position paper, private respondents alleged that petitioner Cohu, owner of C.
Planas Commercial, is engaged in wholesale of plastic products and fruits of different
kinds with more than 24 employees; that private respondents were hired by
petitioners on January 14, 1990, May 14, 1990 and July 1, 1991, respectively, as
helpers/laborers; that they were paid below the minimum wage law for the past 3
years; that they were required to work for more than 8 hours a day without overtime
pay; that they never enjoyed holiday pay and did not have a rest day as they worked
for 7 days a week; and they were not paid service incentive leave pay although they
had been working for more than one year. Private respondent Ofialda asked for night
shift differential as he had worked from 8 p.m. to 8 a.m. the following day for more
than one year.
Petitioners filed their comment admitting that private respondents were their helpers
who used to accompany the delivery trucks and helped in the loading and unloading
of merchandise being distributed to clients; that they usually started their work from
10 a.m. to 6 p.m.; that private respondents stopped working with petitioners sometime
in September 1993 as they were already working in other establishments/stalls in
Divisoria; that they only worked for 6 days a week; that they were not entitled to
holiday and service incentive leave pays for they were employed in a retail and
service establishment regularly employing less than ten workers.

On December 6, 1994, a decision5 was rendered by the Labor Arbiter dismissing
private respondents’ money claims for lack of factual and legal basis. He made the
following findings:
The basic issue raised before us is whether or not complainants are entitled to the
money claims.
The rule in this jurisdiction is that employers who are regularly employing not more
than ten workers in retail establishments are exempt from the coverage of the
minimum wage law.
In connection therewith and in consonance with Sec. 1, Rule 131 of the Rules of
Court, it is incumbent upon the party to support affirmative allegation that an employer
regularly employs more than ten (10) workers.
In the case at bar, complainants failed to substantiate their claim that the respondent
establishment regularly employs twenty (sic) (24) workers.
Accordingly, we have no factual basis to grant salary differentials to complainants. In
the same context, under Sec. 1 (b), Rule IV and Sec. 1(g), Rule V of the
Implementing Rules of the Labor Code, complainants are not entitled to legal holiday
pay and service incentive leave pay.
We also do not have sufficient factual basis to award overtime pay and premium pay
for holiday and rest day because complainants failed to substantiate that they
rendered overtime and during rest days.6
Private respondents filed their appeal with the NLRC which was opposed by
petitioners. However, pending the appeal, private respondents Morente 7 and
Allauigan8 filed their respective motions to dismiss with release and quitclaim before
the NLRC.
On September 30, 1997, the NLRC rendered its decision, 9 the dispostive portion of
which reads:
WHEREFORE, in view of all the foregoing considerations, the decision appealed from
should be, as it is hereby, MODIFIED by directing the respondent to pay Alfredo
Ofialda, Diolito Morente and Rudy Allauigan the total amount of Seventy-Five
Thousand One Hundred Twenty Five Pesos (P75,125.00) representing their
combined salary differentials, holiday pay, and service incentive leave pay.
The NLRC made the following ratiocinations:
… On claims for underpayment/non-payment of legally mandated wages and fringe
benefits where exemption from coverage of the minimum wage law is put up as a
defense, he who invokes such an exemption (usually the employer) has the burden of
showing the basis for the exemption like for instance the fact of employing regularly
less than ten workers.
In the instant case, complainants alleged that despite employing more than twentyfour (24) workers in his establishment, hence covered by the minimum wage law,
LABOR LAW I CASES (Arts.97-102) |23

00 P1.00 respectively. the period covered is from September 14. This in turn brings us to the question of whether the complainants were underpaid and unpaid of legal holiday pay and service incentive leave pay due them.000. The Law does not consider as valid any agreement to receive less compensation than what a worker is entitled to receive. This is so because the employers and the employees obviously do not stand on equal footing. 1993 when the instant case was filed.952. It said: Having claimed exemption from the coverage of the minimum wage laws or order. complied therewith.00 3. Australia and the United States" (p.00 P2.00 2. and the consideration for the quitclaim is credible and reasonable" (Santiago v. DOLE. respondents countered that they employ less than ten (10) persons. (Lopez Sugar Corp v.00 for respondent Allauigan. the underpayment (salary differential).. On this score. These claims. Martin Funeral Homes vs. from petitioner. 12 the petition was referred to the CA pursuant to our ruling in St. representing the combined salary differentials. hence the money claims of complainants lack factual and legal basis.10 Petitioners filed a petition for certiorari11 with prayer for temporary restraining order and preliminary injunction before this Court on November 26. 167 SCRA 767 (1988) enunciates: In the absence of any showing that the compromise settlement and the quitclaims and releases entered into and made by the employees were free. the respondents raised the defense of exemption from coverage of the minimum wage law and in support thereof alleged that they regularly employed less than ten (10) workers to serve as basis for their exemption under the law. Taking note of the 3 year prescription.00 and P6. We find no reason to disturb the Labor Arbiter’s ruling thereon. FFW-PLU.964. In a Resolution dated June 28. Respondents were required to file their Comment but only public respondent NLRC. as computed.597. public respondent awarded P75.00.180. legal holiday pay.609. This failure is fatal to respondents’ defense. not by price of fruit. considering private respondents claim that petitioner "employs more than twenty four (24) employees and engaged in both wholesale and retail business of fruits by volume on CONTAINER BASIS. 200 SCRA 201 [1991]). For the law usually looks with disfavor upon quitclaims and releases executed by employees usually resulting from a compromise with their employers.362.00 3. 170. On January 19. OFIALDA P14. a "retail establishment" which employs less than ten (10) employees.00 1.730. Holiday Pay SILP 1. and P27.258. fruits coming from China. Of this. However. the employee is in no position to resist the money offered. the fact that they executed the same and received their monetary benefits thereunder does not militate against them.730. are as follows: Salary Diff. which amounts according to complainants are "way below the minimum wage then prevailing.especially as to the amount or consideration given by the employer in exchange therefore. 1997. unlike claims for underpayment and non-payment of fringe benefits mandated by law." Considering that respondents failed to present the payrolls or vouchers which could prove otherwise.00 is earmarked for respondent Morente. apart from their allegation.00 3. indeed. the Court quotes with approval the arguments advanced by the Solicitor General thus: While a compromise agreement or amicable settlement is not against public policy per se it must be shown however that it was "voluntarily entered into and represents a reasonable settlement. they (respondents) must prove that they employed less than ten workers. respondents presented no evidence to show the number of workers they employed regularly. it is hard to believe that petitioner does not keep such records.e. fair and reasonable. Thus. NLRC. against complainants’ charge of underpayment in wages and nonpayment of fringe benefits legally granted to them. In its decision. both of whom executed quitclaims after receiving P3. instead of more than twenty-four (24) workers as alleged by the complainants. Needless to say. 189 SCRA 179 [1990]). Stated differently. A. Rollo). R. 2000. NLRC. 1999. overtime pay and premium pay for holiday and rest day. D. LABOR LAW I CASES (Arts.125.00 1. the money claims deserve favorable consideration. and service incentive leave pay due to complainants. By way of answer. Driven against the wall by the employer. Indeed. P28.934. Its failure to present records of its workers and their respective wages gives rise to the presumption that these are adverse to its claims. petitioner failed to adduce evidence to prove that it is. involving millions of pesos capital. i. 198 SCRA 111 [1991]). that there is no sufficient factual basis to award the claims because complainants failed to substantiate that they rendered overtime and during rest days. MORENTE 23.00 With respect to the other claims. through the Solicitor General. Stated earlier are the different amounts that each complainant was receiving by way of salary on certain periods of their employment with respondents. but by container size retail. ALLAUIGAN 22. the inclusion of respondents Morente and Allauigan in the NLRC award is in order. Fuentes v.258. holiday pay and service incentive leave pay of all three (3) private respondents.000. (Velasco v. and based on a 6-day work per week.nevertheless the individual respondent did not pay his workers the legal rates and benefits due them since their employment. More so.97-102) |24 . it was incumbent upon petitioner to prove such claim. Apart from simply denying private respondents’ allegation that it employs more than 24 workers in its business. need to be proven by the claimants. NLRC. 1990 to September 14.13 the CA denied the petition for lack of merit and affirmed in toto the NLRC decision.

thus salaries and wages are paid by merely handing the money to the worker without the latter being required to sign anything as proof of receipt. thus the burden of proving 16 such exemption rests on petitioners. Planas Commercial is a retail establishment principally engaged in the sale of plastic products and fruits to the customers for personal use. Petitioners also contend that the CA erred in applying strictly the rules of evidence against them by holding that it was incumbent upon them to prove that their company is exempted from the minimum wage law. it will be noticed that the vouchers dated September 13. Rollo). . Hence. Parenthetically. to prove that there were less than ten (10) employees in the company. has through a motion for reconsideration. In Murillo vs. Petitioners claim that since private respondents alleged that petitioners employed 24 workers. it must be shown that the establishment is regularly employing not more than ten (10) workers and had applied for exemptions with and as determined by the appropriate Regional Board in accordance with the applicable rules and regulations issued by the Commission. that it merely leases and occupies a stall in the Divisoria Market and the level of its business activity requires and sustains only less than ten employees at a time. Petitioners insist that C.000. under the coverage of the provision granting service incentive leave to workers. Whenever an application for exemption has been duly filed with the appropriate Regional Board. for a retail/service establishment to be exempted from the coverage of the minimum wage law. holiday pay and service incentive leave pay less the amounts they had already received under the compromise settlements with petitioners (pp. They contend that they could not present records of their workers and their respective wages because by the very nature of their business. 1995 and September 20. a chance to correct the errors imputed to it.97-102) |25 . action on any complaint for alleged non-compliance with this Act shall be deferred pending resolution of the application for exemption by the appropriate Regional Board. certiorari will not lie unless an inferior court. 1996 (pp.A. thus the Labor Arbiter is correct in ruling that private respondents’ claim for underpayment has no factual and legal basis. We are not persuaded.. Retail/service establishments regularly employing not more than ten (10) workers may be exempted from the applicability of this Act upon application with and as determined by the appropriate Regional Board in accordance with the applicable rules and regulations issued by the Commission. 194 and 197. we held: …. Petitioners’ main defense in controverting private respondents’ claim for underpayment of wages is that they are exempted from the application of the minimum wage law. R. Thus.00 and Morente.. As a general rule. petitioners must be deemed entitled to service incentive leave. In the event that applications for exemptions are not granted. 4. the same was granted.00 and P27.17 where the respondents claim that petitioners therein are not entitled to service incentive leave pay inasmuch as establishment employing less than ten (10) employees are exempted by the Labor Code and the Implementing Rules from paying service incentive leave pay. show that private respondent Allauigan was only paid P6. Under the circumstances. NLRC Record). the Court notes that petitioner availed itself of this remedy without first seeking a reconsideration of the assailed decision.when they are legally entitled to receiveP28. subject compromise settlements cannot be considered valid and binding upon the NLRC as they do not represent fair and reasonable settlements. it would be unreasonable to insist upon petitioner to present documents that they do not possess or keep in the first place. submitted by petitioners (pp. Petitioners had not shown any evidence to show that they had applied for such exemption and if they had applied.597. These employees should still be paid the full amounts of their salary differentials. which would have justified outright dismissal of the petition were it not for the Court’s desire to resolve the case not on a technicality but on the merits.00. Petitioners contend that private respondents were paid over and above the minimum wage required for a retail establishment. (c) Exempted from the provisions of this Act are household or domestic helpers and persons employed in the personal service of another. it was the duty of respondents. nor do they demonstrate voluntariness on the part of private respondents Morente and Allauigan. 6727 known as the Wage Rationalization Act provides for the statutory minimum wage rate of all workers and employees in the private sector. Record).14 Petitioners’ motion for reconsideration was denied in a Resolution dated August 15. it was incumbent upon them to prove such allegation which private respondents failed to do. Specifically. Inc..In the case at bar. including family drivers. 174-175. employees shall receive the appropriate compensation due them as provided for by this Act plus interest of one percent (1%) per month retroactive to the effectivity of this Act.15 Hence.00 --. petitioner has not shown any reason for this Court not to apply said rule. While the rule admits of exceptions.952.18 LABOR LAW I CASES (Arts. P3. the instant petition for review on certiorari filed by petitioners.000. Sun Valley Realty. not of petitioners. Private respondents' claim is that they fell within the exception. 2000. it was incumbent upon them to prove that they belonged to a class excepted by law from the general rule. private respondents must be deemed to be covered by the general rule. Section 4 of the Act provides for exemption from the coverage. thus exempted from the application of the minimum wage law. except a few classes. Clearly. notwithstanding the failure of petitioners to allege the exact number of employees of the corporation. No. Having failed to discharge its task. thus: Sec. respectively.the clear policy of the Labor Code is to include all establishments. the system of management is very loose and informal. 191-192. In other words.

As employer. it was well within his means to refute any monetary claim alleged to be unpaid.. that they were the ones who initiated the talks for settlement and who pegged the amount. We are unconvinced. Thus. all that is left is our stamp of finality by affirming the factual findings made by them. Thus.26 The Court finds such inaction on the part of private respondents Allauigan and Morente an indication that they already relented in their claims and gives credence to petitioners’ claim that they had voluntarily executed the release and quitclaim and the motion to dismiss. They failed to refute petitioners’ allegation that the settlement was voluntarily made as they had not filed any pleadings before the CA. except (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person. NLRC.0023 which was subsequently increased to P2. Petitioners insist that both private respondents Morente and Allauigan voluntarily entered into an amicable settlement with them on September 17 and 18. Notably. we have required private respondents to file their comment on the instant petition. It has been held that not all quitclaims are per se invalid or against public policy. Well-settled is the rule that factual findings of labor officials who are deemed to have acquired expertise in matters within their jurisdiction are generally accorded not only respect but even finality and bind this Court when supported by substantial evidence or that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. the Court ordered the National Bureau of Investigation to arrest and detain private respondents and the private respondents to file their comment. that they both voluntarily appeared before the Labor Arbiter to move for the dismissal of their case insofar as their claims are concerned as well as submitted to the Labor Arbiter their respective quitclaims and releases which were duly subscribed before the Labor Arbiter and duly notarized. Petitioners aver that the CA erred in ruling that private respondents Morente and Allauigan are still entitled to monetary awards despite the latter’s execution of release and quitclaims because the settlement was not voluntarily entered into by private respondents. In this case. they were imposed a fine of P1. as long as their decisions are devoid of any unfairness or arbitratriness in the process of their deduction from the evidence proferred by the parties before them. the order of arrest and commitment was returned unserved. and the Rules Implementing Wage Order Nos. that private LABOR LAW I CASES (Arts. In a Resolution dated July 22. thus. however. The CA found that the subject compromise agreements are not valid considering that they did not represent the fair and reasonable settlements. The records disclose de los Reyes' clear entitlement to salary differentials.e. (c) of RA 6727 categorically provides: Retail/service establishments regularly employing not more than ten (10) workers may be exempted from the applicability of this Act upon application with and as determined by the appropriate Regional Board in accordance with the applicable rules and regulations issued by the Commission. 21 We find these two instances not present in private respondents Allauigan and Morente’s case. More importantly.22 However. employees shall receive the appropriate compensation due them as provided for by this Act plus interest of one percent (1%) per month retroactive to the effectivity of this Act (emphasis supplied). the award of salary differentials by the NLRC in favor of de los Reyes was made pursuant to RA 6727 otherwise known as the Wage Rationalization Act. 25 thus the Court required the Office of the Solicitor General to file the comment in behalf of all the respondents.Moreover. They insist that PLANAS is a retail establishment leasing a very small and cramped stall in the Divisoria market which cannot accommodate more than ten (10) workers in the conduct of its business. 24 As private respondents could not be located at their given address and they are not known in their locality. subpar.000. they failed to do so. 1995. action on any complaint for alleged non-compliance with this Act shall be deferred pending resolution of the application for exemption by the appropriate Regional Board. Manager Cohu ought to be the keeper of the employment records of all his workers. i. NCR-01 and NCR-01-A and Wage Order Nos. in C. Planas Commercial vs. We have every reason to believe that petitioners need at least thirty (30) persons to conduct their business considering that Manager Cohu did not submit any employment record to prove otherwise. In the event that applications for exemptions are not granted.19 where herein petitioners are also involved in a case filed by one of its employees. Extant in the records is the fact that petitioners had persistently raised the matter of their exemption from any liability for underpayment without substantiating it by showing compliance with the aforecited provision of law. Section 4. We find merit in petitioners’ argument. It bears stressing that the NLRC affirmed the Labor Arbiter’s award of salary differentials due to underpayment on the ground that de los Reyes' claim therefor was not even denied or rebutted by petitioners. His inability to produce the payrolls from their files without any satisfactory explanation can be interpreted no less as suppression of vital evidence adverse to PLANAS.00 as there was still no compliance. the best proof that they could have adduced was their approved application for exemption in accordance with applicable guidelines issued by the Commission.20Such quitclaim and release agreements are regarded as ineffective to bar the workers from claiming the full measure of their legal rights. respectively. NLRC correctly upheld the Labor Arbiter's finding that PLANAS employed around thirty (30) workers. Petitioners claim exemption under the aforestated law. they still failed to file their comment. or (2) where the terms of settlement are unconscionable on their face.97-102) |26 . Whenever an application for exemption has been duly filed with the appropriate Regional Board. NCR-02 and NCR-02-A. In these cases. They were then required to show cause why they should not be disciplinarily dealt with or held in contempt. However. 2002. the law will step in to annul the questionable transactions. we ruled: Petitioners invoke the exemption provided by law for retail establishments which employ not more than ten (10) workers to justify their non-liability for the salary differentials in question.000.

2000 are AFFIRMED with MODIFICATION that petitioners are ordered to pay private respondent Alfredo Ofialda the total amount of P18.27 InMercer vs. NLRC. As computed by the NLRC. we ruled that: "A quitclaim executed in favor of a company by an employee amounts to a valid and binding compromise agreement between them.952.00 and Morente.00 and the monetary awards in favor of private respondents Rudy Allauigan and Dioleto Morente are hereby DELETED. all in the total amount ofP18.934.00. We do not agree. private respondent Alfredo Ofialda is entitled to the payment of P14.362. The Decision of the Court of Appeals dated January 19.476.00 and P27.000.28 we held that: In Samaniego v.180. It bears stressing that at the time of the execution of the release and quitclaim. Private respondents could have executed the release and quitclaim because of a possibility that their appeal with the NLRC may not be successful.when they are legally entitled to receive P28.00 --. SO ORDERED.000.respondent Allauigan was only paid P6. no deception has been established that would justify the annulment of private respondents quitclaims. the petition is PARTLY GRANTED. 2000 and its Resolution dated August 15.P3.00. we held that in the absence of any showing that petitioner was "coerced or tricked" into signing the above-quoted Quitclaim and Release or that the consideration thereof was very low.97-102) |27 .476. WHEREFORE. Since there was yet no decision rendered by the NLRC when the quitclaims were executed.597. LABOR LAW I CASES (Arts.00 as salary differential. the case filed by private respondents against petitioners was already dismissed by the Labor Arbiter and it was pending appeal before the NLRC.00 as legal holiday pay and P1. P2." Recently.00 as service incentive leave pay. In any event. she is bound by the conditions thereof. respectively. it could not be said that the amount of the settlement is unconscionable. NLRC.

LABOR RELATIONS. — It is thus erroneous for petitioner to isolate Section 1. it must yield to the common good. — A collective bargaining agreement (CBA). ID. JURISDICTION OF VOLUNTARY ARBITRATOR.. however.. LABOR LAWS AND SOCIAL LEGISLATION. is not only tainted with arbitrariness but likewise discriminatory in nature. RUBEN V. are by their nature. or a period of three (3) years and nine (9) months. Article VIII of the 1989 CBA cannot be faulted with and is absolutely correct. Reasonable and practical interpretation must be placed on contractual provisions. including overtime pursuant to the schedule provided therein. therefore. that the thing may continue to have efficacy rather than fail. The questioned directive of the herein public respondent is the necessary consequence of the exercise of his arbitral power as Voluntary Arbitrator under Article 261 of the Labor Code "to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement. petitioner.. ID. as a labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations between labor and capital. an ordinary contract to which is applied the principles of law governing ordinary contracts. 1985 until three (3) months from its renewal on April 15. ID. Article VIII of the 1989 CBA.R. Moreover. Article 261 of the Labor Code is clear. ID. This fixed 15-day sick leave with pay benefit should be distinguished from the variable number of days of sick leave. refers to a contract executed upon request of either the employer or the exclusive bargaining representative incorporating the agreement reached after negotiations with respect to wages. as used in Article 252 of the Labor Code.. ID. DAVAO INTEGRATED PORT STEVEDORING SERVICES. They are non-contributory in nature. No. as mandated by Section 1.THIRD DIVISION G. ID. Such interpretation is to be adopted. 4.. BENEFITS GRANTED PURSUANT TO COMPANY PRACTICE OR POLICY CANNOT BE PEREMPTORILY WITHDRAWN. not to exceed 15 days. his interpretation of Sections 1 and 3. While the terms and conditions of a CBA constitute the law between the parties. CASE AT BAR. specifically Section 3 thereof. in the sense that the employees contribute nothing to the operation of the benefits. ABARQUEZ. 102132. namely: (1) the regular non-intermittent workers or those workers who render a daily eight-hour service to the company and are governed by Section 1. A CBA. DEFINED. 5. NATURE AND PURPOSE. 2." We.. 1993. CONDITIONS OF EMPLOYMENT. 1989 or those workers who have irregular working days and are governed by Section 3. is not merely contractual in nature but impressed with public interest. As such. intended to be replacements for regular income which otherwise would not be earned because an employee is not working during the period of said leaves. including proposals for adjusting any grievances or questions arising under such agreement. thus. NATURE THEREOF. like other economic benefits stipulated in the CBA such as maternity leave and vacation leave benefits. ID. CONSTRUCTION TO BE PLACED THEREON. Libron. March 19. The manner they were deprived of the privilege previously recognized and extended to them by petitioner-company during the lifetime of the CBA of October 16. COLLECTIVE BARGAINING AGREEMENT. Bansalan B. and the courts must place a practical and realistic construction upon it. 1989. there is irregularity in their work-days. respondents. ID. vs. ID. extended to intermittent workers under Section 3 depending on the number of hours of service rendered to the company. upon agreement of the parties.. to wit: (1) the employee-applicant must be regular or must have rendered at least one year of service with the company. 3.." as used in the last sentence of Section 1. hours of work and all other terms and conditions of employment. ID. Interpetatio fienda est ut res magis valeat quam pereat. it must be construed liberally rather than narrowly and technically. By their nature. they are intended to alleviate the economic condition of the workers. in its attempt to justify the discontinuance or withdrawal of the privilege of commutation or conversion to cash of the unenjoyed portion of the sick leave benefit to regular intermittent workers. Gaspar & Associates for petitioner. CASE AT BAR.. in his capacity as an accredited Voluntary Arbitrator and THE ASSOCIATION OF TRADE UNIONS (ATU-TUCP). Article VIII of the 1989 CBA from the other related section on sick leave with pay benefits. SYLLABUS 1. it is not.. refers to the privilege of having a fixed 15-day sick leave with pay which. giving due consideration to the context in which it is negotiated and purpose which it is intended to serve. It is only fair and reasonable for petitioner-company not to stipulate a fixed 15-day sick leave with pay for its regular intermittent workers since. It must be noted that the 1989 CBA has two (2) sections on sick leave with pay benefits which apply to two (2) distinct classes of workers in petitioner's company. — Petitioner-company's objection to the authority of the Voluntary Arbitrator to direct the commutation of the unenjoyed portion of the sick leave with pay benefits of intermittent workers in his decision is misplaced. — Sick leave benefits. and (2) the application must be accompanied by a certification from a company-designated physician. — Whatever doubt there may have been early on was clearly obliterated when petitioner-company recognized the said privilege and paid its intermittent workers the cash equivalent of the unenjoyed portion of their sick leave with pay benefits during the lifetime of the LABOR LAW I CASES (Arts. ID. Metilla for Association of Trade Unions (ATUTUCP). PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS.97-102) |28 . only the nonintermittent workers are entitled to. among others. It is not disputed that both classes of workers are entitled to sick leave with pay benefits provided they comply with the conditions set forth under Section 1 in relation to the last paragraph of Section 3.. Article VIII of the 1989 CBA. ID. find that no grave abuse of discretion was committed by public respondent in issuing the award (decision). the phrase "herein sick leave privilege.. and (2) intermittent field workers who are members of the regular labor pool and the present regular extra labor pool as of the signing of the agreement on April 15. as the term "intermittent" implies. SICK LEAVE BENEFITS.

J p: 901 — 925 8 8 In this petition for certiorari. thus: "ARTICLE VIII Section 1. Article VIII. as revised.050 9 9 The facts are as follows: The conditions for the availment of the herein vacation and sick leaves shall be in accordance with the above provided Sections 1 and 2 hereof. the exclusive collective bargaining agent of the rank and file workers of petitioner-company. 1989. in his capacity as Voluntary Arbitrator of the National Conciliation and Mediation Board. 1985 which.125 10 10 1. — All intermittent field workers of the company who are members of the Regular Labor Pool shall be entitled to vacation and sick leaves per year of service 826 — 900 7 7 901 — 925 8 8 LABOR LAW I CASES (Arts.351 — 1. these may be deemed to have ripened into company practice or policy which cannot be peremptorily withdrawn.350 13 13 1. with pay under the following schedule based on the number of hours rendered including overtime. entered into a collective bargaining agreement (CBA) on October 16. Well-settled is it that the said privilege of commutation or conversion to cash. provides. on several instances in the past. Sick Leaves — The Company agrees to grant 15 days sick leave with pay each year to every regular non-intermittent worker who already rendered at least one year of service with the company. shall be converted to cash and shall be paid at the end of the said one year period.97-102) |29 . Under the circumstances. that only those regular workers of the company whose work are not intermittent." Petitioner Davao Integrated Port Stevedoring Services (petitioner-company) and private respondent ATU-TUCP (Union). AC-211BX1-10-003-91 which directed petitioner to grant and extend the privilege of commutation of the unenjoyed portion of the sick leave with pay benefits to its intermittent field workers who are members of the regular labor pool and the present regular extra pool in accordance with the Collective Bargaining Agreement (CBA) executed between petitioner and private respondent Association of Trade Unions (ATU-TUCP). any unenjoyed portion thereof. from the time it was discontinued and henceforth. — All intermittent field workers of the company who are members of the Regular Labor Pool and present Regular Extra Labor Pool as of the signing of this agreement shall be entitled to vacation and sick leaves per year of service with pay under the following schedule based on the number of hours rendered including overtime. 1989. petitioner Davao Integrated Port Services Corporation seeks to reverse the Award 1 issued on September 10.CBA of October 16. the provisions for sick leave with pay benefits were reproduced under Sections 1 and 3. and if the same is not enjoyed within one year period of the current year.200 11 11 1. granted and paid the cash equivalent of the unenjoyed portion of the sick leave benefits of some intermittent workers. However. Regional Arbitration Branch XI in Davao City in Case No." Section 3. the petitioner-company may not unilaterally withdraw. to wit: DECISION 826 — 900 7 7 ROMERO.051 — 1. to wit: Hours of Service Per Vacation Sick Leave Calendar Year Leave Less than 750 NII NII xxx xxx xxx 751 — 825 6 days 6 days Section 3.500 15 15 Upon its renewal on April 15. Article VIII thereof. being an existing benefit. provide for sick leave with pay benefits each year to its employees who have rendered at least one (1) year of service with the company. 1985 until three (3) months from its renewal on April 15. Abarquez.275 12 12 1. Hours of Service Per Vacation Sick Leave Calendar Year Leave Less than 750 NII NII 751 — 825 6 days 6 days 1. 1991 by respondent Ruben V.276 — 1.425 14 14 1.126 — 1.426 — 1.201 — 1. And provided however. Article VIII of the new CBA. but the coverage of the said benefits was expanded to include the "present Regular Extra Labor Pool as of the signing of this Agreement. thus: "Section 3. It is a fact that petitioner-company had. are entitled to the herein sick leave privilege. 926 — 1. under Sections 1 and 3. such sick leave can only be enjoyed upon certification by a company designated physician. or diminish such benefits. respectively.

as a labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations between labor and capital. Article VIII of the 1989 CBA. can never ripen into a practice. it was well within petitioner-company's rights to rectify the error it had committed and stop the payment of the said sick leave with pay benefits.276 — 1. premises considered. 1989. and the courts must place a practical and realistic construction upon it. refers to a contract executed upon request of either the employer or the exclusive bargaining representative incorporating the agreement reached after negotiations with respect to wages.425 14 14 1. to act as voluntary arbitrator. all the field workers of petitioner who are members of the regular labor pool and the present regular extra labor pool who had rendered at least 750 hours up to 1. Beltran who misinterpreted Sections 1 and 3 of Article VIII of the 1985 CBA.97-102) |30 . respectively. thus. thus: ". stopped the payment of its cash equivalent on the ground that they are not entitled to the said benefits under Sections 1 and 3 of the 1989 CBA.126 — 1.351 — 1. 5 LABOR LAW I CASES (Arts.050 9 9 1. Article VIII of the CBA. Jr. giving due consideration to the context in which it is negotiated and purpose which it is intended to serve. the dispositive portion of which reads: "WHEREFORE. as used in Article 252 of the Labor Code. An error in payment. 2 public respondent Ruben Abarquez. As such. Any unenjoyed portion thereof at the end of the current year was converted to cash and paid at the end of the said one-year period pursuant to Sections 1 and 3.201 — 1." During the effectivity of the CBA of October 16. SO ORDERED. We find the arguments unmeritorious. however. .500 hours were extended sick leave with pay benefits. The Union objected to the said discontinuance of commutation or conversion to cash of the unenjoyed sick leave with pay benefits of petitioner's intermittent workers contending that it is a deviation from the true intent of the parties that negotiated the CBA. an ordinary contract to which is applied the principles of law governing ordinary contracts. Article VIII of the CBA.426 — 1. Regional Arbitration Branch XI at Davao City by way of complaint for enforcement of the CBA. including proposals for adjusting any grievances or questions arising under such agreement. the instant petition. the Union brought the matter for voluntary arbitration before the National Conciliation and Mediation Board. Upon failure of the parties to amicably settle the issue on the interpretation of Sections 1 and 3. . Benjamin Marzo (who replaced Mr.051 — 1. that only those regular workers of the Company whose work are not intermittent are entitled to the herein sick leave privilege. hours of work and all other terms and conditions of employment. Jr. While the terms and conditions of a CBA constitute the law between the parties. The number of days of their sick leave per year depends on the number of hours of service per calendar year in accordance with the schedule provided in Section 3.926 — 1. Article VIII of the 1989 CBA that only the regular workers whose work are not intermittent are entitled to the benefit of conversion to cash of the unenjoyed portion of sick leave. upon the latter's resignation in June 1989). however. After the parties had filed their respective position papers. however. it must yield to the common good. 1991 an Award in favor of the Union ruling that the regular intermittent workers are entitled to commutation of their unenjoyed sick leave with pay benefits under Sections 1 and 3 of the 1989 CBA. according to petitioner-company. or until July 1989 (a total of three (3) years and nine (9) months). the management of the respondent Davao Integrated Port Stevedoring Services Corporation is hereby directed to grant and extend the sick leave privilege of the commutation of the unenjoyed portion of the sick leave of all the intermittent field workers who are members of the regular labor pool and the present extra pool in accordance with the CBA from the time it was discontinued and henceforth. The parties mutually designated public respondent Ruben Abarquez.200 11 11 1. And provided. is not merely contractual in nature but impressed with public interest. discontinued or withdrawn when petitioner-company under a new assistant manager. 1985 until three (3) months after its renewal on April 15. Jr.350 13 13 1.500 15 15 The conditions for the availment of the herein vacation and sick leaves shall be in accordance with the above provided Sections 1 and 2 hereof. Petitioner-company argued that it is clear from the language and intent of the last sentence of Section 1.125 10 10 1. 3 it is not. The commutation of the unenjoyed portion of the sick leave with pay benefits of the intermittent workers or its conversion to cash was. Cecilio Beltran. Mr. that it would violate the principle in labor laws that benefits already extended shall not be taken away and that it would result in discrimination between the nonintermittent and the intermittent workers of the petitioner-company." Petitioner-company further argued that while the intermittent workers were paid the cash equivalent of their unenjoyed sick leave with pay benefits during the previous management of Mr. 4 A CBA. hence." Petitioner-company disagreed with the aforementioned ruling of public respondent. A collective bargaining agreement (CBA).275 12 12 1. it must be construed liberally rather than narrowly and technically. issued on September 10.

there is irregularity in their work-days. After a careful examination of Section 1 in relation to Section 3. these may be deemed to have ripened into company practice or policy which cannot be peremptorily withdrawn. we find and so hold that the last sentence of Section 1. It must be noted that the 1989 CBA has two (2) sections on sick leave with pay benefits which apply to two (2) distinct classes of workers in petitioner's company. Article VIII of the 1989 CBA. 12 Moreover. It is not disputed that both classes of workers are entitled to sick leave with pay benefits provided they comply with the conditions set forth under Section 1 in relation to the last paragraph of Section 3. the petitioner-company may not unilaterally withdraw. 1989. petitioner-company's objection to the authority of the Voluntary Arbitrator to direct the commutation of the unenjoyed portion of the sick leave with pay benefits of intermittent workers in his decision is misplaced. If they are treated equally with respect to vacation leave privilege. specifically Section 3 thereof. as mandated by Section 1." as used in the last sentence of Section 1. or a period of three (3) years and nine (9) months.97-102) |31 . Such interpretation is to be adopted. and (2) intermittent field workers who are members of the regular labor pool and the present regular extra labor pool as of the signing of the agreement on April 15. upon agreement of the parties. like other economic benefits stipulated in the CBA such as maternity leave and vacation leave benefits. Any other distinction would cause discrimination on the part of intermittent workers contrary to the intention of the parties that mutually agreed in incorporating the questioned provisions in the 1989 CBA. 1985 until three (3) months from its renewal on April 15. including overtime pursuant to the schedule provided therein. 6 They are noncontributory in nature. Interpetatio fienda est ut res magis valeat quam pereat. For the phrase "herein sick leave privilege. 10 It is a fact that petitioner-company had. and (2) the application must be accompanied by a certification from a company-designated physician.noncommutable and non-cumulative. Article 261 of the Labor Code is clear." We. if the intention were otherwise. granted and paid the cash equivalent of the unenjoyed portion of the sick leave benefits of some intermittent workers. or diminish such benefits. Reasonable and practical interpretation must be placed on contractual provisions. among others. in its attempt to justify the discontinuance or withdrawal of the privilege of commutation or conversion to cash of the unenjoyed portion of the sick leave benefit to regular intermittent workers. being an existing benefit.It is thus erroneous for petitioner to isolate Section 1. in relation to Section 3. Article VIII of the 1989 CBA between the two classes of workers in the company insofar as sick leave with pay benefits are concerned. are by their nature. to wit: (1) the employee-applicant must be regular or must have rendered at least one year of service with the company. Article VIII. 9 Besides. The manner they were deprived of the privilege previously recognized and extended to them by petitioner-company during the lifetime of the CBA of October 16. Article VIII of the 1989 CBA. 1985 until three (3) months from its renewal on April 15. intended to be replacements for regular income which otherwise would not be earned because an employee is not working during the period of said leaves. 11 Under the circumstances. extended to intermittent workers under Section 3 depending on the number of hours of service rendered to the company. Sick leave benefits. Article VIII of the 1989 CBA from the other related section on sick leave with pay benefits. Public respondent correctly observed that the parties to the CBA clearly intended the same sick leave privilege to be accorded the intermittent workers in the same way that they are both given the same treatment with respect to vacation leaves . is not only tainted with arbitrariness but likewise discriminatory in nature. they are intended to alleviate the economic condition of the workers. find that no grave abuse of discretion was committed by public respondent LABOR LAW I CASES (Arts. Petitioner-company is of the mistaken notion that since the privilege of commutation or conversion to cash of the unenjoyed portion of the sick leave with pay benefits is found in Section 1. This fixed 15-day sick leave with pay benefit should be distinguished from the variable number of days of sick leave. as the term "intermittent" implies. in the sense that the employees contribute nothing to the operation of the benefits. therefore. Article VIII of the 1989 CBA in light of the facts and circumstances attendant in the instant case. why did not the parties expressly stipulate in the 1989 CBA that regular intermittent workers are not entitled to commutation of the unenjoyed portion of their sick leave with pay benefits? Whatever doubt there may have been early on was clearly obliterated when petitioner-company recognized the said privilege and paid its intermittent workers the cash equivalent of the unenjoyed portion of their sick leave with pay benefits during the lifetime of the CBA of October 16. during its renegotiation. refers to the privilege of having a fixed 15-day sick leave with pay which. The questioned directive of the herein public respondent is the necessary consequence of the exercise of his arbitral power as Voluntary Arbitrator under Article 261 of the Labor Code "to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement. namely: (1) the regular non-intermittent workers or those workers who render a daily eight-hour service to the company and are governed by Section 1. 7 By their nature. 1989 or those workers who have irregular working days and are governed by Section 3. only the non-intermittent workers are entitled to. only the regular non-intermittent workers and no other can avail of the said privilege because of the proviso found in the last sentence thereof. that the thing may continue to have efficacy rather than fail. Well-settled is it that the said privilege of commutation or conversion to cash. with more reason should they be on par with each other with respect to sick leave privileges. if qualified. 8 We find the same to be a reasonable and practical distinction readily discernible in Section 1. It is only fair and reasonable for petitioner-company not to stipulate a fixed 15-day sick leave with pay for its regular intermittent workers since. on several instances in the past. Article VIII of the 1989 CBA. 1989. invoked by petitioner-company does not bar the regular intermittent workers from the privilege of commutation or conversion to cash of the unenjoyed portion of their sick leave with pay benefits. not to exceed 15 days.

Article VIII of the 1989 CBA cannot be faulted with and is absolutely correct. the petition is DISMISSED. Moreover. 1991 is hereby AFFIRMED.97-102) |32 .in issuing the award (decision). SO ORDERED. his interpretation of Sections 1 and 3. No costs. LABOR LAW I CASES (Arts. The award (decision) of public respondent dated September 10. in view of the foregoing. WHEREFORE.

On September 8. Case No. on the ground of grave abuse of discretion. Four (4) collective bargaining agreements separately covering the petitioner's employees in its: 1. 2. without notice. 58-59. 1989. After conciliation efforts of the National Conciliation and Mediation Board (NCMB) yielded negative results. the decision dated August 8. After the parties had filed their pleadings.. were negotiating. Thereafter. On September 2. the NLRC issued a resolution denying the motions for reconsideration. However. while the parties. 1988. 3. 1988. with the Cagayan de Oro factory workers. By reason of its incorporation. (p. alleging that since its retirement plan is non-contributory. on March 30. 32.FIRST DIVISION G. UFE was certified as the sole and exclusive bargaining agent for all regular rank-and-file employees at the petitioner's Cagayan de Oro factory. 1987 up to December 8. "In Re: Labor Dispute of Nestlé Philippines. vs. In spite of that order. We need to clarify Our resolution on this issue. Inc. The NLRC affirmed the dismissals on November 2. 1989 of the National Labor Relations Commission (NLRC). respondents.: Nestlé Philippines. the UFE declared a bargaining deadlock. it (Nestlé) has the sole and exclusive prerogative to define the terms of the plan "because the workers have no vested and demandable rights thereunder. 1988. Second Division. seeks to annul. On August 8. Inc. c) 20 years or more — 150% of the employee's monthly salary for every year of service. 1988. 1988. the grant thereof being not a contractual obligation but merely gratuitous. Rollo. the NLRC issued a resolution on June 5. the employees at Cabuyao resorted to a "slowdown" and walk-outs prompting the petitioner to shut down the factory. Makati Administration Office. (pp. at the Alabang/Cabuyao factory. the plan assumes a consensual character which cannot be terminated or modified at will by either party. 1987. 91231 February 4. Retirement Plan The company shall continue implementing its retirement plan modified as follows: a) for fifteen years of service or less — an amount equal to 100% of the employee's monthly salary for every year of service. With regard to the Retirement Plan. We find no cogent reason to alter our previous decision on this matter. THE NATIONAL LABOR RELATIONS COMMISSION and UNION OF FILIPRO EMPLOYEES. 1987. On the contrary. (Both Alabang/Cabuyao factories and Makati office were represented by the respondent. as well as its Cebu/Davao Sales Office. While it is not disputed that the plan is non-contributory on the part of the workers. J. The company retaliated by dismissing the union officers and members of the negotiating panel who participated in the illegal strike. 1987. the union struck. 0522 entitled. the plan is specifically mentioned in the previous bargaining agreements (Exhibits "R-1" and "R-4"). the Makati office and Cagayan de Oro factory on September 11. GRIÑO-AQUINO. INC. thereby integrating or incorporating the provisions thereof to the agreement. in Cert. Consequently." insofar as it modified the petitioner's existing non-contributory Retirement Plan. 1991 NESTLÉ PHILIPPINES. all expired on June 30. Cebu/Davao Sales Offices represented by the Trade Union of the Philippines and Allied Services (TUPAS). On January 26.97-102) |33 . Cagayan de Oro Factory represented by WATU. the NLRC held: Anent management's objection to the modification of its Retirement Plan. by this petition for certiorari. 1987. the dispute was certified to the NLRC by the Secretary of Labor on October 28. When we increased the emoluments in the plan.R. 1989. tills does not automatically remove it from the ambit of collective bargaining negotiations. the Secretary of Labor assumed jurisdiction and issued a return to work order. and on August 5. The union assailed the validity of those agreements and filed a case of unfair labor practice against the company on November 16. At most the company can only be directed to maintain the same LABOR LAW I CASES (Arts. Union of Filipro Employees [UFE]). 1987. No. whose pertinent disposition regarding the union's demand for liberalization of the company's retirement plan for its workers.) On December 14. b) more than 15 but less than 20 years — 125% of the employee's monthly salary for every year of service. Rollo. the petitioner filed this petition for certiorari.. the company was able to conclude a CBA with the union at the Cebu/Davao Sales Office. However. Marathon collective bargaining negotiations between the parties ensued. and 4. it becomes part and parcel of CBA negotiations. 1989. In August.) Both parties separately moved for reconsideration of the decision. the conditions for the availment of the benefits set forth therein remain the same. provides as follows: xxx xxx xxx 7. Alabang/Cabuyao factories. 1988. petitioner. UFE filed a notice of strike on the same ground of CBA deadlock and unfair labor practices.

subparagraph [i] of the Labor Code). 57. 109. 89766. et al. The deadlock between the company and the union on this issue was resolvable by the Secretary of Labor. 13th and 14th month pay. but the company was adamant. seniority pay. vacation. Hon.) The NLRC's resolution of the bargaining deadlock between Nestlé and its employees is neither arbitrary. has no merit for employees do have a vested and demandable right over existing benefits voluntarily granted to them by their employer. The benefits and concessions given to the employees were based on the NLRC's evaluation of the union's demands. and the recent trends in the industry to which the Company belongs (p.97-102) |34 . president of Nestlé Philippines. The Court agrees with the NLRC's finding that the Retirement Plan was "a collective bargaining issue right from the start" (p. . is not welltaken. The company's contention that its retirement plan is non-negotiable. No. Tiangco. the petition for certiorari is dismissed. The union thereafter modified its proposal. the parties themselves expressly included retirement benefits among the economic issues to be resolved by voluntary arbitration. The petitioner's contention. Honorable Panel of Arbitrators. CBA previously entered into by the parties included provisions for the implementation of a "Retirement and Separation Plan. gives "a consensual character" to the plan so that it may not be terminated or modified at will by either party (p. vs. and competitive with those existing in the industry. almost all of the benefits that the petitioner has granted to its employees under the CBA — salary increases. the evidence adduced by the parties. WHEREFORE. with costs against the petitioner. Petitioner's claim that retirement benefits. reward their loyalty. The union's original proposal was to modify the existing plan by including a provision for early retirement. sick & other leaves with pay — are noncontributory benefits. Petitioner is estopped from now contesting the validity of the increased award granted by the arbitrators. the economic conditions prevailing in the country as they affect the purchasing power of the employees as well as its concommitant effect on the other factors of production. Rollo). Rollo).1âwphi1 The NLRC correctly observed that the inclusion of the retirement plan in the collective bargaining agreement as part of the package of economic benefits extended by the company to its employees to provide them a measure of financial security after they shall have ceased to be employed in the company. after the Secretary had assumed jurisdiction over the labor dispute (Art. As a matter of fact. The expired LABOR LAW I CASES (Arts. 32. Rollo). Labor Code. that the employees contribute nothing to the operation of the plan. are not proper subjects for voluntary arbitration is devoid of merit. 1987 to Arthur Gilmour.but not to change its terms. The fact that the retirement plan is non-contributory.. Leogardo. Its decision is not vitiated by abuse of discretion. Since the retirement plan has been an integral part of the CBA since 1972. 19.e. 263. its longterm viability. the impassé on the retirement plan become one of the issues certified to the NLRC for compulsory arbitration." it is only to be expected that the parties would seek a renewal or an improvement of said item in the new CBA. eliminate or diminish such benefits (Art. Rollo. or the NLRC. The latter may not unilaterally withdraw. i. . midyear bonuses. SO ORDERED. 145. The company did not question the validity of that proposal as a collective bargaining issue but merely offered to maintain the existing non-contributory retirement plan which it believed to be still adequate for the needs of its employees. In fact. Rollo) for the improvement of the existing Retirement Plan was one of the original CBA proposals submitted by the UFE on May 8. being noncontributory in nature. G. capricious. nor whimsical. Feb. (p. the Union's demand to increase the benefits due the employees under said plan. health and dental services. medical and hospitalization plans. It should be left to the discretion of the company on how to improve or mollify the same" (p. 100. 122 SCRA 267). Consequently. This Court ruled similarly in Republic Cement Corporation vs. rice allowances. et al. boost their morale and efficiency and promote industrial peace. that employees have no vested or demandable right to a non-contributory retirement plan. does not make it a non-issue in the CBA negotiations. 10.R. the financial capacity of the Company to grant the demands. 1990: . is a valid CBA issue..

respondents. despite the "no work. Solomon Clarin. the respondent Deputy Minister of Labor and Employment modified the order and directed the petitioners to restore and pay the individual respondents their fixed monthly allowance from March. were batillos engaged by Victoria Tiangco. FRUTO GIHAPON. His business is capitalized at P2. they no longer paid allowances for non-working days. HON. Ernesto Batoy. and Graciano Durana. or with grave abuse of discretion in ordering them to pay the private respondents a fixed monthly allowance from March. Rizal. PEPITO BATOY.00. Rogelio Carabio. a daily extra pay in amounts ranging from 30 centavos to 10 pesos which are sufficient to offset the laborers' claim for service incentive leave and legal holiday pay. JESUS GILBUENA. AURELIO ILUSTRISIMO. 1980. AGUEDO MARABE. Tomas Capalar. ERNESTO DIONG. JOSE OFQUERIA. Rustom Ofqueria. Juan Castro. JUAN GIHAPON. Jose Ofqueria. JR. Victoria Tiangco. and effective February. The private respondents should not be paid their allowances during non-working days. The private respondents.00. that no law was violated as their refusal to pay allowances for non-working days is in consonance with the principle of "no work. CLEMENTE VILLARUEL. 7 When their motion for the reconsideration of the above order was denied. Antonio Gilbuena. The petitioner. JUAN CASTRO.. Pepito Batoy.97-102) |35 . service incentive pay. Alcafone Esgana. ABRAHAM GILBUENA. 3 The work of these batillos were limited to days of arrival of the fishing vessels and their working days in a month are comparatively few. They argued. CONCEPCION. no allowance". On May 22. the record shows that the private respondents work for the petitioners on a part-time basis and their work average only four (4) days a week. and that they could not pay private respondents a fixed monthly allowance without risking the viability of their business. the private respondents' consent to receive an allowance for days worked for. in contravention of Article 100 of the new Labor Code which prohibits the elimination or diminution of existing benefits. 1977 to February 21. 1981.000.'production incentive benefit". Abraham Gilbuena. PEPITO GILBUENA. are batillos engaged by the petitioner Reynaldo Tiangco to unload the fish catch from the vessels and take them to the Fish Stall of the petitioner Victoria Tiangco. 5 Resolving the case. ANTONIO GILBUENA. Fruto Gihapon. Daniel Cabrera.000. 2 The private respondents. Reynaldo Tiangco. EDDIE BATOBALANOS. Dominador Lacerna. Clemente (Emerenciano) Villaruel." law. The petitioners claim that the respondent Deputy Minister of Labor and Employment acted in excess of jurisdiction. ROBERTO BAYON-ON. SOLOMON CLARIN. the petitioners interposed the present recourse." and private respondents are not entitled to a fixed monthly allowance since they work on a part time basis which average only four (4) days a week. Indeed. ELIAS ESCARAN. petitioners. Their working hours average four (4) hours a day. 4 The petitioners denied the laborers' contention. both parties appealed. he denied the laborers' claim for differentials in the emergency cost of living allowance for the reason that the emergency cost of living allowance accrues only when the laborers actually work following the principle of "no work. 1980. No. as well as underpayment of their emergency cost of living allowances which used to be paid in full irrespective of their working days. As regards the claim for emergency allowance differentials. DOMINADOR LASERNA. RUSTOM OFQUERIA. but which were reduced effective February. ALCAFONE ESGANA.SECOND DIVISION G. VICENTE LEOGARDO. J. 6 From this order. with preliminary injunction and/or restraining order. Pepito Gilbuena. vs. however.. payment of which cannot be used to offset a benefit provided by law. 1980. 1980. as underpayment of their living allowance from May. 1 while the petitioner. It is not also LABOR LAW I CASES (Arts. separate and distinct from the service incentive leave pay and legal holiday pay. 1980. no pay. JR. Eddie Batobalanos. Elias Escaran and Roberto Bayon-on. 1980 and to pay them the amount of P58. to annul and set aside the order of the respondent Deputy Minister of Labor which modified and affirmed the order of Director of the National Capitol Region of the Ministry of Labor directing the petitioners to pay the private respondents their legal holiday pay. TOMAS CAPALAR. is a fish broker whose business is capitalized at P100. and differentials in their emergency cost of living allowances. the Director of the National Capitol Region of the Ministry of Labor and Employment ruled that the daily extra pay given to private respondents was a . 1983 REYNALDO TIANGCO and VICTORIA TIANGCO.R.860. no pay. However. Juan Gihapon. the private respondents filed a complaint against the petitioners with the Ministry of Labor and Employment for non-payment of their legal holiday pay and service incentive leave pay. Serafio Yadawon. L-57636 May 16. and SERAFIO YADAWON. Ernesto Diong. is a fishing operator who owns the Reynaldo Tiangco Fishing Company and a fleet of fishing vessels engaged in deep-sea fishing which operates from Navotas. Gregorio Laylay. ERNESTO BATOY. as Deputy Minister of the Ministry of Labor and Employment. Aurelio Ilustrisimo. DANIEL CABRERA. Aguedo Marabe. Jesus Gilbuena.000.: Petition for certiorari and prohibition. claiming that the laborers were all given. the petitioners admitted that they discontinued their practice of paying their employees a fixed monthly allowance. GREGORIO LAYLAY. in addition to their regular daily wage. and the findings of the Director of the National Capitol Region that private respondents work for other employers and are part-time employees of the petitioners. On April 8. GRACIANO DURANA. and ordered the petitioners to pay the private respondents their service incentive leave pay and legal holiday pay. ROGELIO CARABIO. as stated in their appeal.00.

The petitioners contend that the emergency cost of living allowances of the private respondents had been paid in full. while the remaining seventeen (17) were employed by the petitioner Victoria LABOR LAW I CASES (Arts. This requirement shall apply to any employee with more than one employer. — Employees shall be paid in full the monthly allowances on the basis of the scales provided in Section 3 hereof. the discontinuance of the practice and/or agreement unilaterally by the petitioners contravened the provisions of the Labor Code. 1977 to February 20.00 a month. or higher. is less than P100. the respondent Deputy Minister of Labor and Employment correctly ruled that since the petitioners had been paying the private respondents a fixed monthly emergency allowance since November. and voluntary employer practice.D. 1123. Section 16 of the Rules on P. Rogelio Carabio. 525 and subsequent amendatory decrees. whichever is applicable and higher is at least P100. were employees of the petitioner Reynaldo Tiangco.D. Dominador Lacerna. — Nothing herein shall prevent the employer and his employees from entering into any agreement with terms more favorable to the employees than those provided therein. — Every covered employer shall give to each of his employees who is receiving less than P600. Section 7 of the Rules and Regulations implementing P. Allowance on Daily Paid & Part — Time employees. 525 and Section 16 of the Rules on P. a revision of the amount due the private respondents is in order for the reason that the respondent Deputy Minister of Labor and Employment failed to take into consideration. Ernesto Diong.disputed that the private respondents work for more than one employer so that the private respondents should be paid their living allowance only for the days they actually worked in a week or month and all the employers of the employee shall share proportionately in the payment of the allowance of the employee. in computing the amount due each worker. as follows: Section 7.00 where the authorized capital stock or total assets. is 71 million or more. However.000.860. D. Emerenciano Villaruel. also provides. and voluntary employer practice. wherein the amount of the emergency cost of living allowance to be paid to a worker is made to depend upon the capitalization of the business of his employer or its total assets. 525 provides. increasing the emergency allowance under P. contrary to the provisions of P. However. regardless of the number of their regular working days. Section 12 of the Rules and Regulations implementing P.00 a month.00 a month not less than the following allowances. In case of part-time employment. Section 15 of the Rules on P. Nothing herein shall prevent employers from granting allowances to their employees who will receive more than P600. 525 which made mandatory the payment of emergency cost of living allowances to workers in the private section. as follows: Section 11. agreements.00 to the private respondents as underpayment of respondents' allowances from May. the allowance to be paid shall be proportionate to the time worked by the employee. 1980. or be construed to sanction the diminution of any benefit granted to the employees under existing laws. Rustom Ofquiera. provides. may grant his employees an allowance which if added to their monthly salary. Pepito Gilbuena. the private respondents admit that only ten (10) of them. Relation to other agreements.00 but less than P 1miilion and (c) P15. on the basis of the scales provided in Section 7 hereof. Thus. Abraham Gilbuena.00. as a matter of practice and/or verbal agreement between the petitioners and the private respondents. (b) P30. Section 15 of the Rules on P. as follows: Section 15. 1980. In case of part-time employment. whichever is higher.D. as follows: Section 16. It provides. Amount of Allowances. including the allowances. The petitioners further claim that the respondent Deputy Minister of Labor and Employment erred in ordering them to pay the amount of P58. 1123 similarly prohibits diminution of benefits. Relation to Agreement.D. — Nothing herein shall prevent employers from granting allowances to their employees in excess of those provided under the Decree and the Rules nor shall it be construed to countenance any reduction of benefits already being enjoyed. If employed by more than one employer. 525 reads. An employer. as follows: Section 12. In this case. We find no merit in the contention. if they incur no absence during the month. will not yield to them more than P600. and Graciano Durana. If they incur absences.00 where the authorized capital stock or total assets. particularly Article 100 thereof which prohibits the elimination or diminution of existing benefits. Allowances of full-time and part-time employees.97-102) |36 .000. however. agreements.D. 525. the allowances shall be paid in the amount proportionate to the time worked by the employee.D.D. all employers of such employee shall share proportionately in the payment of the allowance of the employee. whichever is applicable and higher. 1976 up to February. the amounts corresponding to their absences may be deducted from the monthly allowance.D. — Employees who are paid on a daily basis shall be paid their allowances for the number of days they actually worked in a week or month. whichever is applicable and higher. (a) P50. the fact that the private respondents are employed by two different individuals whose businesses are divergent and capitalized at various amounts. Section 11 of the Rules implementing P. 1123 also prohibits the diminution of any benefit granted to the employees under existing laws. Jesus Gilbuena. namely: Aurelio Ilustrisimo.00 where the authorized capital stock or total assets.

the following amendatory decrees. After P. The record shows that during this period. each. 1980. 1977. as a fishing operator with a fleet of fishing vessels.00 each. 1980. 1979.D. while the petitioner Reynaldo Tiangco should pay the amount of P250.00 for everybatillo under her employ for the 23month period. he should pay his workers differentials in the amount of P120. 18 Hence. 1980 to May. however. each as allowance for that month. providing for an across-the-board increase of P60. 19 the workers employed by her should be paid P50. paid to Juan Gihapon and Roberto Bayonon.00 a month effective May 1.00 a month effective September 1. that both petitioners paid their workers only P120.00. the petitioner Victoria Tiangco should pay her workers a fixed monthly allowance of P 30.00. 1980.00.00 a month in the case of the petitioner Victoria Tiangco. 1123. the record shows that his workers were only paid P60.00 a month for the months of January and February. in the allowances of the workers of the petitioner Victoria Tiangco in the amount of P30. therefore. there was an underpayment of P20. and P340. 1979.00 a month. however. are entitled to differentials in the amount of P50. 1979. a day. 14 There was a difference of P30.00 each. 2.D. were entitled to a monthly allowance of P230. and 4. 1979 and another P30. 1980. 1979. P.00) than those workers employed by the petitioner Reynaldo Tiangco whose business.00 a day from February 21. 1980. 1634.00 a month.00. paid to Eddie Batobalanos and Fruto Gihapon.D. 1634.D. the employees of the petitioner Victoria Tiangco were entitled to a fixed monthly allowance of P150. 3. But. the workers of the petitioner Reynaldo Tiangco were entitled to receive a fixed monthly allowance of P110. 10 Accordingly. 1678. the workers of the petitioner Victoria Tiangco. 1980. the workers of the petitioner Victoria Tiangco were entitled to a fixed monthly allowance of P90. 1976 to April 30.00 for the 23-month period. Accordingly. The record shows.00 a month in their allowances.00 a month. directing the payment of additional allowances to employees. however. 1980. for the said month. the workers should be paid an additional P2. 1979 to February. is capitalized at more than P2. With the addition of P60. and are entitled to receive a fixed monthly allowance of P50. each. in the case of the petitioner Reynaldo Tiangco. there was also underpayment in their allowances. the petitioner Victoria Tiangco was paying her workers a monthly allowance of P30. for the months of September. each batillo hired by him should be paid a differential of P1.00 a month. or a difference of P30.00. 1980. P. a month. 1678.00 a month for the months of September to December. Hence. For the period from April. for this period. For the period from May. failed to pay the fixed monthly allowance of their workers which was P240.00.00 a month. The record shows that the petitioners had complied with this requirement. 1980.00 effective January 1. The record shows. since. while the workers of the petitioner Reynaldo Tiangco were entitled to a fixed monthly allowance of P50. a month beginning January. for the month of March.00 a month beginning January 1.00. 1979. 1614.00. except Juan Gihapon and Roberto Bayon-on who should be paid P30. 9 should receive a lesser amount of allowance (P30.000. in the case of the workers of the petitioner Reynaldo Tiangco. Consequently. beginning February. For the 6-month period. each. The workers of the petitioner Reynaldo Tiangco. For this period.00 across-the-board increase in their allowances. they should be paid the amount of LABOR LAW I CASES (Arts. in the case of the workers employed by the petitioner Victoria Tiangco. 1123 which granted an across-the-board increase of P60.Tiangco.00. 8 Accordingly. the said petitioner paid her workers only P60.00. the lowest of which was P30.00. instead of P50. The petitioner Reynaldo Tiangco.00. paid his employees P30.00 a month as differentials for the months of March.D. as mandated by law.00 a month from September. 1980. and another P30.000. 17 The petitioners. for the month of March.D. P.00. upon the other hand. therefore. 12 There was. 20 Hence. The private respondents hired by the petitioner Reynaldo Tiangco. the workers of the petitioner. as differentials in the cost of living allowances of the workers under his employ. pursuant to P. and P50. having received the amount of P210. 1980. 1977. 1614.00. For the month of April.97-102) |37 . the respondents employed by Victoria Tiangco are wining to accept P50. 1979 to August.00. which directed the payment of P60.D. pursuant to P.00. and P260. the petitioner Victoria Tiangco paid her workers varying amounts.D.150.00.which directed the payment of an additional P2. which provided for the payment of an additional P60. 11 Therefore.00 while the workers employed by the petitioner Reynaldo Tiangco were entitled to an allowance of P170. however.00.00 each. 1977 to March 1979. each. effective September. 1980. a month.00 a month. 1979. a month beginning January.00 a month for the same period. and the highest of which was P210. P.00 for each batillo in her employ. Upon the promulgation of P. However. Thus. or P300. 13 or a difference of P50. upon the other hand. 16 There was underpayment. were promulgated: 1.D. the petitioner Victoria Tiangco should pay the amount of P150. 21. an underpayment of P690. or P180.00 a month effective September. Hence. whose business as fish broker is capitalized at P100.00 to P210. 15 and P210. Then. for the period from November.00.00.00 in view of the promulgation of P.00 monthly allowance effective April 1.000. and P260. however. 525.00 to each batillo in her employ.00.00 a month for each batillo under his employ. were paid varying amounts ranging from P120.00. that both petitioners paid their workers the amounts of P180. Victoria Tiangco.00. there was no underpayment for this period insofar as her batillos are concerned. there was underpayment in their emergency cost of living allowances. the workers of the petitioner Victoria Tiangco were entitled to receive a fixed monthly allowance of P210. directing the payment of an additional P60.

22 Since they were entitled to a fixed monthly allowance of P260. Gregorio Laylay.. ranging from P210. 1 7 0 . 1980.. the respondents Rustom Ofqueria and Aurelio Ilustrisimo. each. there was underpayment in their cost of living allowances. and Gregorio Laylay who should be paid P30. were not also paid their emergency cost of living allowance in full.. 0 0 5... the said petitioner should pay his workers the amount of P30. Jesus Gilbuena.00...... .. 1980.. Rogelio Carabio... 0 0 4. and Solomon Clarin. the amount of P10. who are entitled to only P40. Juan Castro. the workers of the petitioner Reynaldo Tiangco.. the amount of P40.. 0 0 Aguedo Morabe..... as they are hereby...00. except for Pepito Gilbuena. 1 5 0 . 1 . .00...00.. ... The workers were paid varying amounts of P130....... 2.. also paid the employees varying amounts. as emergency cost of living allowance.. each. 1980.00. who should be paid P40. . the amount of P20... the respondents Dominador Lacerna and Graciano Durano. each. 1 7 0 . 1 5 0 . The petitioner. 1 . 1980......00 each for the month of May.. Daniel Cabrera. Antonio Gilbuena. Pepito Batoy..00..00 each. 23 Hence. they should be paid the amount of P50. 1980. Reynaldo Tiangco. the petitioner should pay the respondent Pepito Gilbuena the amount of P50. except for Juan Gihapon. The petitioner..00..00 each. Eddie Batobalan os.... the respondent Ernesto Diong. each..00.. instead of P260.00..00.. and Aguedo Marabe.. For the month of April.. each.. each..00 each.. the petitioners Victoria Tiangco and Reynaldo Tiangco should be. 0 0 For the month of May.. 0 0 3.. WHEREFORE.. 1 7 0 .... 24 Hence. and Emerenciano Villaruel... Jesus Gilbuena. 22.00.. Reynaldo Tiangco did not also pay his workers their full cost of living allowance for the month of May..97-102) |38 . Fruto Gihapon. and Graciano Durano. paid her workers varying amounts less that what was provided for by law. 1 ....... as required by law. and the respondents Abraham Gilbuena..00. and Rustom Ofqueria. Accordingly.. 1 6 0 . the petitioner Victoria Tiangco.00 to P150... ordered to PAY the private respondents the following amounts as differentials in their emergency cost of living allowance: Petitioner Victoria Tiangco: 1 ...P50... LABOR LAW I CASES (Arts.... 21 Hence. for this month. 1 .00 each. they should be paid the amunt of P50... who should be paid the amount of P50. Solomon Clarin . P l..... for the month of March... the amount of P30. 0 0 6....00 to P250..... 1 . .

97-102) |39 ... .. . 1 ............ 1 5 0 LABOR LAW I CASES (Arts. . 1 5 0 .... ........ 1 5 0 ...... Jose Ofqueria.... 0 0 14. .. 0 0 12....... 1 6 0 .... 1 .. 9. ... 1 4 0 ... Ernesto Batoy.. 0 0 13... 1 ........... 1 .... 1 7 0 ............ ............ 0 0 Alcafone Esgana........ .. 1 7 0 ... 1 6 0 ........ 0 0 15.. 1 .......... Serapio Yadawon... 8. 0 0 Juan Castro.... .... .. .. 0 0 Tomas Capalar ...... 0 0 16..... 1 . 11..... Antonio Gilbuena.......... 10. .. 1 . 1 7 0 .. Juan Gihapon.. 1 .... 1 7 0 ................ 1 .... Elias Escaran ..... .. .. 1 ... 0 0 Daniel Cabrera......7..

.
0
0
17.

Roberto
Bayonon.............
.

1
,
1
3
0
.
0
0

4.

Abraha
m
Gilbuen
a...........
..

1
,
9
1
0
.
0
0

5.

Rustom
Ofqueri
a...........
.....

1
,
9
3
0
.
0
0

6.

Ernesto
Diong....
.............
...

1
,
9
3
0
.
0
0

7.

Jesus
Gilbuen
a...........
........

1
,
9
2
0
.
0
0

8.

Emeren
ciano
Villaruel.
.......

1
,
9
1
0
.
0

Petitioner Reynaldo Tiangco:
1

.

2.

3.

Aurelio
Ilustrisi
mo........
....

P

Pepito
Gilbuen
a...........
......

1
,
9
7
0
.
0
0

Rogelio
Carabio.
.............
...

1
,
9
1
0
.
0
0

l
,
9
2
0
.
0
0

LABOR LAW I CASES (Arts.97-102) |40

0
9.

Domina
dor
Lacerna
............

1
,
9
4
0
.
0
0

10.

Gracian
o
Durano.
.............
...

1
,
9
5
0
.
0
0

With this modification, the judgment appealed from is AFFIRMED in all other
respects. With costs against the petitioners.
SO ORDERED.

LABOR LAW I CASES (Arts.97-102) |41

SECOND DIVISION
G.R. No. 74156 June 29, 1988
GLOBE MACKAY CABLE AND RADIO CORPORATION, FREDERICK WHITE and
JESUS
SANTIAGO,petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, FFW-GLOBE MACKAY
EMPLOYEES UNION and EDA CONCEPCION, respondents.
MELENCIO-HERRERA, J.:
A special civil action for certiorari with a prayer for a Temporary Restraining Order to
enjoin respondents from enforcing the Decision of 10 March 1986 of the National
Labor Relations Commission (NLRC), in NCR Case No. 1-168-85 entitled "FFWGlobe Mackay Employees Union, et al., vs. Globe Mackay Cable & Radio
Corporation, et al.," the dispositive portion of which reads:
WHEREFORE, premises considered, the appealed Decision is as it is hereby
SET ASIDE and another one issued:
1. Declaring respondents-appellees
deductions of cost-of-living allowance;

(petitioners herein)

guilty of

illegal

2. Ordering respondents-appellees to pay complainants-appellants their back
allowances reckoned from the time of illegal deduction; and
3. Ordering respondents-appellees from further illegally deducting the allowances
of complainants-appellants.
SO ORDERED.
Presiding Commissioner of the NLRC, Diego P. Atienza, concurred in the result, while
Commissioner Cleto T. Villaltuya dissented and voted to affirm in toto the Labor
Arbiter's Decision.
On 19 May 1986, we issued the Temporary Restraining Order enjoining respondents
from enforcing the assailed Decision. On 2 September 1987, we gave due course to
the petition and required the submittal of memoranda, by the parties, which has been
complied with.

Wage Order No. 6, which took effect on 30 October 1984, increased the cost-of-living
allowance of non-agricultural workers in the private sector. Petitioner corporation
complied with the said Wage Order by paying its monthly-paid employees the
mandated P3.00 per day COLA. However, in computing said COLA, Petitioner
Corporation multiplied the P 3.00 daily COLA by 22 days, which is the number of
working days in the company.
Respondent Union disagreed with the computation of the monthly COLA claiming that
the daily COLA rate of P3.00 should be multiplied by 30 days to arrive at the monthly
COLA rate. The union alleged furthermore that prior to the effectivity of Wage Order
No. 6, Petitioner Corporation had been computing and paying the monthly COLA on
the basis of thirty (30) days per month and that this constituted an employer practice,
which should not be unilaterally withdrawn.
After several grievance proceedings proved futile, the Union filed a complaint against
Petitioner Corporation, its President, F. White, and Vice-President, J. Santiago, for
illegal deduction, underpayment, unpaid allowances, and violation of Wage Order No.
6. Petitioners White and Santiago were sought to be held personally liable for the
money claims thus demanded.
Labor Arbiter Adelaido F. Martinez sustained the position of Petitioner Corporation by
holding that since the individual petitioners acted in their corporate capacity they
should not have been impleaded; and that the monthly COLA should be computed on
the basis of twenty two (22) days, since the evidence showed that there are only 22
paid days in a month for monthly-paid employees in the company. His
reasoning, inter alia, was as follows:
To compel the respondent company to use 30 days in a month to compute the
allowance and retain 22 days for vacation and sick leave, overtime pay and other
benefits is inconsistent and palpably unjust. If 30 days is used as divisor, then it
must be used for the computation of all benefits, not just the allowance. But this
is not fair to complainants, not to mention that it will contravene the provision of
the parties' CBA.
On appeal, the NLRC reversed the Labor Arbiter, as heretofore stated, and held that
Petitioner Corporation was guilty of illegal deductions, upon the following
considerations: (1) that the P3.00 daily COLA under Wage Order No. 6 should be paid
and computed on the basis of thirty (30) days instead of twenty-two (22) days since
workers paid on a monthly basis are entitled to COLA on Saturdays, Sundays and
legal holidays "even if unworked;" (2) that the full allowance enjoyed by Petitioner
Corporation's monthly-paid employees before the CBA executed between the parties
in 1982 constituted voluntary employer practice, which cannot be unilaterally

The facts follow:
LABOR LAW I CASES (Arts.97-102) |42

and (3) that petitioners White and Santiago were properly impleaded as respondents in the case below. the payment of COLA is mandated only for the days that the employees are paid their basic wage. Art. thus: Section 3. Art. 1984. In other words. This is over and above his monthly basic pay as supported by the fact that base pay was paid. 127 SCRA 691): . XV(b)—Forty net hours of work.' (Oceanic Pharmacal Employees Union [FFW] vs. November 7. 4 were issued on 21 May 1984 that a formula for the conversion of the daily allowance to its monthly equivalent was laid down. L-63122. should not be construed as constitutive of voluntary employer practice.. the specimen payrolls of employees. by eight (8) working hours. Applied to monthly-paid employees if their monthly salary covers all the days in a month. 5 working days. Inciong. Hence. is the circumstance that pursuant to the Collective Bargaining Agreement (CBA) between Petitioner Corporation and Respondent Union. Section 5 of the Rules Implementing Wage Orders Nos. for entitlement to COLA is that basic wage is being paid. there was lack of administrative guidelines for the implementation of the Wage Orders. It was only when the Rules Implementing Wage Order No. 1(b)—All overtime worked in excess of eight net hours daily or in excess of 5 days weekly shall be computed on hourly basis at the rate of time and one half. Peculiar to this case. So that. he is paid his basic salary rate plus one-half thereof. it is evident that the intention of the law is to grant ECOLA upon the payment of basic wages. therefore.. the monthly wage is divided by the number of actual work days in a month and then. if not acceptable. where the company observes a 5-day work week. anchored on the charge of grave abuse of discretion by the NLRC. Sec. the pertinent provisions of that Agreement read: Art. L-50568. Under the peculiar circumstances obtaining. Respondent Company agreed to continue giving holiday pay knowing fully well that said employees are not covered by the law requiring payment of holiday pay. XV(a)—Eight net working hours shall constitute the regular work day for five days. Similarly. the payment of COLA is not mandated. (Emphasis ours) Moreover. 2) Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in 1982 and in compliance with Wage Orders Nos. after examining the specimen payroll of employee Jesus L. Santos. or twenty two (22) days a month." as the NLRC had opined. before Wage Order No. however. we have the principle of 'No Pay. University of Pangasinan. Santos. If a monthly-paid employee renders overtime work. The test of long practice has been enunciated thus: . If the 6th and 7th days of the week are deemed paid even if unworked and included in the monthly salary. showed that in computing the vacation and sick leaves of the employees. Thus. No ECOLA.97-102) |43 . and must be shown to have been consistent and deliberate. Dennis Dungon and Rene Sanvictores. Adequate proof is wanting in this respect. it should have been practiced over a long period of time. 3. it will have to be held that the COLA should be computed on the basis of twenty two (22) days. Allowance for Unworked Days. they are deemed paid their basic wages for all those days and they should be entitled to their COLA on those days "even if unworked. which cannot now be unilaterally withdrawn by petitioner. To be considered as such. XVI. 4. can be the subject of future re-negotiation. therefore. this Petition. Application of Section 2-- LABOR LAW I CASES (Arts. shall constitute the regular work week. The CBA is the law between the parties and. Santos should not have been paid his base pay for Saturday and Sunday but should have received only the 50% overtime premium. For example.. 2. 5 and 6 uniformly read as follows: Section 5. even if said days are unworked. All covered employees shall be entitled to their daily living allowance during the days that they are paid their basic wage. the monthly basic pay is computed on the basis of five (5) days a week. on the days that employees are not paid their basic wage. who worked on Saturday and Sunday was paid base pay plus 50% premium. Petitioner Corporation consistently used twenty-two (22) days. 1 (26 March 1981) to 5 (11 June 1984). Hence. 1979.. 94 SCRA 270). We are constrained to reverse the reversal. (Emphasis supplied) The primordial consideration. February 20.withdrawn. even if unworked. the Labor Arbiter found: the employee Jesus L. which is the period during which the monthly-paid employees of Petitioner Corporation receive their basic wage. As held in University of Pangasinan Faculty Union vs. The Labor Arbiter also found that in determining the hourly rate of monthly paid employees for purposes of computing overtime pay.

The Temporary Restraining Order heretofore issued is hereby made permanent. dated 9 May 1985. This formula results in the equivalent of 21. no vested right may be said to have arisen nor any diminution of benefit under Article 100 of the Labor Code 3 may be said to have resulted by virtue of the correction. is hereby REINSTATED.00 x 262) divided by 12 = P 253. Since it is a past error that is being corrected. 1 in relation to Article 2154 2 of the Civil Code). there is no further need to discuss the liability of the officers of Petitioner Corporation. certiorari is granted. 1634. 1678 and 1713: xxx xxx xxx (3) For workers who do not work and are not considered paid on Saturdays and Sundays: P60 + P90 + P60 + (P2. LABOR LAW I CASES (Arts. Petitioner Corporation cannot be faulted for erroneous application of the law.8 days in a month.xxx xxx xxx (a) Monthly rates for non-agricultural workers covered Under PDs 1614. SO ORDERED. are not considered paid). and the Decision of the Labor Arbiter. dated 10 March 1986. Payment may be said to have been made by reason of a mistake in the construction or application of a "doubtful or difficult question of law.97-102) |44 . the monthly equivalent of a daily allowance is arrived at by multiplying the daily allowance by 262 divided by 12. WHEREFORE. issued for the first time. With the conclusions thus reached." (Article 2155. when applied to a company like respondent which observes a 5day work week (or where 2 days in a week. the Decision of the National Labor Relations Commission.70 (Emphasis ours) As the Labor Arbiter had analyzed said formula: Under the aforecited formula/guideline. not necessarily Saturday and Sunday. is SET ASIDE. Absent clear administrative guidelines.

00 per day. Mr. This was followed by Wage Order No. — Defer — Sect.97-102) |45 . 113856 September 7. 01 granting an increase of P17. our union agreed to drop said proposal relying on the undertakings made by the officials of the company who negotiated with us. 1 In their joint affidavit dated January 30. private respondent granted the P17. Inc. the union. through its legal counsel. 1998 SAMAHANG MANGGAGAWA SA TOP FORM MANUFACTURING UNITED WORKERS OF THE PHILIPPINES (SMTFM-UWP). Also. the parties agreed to discuss unresolved economic issues.00 to P10. As expected. 2. On the strength of the representation of the negotiating panel of the company and the above undertaking/promise made by its negotiating panel. 1990 providing for a P12. Barnes.30 and from P6. The union decided to defer this provision. For employees receiving salary higher than P125. the union insisted on the incorporation in the collective bargaining agreement (CBA) of the union proposal on "automatic across-the-board wage increase." They added that: 11.99 to P14.R. Such refusal was aggravated by the fact that prior to the issuance of said wage orders. 1992. respectively. DE VERA and TOP FORM MANUFACTURING PHIL. Private respondent refused to accede to that demand. respondents. 1991. the company has granted to us government mandated wage increases on across-the-board basis. However. Eulisa Mendoza. the employer allegedly promised at the collective bargaining conferences to implement any government-mandated wage increases on an acrossthe-board basis. LABOR LAW I CASES (Arts. 3. petitioners. J. in the past years. private respondent granted an escalated increase ranging from P6. the union requested the implementation of said wage orders. Union proposed that any future wage increase given by the government should be implemented by the company across-the-board or non-conditional. JOSE G. Mr.: The issue in this petition for certiorari is whether or not an employer committed an unfair labor practice by bargaining in bad faith and discriminating against its employees.00 per day and below. The union acknowledges management's sincerity but they are worried that in case there is a new set of management. On October 15.00 daily increase in salary. they can just show their CBA.THIRD DIVISION G. they demanded that the increase be on an across-the-board basis. HON. 1. Management requested the union to retain this provision since their sincerity was already proven when the P25. INC. No. Status quo Sec.. The P12. 1990.00. private respondent adamantly maintained its position on the salary increases it had granted that were purportedly designed to avoid wage distortion. Instead. 4Several conferences between the parties notwithstanding. Remedios Felizardo. Lourdes Barbero and Concesa Ibañez affirmed that at the subsequent collective bargaining negotiations. According to the minutes of the meeting. 02 dated December 20. At the collective bargaining negotiation held at the Milky Way Restaurant in Makati. VII. 02 was granted to those receiving the salary of P140. NATIONAL LABOR RELATIONS COMMISSION. the RTWPB-NCR issued Wage Order No. Petitioner Samahang Manggagawa sa Top Form Manufacturing — United Workers of the Philippines (SMTFM) was the certified collective bargaining representative of all regular rank and file employees of private respondent Top Form Manufacturing Philippines.. wrote private respondent a letter demanding that it should "fulfill its pledge of sincerity to the union by granting an across-the-board wage increases (sic) to all employees under the wage orders. Samuel Wong and Mrs. Wages Sect.00 wage increase was granted across-the-board. Article VII of the collective bargaining agreement was discussed.00 increase under Wage Order No. The charge arose from the employer's refusal to grant across-the-board increases to its employees in implementing Wage Orders Nos. 1990. vs.00 increase mandated by Wage Order No. Thus. 3 On October 24. The following appear in said Minutes: Art.00 per day in the salary of workers. its officers and members." The union reiterated that it had agreed to "retain the old provision of CBA" on the strength of private respondent's "promise and assurance" of an across-the-board salary increase should the government mandate salary increases.00 per day and below. William Reynolds. 2 union members Salve L. 01 to workers/employees receiving salary of P125. namely. Metro Manila on February 27. ROMERO. 01 and 02 of the Regional Tripartite Wages and Productivity Board of the National Capital Region (RTWPB-NCR). it implemented a scheme of increases purportedly to avoid wage distortion.00 or P140.

the alleged company practice of implementing wage increases declared by the government on an across-theboard basis has not been duly established by the complainants' evidence. Section 7 of the existing CBA as herein earlier quoted is likewise found by this Branch to have no basis in fact and in law. 1992. 6727 which granted a wage increase of P25. That there were employees who were granted the full extent of the increase authorized and some others who received less and still others who did not receive any increase at all. 5 In its position paper. even though such subject or matter may not have been within the knowledge or contemplation of either or both of the parties at the time they negotiated or signed this Agreement. 1994. their prayer for moral and exemplary damages and attorney's fees may not be granted. the latter vacillated on its own proposal to adopt an across-the-board stand or future wage increases. specifically "bargaining in bad faith. the union filed a complaint with the NCR NLRC alleging that private respondent's act of "reneging on its undertaking/promise clearly constitutes act of unfair labor practice through bargaining in bad faith." It charged private respondent with acts of unfair labor practices or violation of Article 247 of the Labor Code. Likewise. de Vera rendered a decision dismissing the complaint for lack of merit. That such union proposal was not adopted in the existing CBA was due to the fact that it was the union itself which decided for its deferment. with respect to any subject or matter not specifically referred to or covered by this Agreement. Otherwise. such isolated single act that respondents adopted would definitely not ripen into a company practice. 01 and 02. would not ripen into what the complainants termed as discrimination. in the face of the above discussion as well as our finding that the respondents correctly applied the law on wage increases. It emphasized that only "after a reasonable length of time from the implementation" of the wage orders "that the union surprisingly raised the question that the company should have implemented said wage orders on an acrossthe-board basis. however. moral and exemplary damages. as well as Article XVII. In fact. and each agrees that the other shall not be obligated." 6 Private respondent. 1989 on an acrossthe-board basis. 01 and 02. on the second issue of whether or not the employees of the respondents are entitled to an across-the-board wage increase pursuant to Wage Orders Nos. as amended. Hence. in turn. Still dissatisfied. No benefits or privileges previously enjoyed by the employees were withdrawn as a result of the implementation of the subject orders. The alleged discrimination in the implementation of the subject wage orders does not inspire belief at all where the wage orders themselves do not allow the grant of wage increases on an across-the-board basis. Labor Arbiter Jose G. It quoted the provision of the CBA that reflects the parties' intention to "fully set forth" therein all their agreements that had been arrived at after negotiations that gave the parties "unlimited right and opportunity to make demands and proposals with respect to any subject or matter not removed by law from the area of collective bargaining." It asserted that there was no agreement to the effect that future wage increases mandated by the government should be implemented on an acrossthe-board basis. on the other hand." 7 On March 11. promulgated the assailed Resolution of April 29." and prayed that it be awarded actual. the union acknowledges the management's sincerity when the latter allegedly implemented Republic Act 6727 on an across-the-board basis. Not satisfied. contended that in implementing Wage Orders Nos. to bargain collectively. Likewise." The same CBA provided that during its effectivity. 19939 dismissing the appeal for lack of merit.Consequently. he explained as follows: The charge of bargaining in bad faith that the complainant union attributes to the respondents is bereft of any certitude inasmuch as based on the complainant union's own admission.00 effective July 1. 01 and 02 on an across-theboard basis. The complainants asserted that the company implemented Republic Act No. the union added that it was charging private respondent with "violation of Article 100 of the Labor Code. petitioner sought reconsideration which. What the respondents did under the circumstances in order to deter an eventual wage distortion without any arbitral proceedings is certainly commendable. That the implementation of the subject wage orders resulted into an uneven implementation of wage increases is justified under the law to prevent any wage distortion. the parties "each voluntarily and unqualifiedly waives the right. that agreement would have been incorporated and expressly stipulated in the CBA. this Branch rules in the negative. Finding no basis to rule in the affirmative on both issues. was denied by the NLRC in the Resolution dated January 17. for want of factual basis and under the circumstances where our findings above are adverse to the complainants. as amended. It is. therefore. misleading to claim that the management undertook/promised to implement future wage increases on an across-the-board basis when as the evidence shows it was the union who asked for the deferment of its own proposal to that effect.97-102) |46 . it had avoided "the existence of a wage distortion" that would arise from such implementation. 8 He considered two main issues in the case: (a) whether or not respondents are guilty of unfair labor practice. It has been said that "a sparrow or two returning to Capistrano does not a summer make. petitioner appealed to the NLRC that. the instant petition for certiorari contending that: LABOR LAW I CASES (Arts. The alleged violation of Article 100 of the Labor Code. Granting that the same is true." Finally. and (b) whether or not the respondents are liable to implement Wage Orders Nos.

MORAL. 11 In the same vein. Where a proposal raised by a contracting party does not find print in the CBA. arguing additionally that said Minutes forms part of the entire agreement between the parties. WITHOUT ADMITTING THAT THE PUBLIC RESPONDENTS HAVE CORRECTLY RULED THAT THE PRIVATE RESPONDENTS ARE GUILTY OF ACTS OF UNFAIR LABOR PRACTICES. AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES. and (b) whether or not there was a significant wage distortion of the wage structure in private respondent as a result of the manner by which said wage orders were implemented.97-102) |47 . 1990 regarding wages. if there was indeed a promise or undertaking on the part of private respondent to obligate itself to grant an automatic across-the-board wage increase. The basic premise of this argument is definitely untenable. 15 At the negotiations. CBA provisions should be "construed liberally rather than narrowly and technically. With respect to the first issue. petitioner union may not validly claim that the proposal embodied in the Minutes of the negotiation forms part of the CBA that it finally entered into with private respondent. To start with. to wit: (a) whether or not private respondent committed an unfair labor practice in its refusal to grant across-the-board wage increases in implementing Wage Orders Nos. the pivotal issues in this petition can be reduced into two. the duty includes "executing a contract incorporating such agreements if requested by either party. petitioner union has the means under the law to compel private respondent to incorporate this specific economic proposal in the CBA. petitioner union anchors its arguments on the alleged commitment of private respondent to grant an automatic across-the-board wage increase in the event that a statutory or legislated wage increase is promulgated. However. THEY COMMITTED SERIOUS ERROR IN NOT FINDING THAT THERE IS A SIGNIFICANT DISTORTION IN THE WAGE STRUCTURE OF THE RESPONDENT COMPANY. OBVIOUSLY. It could have invoked Article 252 of the Labor Code defining "duty to bargain." thus. Article 252 also states that the duty to bargain "does not compel any party to agree to a proposal or make any concession. 01 and 02. -CTHE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT FINDING THE PRIVATE RESPONDENTS GUILTY OF HAVING VIOLATED SECTION 4. -FTHE PUBLIC RESPONDENTS ERRED IN NOT AWARDING TO THE PETITIONERS HEREIN ACTUAL. -EASSUMING. It cites as basis therefor. 14 it is not a part thereof and the proponent has no claim whatsoever to its implementation. -BTHE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT DECLARING THE PRIVATE RESPONDENTS GUILTY OF ACTS OF DISCRIMINATION IN THE IMPLEMENTATION OF NCR WAGE ORDER NOS. -DTHE PUBLIC RESPONDENTS GRAVELY ERRED IN NOT DECLARING THE PRIVATE RESPONDENTS GUILTY OF HAVING VIOLATED ARTICLE 100 OF THE LABOR CODE OF THE PHILIPPINES. petitioner union should have requested or demanded that such "promise or undertaking" be incorporated in the CBA. After all. ARTICLE XVII OF THE EXISTING CBA. and the courts must place a practical and realistic construction upon it. petitioner union's contention that the Minutes of the collective bargaining negotiation meeting forms part of the entire agreement is pointless. Hence. AS AMENDED. the aforequoted portion of the Minutes of the collective bargaining negotiation on February 27. The CBA is the law between the contracting parties 10 — the collective bargaining representative and the employer-company. As the Court sees it. however.. THE LATTER HAS BARGAINED IN BAD FAITH WITH THE UNION AND HAS VIOLATED THE CBA WHICH IT EXECUTED WITH THE HEREIN PETITIONER UNION." Petitioner union's assertion that it had insisted on the incorporation of the same proposal may have a factual basis considering the allegations in the aforementioned joint affidavit of its members. 01 AND 02. it is but natural for both management and LABOR LAW I CASES (Arts. giving due consideration to the context in which it is negotiated and purpose which it is intended to serve.ATHE PUBLIC RESPONDENTS GROSSLY ERRED IN NOT DECLARING THE PRIVATE RESPONDENTS GUILTY OF ACTS OF UNFAIR LABOR PRACTICES WHEN. Compliance with a CBA is mandated by the expressed policy to give protection to labor. that only provisions embodied in the CBA should be so interpreted and complied with. 13 It goes without saying." Thus. The Minutes reflects the proceedings and discussions undertaken in the process of bargaining for worker benefits in the same way that the minutes of court proceedings show what transpired therein." 12 This is founded on the dictum that a CBA is not an ordinary contract but one impressed with public interest.

the charge of bad faith bargaining on the part of private respondent was nothing but a belated reaction to the implementation of the wage orders that private respondent made in accordance with law. On the other hand. nothing is considered final until the parties have reached an agreement. . from the facts of this case." On the part of petitioner union. Neither can bad faith be inferred from a party's insistence on the inclusion of a particular substantive provision unless it concerns trivial matters or is obviously intolerable. under the law." purportedly because it relied upon the "undertaking" of the negotiating panel of private respondent. the employer refused to bargain with the collective bargaining representative. LABOR LAW I CASES (Arts. the Court concluded that the company was "unwilling to negotiate and reach an agreement with the Union. Petitioner's reliance on this Court's pronouncements 17 in Kiok Loy v. private respondent may not be considered in bad faith or at the very least. petitioner union had. petitioner union does not deny that discussion on its proposal that all government-mandated salary increases should be on an across-theboard basis was "deferred. Because the proposal was never embodied in the CBA. one of management's usual negotiation strategies is to ". Thus: Obviously the purpose of collective bargaining is the reaching of an agreement resulting in a contract binding on the parties. the implementation of which cannot be validly demanded under the law. This is not a case where private respondent exhibited an indifferent attitude towards collective bargaining because the negotiations were not the unilateral activity of petitioner union. However. but they do not compel one. As earlier stated. such promise could only be demandable in law if incorporated in the CBA. In other words. The duty to bargain does not include the obligation to reach an agreement. The inevitable conclusion is that private respondent did not commit the unfair labor practices of bargaining in bad faith and discriminating against its employees for implementing the wage orders pursuant to law. petitioner union harbored the notion that its members and the other employees could have had a better deal in terms of wage increases had it relentlessly pursued the incorporation in the CBA of its proposal. may indicate bad faith and this is specially true where the Union's request for a counter-proposal is left unanswered. the right and the opportunity to insist on the foreseeable fulfillment of the private respondent's promise by demanding its incorporation in the CBA. it could have refused to bargain and to enter into a CBA with private respondent. The statutes invite and contemplate a collective bargaining contract. 20 Neither does petitioner union deny the fact that "there is no provision of the 1990 CBA containing a stipulation that the company will grant across-the-board to its employees the mandated wage increase. therefore. and it is no answer to the charge of refusal to bargain in good faith that the insistence on the disputed clause was not the sole cause of the failure to agree or that agreement was not reached with respect to other disputed clauses. by making such promise." Considering the facts of that case. . that the proposal in question was not included in the CBA indicates that no contractual commitment thereon was ever made by private respondent as no agreement had been arrived at by the parties. The CBA is proof enough that private respondent exerted "reasonable effort at good faith bargaining. bad faith bargaining can no longer be imputed upon any of the parties thereto. the importance of its proposal dawned on it only after the wage orders were issued after the CBA had been entered into. resorting to the scheme of feigning to undertake the negotiation proceedings through empty promises. 32 With the execution of the CBA. . In fact. In that case. private respondent's firm stand against the proposal did not mean that it was bargaining in bad faith." They simply assert that private respondent committed "acts of unfair labor practices by virtue of its contractual commitment made during the collective bargaining process. In that case. . the Court opined that "(a) Company's refusal to make counter-proposal. however. however.labor to adopt positions or make demands and offer proposals and counter-proposals. . the promise has remained just that. the adamant insistence on a bargaining position to the point where the negotiations reach an impasse does not establish bad faith. agree tentatively as you go along with the understanding that nothing is binding until the entire agreement is reached." 23 Indeed. but the failure to reach an agreement after negotiations continued for a reasonable period does not establish a lack of good faith." 19 In the case at bench." 21 The mere fact. 25 On account of the importance of the economic issue proposed by petitioner union." 16 If indeed private respondent promised to continue with the practice of granting across-the-board salary increases ordered by the government. Indeed. ignoring all notices for negotiations and requests for counter proposals that the union had to resort to conciliation proceedings. but a refusal to contract unless the agreement covers a matter which is not a mandatory subject is in substance a refusal to bargain about matters which are mandatory subjects of collective bargaining. NLRC 18 is. All provisions in the CBA are supposed to have been jointly and voluntarily incorporated therein by the parties. A party may refuse to enter into a collective bargaining contract unless it includes a desired provision as to a matter which is a mandatory subject of collective bargaining. It had the right "to insist on (its) position to the point of stalemate. Moreover. 24 The question as to what are mandatory and what are merely permissive subjects of collective bargaining is of significance on the right of a party to insist on his position to the point of stalemate. if considered in relation to the entire bargaining process. a promise. misplaced.97-102) |48 .

. jurisprudence. In the resolution of labor cases. No costs. Petitioner union's argument in this regard is actually tied up with its claim that the implementation of Wage Orders Nos. the NLRC Decision in this case which was penned by the dissenter in that case. in Metropolitan Bank and Trust Company. we may add. is. 30 Sec. ." We agree with the Labor Arbiter and the NLRC that no benefits or privileges previously enjoyed by petitioner union and the other employees were withdrawn as a result of the manner by which private respondent implemented the wage orders. this Court is well cautioned not to be as so conscious in passing upon the sufficiency of the evidence. It is apropos to note. 01 and 02 by private respondent resulted in wage distortion. 01 and 02. we agree. . We find no reason to depart from the conclusions of both the labor arbiter and the NLRC. this Court has always been guided by the State policy enshrined in the Constitution that the rights of workers and the promotion of their welfare shall be protected. 5. the members of the same labor tribunal are not in accord on those aspects of a case. The issue of whether or not a wage distortion exists is a question of fact 27 that is within the jurisdiction of the quasi-judicial tribunals below. Article VII of the existing CBA 26 as well as Article 100 of the Labor Code. be it labor or management. rules and regulations affecting labor. Judicial review of labor cases. moreover. Unlike in above-cited case where the Decision of the NLRC was not unanimous.97-102) |49 . 6727. NLRC. as amended. Factual findings of administrative agencies are accorded respect and even finality in this Court if they are supported by substantial evidence. When. 31 The Court is likewise guided by the goal of attaining industrial peace by the proper application of the law. As such. The CBA provision states: Presiding Commissioner Edna Bonto-Perez unanimously ruled that no wage distortions marred private respondent's implementation of the wage orders. 29 The NLRC then quoted the labor arbiter's ruling on wage distortion. the Court said: The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain employees. WHEREFORE. does not go beyond the evaluation of the sufficiency of the evidence upon which the labor officials' findings rest. It is not within this Court's power to rule beyond the ambit of the law. v. by and large. a question of fact the determination of which is the statutory function of the NLRC. Inc. or other employee benefits being enjoyed at the time of promulgation of this Code. 28 Thus. Granted that private respondent had granted an across-the-board increase pursuant to Republic Act No. as in this case. private respondent violated the provisions of Section 5. that petitioner's contention on the issue of wage distortion and the resulting allegation of discrimination against the private respondent's employees are anchored on its dubious position that private respondent's promise to grant an across-the-board increase in government-mandated salary benefits reflected in the Minutes of the negotiation is an enforceable part of the CBA. the factual findings of the NLRC are generally accorded not only respect but also finality provided that its decisions are supported by substantial evidence and devoid of any taint of unfairness or arbitrariness. in arriving at a just solution to a controversy if the party has no valid support to its claims. the instant petition for certiorari is hereby DISMISSED and the questioned Resolutions of the NLRC AFFIRMED. It cannot favor one party. and all other laws. we are satisfied that there was a meaningful implementation of Wage Orders Nos. orders. LABOR LAW I CASES (Arts. SO ORDERED. It should be noted that this itemization has not been successfully traversed by the appellants. Art. The NLRC said: On the issue of wage distortion. 100 of the Labor Code on prohibition against elimination or diminution of benefits provides that "(n)othing in this Book shall be construed to eliminate or in any way diminish supplements. The COMPANY agrees to comply with all the applicable provisions of the Labor Code of the Philippines. This debunks the claim that there was wage distortion as could be shown by the itemized wages implementation quoted above. however. . that single instance may not be considered an established company practice. instructions. decrees.The Court likewise finds unmeritorious petitioner union's contention that by its failure to grant across-the-board wage increases. let alone the conclusions derived therefrom.

00 07. REGACHUELO DENNIS 11. Petitioner forwarded a letter3dated March 10. NCR-06.25.00 DECISION 11. 1998 to the Union with the list of the salary adjustments of the rank-and-file employees after the implementation of Wage Order No.00 Petitioner Pag-Asa Steel Works.00 19.00 10.97 221.00 21.07.00 10.00 10.00 22. BANIA LUIS JR.10.00 10.00 31. to pay the members of Pag-Asa Steel Workers Union (Union) the wage increase prescribed under Wage Order No. ALEJANDRO OLIVER 12.BAGASBAS EULOGIO JR. RIOJA JOSEPH 12. INC. RAYMUNDO ANTONIO 06.95 246.00 13. 08.00 10. 12.95 275. TABAOG ALBERT 04.00 10. PAEZ REYNALDO 02.01.00 10.11. PRIELA DANILO 11.FIRST DIVISION 7.05.00 12.97 221.00 11.: 13.00 15.00 27.30.95 246. 65171 ordering Pag-Asa Steel Works.00 13.95 246. FORMER SIXTH DIVISION and PAG-ASA STEEL WORKERS UNION (PSWU). RELATO RAMON 2/6/98 1.00 11.00 29.00 16. BERNABE ALFREDO 10.10.09.01. 2 It provided for an increase of P13.00 10.96 275. SALON FONDADOR 11.00 10.25.00 23. EDRADAN ELDEMAR P.96 265.14. SEVANDRA RODOLFO 01.00 33.95 265.00 11. Pag-Asa Steel Workers Union is the duly authorized bargaining agent of the rankand-file employees of petitioner.00 2.00 10.16.00 10.16.94 268.00 11.00 9. COURT OF APPEALS..28.95 246.Respondent.00 8.98 220.00 per day in the salaries of employees receiving the minimum wage. NINORA BONIFACIO 03.00 3. PEPINO EMMANUEL 08. Petitioner.98 192. is a corporation duly organized and existing under Philippine laws and is engaged in the manufacture of steel bars and wire rods.24. UMBAL ADOLFO 08.00 G.18. NCR-06. 17.10. 04. SP No.10. RODA GEORGE 10. AQUINO JONAS 08. No. SR.97-102) |50 ." NAME DATE REGULAR PRESENT RATE ADJUST EFF 26. REBOTON RONILO 05.97 221.00 LABOR LAW I CASES (Arts.18. 04.08. 166647 March 31.00 32. BERMEJO JIMMY JR.97 200.18.96 246.00 10. MAGBOO VICTOR 05. Also assailed in this petition is the CA Resolution denying the corporation’s motion for reconsideration.00 12.00 This is a Petition for Review on Certiorari of the Decision 1 of the Court of Appeals (CA) in CA-G.00 10. ORNOPIA REYNALDO 08.97 191.97 221. Inc.96 246.00 per day.00 25.97 215.22.97. PUTONG PASCUAL 06.18. J.00 18.. 14.96 246.00 10. On January 8.95 246.00 6. PAR EULOGIO JR.30.R. ALANCADO RODERICK 11. PULPULAAN JAIME 01.03. SALEN EDILBERTO 02.00 5.00 10.96 275. NCR-06.96 246.00 10. Petitioner and the Union negotiated on how to go about the wage adjustments.00 10.23.95 280.00 10.00 10.00 11.R.23.96 246.00 10.00 20. and a consequent increase in the minimum wage rate to P198.17.97 215. 235.00 11.96 275. HERNANDEZ ALFREDO 03.17. 01.27.00 10. 2006 PAG-ASA STEEL WORKS.00 28.96 246. and the notation that said "adjustments [were] in accordance with the formula [they] have discussed and [were] designed so as no distortion shall result from the implementation of Wage Order No. AGCAOILI JAIME 01. BUGTAI ROBERTO 04.08.00 24.00 CALLEJO. Inc.97 221. NCR-08. 1998.00 13. PANLAAN FERDINAND 01. vs. the Regional Tripartite Wages and Productivity Board (Wage Board) of the National Capital Region (NCR) issued Wage Order No.00 30.00 11.00 4.95 246.

CASCARA RODRIGO 06.00 64.00 10. JUMAWAN URBANO JR.30.30.94 288. QUIDATO ARISTON 12.00 10.93 288.00 10.00 65.00 42.00 10.07.93 305.00 57. SABATIN GILBERT 04.23. ALBANO JESUS 01.94 288.93 303.26.06.00 10.88 354.20. SAMPAGA EDGARDO 06.93 322.00 10.00 10. BASCONES NELSON 02.93 322.00 10. BAYO-ANG ALDEN JR.00 59.23.12.88 351.93 322. MAZON NESTOR 07.00 10.10. ELEDA FULGENIO 06.93 288.00 10.00 10. LUMANSOC MARIANO 06.00 10. SE FREDIE 03.93 288.00 10. MORALES LUIS 09.00 10.00 49.93 288.26.93 322. WHITING JOEL 09.19.00 52.00 10.00 38.97-102) |51 .00 72.30.00 10.00 61.15.03.00 10.94 297.93 288. SAJOT RONNIE 10. VENTURA FERDINAND 09.00 55.20.00 10.00 40.94 288.00 37.93 288.00 10.09.00 66.93 307.00 10.00 10.00 36.07.00 62.00 69. BRIN LUCENIO 07.00 10.16. RONCALES DIOSDADO 04.00 56. MARASIGAN GRACIANO 05. EXMUNDO HERCULES 05.00 10.00 10.90 330.93 288.00 10. CAGOMOC DANILO 01.00 10.24.00 79. NOBELJAS EDGAR 07. CALLEJA JOSEPH 05. SIBOL MICHAEL 12.18.06.14.92 347.00 34.00 68.00 10.19. CHUA MARLONITO 10. CURAMBAO TIRSO 09.00 45.00 10.93 303.00 76.00 10.00 63. BATOY ERNIE 06.13.00 10.06. DISCAYA EDILBERTO 09.00 10. ANTOLO DANILO 12.00 10.00 35.DE LOS SANTOS REYNALDO 12.00 10.94 288.94 292.00 10.26.13.00 70.11.00 83.00 60.90 330.00 67.93 288.00 39.20. SURINGA FRANKLIN 12. DOROL ERWIN 09.00 10.93 288.92 348.87 354.89 340.30.90 340.13.00 LABOR LAW I CASES (Arts.00 44.95 283. YSON ROMEO 09.07.14.00 10.00 73.00 10.93 288.23.00 10.00 75. REYES EFREN 10.00 10.00 78.94 288.93 288. RAMOS GRACIANO 06. CLAVECILLA AMBROSIO 09.00 53.23. 12.00 43.00 74.93 288.00 10. CATACUTAN JUNE 03.94 288. ROMANOS ARNULFO 06. PEREZ DANILO 03. SOLO JOSE 02. 10.88 351.58.00 10.00 41.25.11. SOLON ROBINSON 05.93 288.94 315.07.00 82.00 81.94 288.94 288.00 10.20.07.00 10.00 10.00 80.00 47.00 10.10.90 340.87 354. AMPER VALENTINO 08.02.93 322.93 288.01.10.10.00 46.00 10. CASTRO PEDRO 10.93 288.00 50.93 288.00 71.20.00 10. DECENA LAURO 09.02.00 10.00 48. AMANIA WILFREDO 01.00 77.93 288. REYES RONALDO 04.02.00 10. MAGLENTE ROLANDO 09. LAROGA CLAUDIO JR.07.00 54.00 51.00 10. TIZON JOEL 12. 07. SUAREZ LUISTO 06.

00The difference of the first year adjustment to retroact to July 1.77 107. if no wage increase 10. .00 86. . .79 372.50 10.00 The aforesaid wage increase shall be implemented across the board.006715. . petitioner and the Union entered into a Collective Bargaining Agreement (CBA).00 10.79 108.00 per day per employee 10.22.02.03.00 85. 10.50 10. .00 per day per employee 10. 102. ZUNIEGA CARLOS 02.00 90. .76 374. . . . Pedro Acasio P427.87 354.00 1. CAMAING CARLITO 12. GRIPON GIL 01. Roderick Alancado 301.00 per day per employee July 1.07. .87 359.50 10.00 113 HILOTIN ARLEN 10. VILLANUEVA DOMINGO 12. . . 2001 .00 10.13. ZIPAGAN NELSON 02.77 383.04. MALAPO MARCOS JR.00The across-the-board wage increase for the 4th and 5th year of this AGREEMENT shall be subject for a re-opening or renegotiation as provided for by Republic Act No. Jesus10.29. . MANLABAO HEROHITO 04. .00 110. DE LA CRUZ CHARLIE 07. . However. . SURIGAO HERNANDO 12.76 379.00 10.50 10. .00 July 1.50 10.00 100. BUBAN JONATHAN 10.00 95. . P20. .00 87. . GUEVARRA ARNOLD 10.00 99. SEVANDRA ALFREDO 05.25. 2000 .19.00 per day per employee 10.00 10.00 Albano 352. FULGUERAS DOMINGO 01. . . .97-102) |52 .87 354.14.00 3.00 109.81 374.00 89. .00 per day per employee July 1. JR.84. . 2000 . MACALISANG EPIFANIO 02. . the Management is willing to give the following increases.00(Salaries and Wage) of said CBA provides: 91. . .75 10.17.04. .82 371. Luis Morales 343. ACASIO PEDRO 11.02.22.14.88 372. SALAMEDA EDUARDO 02.00On September 23.87 354.00 WAGE NAME WAGE 375. .00is given by the Wage Board within six (6) months from the signing of this AGREEMENT. .00 10. .00 55.00 LABOR LAW I CASES (Arts. to wit: 10.00Order to be implemented by the Regional Tripartite Wage and Productivity Board shall be in addition to the wage increase adverted to above. LAURIO JESUS 06.00 112. NEBRIA CALIX 02. . ARNALDO LOPE 05.00 376. SABORNIDO JULITO 12.00 105. .50 103.00 10. .69 378.00 94.87 354.00 92.00 10. 04.25. .17.04. AGUILLON GRACIANO 05.06. OFILAN ANTONIO 03.00 July 1.87 354.20.00 10. . . CARLON HERMINIGILDO. . Any Wage 10. .12.87 375. . WAGE ADJUSTMENT . 1999 .00 2.00 July 1.00AGREEMENT.15. .The COMPANY agrees to grant all the workers.87 354.79 July 1.81 106. P30. .04.87 359. .00Section 1.00For the first year of the CBA’s effectivity. BARBIN DANIEL 09.00 377. . . .01. a general wage increase as follows: 93.00 54.27.00 10.79 379. 1999 . P25.01. effective July 1. 1999 until July 1. 2004.69 374. Nestor Mazon P385.79 374.02. . the salaries of Union members were increased as follows: 375. CRISTY EMETERIO 04.01. VILLAMER JOEY 11. P25.88 354. . APITAN NAZARIO 09.87 362.00 96. .88 354.21. Calix Nebria 409. .50 101. . . .00 10. who are already regular and covered by this AGREEMENT at the effectivity of this 10. ROSAURO JUAN 07.00 88. . . . .5 104. . P30.84 370. Section 1. .00 per day per employee 10. 1999.76 379. 2001 . Article VI 10.00 10.00 10.00 111. P15.00 98. 1999.10.88 354. 08.00 53. DALUYO LOTERIO 04.00 97.00 10.

00 Welfredo Amania 343.00 alentino Amper 343.00 64. Robinson Solon 370. Danilo Perez 43. Efren Reyes 50. Joseph Rioja 52.301. Ferdinand Panlaan 39. Edgar Noblejas 35.00 72. Nelson Zipagan 425. Carlos Zuniega 409.00 Ronilo Lacandoze 265.00 104.00 Gil Gripon 429.00 Graciano Marasigan 409.223.377.00 98.00 Raynaldo delos Santos 343. private sector workers and employees in the National Capital Region receiving the prescribed daily minimum wage rate of P223.291. Ariston Quidato 45.00 per day. Romeo Yson 406. Jr. Jr. Upon the effectivity of this Wage Order.00 Luis Bania. Emmanuel Pepino 42.00 70.Domingo Villanueva 430. Diosdado Roncales 395.00 100.50 per day increase to all of its rank-and-file employees.00 Roberto Bugtai 301.50 Jimmy Bermejo 277.343.00 76. 2000. Wage Order No.00 66. Edgar Sampaga 362.343.00 Eulogio Bagasbas.00 74. Alfredo Umbal 272.343. 343. Jr.249. It provided for a P25.00 Eldemar Edradan 277. its Implementing Rules and Regulations.00 On October 14. Rodolfo Sevandra 250.00 83.00 69.00 Domingo Fulgueras 417.00 97.00 71.00 85.00 Tirso Curambao 343. Petitioner paid the P25.00 Lauro Decena 343. Jr. 330.00 80.00 Federico Garcia 277.00 Carlito Camaing 409.50 79.00 Nelson Bascones 343.00 86.75 92. Jose Solo 343.00 Marlonito Chua 343.00 Erwin Dorol 343.00 Charlie dela Cruz 434. Jaime Pulpulaan 44. Reynaldo Paez 38.00 99. Joel Tizon 343.00 Ambrocio Clavecilla 406.00 June Catacutan 343. 430.00 84.00 67. Rodrigo Cascara 377.00 73.00 65. 2000.00 Jonathan Buban 409. Fundador Salon 301.320. Franklin Suringa 343. 409.50 per day increase in the salary of employees receiving the minimum wage and increased the minimum wage to P223.00 56.00 Loterio Daluyo 409.00 88.00 Alden Bayo-ang.00 81. Ferdinand Ventura 347. 301.00 62.00 Joseph Calleja 358. George Roda 301. Fredie Se 395. Joel Whiting 343. Renante Tangian 223. Michael Sibol 343.50 Fulgencio Eleda 377. Eduardo Salameda 432. Gilbert Sabatin 343.00 87.00 Victor Magboo 301.00 Emeterio Cristy 414.00 Arnold Guevarra 409. NCR-07 7 was issued. Bonifacio Ninora Jr.00 78. Albert Tabaog 277.00 58.00 82.50 per day.00 94. Jeriel Suico 223.00 96. NCR-08 9 took effect. Edilberto Salen 277.429. Graciano Ramos Jr. Edilberto Discaya 395.358.00 60.00 anilo Antolo 343. 1999. Eulogio Par Jr. the rank-and-file employees were granted the second year increase provided in the CBA in the amount of P25.00 93. Hernando Surigao 434. Marvin Peco 41.301.00 Danilo Cagomoc 343.00 Rolando Maglente 409. 409.33.00 91.00 89. On July 1. Antonio Ofilan 36.00 95.00 Lucenio Brin 385.00 75. Luisito Suarez 402.006 Hermenigildo Carlon.50 Alfredo Bernabe 258.00 Urbano Jumawan.00 103. Ronaldo Reyes 51. Antonio Raymundo 47. Section 1 thereof provides: Section 1.00 68. Reynaldo Ornopia 37.8 On November 1. 343.00 63.00 azario Apitan 431.00 101. 1999.00 Marcos Malapo Jr. Joey Villamer 429.97-102) |53 . 34.00 57. 46.00 61. and on October 26. 40. Julito Sabornido 409. Ronilo Reboton 48.00 102.00 77.330.00 59.301.00 liver Alejandro 330.00 Herohito Manlabao 430.00 Mariano Lumansoc 377.00 Daniel Barbin 409. Ronnie Sajot 343.330.00 Claudio Laroga. Ramon Relato 49. Jr.00 Hercules Exmundo 343.00 Jesus Laurio 426.277.338.00 Arlen Hilotin 438.50 shall receive an increase of TWENTY SIX PESOS and FIFTY LABOR LAW I CASES (Arts.00 onas Aquino 272. Wage Order No.00 90.301. Jr.323.

Atty. In the Submission Agreement. the Union alleged that it has been the company’s practice to grant a wage increase under a government-issued wage order. NCR #8 as a matter of practice. hence. The fallo of the decision reads: WHEREFORE. In fact. As for Wage Order No.14 In reply to the Union’s position paper.13 For its part. the assailed Decision dated June 6. NCR-08 and irrespective of whether wage distortion exists.00) per day. Atty. aside from the yearly wage increases in the CBA. NCR-08. NCR-08 must be paid to the union members as a matter of practice and whether or not parol evidence can be resorted to in proving or explaining or elucidating the existence of a collateral agreement/company practice for the payment of the wage increase under the wage order despite that the employees were already receiving wages way above the minimum wage of P250.97-102) |54 . but only per request of the Union and after a series of negotiations. parol evidence should be resorted to."11 and that the award of the Voluntary Arbitrator (VA) shall be final and binding.12 In its Position Paper. It averred that petitioner paid the salary increases provided under the previous wage orders in full (aside from the yearly CBA increases).22 LABOR LAW I CASES (Arts. or whether Union members’ salaries were above the minimum wage rate. 2001.19 It held that there was no company practice of granting a wage order increase to employees across-the-board.00 to P13. insisted that there was such a company practice. Thus. It asserted that at present. x x x To supplement the above wage increases. NCR-01-05) because some of its employees were receiving wages below the minimum prescribed under said orders. the CA rendered judgment in favor of the Union and reversed that of the VA. was an exception since the adjustments were the result of the formula agreed upon by the Union and the employer after negotiations.50) per day. the parties agreed that the sole issue is "[w]hether or not the management is obliged to grant wage increase under Wage Order No. to determine the true intention of the parties. however. to include an across-the-board implementation of the wage orders:15 Then Union president Lucenio Brin requested petitioner to implement the increase under Wage Order No. Florente Yambot. NCR06. claiming that since none of the employees were receiving a daily salary rate lower than P250.20 The Union filed a petition for review with the CA under Rule 43 of the Rules of Court.CENTAVOS (P26. It pointed out that an established practice cannot be discontinued without running afoul of Article 100 of the Labor Code on non-diminution of benefits. NCR-06 and NCR-07 because an actual distortion occurred as a result of their implementation. thereby setting the new minimum wage rate in the National Capital Region at TWO HUNDRED FIFTY PESOS (P250. SO ORDERED. Wage Order No. NCR-08. is ordered to pay the members of the petitioner union the P26. Petitioner rejected the request. it steadfastly rejected the following proposal of the Union’s counsel.50 under Wage Order No. petitioner contended that the full implementation of the previous wage orders did not give rise to a company practice as it was not given to the workers within the bargaining unit on a silver platter. the VA rendered judgment in favor of the company and ordered the case dismissed. or at least to negotiate how much will be paid. It claimed that the parties intended that petitioneremployer would pay the additional increases apart from those in the CBA. It pointed out that despite the fact that all the employees were already receiving salaries above the minimum wage.10 negotiations.50 daily wage by applying the wage increase prescribed under Wage Order No. petitioner alleged that its compliance was in accordance with its verbal commitment to the Union during the CBA negotiations that it would implement any wage order issued in 1999. Inc. 2001 of public respondent Voluntary Arbitrator is REVERSED and SET ASIDE. NCR-08 in favor of the company’s rank-and-file employees. The Union averred that all of their CBAs with petitioner had a "collateral agreement" where petitioner was mandated to pay the equivalent of the wage orders across-the-board. 17 The Union further asserted that the CBA did not include all the agreements of the parties.00/day as prescribed by Wage Order No. Petitioner further averred that it applied the wage distortion formula prescribed under Wage Order Nos. 2004.18 On June 6. it was not obliged to grant the wage increase.00 and there was no wage distortion. NCR– 08 across-the-board. regardless of whether there was a resulting wage distortion. NCR-07. It defined the issue for resolution as follows: The principal issue in the present petition is whether or not the wage increase of P26. Private respondent Pag-Asa Steel Works. all its employees enjoy regular status and that none receives a daily wage lower than the P250.00 minimum wage rate prescribed under Wage Order No. Yambot’s version of the wage adjustment provision should be considered. petitioner alleged that there is no such company practice and that it complied with the previous wage orders (Wage Order Nos. Costs against private respondent.21 On September 23. the CBA still provided for the payment of a wage increase using wage orders as the yardstick.16 The Union elevated the matter to the National Conciliation and Mediation Board. the parties agree that additional wage increases equal to the wage orders shall be paid across-the-board whenever the Regional Tripartite Wage and Productivity Board issues wage orders. where rank-and-file employees were given different wage increases ranging from P10. they agreed to refer the case to voluntary arbitration.00. When the parties failed to settle. and that there is no provision in the CBA that would oblige petitioner to grant the wage increase under Wage Order No. during CBA The Union. It is understood that these additional wage increases will be paid not as wage orders but as agreed additional salary increases using the wage orders merely as a device to fix or determine how much the additional wage increases shall be paid.

33 The petition is meritorious. or as a matter of company practice. respondent Union changed its theory on appeal when it claimed before the CA that the CBA is ambiguous. 34 Points of law. and not every wage order issued during its effectivity. NCR-07 which was issued 28 days from the execution of the CBA. and leaves no doubt as to the intention of the parties. 8 CANNOT BE DEMANDED AS A MATTER OF RIGHT BY THE RESPONDENT UNDER THE 1999 CBA. According to petitioner. it is clear that the CBA contemplated only the implementation of a wage order issued within six months from the execution of the CBA.23 Petitioner filed a motion for reconsideration which the CA denied for lack of merit on January 11. We rule that petitioner is not obliged to grant the wage increase under Wage Order No. that issues not raised below cannot be raised for the first time on appeal. It insists that an issue cannot be raised for the first time on appeal. that is. WHETHER THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE ERROR IN NOT FINDING THAT THE INCREASES PROVIDED FOR UNDER WAGE ORDER NO. issues and arguments not brought to the attention of the lower court need not be. theories. The fact that the "Yambot proposals" were left out in the final document simply means that the parties never agreed to them. 2005. NCR-08 as a matter of practice. to grant a wage increase that may be ordered by the Wage Board in addition to the CBA-mandated salary increases regardless of whether the employees are already receiving wages way above the minimum wage. the CBA contemplated all the salary increases that may be mandated by wage orders to be issued in the future. Hence. it had been paying the wage increase provided for in the CBA even though the employees concerned were already receiving wages way above the applicable minimum wage. also applicable in labor cases. Atty. in that: a) Issue not averred in the complaint nor raised during the trial cannot be raised for the first time on appeal. NCR-08 because prior thereto. NCR-08 as a matter of practice. in effect. as well as Section 11 of the Rules of Court. Yambot’s version of said provision. well-settled is the rule. 8 CANNOT BE DEMANDED BY THE RESPONDENT UNION AS A MATTER OF PRACTICE. Petitioner argues that the previous wage orders were implemented because at that time. It avers that Section 1. On the procedural issue. petitioner complied with Wage Order No. that is. Respondent did not anchor its claim LABOR LAW I CASES (Arts.The CA stressed that the CBA constitutes the law between the employer and the Union.25 Petitioner points out that the only issue agreed upon during the voluntary arbitration proceedings was whether or not the company was obliged to grant the wage increase under Wage Order No. considered by the reviewing court. II. It held that the CBA is plain and clear. Since the wage order was only a device to determine exactly how much and when the increase would be given. and ordinarily will not be. Petitioner emphasizes that this was implemented not because it was a matter of practice but because it was agreed upon in the CBA. It points out that. NCR-08 either by virtue of the CBA. in relation to Article 1370 and 1374 of the New Civil Code. respondent Union avers that the provision "[a]ny Wage Order to be implemented by the Regional Tripartite Wage and Productivity Board shall be in addition to the wage increase adverted to above" referred to a company practice of paying a wage increase whenever the government issues a wage order even if the employees’ salaries were above the minimum wage and there is no resulting wage distortion. The appellate court further held that the employer has no valid reason not to implement the wage increase mandated by Wage Order No.30 In any case.29 It alleges that respondent Union in fact realized that it could not invoke the provisions of the CBA to enforce Wage Order No. According to respondent.31 For its part. these increases are. 26 Petitioner contends that respondent Union was precluded from raising this issue as it was not raised during the voluntary arbitration. as admitted by respondent Union. There is no company practice of granting a wage-order-mandated increase in addition to the CBA-mandated wage increase. and b) The Rules of Statutory Construction. which is why it agreed to limit the issue for voluntary arbitration to whether respondent Union is entitled to the wage increase as a matter of practice.27 Petitioner further argues that there is no ambiguity in the CBA. 32 Respondent further avers that the ambiguity in the wage adjustment provision of the CBA can be clarified by resorting to parol evidence. It posits that the respondent did not anchor its claim for such wage increase on the CBA but on an alleged company practice of granting the increase pursuant to a wage order. some employees were receiving salaries below the minimum wage and the resulting wage distortion had to be remedied. NCR-08. WHETHER THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE ERROR IN NOT FINDING THAT THE INCREASES PROVIDED FOR UNDER WAGE ORDER NO. as they cannot be raised for the first time at that late stage. Article VI of the CBA should be read in its entirety. The parties specifically confined the issue for resolution by the VA to whether or not the petitioner is obliged to grant an increase to its employees as a matter of practice. petitioner avers that respondent Union is not entitled to the wage increase provided under Wage Order No.97-102) |55 . the previous wage orders were not automatically implemented and were made applicable only after negotiations.24 Petitioner then filed the instant petition in which it raises the following issues: I.28 From the said provision.35 We agree with petitioner’s contention that the issue on the ambiguity of the CBA and its failure to express the true intention of the parties has not been expressly raised before the voluntary arbitration proceedings. Basic considerations of due process impel this rule. CBA-mandated and not wage order increases. requires that contract must be read in its entirety and the various stipulations in a contract must be read together to give effect to all.

These assertions indicate that respondent Union also relied on the CBA to support its claim for the wage increase. it claimed that such provision clearly provided that petitioner would pay the additional increases apart from the CBA and that the wage order serves only as a measure of said increase. then the company could have simply accepted the original demand of the union for such across-the-board implementation.00 per day would receive an increase of P26.e. 1999 ……. As correctly ruled by the VA: We now come to the core of this case. With the above narration of facts and with the union not having effectively controverted the same.00/day as prescribed by Wage Order No.00 per day per employee July 1. raised before the voluntary arbitration proceedings. However. Neither do we find merit in the argument that under the CBA.for an across-the-board wage increase under Wage Order No. In its Position Paper. WAGE ADJUSTMENT – The COMPANY agrees to grant to all workers who are already regular and covered by this AGREEMENT at the effectivity of this AGREEMENT a general wage increase as follows: July 1. delved into these issues and elaborated on its contentions. 2000 ……. NCR-08 on the CBA.. we note that it raised before the CA two issues. the Management is willing to give the following increases. dated September 23. i.00 per day per employee July 1. A perusal of the record shows that the lowest paid employee before the implementation of Wage Order #8 is P250. P25. 1999. the lowest paid employee of petitioner was receiving a wage higher than P250. P 20.50) per day. The fact that it was shown the increases granted under the Wage Orders were obtained thru request and negotiations because of the existence of wage distortion and not as company practice as what the union would want. NCR-08 as a matter of practice. we find no merit to the complainant’s assertion of such a company practice in the grant of wage order increase applied across-the-board. its employees had no right to demand for an increase under said order. such increase should be implemented across-the-board.00/day the company is not obliged to adjust the wages of the workers.50/day increase. 1999.50 shall receive an increase of Twenty-Six Pesos and Fifty Centavos (P26. Despite the submission agreement confining the issue to whether petitioner was obliged to grant an increase pursuant to Wage Order No. Moreover. 2000 ……. If such were the intentions of this provision. a perusal of the records shows that the issue of whether or not the CBA is ambiguous and does not reflect the true agreement of the parties was. P 30.00 per day per employee July 1.00 per day per employee The difference of the first year adjustment to retroact to July 1. namely: x x x whether or not the wage increase of P26." and since the lowest paid is P250. if no wage increase is given by the Wage Board within six (6) months from the signing of this AGREEMENT. when the order was issued. it asserted that the CBA consistently contained a collateral agreement to pay the equivalent of the wage orders across-theboard. thereby setting the new minimum wage rate in said region to P250. Neither could they insist for an adjustment of P26. NCR-08 specifically provides that only those in the private sector in the NCR receiving the prescribed daily minimum wage rate of P223. of the CBA of the parties.36 Petitioner. viz: SALARIES AND WAGE Section 1. There is no legal basis to implement the same across-the-board. The fact that the company rejected this proposal can only mean that it was never its intention to agree. Any Wage Order to be implemented by the Regional Tripartite Wage and Productivity Board shall be in addition to the wage increase adverted to above.00 per day per employee The aforesaid wage increase shall be implemented across the board. However. as set forth in their original proposal (Annex "2" union[‘]s counsel proposal). As such. There is no dispute that. NCR-08 and irrespective of whether wage distortion exists. to wit: July 1. By so doing.00 a day. Central to the substantial issue is Article VI. Is [petitioner] under an obligation to grant wage increase to its workers under W. Section I. The across-the-board wage increase for the 4th and 5th year of this AGREEMENT shall be subject for a reopening or renegotiation as provided for by Republic Act No.O. 1999 ……. respondent Union nevertheless raised the same issues in its pleadings.00 per day. "private sector workers and employees in the National Capital Region receiving the prescribed daily minimum wage rate of P223. 2001 …….50 a day. 2001 …… P 30. This could only mean that the union can no longer demand for any wage distortion adjustment. The provision of wage order #8 and its implementing rules are very clear as to who are entitled to the P26.00 per day per employee July 1.50 increase under Wage Order #8. to such across-the-board LABOR LAW I CASES (Arts.00/day and none was receiving belowP223. No. P15.37 On the other hand.50 under Wage Order No.50 minimum. The provision in the CBA that "Any Wage Order to be implemented by the Regional Tripartite Wage and Productivity Board shall be in addition to the wage increase adverted above" cannot be interpreted in support of an across-the-board increase. in its Comment on the petition. NCR-08 as a matter of practice? It is submitted that employers (unless exempt) in Metro Manila (including the [petitioner]) are mandated to implement the said wage order but limited to those entitled thereto. in fact. P 25. it thereby agreed for the CA to take cognizance of such issues as defined by respondent (petitioner therein). in its Reply. NCR-08 must be paid to the union members as a matter of practice and whether or not parol evidence can be resorted to in proving or explaining or elucidating the existence of a collateral agreement/company practice for the payment of the wage increase under the wage order despite that the employees were already receiving wages way above the minimum wage ofP250. Wage Order No. 6715.97-102) |56 .

It covers the whole employment relationship and prescribes the rights and duties of the parties." The respondent cites Article XXVII of the CBA in effect. Kimberly-Clark Philippines. the literal meaning of its stipulation shall prevail. the company and the Union signed a CBA with a similar provision: "[s]hould there be any government mandated wage increases and/or allowances." From the said CBA provision and upon an appreciation of the entire CBA. Such evidence may be received regardless of whether or not the written agreement contains reference to such collateral agreement. The ruling of the Court in Capitol Wireless.42 We agree with petitioner’s contention that the rule excluding parol evidence to vary or contradict a written agreement. The VA may also consider and LABOR LAW I CASES (Arts. NCR-08 clearly states that only those employees receiving salaries below the prescribed minimum wage are entitled to the wage increase provided therein."40 Thereafter. if. each had the unlimited right & opportunity to make demands. Recognizing the inability of the parties to anticipate or address all future problems. does not extend so far as to preclude the admission of extrinsic evidence. Since the wage orders specified who among the employees are entitled to the statutory wage increases. Therefore. but does not. that each party voluntarily & unqualifiedly waives such right even though such subject may not have been within the knowledge or contemplation of either or both of the parties at the time they signed this AGREEMENT. In order to ascertain the intention of the contracting parties. contending that. Inc. as follows: "The parties acknowledged that during the negotiation which resulted in this AGREEMENT.00 per day under Wage Order No. the same shall be over and above the benefits herein granted. and furthermore. v. the union will have to be contented with the increase of P30. and the fact that the members of respondent Union were already receiving salaries higher than P250.00 a day when it was issued.implementation. the Wage Board of the NCR issued several wage orders providing for an across-the-board increase in the minimum wage of all employees in the private sector.97-102) |57 . However. as gleaned from the pleadings of the parties. NCR-08. v. claims and proposals of every kind and nature with respect to any subject or matter not removed by law from the Collective Bargaining and the understanding and agreements arrived at by the parties after the exercise of that right & opportunity are set forth in this AGREEMENT. we find it to have more than amply covered all aspects of the collective bargaining. the parties stipulate that the hirees must be presumed of employment qualification standards but fail to state such qualification standards in said CBA. whose benefits should be given only to those employees covered thereby. Wage Order No. without taking into account Wage Order No. et al. agrees that neither party shall not be obligated to bargain collectively with respect to any subject matter not specifically referred to or covered in this AGREEMENT. petitioner is not obliged to grant the wage increase to them. The provisions of the CBA should be read in harmony with the wage orders. In that case. 43 As the Court ruled in United Kimberly-Clark Employees Union.:44 A CBA is more than a contract. If the terms of a CBA are clear and have no doubt upon the intention of the contracting parties. When a CBA may be expected to speak on a matter. NCR-02.those receiving not more than the minimum wage. and not all employees across-the-board as respondent Union would want petitioner to do.38 The error of the CA lies in its considering only the CBA in interpreting the wage adjustment provision. The VA rejected this claim: Complainant Pag-Asa Steel Workers Union additionally advances the arguments that "there exist a collateral agreement to pay the equivalent of wage orders across the board or at least to negotiate how much will be paid" and that "parol evidence is now applicable to show or explain what the unclean provisions of the CBA means regarding wage adjustment. pursuant to said provision. then the increases applied only to those mentioned therein. To allow alleged collateral agreements or parol/oral agreements would be violative of the CBA provision afore-quoted. the VA may resort to evidence extrinsic of the CBA to determine the full agreement intended by the parties. It is a system of industrial self-government with the grievance machinery at the very heart of the system. its sentence imports ambiguity on that subject.00 under the CBA which is due on July 31. The VA is not merely to rely on the cold and cryptic words on the face of the CBA but is mandated to discover the intention of the parties. Thus. their contemporaneous and subsequent acts shall be principally considered.00 per day under Wage Order Nos. in a CBA. Considering therefore that none of the members of respondent Union are receiving salaries below the P250. respondent Union relied on a collateral agreement between it and petitioner. the COMPANY and the UNION. to show prior or contemporaneous collateral parol agreements between the parties. The Court held as follows: x x x The wage orders did not grant across-the-board increases to all employees in the National Capital Region but limited such increases only to those already receiving wage rates not more than P125. NCR-01 and NCR-01-A and P142. The Union protested. The company implemented the wage increases only to those employees covered by the wage orders . an agreement extrinsic of the CBA based on an alleged established practice of the latter as employer. it is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate. any and all government-mandated increases in salaries and allowance should be granted to all employees across-the-board. for the life of this AGREEMENT. The CBA cannot be considered independently of the wage order which respondent Union relied on for its claim. (Emphasis added)41 In this case. and the step which is equally a part of the CBA although not expressed in it. 2001 barely a month from now. Bate 39 is instructive on how to construe a CBA vis-à-vis a wage order. gaps may be left to be filled in by reference to the practices of the industry.00 minimum wage. The parties solve their problems by molding a system of private law for all the problems which may arise and to provide for their solution in a way which will generally accord with the variant needs and desires of the parties. Inc.

00 minimum wage rate prescribed by the wage order — two rank-and-file LABOR LAW I CASES (Arts. Mere similarity of contracts does not present the kind of sufficiently similar circumstances to outweigh the danger of prejudice and confusion. the offering party must establish the degree of specificity and frequency of uniform response that ensures more than a mere tendency to act in a given manner but rather. Thus was the ruling of the Court in Bank of Commerce v. customs. In this case. NCR-06 was implemented belie respondent Union’s claim that the wage-order-mandated increases were given to employees despite the fact that they were receiving salaries above the minimum wage. habits. The only instance when petitioner admittedly implemented a wage order despite the fact that the employees were not receiving salaries below the minimum wage was under Wage Order No. It is only when examples offered to establish pattern of conduct or habit are numerous enough to lose an inference of systematic conduct that examples are admissible.00 per day. NCR-08. Only the following lists of salaries of respondent Union’s members were presented in evidence: (1) before Wage Order No. The list of the employees’ salaries before Wage Order No. NCR-08.R. the giving of the increase should not be by reason of a strict legal or contractual obligation. usage or pattern of conduct must be proved like any other facts. NCR-06 was issued. (4) after Wage Order No. NCR-06 was implemented. We have reviewed the records meticulously and find no evidence to prove that the grant of a wage-order-mandated increase to all the employees regardless of their salary rates on an agreement collateral to the CBA had ripened into company practice before the effectivity of Wage Order No. custom. usage or patterns of conduct must be proved. the petition is GRANTED. even if the company continuously grants a wage increase as mandated by a wage order or pursuant to a CBA. or pattern of evidence must be numerous enough to base on inference of systematic conduct. The wage distortion necessitated the upward adjustment of the salaries of the other employees and not because it was a matter of company practice or usage. Moreover. Manalo. The VA has to examine such practices to determine the scope of their agreement. (2) after Wage Order No. and sufficiently regular. Moreover. the same would not automatically ripen into a company practice. petitioner would give the increase to the employees in addition to the CBA-mandated increases. Respondent’s isolated act could hardly be classified as a "company practice" or company usage that may be considered an enforceable obligation. of habit or pattern of conduct. NCR-07 was implemented.rely upon negotiating and contractual history of the parties. and (5) after the second year increase in the CBA was implemented. The Decision of the Voluntary Arbitrator is REINSTATED. 2005 are REVERSED and SET ASIDE. just like any other fact. Petitioner. however. 65171 and Resolution dated January 11. et al. to ripen into a company practice that is demandable as a matter of right. The key criteria are adequacy of sampling and uniformity of response or ratio of reaction to situations. As petitioner explains. The situation of the employees before Wage Order No. petitioner granted the increase under Wage Order No.:46 Habit. Courts must contend with the caveat that. SO ORDERED. After all. The offering party must allege and prove specific. This list proves that some employees were in fact receiving salaries below theP198. The Decision of the Court of Appeals in CA-G. they were still granted salary increase. Respondent Union failed to adduce proof on the salaries of the employees prior to the issuance of each wage order to establish its allegation that.45 However. No costs. a wage distortion occurred as a result of granting the increase to those employees who were receiving salaries below the prescribed minimum wage. explains that it did so because it was agreed upon in the CBA that should a wage increase be ordered within six months from its signing. before they admit evidence of usage. was different. as where the provision of the CBA has been loosely formulated. In determining whether the examples are numerous enough. the key criteria are adequacy of sampling and uniformity of response. habit means a course of behavior of a person regularly represented in like circumstances. NCR-07 on its belief that it was obliged to do so under the CBA. NCR-07.97-102) |58 . even if the employees were receiving salaries above the minimum wage and there was no wage distortion. Not one of the members of respondent Union was then receiving less than P250. employees in particular. SP No. repetitive conduct that might constitute evidence of habit. the CBA must be construed liberally rather than narrowly and technically and the Court must place a practical and realistic construction upon it. WHEREFORE. (3) after the grant of the first year increase under the CBA. but by reason of an act of liberality on the part of the employer. conduct that is semi-automatic in nature. evidence of past practices interpreting ambiguous provisions. Hence. however. The examples offered in evidence to prove habit. premises considered. the minimum wage requirement in said wage order.

50 daily. his station. 1959 to December 31. 1960 to December 31. Ponseca should not be entitled to per diems. 1963 328 days T O TAL 1. 1968 LEXAL LABORATORIES and/or JOSE ANGELES. nothing more nothing less:"5 We. vs.: Condensed.00 previously paid Ponseca under the judgment and P610. 4 Lexal concedes that whenever its employee. 1958 Ponseca had been reporting everyday to the bodega of respondents. The union's evidence is that since the last part of October. rule that CIR erred in including per diems in the back wages due and payable to Guillermo Ponseca. CIR simply hit upon the idea that per diems should be paid as part of the back wages because they were "paid to him regularly. petitioners. or with Ponseca himself for that matter. 3 It would seem to us that per diem is intended to cover the cost of lodging and subsistence of officers and employees when the latter are on duty outside of their permanent station. 1965.50 a day. SANCHEZ. Therefore. 1963 to November 24. 1963. petitioners appealed to this Court from the order of February 16. 1963. 1958 to November 24. Since per diems are in the nature of reimbursement.R. Whereupon.EN BANC G. No. This order was subsequently modified by CIR's resolution of May 22. confirming the report of its Chief Examiner and Economist. 1965 and the resolution of May 22. prior to Ponseca's dismissal.50 a day plus a per diem of P4. 1958 to November 24. "then that is the amount which he lost daily by reason of his dismissal.00 LABOR LAW I CASES (Arts.00 which Ponseca earned from other sources during his lay-off.6 Anyway.000. 1958 when he ceased reporting for work. 1959 365 days January 1. The rest is a matter of mathematical computation but first to the facts. Besides. respondents.00 or a total of P8. 1963. was out of Manila.50 Advance payment P8. 1963 a day prior to his reinstatement on November 25.000. 1960 366 days January 1. 1. Manager. he was allowed a per diem of P4.97-102) |59 . there is nothing to be reimbursed.846 days Less: x P4. 1962 to December 31. he worked daily either in Manila or in the provinces. viz: November 5. to his former position "with full back wages from the day of his dismissal up to the time he is actually reinstated without loss of his seniority rights and of such other rights and privileges enjoyed by him prior to his lay-off. and that for the number of days that he was supposed to be in Manila. P1. Guillermo Ponseca. We checked the accuracy of this figure.846 days from November 5.7 But the order of February 15. the question before us is this: Are per diems included in backpay? This problem came about because of the implementation of the decision of the Court of Industrial Relations (CIR) of June 29. Neither is it suggested in the record that per diems formed part of the terms of employment between petitioners and respondent union (of which Ponseca is a member). is "a daily allowance" given "for each day he (an officer or employee) was away from his home base". 1965 which directed the deduction of P5. Our attention has not been drawn to a rule of law or jurisprudence which holds that per diems are integral parts of regular wages or salaries." Per diem. 1958 to December 31. as follows: .856 days for the period from November 5. 1961 to December 31.00 for lunch.846 days This brings us to the total amount due from Lexa1 to Guillermo Ponseca. Because he spent nothing.00 per diem in the computation of Ponseca's back wages because the latter "did not actually spend for his meals and lodgings for he was all the time in Manila. the dictionary definition tells us. NATIONAL CHEMICAL INDUSTRIES WORKERS UNION-PAFLU (Lexal Laboratories Chapter) and THE COURT OF INDUSTRIAL RELATIONS. accordingly. Nor was pronouncement made either in the original decision or in the questioned order and resolution of CIR that per diems are part of back wages. and during the periods when he should have been in the provinces. 1965 credits Ponseca with 1." CIR. a dismissed employee. L-24632 October 26.50 a day. and P1. So that. P4. J. to November 24.00 for lodging. he spent nothing for meals and lodging outside of Manila. 2. he was to earn P4. Petitioners vigorously objected to the inclusion of the P4. 1965 that Ponseca was entitled to back wages from November 5.00 broken down as follows: P1." CIR brushed this contention aside. 1963 1directing petitioner Lexal Laboratories (Lexal) to reinstate Guillermo Ponseca. 1958 57 days January 1.00 P5. 1961 365 days January 1. 1962 365 days January 1. Ponseca — during the period involved — did not leave Manila.00 for dinner. because Ponseca earned P4.00 for breakfast. ruled in its order of February 16.307. P1. We found that there should only be 1.2 1. back wages are what an employee has lost "in the way of wages" due to his dismissal.

008 P2.00 P5. and Judgment is hereby rendered ordering petitioner Lexal Laboratories to pay Guillermo Ponseca. both of the Court of Industrial Relations. 2002-ULP. and the resolution of May 22.697. 1965.97-102) |60 . the sum of P2. Respondents". the order of February 16.00 . 1965. For the foregoing reasons.610. in its Case No. So ordered. Complainant. LABOR LAW I CASES (Arts.00.697. its Manager. No costs. versus Lexal Laboratories and Jose Angeles. by way of net backpay. entitled "National Chemical Industries Workers Union-PAFLU (Lexal Laboratories Chapter). are hereby modified.Earnings from other sources NET BACKPAY P610.

93 and 94 of the Labor Code as amended. Shift Boiler Supervisor. a corporation which is fully owned and controlled by the Government. considering that respondent union was formed only a year after the implementation of the Job Evaluation Program. The JE Program was designed to rationalized the duties and functions of all positions. rest day and holiday pay allegedly in violation of Article 100 of the Labor Code. and 2. 1 Private respondent union represents the former supervisors of the NASUREFCO Batangas Sugar Refinery. Book V of the Labor Code. pay the individual members of complainant union the difference in money value between the P100. General Accountant. the members of herein respondent union filed a complainant with the executive labor arbiter for non-payment of overtime. On June 1. SO ORDERED. as the bargaining representative of all the supervisory employees at the NASUREFCO Batangas Sugar Refinery. NATIONAL SUGAR REFINERIES CORPORATION. 1990. Shift Sugar Warehouse Supervisor. Executive Labor Arbiter Antonio C. Jobs were ranked according to effort. training and working conditions and relative worth of the job. for public respondent. As a result. the members of respondent union were treated in the same manner as rank-and file employees. as defined in Article 212 (m). 6715 allowing supervisory employees to form their own unions. Jose Mario C. rest day pay and holiday pay enjoyed by them instead of the P100. Head Nurse. respondents. Cost Accountant. Sugar Accountant. 1988. Community Development Officer. General Services Supervisor. On January 7. and all employees including the members of respondent union were granted salary adjustments and increases in benefits commensurate to their actual duties and functions. (PACIWU) TUCP. premises considered. Head of Inventory Control Section..00 special allowance which was implemented on June 11. the labor ruled that the along span of time during which the benefits were being paid to the supervisors has accused the payment thereof to ripen into contractual obligation. NATIONAL LABOR RELATIONS COMMISSION and NBSR SUPERVISORY UNION. petitioner. reestablish levels of responsibility.R. the Technical Assistant to the Refinery Operations Manager. responsibility. The Solicitor General and the Chief Legal Officer. Book III of the same Code. Property Warehouse Supervisor. petitioner implemented a Job Evaluation (JE) Program affecting all employees. hence there was no way for the individual supervisors to express LABOR LAW I CASES (Arts. the following adjustments were made: (1) the members of respondent union were re-classified under levels S-5 to S-8 which are considered managerial staff for purposes of compensation and benefits.00 per month) in basic pay compared to the highest paid rank-and-file employee. On May 11. at the complainants cannot be estopped from questioning the validity of the new compensation package despite the fact that they have been receiving the benefits therefrom. Shift Process Supervisor. (2) there was an increase in basic pay of the average of 50% of their basic pay prior to the JE Program. with the union members now enjoying a wide gap (P1. 50. Pido rendered a decision 2 disposing as follows: "WHEREFORE. J p: The main issue presented for resolution in this original petition for certiorari is whether supervisory employees. should be considered as officers or members of the managerial staff under Article 82. Petitioner National Sugar Refineries Corporation (NASUREFCO). specifically on June 20. vs. DECISION REGALADO. Assistant Safety and Security Officer. and hence are not entitled to overtime rest day and holiday pay. The Batangas refinery was privatized on April 11. 1988. 1991. Iloilo and Batangas.SECOND DIVISION G. Shift Electrical Supervisor. 101761. With the implementation of the JE Program. March 24. pay the individual members of complainant union the usual overtime pay. rest day pay and holiday pay that they ought to have received from June 1. Junior Financial/Budget Analyst. petitioner NASUREFCO recognized herein respondent union. No. rest day and holiday pay pursuant to the provisions of Articles 87. We glean from the records that for about ten years prior to the JE Program. namely. de la Cruz for private respondent.269. 1988. Instrumentation Supervisor. 1990. 1993. Bunag for petitioner.00 special allowance and the overtime pay. from rank-and-file to department heads. Employment and Training Supervisor. they used to be paid overtime. all positions were re-evaluated. and recognize both wage and operational structures. 1992 pursuant to Proclamation No. (3) longevity pay was increased on top of alignment adjustments. Two years after the implementation of the JE Program. Day Maintenance Supervisor and Motorpool Supervisor. Zoilo V. operates three (3) sugar refineries located at Bukidnon. As such.97-102) |61 . Senior Financial/Budget Analyst. Head and Personnel Services. (4) they were entitled to increased company COLA of P225. Shift Operations Chemist. NLRC. which was organized pursuant to Republic Act NO.00 allowance for rest day/holiday work. All other claims are hereby dismissed for lack of merit.00 per month." In finding for the members therein respondent union. Corporation is hereby directed to — respondent National Sugar refineries 1. (5) there was a grant of P100.

however it must of necessity be ascertained first whether or not the union members. which reads: "(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire. as defined under Article 212(m). or (ii) execute under general supervision work along LABOR LAW I CASES (Arts. are to be considered as officers or members of the managerial staff who are exempt from the coverage of Article 82 of the Labor Code. rest day and holiday pay. to wit: "Art. or their suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight. We find creditable merit in the petition and that the extraordinary writ of certiorari shall accordingly issue. discharged. recall. as defined employees. 4 Hence this petition for certiorari. but not to government employees. in the interest of the employer effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of those above definitions are considered rank-and-file employees of this Book. (3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof.97-102) |62 . said employees should be considered as "officers or members of the managerial staff" as defined under Article 82. rest day and holiday pay. It is not disputed that the members of respondent union are supervisory employees.their collective response thereto prior to the formation of the union. "As used herein. and to other officers or members of the managerial staff. managerial employees. which arrangement. Respondent NLRC declared that these supervisory employees are merely exercising recommendatory powers subject to the evaluation. namely: (1) Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof: (2) They customarily and regularly direct the work of two or more employees therein: (3) They have the authority to hire or fire other employees of lower rank. (c) Officers or members of a managerial staff if they perform the following duties and responsibilities: (1) The primary duty consists of the performance of work directly related to management policies of their employer. — The provisions of this title shall apply to employees in all establishments and undertakings whether for profit or not. as supervisory employees.00 special allowance given NASUREFCO fell short of what the supervisors ought to receive had the overtime pay rest day pay and holiday pay not been discontinued. Petitioner. Book V of the Labor Code on Labor Relations. if they meet all of the following conditions. domestic helpers. On appeal. respondent National Labor Relations Commission (NLRC) affirmed the decision of the labor arbiter on the ground that the members of respondent union are not managerial employees. however. 82 Coverage. and the comparative computations presented by the private respondent union showed that the P100. they do not participate in the formulation of management policies nor in the hiring or firing of employees. Rule I. 3 Reconsideration of said decision was denied in a resolution of public respondent dated August 30." (Emphasis supplied. persons in the personal service of another. Book III of the Rules to Implement the Labor Code. transfer.) xxx xxx xxx 'Sec. with petitioner NASUREFCO asseverating that public respondent commission committed a grave abuse of discretion in refusing to recognized the fact that the members of respondent union are members of the managerial staff who are not entitled to overtime. Supervisory employees are those who. and in making petitioner assume the "double burden" of giving the benefits due to rank-andfile employees together with those due to supervisors under the JE Program. avers that for purposes of determining whether or not the members of respondent union are entitled to overtime. rest day and holiday pay. as defined under Article 212 (m) of the Labor Code and. rest day and holiday pay. (2) Customarily and regularly exercise discretion and independent judgment. members of the family of the employer who are dependent on him for support. rest day and holiday pay. 2. field personnel. Book III of the Labor Code on "Working Conditions and Rest Periods" and amplified in Section 2. therefore. therefore. Before this can be resolved. they are entitled to overtime. and workers who are paid by results as determined by the Secretary of Labor in Appropriate regulations. in holding that the union members are entitled to overtime. 'managerial employees' refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof. — The provisions of this rule shall not apply to the following persons if they qualify for exemption under the condition set forth herein: xxx xxx xxx (b) Managerial employees. their responsibilities do not require the exercise of discretion and independent judgment. and in ruling that the latter are not managerial employees. adopted the definition stated in the aforequoted statutory provision. 1991 by its Third Division." Respondent NLRC. 1991. assign or discipline employees. and their main function is to carry out the ready policies and plans of the corporation. Exemption. amounted to a diminution of benefits. The primordial issue to be resolved herein is whether the members of respondent union are entitled to overtime. review and final action by their department heads. suspend. in a decision promulgated on July 19. lay-off.

the union members are supervisory employees. While the Constitution is committed to the policy of social justice and the protection of the working class. among others. The question whether a given employee is exempt from the benefits of the law is a factual one dependent on the circumstances of the particular case. staffing. (2) they customarily LABOR LAW I CASES (Arts. however. may not be occupying managerial positions. Rule I Book III of the implementing rules.: (1) their primary duty consists of the performance of work directly related to management policies of their employer. hence. 5) represents the superintendent or the department when appointed and authorized by the former. In determining whether an employee is within the terms of the statutes. 3) trains and guides subordinates on how to assume responsibilities and become more productive. rest day and supervisory employees under Article 212 (m) should be made to apply only to the provisions on Labor Relations. equipment performance. b) organizing and scheduling of work activities of the department. 10) supervises the activities of all personnel under him and goes to it that instructions to subordinates are properly implemented. for purposes of forming and joining unions. and f) preparing annual departmental budget. and above. the criterion is the character of the work performed. and (4) Who do not devote more 20 percent of their hours worked in a work-week to activities which are not directly and closely related to the performance of the work described in paragraphs (1). viz. e) selecting the appropriate man to handle the job in the department. this Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. controlling communicating and in making decisions in attaining the company's set goals and objectives. experience. This is one such case where we are inclined to tip the scales of justice in favor of the employer. rather than the title of the employee's position.specialized or technical lines requiring special training. while generally this Court is not supposed to review the factual findings of respondent commission. 6 9) sees to it that safety rules and regulations and procedure and are implemented and followed by all NASUREFCO employees. the following operations whereby the employee: 1) assists the department superintendent in the following: a) planning of systems and procedures relative to department activities. follows and implements company policies at all times and recommends disciplinary action on erring subordinates. substantial justice and the peculiar circumstances obtaining herein mandate a deviation from the rule. In terms of working conditions and rest periods and entitlement to the questioned benefits. 5 employees are likewise responsible for the effective and efficient operation of their respective departments. as supervisors. organizing. they are officers or members of the managerial staff. to be dispensed in the light of the established facts and the applicable law and doctrine. Rule I Book III of the aforestated Rules to Implement the Labor Code. and A cursory perusal of the Job Value Contribution Statements 7 of the union members will readily show that these supervisory employees are under the direct supervision of their respective department superintendents and that generally they assist the latter in planning. quality of service and working conditions.97-102) |63 . as contemplated under Article 82 of the Code and Section 2. d) attaining the company's set goals and objectives by giving his full support. however. collective bargaining. has not blinded us to the rule that justice is in every case for the deserving. More specifically. Consequently. as defined in Section 2. it is apparent that the members of respondent union discharge duties and responsibilities which ineluctably qualify them as officers or members of the managerial staff. Management also has its own rights which. 2) observes. or knowledge. From the foregoing. certification elections. These supervisory 11) performs other related tasks as may be assigned by his immediate superior. they are not entitled to overtime. as such. 4) conducts semi-annual performance evaluation of his subordinates and recommends necessary action for their development/advancement. Out of its concern for those with less privileges in life. In other words." It is the submission of petitioner that while the members of respondent union. Such favoritism. 7) recommends disciplinary actions/promotions. c) decision making by providing relevant information data and other inputs. or (iii) execute under general supervision special assignments and tasks. which includes employee shifting scheduled and manning complement. (2). are entitled to respect and enforcement in the interest of simple fair play. and so forth. recommends revisions or modifications to said rules when deemed necessary. directing. their duties and functions include. hence they are not entitled thereto. and initiates and prepares reports for any observed abnormality within the refinery. it should not be supposed that every labor dispute will be automatically decided in favor of labor. they are clearly officers or members of the managerial staff because they meet all the conditions prescribed by law and. 8) recommends measures to improve work methods. while the right of said employees to the questioned benefits should be considered in the light of the meaning of a managerial employee and of the officers or members of the managerial staff. 6) coordinates and communicates with other inter and intra department supervisors when necessary.

and regularly exercise discretion and independent judgment; (3) they regularly and
directly assist the managerial employee whose primary duty consist of the
management of a department of the establishment in which they are employed (4)
they execute, under general supervision, work along specialized or technical lines
requiring special training, experience, or knowledge; (5) they execute, under general
supervision, special assignments and tasks; and (6) they do not devote more than
20% of their hours worked in a work-week to activities which are not directly and
clearly related to the performance of their work hereinbefore described.
Under the facts obtaining in this case, we are constrained to agree with petitioner that
the union members should be considered as officers and members of the managerial
staff and are, therefore, exempt from the coverage of Article 82. Perforce, they are not
entitled to overtime, rest day and holiday.
The distinction made by respondent NLRC on the basis of whether or not the union
members are managerial employees, to determine the latter's entitlement to the
questioned benefits, is misplaced and inappropriate. It is admitted that these union
members are supervisory employees and this is one instance where the
nomenclatures or titles of their jobs conform with the nature of their functions. Hence,
to distinguish them from a managerial employee, as defined either under Articles 82
or 212 (m) of the Labor Code, is puerile and in efficacious. The controversy actually
involved here seeks a determination of whether or not these supervisory employees
ought to be considered as officers or members of the managerial staff. The
distinction, therefore, should have been made along that line and its corresponding
conceptual criteria.
II. We likewise no not subscribe to the finding of the labor arbiter that the payment of
the questioned benefits to the union members has ripened into a contractual
obligation.
A. Prior to the JE Program, the union members, while being supervisors, received
benefits similar to the rank-and-file employees such as overtime, rest day and holiday
pay, simply because they were treated in the same manner as rank-and-file
employees, and their basic pay was nearly on the same level as those of the latter,
aside from the fact that their specific functions and duties then as supervisors had not
been properly defined and delineated from those of the rank-and-file. Such fact is
apparent from the clarification made by petitioner in its motion for reconsideration 8
filed with respondent commission in NLRC Case No. CA No. I-000058, dated August
16, 1991, wherein, it lucidly explained:
"But, complainants no longer occupy the same positions they held before the JE
Program. Those positions formerly classified as 'supervisory' and found after the JE
Program to be rank-and-file were classified correctly and continue to receive
overtime, holiday and restday pay. As to them, the practice subsists.
"However, those whose duties confirmed them to be supervisory, were re-evaluated,
their duties re-defined and in most cases their organizational positions re-designated

to confirm their superior rank and duties. Thus, after the JE program, complainants
cannot be said to occupy the same positions." 9
It bears mention that this positional submission was never refuted nor controverted by
respondent union in any of its pleadings filed before herein public respondent or with
this Court. Hence, it can be safely concluded therefrom that the members of
respondent union were paid the questioned benefits for the reason that, at that time,
they were rightfully entitled thereto. Prior to the JE Program, they could not be
categorically classified as members or officers of the managerial staff considering that
they were then treated merely on the same level as rank-and-file. Consequently, the
payment thereof could not be construed as constitutive of voluntary employer
practice, which cannot be now be unilaterally withdrawn by petitioner. To be
considered as such, it should have been practiced over a long period of time, and
must be shown to have been consistent and deliberate. 10
The test or rationale of this rule on long practice requires an indubitable showing that
the employer agreed to continue giving the benefits knowingly fully well that said
employees are not covered by the law requiring payment thereof. 11 In the case at
bar, respondent union failed to sufficiently establish that petitioner has been motivated
or is wont to give these benefits out of pure generosity.
B. It remains undisputed that the implementation of the JE Program, the members of
private respondent union were re-classified under levels S-5 S-8 which were
considered under the program as managerial staff purposes of compensation and
benefits, that they occupied re-evaluated positions, and that their basic pay was
increased by an average of 50% of their basic salary prior to the JE Program. In other
words, after the JE Program there was an ascent in position, rank and salary. This in
essence is a promotion which is defined as the advancement from one position to
another with an increase in duties and responsibilities as authorized by law, and
usually accompanied by an increase in salary. 12
Quintessentially, with the promotion of the union members, they are no longer entitled
to the benefits which attach and pertain exclusively to their positions. Entitlement to
the benefits provided for by law requires prior compliance with the conditions set forth
therein. With the promotion of the members of respondent union, they occupied
positions which no longer met the requirements imposed by law. Their assumption of
these positions removed them from the coverage of the law, ergo, their exemption
therefrom.
As correctly pointed out by petitioner, if the union members really wanted to continue
receiving the benefits which attach to their former positions, there was nothing to
prevent them from refusing to accept their promotions and their corresponding
benefits. As the sating goes by, they cannot have their cake and eat it too or, as
petitioner suggests, they could not, as a simple matter of law and fairness, get the
best of both worlds at the expense of NASUREFCO.
Promotion of its employees is one of the jurisprudentially-recognized exclusive
prerogatives of management, provided it is done in good faith. In the case at bar,
LABOR LAW I CASES (Arts.97-102) |64

private respondent union has miserably failed to convince this Court that the
petitioner acted implementing the JE Program. There is no showing that the JE
Program was intended to circumvent the law and deprive the members of respondent
union of the benefits they used to receive.
Not so long ago, on this particular score, we had the occasion to hold that:
". . . it is the prerogative of the management to regulate, according to its discretion
and judgment, all aspects of employment. This flows from the established rule that
labor law does not authorize the substitution of the judgment of the employer in the
conduct of its business. Such management prerogative may be availed of without fear
of any liability so long as it is exercised in good faith for the advancement of the
employer's interest and not for the purpose of defeating on circumventing the rights of
employees under special laws or valid agreement and are not exercised in a
malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite."
13
WHEREFORE, the impugned decision and resolution of respondent National Labor
Relations Commission promulgated on July 19, 1991 and August 30, 1991,
respectively, are hereby ANNULLED and SET ASIDE for having been rendered and
adopted with grave abuse of discretion, and the basic complaint of private respondent
union is DISMISSED.

LABOR LAW I CASES (Arts.97-102) |65

G.R. No. 155059. April 29, 2005

d. Promotional Increase.

AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES UNION, Petitioner,
vs.
AMERICAN WIRE AND CABLE CO., INC. and THE COURT OF
APPEALS, Respondents.

A promotional increase was asked by the petitioner for fifteen (15) of its members
who were given or assigned new job classifications. According to petitioner, the new
job classifications were in the nature of a promotion, necessitating the grant of an
increase in the salaries of the said 15 members.

DECISION

On 21 June 2001, a Submission Agreement was filed by the parties before the Office
for Voluntary Arbitration. Assigned as Voluntary Arbitrator was Angel A. Ancheta.

CHICO-NAZARIO, J.:
1

Before Us is a special civil action for certiorari, assailing the Decision of the Special
Eighth Division of the Court of Appeals dated 06 March 2002. Said Decision upheld
the Decision2 and Order3 of Voluntary Arbitrator Angel A. Ancheta of the National
Conciliation and Mediation Board (NCMB) dated 25 September 2001 and 05
November 2001, respectively, which declared the private respondent herein not guilty
of violating Article 100 of the Labor Code, as amended. Assailed likewise, is the
Resolution4 of the Court of Appeals dated 12 July 2002, which denied the motion for
reconsideration of the petitioner, for lack of merit.
THE FACTS
The facts of this case are quite simple and not in dispute.
American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of
wires and cables. There are two unions in this company, the American Wire and
Cable Monthly-Rated Employees Union (Monthly-Rated Union) and the American
Wire and Cable Daily-Rated Employees Union (Daily-Rated Union).
On 16 February 2001, an original action was filed before the NCMB of the
Department of Labor and Employment (DOLE) by the two unions for voluntary
arbitration. They alleged that the private respondent, without valid cause, suddenly
and unilaterally withdrew and denied certain benefits and entitlements which they
have long enjoyed. These are the following:
a. Service Award;
b. 35% premium pay of an employee’s basic pay for the work rendered during Holy
Monday, Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29;
c. Christmas Party; and

On 04 July 2001, the parties simultaneously filed their respective position papers with
the Office of the Voluntary Arbitrator, NCMB, and DOLE.
On 25 September 2001, a Decision5 was rendered by Voluntary Arbitrator Angel A.
Ancheta in favor of the private respondent. The dispositive portion of the said
Decision is quoted hereunder:
WHEREFORE, with all the foregoing considerations, it is hereby declared that the
Company is not guilty of violating Article 100 of the Labor Code, as amended, or
specifically for withdrawing the service award, Christmas party and 35% premium for
work rendered during Holy Week and Christmas season and for not granting any
promotional increase to the alleged fifteen (15) Daily-Rated Union Members in the
absence of a promotion. The Company however, is directed to grant the service
award to deserving employees in amounts and extent at its discretion, in consultation
with the Unions on grounds of equity and fairness.6
A motion for reconsideration was filed by both unions 7 where they alleged that the
Voluntary Arbitrator manifestly erred in finding that the company did not violate Article
100 of the Labor Code, as amended, when it unilaterally withdrew the subject
benefits, and when no promotional increase was granted to the affected employees.
On 05 November 2001, an Order 8 was issued by Voluntary Arbitrator Angel A.
Ancheta. Part of the Order is quoted hereunder:
Considering that the issues raised in the instant case were meticulously evaluated
and length[i]ly discussed and explained based on the pleadings and documentary
evidenc[e] adduced by the contending parties, we find no cogent reason to change,
modify, or disturb said decision.
WHEREFORE, let the instant MOTION[S] FOR RECONSIDERATION be, as they are
hereby, denied for lack of merit. Our decision dated 25 September 2001 is affirmed
"en toto."9
LABOR LAW I CASES (Arts.97-102) |66

12 A motion for reconsideration13 was filed by the petitioner. the petitioner should have elevated the instant case to this Court through a petition for review on certiorari under Rule 45. and not through a special civil action for certiorari under Rule 65. III THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE YEARLY SERVICE AWARD IS NOT DEPENDENT ON PROFIT BUT ON SERVICE AND THUS. The dispositive portion of the Resolution states: Synthesized. there is no question that the Supreme Court has the discretion to dismiss it if it is defective. contending that the Court of Appeals misappreciated the facts of the case. as amended. INCIDENTAL BENEFITS. when the subject benefits were unilaterally withdrawn. AND 3) SERVICE AWARD. of the 1997 Rules on Civil Procedure. premises considered. Before we address the sole issue presented in the instant case. The decretal portion of the decision reads: WHEREFORE. 68182.R. for lack of merit. petitioner instituted the instant special civil action for certiorari. the present petition is hereby DENIED DUE COURSE and accordingly DISMISSED. a Decision in favor of herein respondent company was promulgated by the Special Eighth Division of the Court of Appeals in CA-G. 2001 in VA Case No. AS A MATTER OF LONG ESTABLISHED COMPANY PRACTICE. as amended. Further.15 THE COURT’S RULING Dissatisfied with the court a quo’s ruling. Ancheta erred in finding that the company did not violate Article 100 of the Labor Code.18 LABOR LAW I CASES (Arts. the motion for reconsideration is hereby DENIED for lack of merit. the solitary issue that must be addressed by this Court is whether or not private respondent is guilty of violating Article 100 of the Labor Code. ISSUE The Court of Appeals denied the motion in its Resolution dated 12 July 200214 because it did not present any new matter which had not been considered in arriving at the decision. The petitioner averred that Voluntary Arbitrator Angel A. the Voluntary Arbitrator erred in adopting the company’s unaudited Revenues and Profitability Analysis for the years 1996-2000 in justifying the latter’s withdrawal of the questioned benefits. SP No. WHEREFORE.An appeal under Rule 43 of the 1997 Rules on Civil Procedure was made by the Daily-Rated Union before the Court of Appeals 10 and docketed as CA-G. 2001 and his Order dated November 5. Ancheta dated September 25. when the benefits/entitlements given to the members of petitioner union were withdrawn. CANNOT BE UNILATERALLY WITHDRAWN BY RESPONDENT COMPANY. WITH THE FURTHER FACT THAT THE SAME NOT BEING DEPENDENT ON PROFITS. they assert. it is best to first discuss a matter which was raised by the private respondent in its Comment.16 citing grave abuse of discretion amounting to lack of jurisdiction.97-102) |67 . LINE AND SINKER. TO WIT: 1) 35% PREMIUM PAY.R.17 ASSIGNMENT OF ERRORS The petitioner assigns as errors the following: I THE COURT OF APPEALS ERRED IN HOLDING THAT THE COMPANY DID NOT VIOLATE ARTICLE 100 OF THE LABOR CODE. II THE COURT OF APPEALS ERRED WHEN IT JUST ACCEPTED HOOK. AAA-10-6-4-2001 are hereby AFFIRMED and UPHELD. According to it. and that it committed serious error when it ruled that the unaudited financial statement bears no importance in the instant case. 68182. WHICH IN TRUTH AND IN FACT SAID BENEFITS/ENTITLEMENTS HAVE BEEN GIVEN THEM SINCE TIME IMMEMORIAL. rather than on technicality. SP No. However. 2) CHRISTMAS PARTY AND ITS Assuming arguendo that the mode of appeal taken by the petitioner is improper.11 On 06 March 2002. The Decision of Voluntary Arbitrator Angel A. sound policy dictates that it is far better to dispose the case on the merits. The private respondent contends that this case should have been dismissed outright because of petitioner’s error in the mode of appeal. THE RESPONDENT COMPANY’S SELF SERVING AND UNAUDITED REVENUES AND PROFITABILITY ANALYSIS FOR THE YEARS 1996-2000 WHICH THEY SUBMITTED TO FALSELY JUSTIFY THEIR UNLAWFUL ACT OF UNILATERALLY AND SUDDENLY WITHDRAWING OR DENYING FROM THE PETITIONER THE SUBJECT BENEFITS/ENTITLEMENTS. WHEN IT UNILATERALLY WITHDREW THE BENEFITS OF THE MEMBERS OF PETITIONER UNION. AS AMENDED.

and not whether the company acquired profit or not. NLRC.26 On the subject of the unaudited financial statement presented by the private respondent. viz: 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.27 The respondent company likewise asseverates that the 15 members of petitioner union were not actually promoted. 100.23 where we held that financial statements audited by independent auditors constitute the normal method of proof of the profit and loss performance of the company. The Court shall resolve the solitary issue on the merits for future guidance of the bench and bar. we shall now resolve whether or not the respondent company is guilty of violating Article 100 of the Labor Code. or other employee benefits being enjoyed at the time of promulgation of this Code. et al.28 From the foregoing contentions. the petitioner argues that it is the employee’s length of service which is taken as a factor in the grant of this benefit. 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 LABOR LAW I CASES (Arts. these cases do not require that the only legal method to ascertain profit and loss is through an audited financial statement. The cases only provide that an audited financial statement is the normal method.19 With that out of the way. Article 100 of the Labor Code provides: ART. and without the consent of the former. – Nothing in this Book shall be construed to eliminate or in any way diminish supplements. Hence. we held: … The Court has previously ruled that financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS.97-102) |68 . The grant of these benefits was a customary practice that can no longer be unilaterally withdrawn by private respondent without the tacit consent of the petitioner. The grant of these benefits was conditional based upon the financial performance of the company and that conditions/circumstances that existed before have indeed substantially changed thereby justifying the discontinuance of said grants. The petitioner submits that the withdrawal of the private respondent of the 35% premium pay for selected days during the Holy Week and Christmas season. the petitioner insists that since the former was unaudited. as amended.22 The petitioner cites our ruling in the case of Saballa v.20 With respect to the fifteen (15) employees who are members of petitioner union that were given new job classifications.24 was likewise invoked.Our ruling in the case of Bogo-Medellin Sugarcane Planters Association. it only necessarily follows that the company’s financial situation at present is already very much different from where it was three or four years ago. it asserts that a promotional increase in their salaries was in order.21 On respondent company’s Revenues and Profitability Analysis for the years 19962000. Inc." the grant of the same. but simply. The benefits in question were given by the respondent to the petitioner consistently. The benefits/entitlements were not given to petitioner due to an error in interpretation. The company’s financial performance was affected by the recent political turmoil and instability that led the entire nation to a bleeding economy. the holding of the Christmas Party and its incidental benefits. v. et al. Even assuming that it can be treated as a "bonus. it should not have justified the company’s sudden withdrawal of the benefits/entitlements. the grant has been a practice over a long period of time. In this case. may be regarded as part of regular compensation. On the matter of the withdrawal of the service award. or a construction of a difficult question of law. and the giving of service awards violated Article 100 of the Labor Code.. The normal and/or legal method for establishing profit and loss of a company is through a financial statement audited by an independent auditor. and unconditionally since time immemorial.25 In answer to all these. However. NLRC29 we have characterized what a bonus is. The benefits given by the respondent cannot be considered as a "bonus" as they are not founded on profit. the respondent corporation avers that the grant of all subject benefits has not ripened into practice that the employees concerned can claim a demandable right over them. deliberately. it is critical that a determination must be first made on whether the benefits/entitlements are in the nature of a bonus or not. the latter contends that the cases cited by the petitioner indeed uniformly ruled that financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. and assuming they are so.The Supreme Court may brush aside the procedural barrier and take cognizance of the petition as it raises an issue of paramount importance. As such. NLRC. Salary adjustment is a must due to their promotion. it appears that for the Court to resolve the issue presented. There was only a realignment of positions. whether they are demandable and enforceable obligations. by reason of its long and regular concession. In the case of Producers Bank of the Philippines v. it cannot be withdrawn from the petitioner at respondent’s whim and caprice.

They were never incorporated in the Collective Bargaining Agreement (CBA).32 The benefits/entitlements in question were never subjects of any express agreement between the parties. may be withdrawn.97-102) |69 . can these bonuses be considered part of the wage or salary or compensation making them enforceable obligations? The Court does not believe so.39 Having thus ruled that the additional 35% premium pay for work rendered during selected days of the Holy Week and Christmas season. bonus should have been done over a long period of time. viz: … Considering that the Union was unable to adduce proof that a promotion indeed occur[ed] with respect to the 15 employees.33 The Christmas parties and its incidental benefits. it is not necessary anymore to delve into the Revenues and Profitability Analysis for the years 1996-2000 submitted by the private respondent. and have not yet been incorporated in the CBA. the holding of Christmas parties with its incidental benefits. Also. there had been no evidence adduced that it had been a regular practice. something given in addition to what is ordinarily received by or strictly due the recipient. salary or compensation of the employee. the petitioner has not denied having made proposals with the private respondent for the service award and the additional 35% premium pay to be made part of the CBA. there had been a downtrend in the amount given as service award. as held by the Court of Appeals: Based on the foregoing pronouncement. except when it is made part of the wage. and the cash incentives given together with the service awards are all in excess of what the law requires each employer to give its employees. the grant of these two aforementioned bonuses cannot be considered to have been the private respondent’s long and regular practice.bigger profits. Stated another way. a bonus is not a demandable and enforceable obligation.34 There was also a downtrend with respect to the holding of the Christmas parties in the sense that its location changed from paid venues to one which was free of charge.36The downtrend in the grant of these two bonuses over the years demonstrates that there is nothing consistent about it. the Daily Rated Union’s claim for promotional increase likewise fall[s] there being no promotion established under the records at hand. the holding of Christmas parties with raffle. the same however did not ripen into a company practice on account of the fact that it was only granted for two (2) years and with the express reservation from respondent corporation’s owner that it cannot continue to rant the same in view of the company’s current financial situation. The granting of a bonus is a management prerogative. and the grant of cash incentive together with the service award are all bonuses which are neither demandable nor enforceable obligations of the private respondent. We agree with the Voluntary Arbitrator that the same was merelysponsored by the respondent corporation out of generosity and that the same is dependent on the financial performance of the company for a particular year…37 The consequential question therefore that needs to be settled is if the subject benefits/entitlements. What is clear from the records is that over the years. Anent the Christmas party and raffle of prizes. it is obvious that the benefits/entitlements subjects of the instant case are all bonuses which were given by the private respondent out of its generosity and munificence.30 or it must have had a fixed amount31 and had been a long and regular practice on the part of the employer. unless they have been made a part of the wage or salary or compensation of the employees. are demandable or not. As observed by the Voluntary Arbitrator. On the alleged promotion of 15 members of the petitioner union that should warrant an increase in their salaries. . To be considered a "regular practice.35evidently to cut costs. the granting of the same was a management prerogative. [N]otwithstanding that the subject 35% premium pay was deliberately given and the same was in excess of that provided by the law. and the giving of cash incentive together with the service award cannot be said to have fixed amounts. Thus. The additional 35% premium pay for work done during selected days of the Holy Week and Christmas season. it must have been promised by the employer and expressly agreed upon by the parties. Further. In fact. As propitiously observed by the Court of Appeals: .40 LABOR LAW I CASES (Arts. and must be shown to have been consistent and deliberate. which are bonuses. the factual finding of the Voluntary Arbitrator is revealing. which.38 To hold that an employer should be forced to distribute bonuses which it granted out of kindness is to penalize him for his past generosity. Since they are above what is strictly due to the members of petitionerunion. . Aside from the general averment of the petitioner that this benefit had been granted by the private respondent since time immemorial." the giving of the The additional 35% premium pay for work rendered during selected days of the Holy Week and Christmas season cannot be held to have ripened into a company practice that the petitioner herein have a right to demand. whenever management sees necessary. For a bonus to be enforceable. the records reveal that these benefits/entitlements have not been subjects of any express agreement between the union and the company.

97-102) |70 . respectively. the assailed Decision and Resolution of the Court of Appeals dated 06 March 2002 and 12 July 2002. No pronouncement as to costs. LABOR LAW I CASES (Arts. SO ORDERED. which affirmed and upheld the decision of the Voluntary Arbitrator. in view of all the foregoing. are hereby AFFIRMED.WHEREFORE.

Wherefore. it was the Acting Chief of Staff who had been authorized to sign contracts of lease in behalf of the Republic of the Philippines. Petition) The above quitclaim agreement was signed by petitioner. REYES. Mariano C. that the Armed Forces did not have any contract. de Murciano's claim for the balance of back rentals on her property in Porac and Floridablanca. through her attorney-infact. the Office of the Chief of Engineers. therefore.00 per hectare per month". Col. Antonio P. The agreement was signed by petitioner's attorney-in-fact and returned to the Armed Forces of the Philippines.B. Rigoberto J. but for some reason or another was not received by the Office of the Chief of Engineers of the Armed Forcers of the Philippines. petitioner sent a letter to the Auditor General requesting payment of her claim of P15. so that on February 5. and again returned to the Office of the Chief of Engineers of the Armed Forces of the Philippines at Camp Murphy. On the basis of the above facts.067.386. 1950 forwarded to petitioner for her signature a quitclaim agreement whereby she was to be paid the amount of P15. 1949 to October 8. 1949.97-102) |71 . Col. Lt. we believe the Deputy Auditor General erred in denying petitioner's claim. such reservation did not bind the government to accept the same.40 in full satisfaction of her claim. the Deputy Auditor General denied petitioner's claim. On June 26.31 representing "complete payment of rentals for the entire period of occupancy from 1 May 1948 to 8 October 1949 at the rate of P6. through Lt. Office of the Chief of Engineers. and asking petitioner to sign said agreement and forward the same to his Office. Bernardo for the respondent Auditor General. 1948 to October 8. Atienza. represented in this case by her attorney-infact. informing petitioner that due to the reorganization of the Armed Forces and the abolition of the Philippine Service Command. at Camp Murphy. Littaua of the Philippine Service Command in representation of the Republic of the Philippines. Office of the Solicitor General Ambrosio Padilla and Solicitor Sumilang V. Deputy and Ex-O. petitioner was offered the amount of P3. To indemnify petitioner for this occupancy and use of her property. a portion thereof was occupied and utilized from May 1.petitioner.31 to petitioner. After the withdrawal of the United States Army from the premises. without prejudice to "further claims on the balance" (Annex E). Pampanga. ET AL.: This is a petition to review a decision of the Auditor General denying payment of petitioner Pilar Gil Vda. (Annexes "C" and "D". No.. prepared and signed by petitioner.000 already received by her from the Armed Forces of the Philippines. CARLOS RODRIGUEZ. Philippine Service Command. J.067. Chanco. Before signing the agreement in behalf of the Republic. respondents. J. Atienza sent petitioner another letter asking for the return of the signed quitclaim agreement in order that payment thereof may be made upon availability of funds.R. express or implied.. "the Armed Forces of the Philippines is released from all claims which you may have against it for the occupancy of the land upon payment of the above-mentioned rentals".000. S. The property in question was originally occupied by the United States Army after liberation. through her attorney-in-fact. Army was paying before for similar lot within the area". 1956.000 was based on the principle of "quantum meruit" that petitioner had not submitted satisfactory proof that the damage to her property warranted the payment of her additional claim. by the Artillery Firing Group of the Philippine Ground Force. the Armed Forces of the Philippines was reorganized and the Philippine Service Command abolished. the Chief of Staff of the Armed Forces appointed a survey party to ascertain the amount of damage to petitioner's property. on April 4. as impact area. totally or partially. with petitioner for the payment of rentals on her property. Omeña for petitioner. LABOR LAW I CASES (Arts. who returned the claim with the recommendation that it be denied. "the same rate the U. plus interests at the rate of 6% per annum from May 1. Col.067. minus the sum of P7. which she refused to accept. 1948 until full payment. on July 27. Armed Forces of the Philippines. DE MURCIANO. This letter was endorsed by the Auditor General to the Chief of Staff of the Armed Forces. and that although petitioner had reserved her right to make further claims upon the government. sent petitioner another copy of the quitclaim agreement similar to the first. Col. 1950. Whereupon.L.31. hence the present petition for review. for the reason that the use of petitioner's land by the Armed Forces was only intermittent. Protracted negotiations followed. which was used as impact area by the Armed Forces of the Philippines from May 1. A new quitclaim agreement of exactly the same tenor as the first was. and the survey party found that no substantial damage was caused thereto to justify the payment of P15. that its payment to petitioner of the sum of P7.00 per hectare. 1958 PILAR GIL VDA. In view of the explanations and recommendation of the Chief of Staff.EN BANC G. 1951. with the understanding that upon payment of said amount. and the United States Government paid for it a monthly rental of P6. vs. 1951. THE AUDITOR GENERAL. however. Armed Forces of the Philippines. on August 14. L-11744 May 28. resulting in the payment by the Armed Forces of the Philippines to petitioner of the sum of P7. but before it could be signed by Lt. 1949.

000.386. But that as it may. 89 Phil. 48 Off. It is thus clear that petitioner had never waived. duly signed by petitioner's attorney-in-fact. 87 Phil. her right to make further claims upon the Armed Forces of the Philippines.067.067. through the Office of the Chief of Engineers.067. Recs. a contract for the payment of P15. 17). 25). as shown by the letter of Col. on July 27. Civil Code).067. the fact remains that from the very beginning the Armed Forces of the Philippines had itself fixed the reasonable compensation or indemnity due to petitioner at the amount of P15. is binding on both parties and its validity or compliance cannot be left to the will of one of them (Art. the Chief of Staff refused to sign it in behalf of the Republic because it was found that the damage to petitioner's property did not warrant the payment to her of the sum of P15.000. stating that "after protracted negotiations.. 560. She can not. such offer was not accepted by the latter. also Tanda vs. Even after the reorganization of the Armed Forces of the Philippines and the transfer of authority to sign contracts of lease in behalf of the Republic of the Philippines to the Chief of Staff. 1956. even justifying its reasonableness on the ground that "this is the same rate the U. Camp Murphy. and this is confirmed by the endorsement of the chief of Staff returning petitioner's claim to the Auditor General.386. the Armed Forces of the Philippines paid the claimant the compromise sum of P7. therefore. what appears is that the Armed Forces insisted in paying petitioner no more than P3. the Party of the First Part hereby reserves her rights in accordance with the letter of her counsel dated April 12. as already stated.31. even as she had accepted the amount of P7.000.000. Said offer was accepted by petitioner and the quitclaim agreement. legally accepted by petitioner. 471.S.067. hence..00 was paid to petitioner "without prejudice of further claim on the balance" (Orig. 1948 to October 8. the Armed Forces can not. 1948. once perfected. p. to the Chief of staff. Receipt of petitioner's acceptance is..31.067.000. 1949. and asking her to sign anew the same agreement (Orig. was returned to the offer or. New Civil Code).067. among other things.. it appears that the amount of P7. Chanco of the Office of the Chief of Engineers. AFP. even enclosing in its offer a quitclaim agreement prepared by the Army for petitioner's signature. The rule is that a debtor is considered to incur in delay only from LABOR LAW I CASES (Arts. advising petitioner of said reorganization and transfer of authority to sign the quitclaim agreement to the Chief of Staff..067. Recs. For the above reasons. the balance of her claim against the Republic of the Philippines in the amount of P8. modify or alter its previous perfected contract with her by reducing the amount payable. but had always insisted on. 1319. The authority of the representatives of the Armed Forces who made this offer to petitioner is not denied. Antonio P.31. had recognized the existence of a perfected contract to pay petitioner the sum of P15. 19) . admitted by the Armed Forces of the Philippines. p. In fact. among other things. she made the following reservation: Notwithstanding the stipulation in this contract. Recs. The Armed Forces claim that after the signed agreement was returned by petitioner. as prayed for by her.00 and signed with the Republic of the Philippines an agreement (Orig. this circumstance does not in the least affect petitioner's right to ask for the fulfillment of her perfected agreement with the Armed Forces of the Philippines for the payment to her of the amount of P15. which the Office of the Chief of Staff later found to be only P3. the offer was binding and effective on the Armed Forces of the Philippines. 20-21) providing. which she merely considered as partial payment of her claim. p. however. therefore. Aldaya. Whether petitioner's claim be for rentals or damages. The Solicitor General also argues that petitioner's claim is not one for rentals but for damages to her property and that the extent of damages to which petitioner is entitled is only the reasonable compensation for the use of the premises.00 allegedly in full satisfaction of her claim. 1308. her attorney-in-fact submitted a counteroffer of P7.00 which the latter accepted without prejudice to her right to make further claims" (supra. by unilateral act and without petitioner's consent or approval. Recs. that said counteroffer was not considered by its Headquarters "due. the Armed Forces admit.97-102) |72 .. Gaz. Assuming therefore. The Armed Forces of the Philippines claim that when it had refused to pay petitioner her claim of P15.00 "in the complete payment and full satisfaction" of all her claims against the Republic. that petitioner did offer to novate her original contract with the Army by reducing her claim to P7.31 to petitioner in full satisfaction of rentals on her property during its use and occupancy by the Philippine Army was perfected between the parties (Art.40. the contract not being of the class called "formal" or "solemn" in which the writing is essential to their binding effect.40. p. As this offer was. that she accepted said amount of P7. however. In fact.00.00. The absence of a writing does not preclude the binding effect of the contract duly perfected by a meeting of the minds. 1950. pp. no novation took place and the parties are still bound by their original agreement. recover interests on this amount from May 1. to lack of funds". for in the same agreement that petitioner signed with the Republic. It is elementary that a contract. offered to pay the petitioner the total amount of P15. (2). and should be paid.000.31. 14). again. however. and that "both parties agree to release each other from all claims whatsoever".31. 497).It appears that it was the Armed Forces of the Philippines. Santos. From the time the Armed Forces received petitioner's acceptance.. The Solicitor General asserts that petitioner had waived whatever rights she had to make further claims on the Armed Forces when she finally accepted the sum of P7.31.000. which. Army was paying before for similar lots within the area" (Orig. we hold that petitioner is entitled to.31 as rentals for its use of her property from May 1. the Armed Forces. Nor may contracts deliberately entered into be overturned by reason of mistake of one of the parties to which the other in no way has contributed (De Gonzales Mondragon vs. Granting the truth of this allegation. We find the argument untenable.

the time the obligee judicially or extrajudicially demands the fulfillment of the obligation (Art. Therefore. 1956 until full payment. petitioner is entitled to the payment of interests only from June 26. There being no evidence showing that petitioner made demands upon the Armed Forces of the Philippines for the payment of the balance of her claim prior to her filing thereof with the Auditor General on June 26. and it is only from the time of delay that interest is recoverable (Art. 1169. 1956. with legal interests thereon from June 26. New Civil Code). The decision appealed from is reversed. Cost de oficio. she must be considered to have made demand for its payment only on this date.31.97-102) |73 . LABOR LAW I CASES (Arts. 1956. supra). 2209. So ordered. and the Auditor General is ordered to approve payment for petitioner the amount of P8.067.

J. to wit: 1. agreed on the terms of the CBA. the diminution of benefits being enjoyed by the employees since time immemorial. No.R. mid-year bonus. On March 24. filed a letter-complaint against TRB with the Conciliation Division of the Bureau of Labor Relations claiming that: First. only to that extent are bonuses deemed part of regular compensation. from two (2) months gross pay to two (2) months basic and year-end bonus from three (3) months gross to only two (2) months. 1986 paid the employees their holiday pay but has withheld from the union the basis of their computation. respondents. mid-year.97-102) |74 . Third. had jurisdiction over the money claims of the employees. E. This diminution of existing benefits has decreased our overtime rate and has affected the employees' take home pay. 1988 of the National Labor Relations Commission. 26.) G. and year-end bonuses. but has withheld from the Union the basis of their computation. San Agustin & Sinense for petitioner. 2. Traders Royal Bank (or TRB). Gonzalez. Enfero & Associates for private respondent. NATIONAL LABOR RELATIONS COMMISSION & TRADERS ROYAL BANK EMPLOYEES UNION. the management of TRB per memo dated October 10. (pp. if the bonus given is less than that in previous years. the Union. which found the petitioner.e. there is no diminution. through its president. 67-68. i. the parties who had been negotiating for a collective bargaining agreement.g. solely at the instance of the branch. e. manager. from two (2) months gross pay to two (2) months basic and year-end bonus from three (3) months gross to only two (2) months. TRB pointed out that the NLRC. the computation in question. 1986. guilty of diminution of benefits due the private respondents and ordered it to pay the said employees' claims for differentials in their holiday.A. the Secretary of Labor certified the complaint to the NLRC for resolution of the following issues raised by the complainants: San Juan. Second.) In the meantime.g. As regards the third and fourth bonuses. The whole of the bonuses given in previous years is not demandable. This diminution of existing benefits has decreased our overtime rate and has affected the employees' take home pay. Cruz. 1990 In its answer to the union's complaint.. TRADERS ROYAL BANK. 28. and not demandable as part of compensation. l) The Management of TRB per memo dated October 10. (p. (p. vs. 4) The refusal by management to recall active union members from the branches which were being transferred without prior notice. 88168 August 30. the refusal by management to recall active union members from the branches which were being transferred without prior notice. Rollo. Rollo. 1987. 2) The computation in question has allegedly decreased the daily salary rate of the employees. mid-year bonus. 3.) LABOR LAW I CASES (Arts.: This petition for certiorari seeks to nullify or set aside the decision dated September 2. e. petitioner. they are entirely dependent on the income of the bank. has allegedly decreased the daily salary rate of the employees. 1986 paid the employees their HOLIDAY PAY.N. On November 18. solely at the instance of the branch manager.FIRST DIVISION Fourth. Since only two months bonus is guaranteed. 3) The diminution of benefits being enjoyed by the employees since the (sic) immemorial. not the Bureau of Labor Relations. as to be liable for a differential. Rollo. GRIÑO-AQUINO.

The practice of giving them bonuses at year's end. (pp. is not correct. 1989). The matter of giving them bonuses over and above their lawful salaries and allowances is entirely dependent on the profits. and leave benefits. the same having prescribed. There is merit in the petitioner's contention that the NLRC gravely abused its discretion in ordering it to pay mid-year/year-end bonus differential for 1986 to its employees.R. In other respects. Cebu Portland Cement Co. for bonuses are not part of labor standards in the same class as salaries. judgment is hereby rendered in favor of the petitioner and ordering respondent bank to pay petitioner membersemployees the following: 1. The petitioner pointed out. the income of the Bank was only 20. cost of living allowances. the decision is affirmed. 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. It is clear from the above-cited rulings that the petitioner may not be obliged to pay bonuses to its employees. National Labor Relations Commission. "It is something given in addition to what is ordinarily received by or strictly due the recipient. insisted that it had paid the employees holiday pay. . that the Bank weakened considerably after 1986 on account of political developments in the country. the dispositive portion of which reads: WHEREFORE. 1983 is hereby dismissed. it was placed under sequestration by the present administration and is now managed by the Presidential Commission on Good Government (PCGG). the bonuses were less because the income of the Bank had decreased. Generally. the bonus given was two (2) months basic mid-year and two (2) months gross end-year. Likewise. that the decrease in the midyear and year-end bonuses constituted a diminution of the employees' salaries. be penalized for its past generosity to its employees. A bonus is "a gratuity or act of liberality of the giver which the recipient has no right to demand as a matter of right" (Aragon vs. Private respondent's contention. 1983 and using the Divisor 251 days in determining the daily rate of the employees. Hence. 1988. 2. 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" .97-102) |75 . the charge of unfair labor practice against the respondent company is hereby dismissed for lack of merit. Costs against the respondent union. WHEREFORE. Federation of Free Workers and Nemia Quiambao. In the light of these submissions of the petitioner. realized by the Bank from its operations during the past year. 72-73. The claim for holiday differential for the period earlier than November 11. No. G.G. however. if any." The granting of a bonus is basically a management prerogative which LABOR LAW I CASES (Arts. Rollo.2 million pesos. the petition for certiorari is granted. however. Its fiscal condition having declined. Mid-year bonus differential representing the difference between two (2) months gross pay and two (2) months basic pay and endyear bonus differential of one (1) month gross pay for 1986. Holiday differential for the period covering l983-1986 as embodied in Resolution No. the NLRC rendered a decision in favor of the employees. From 1979-1985. but the Bank still gave out the usual two (2) months basic mid-year and two months gross year-end bonuses. in effect. which are provided by the Labor Code. 61 O.Despite the terms of the CBA. Petitioner.. (Kamaya Point Hotel vs. Suspected to be a Marcos-owned or controlled bank. arguing that the CBA would apply prospectively only to claims arising after its effectivity.) A motion for reconsideration was filed by TRB but it was denied. . In 1986. SO ORDERED. 4984-1986 of respondent's Board of Directors but to start from November 11. the Bank may not be forced to distribute bonuses which it can no longer afford to pay and. 4597). on the other hand. holiday pay. 75289. the union insisted on pursuing the case. The decision of the National Labor Relations Commission is modified by deleting the award of bonus differentials to the employees for 1986. this petition for certiorari. August 31. would depend on how profitable the operation of the bank had been. On September 2.

To settle the strike. No. COL. 130. No. or on January 29. which. LABOR LAW I CASES (Arts. Six days after. premises considered. VII.) On December 18. NFSW has been the bargaining agent of CAC rank and file employees (about 1200 of more than 2000 personnel) and has concluded with CAC a collective bargaining agreement effective February 16. 1981 having become final and executory — entry of judgment was made.97-102) |76 . among others. Labor Arbiter Ovejera declared the NFSW strike illegal. FACTS — 1. 51254 (Marcopper Mining Corp. a compromise agreement was concluded between CAC and NFSW on November 30. Case No.R. 3311st P. milling and amelioration bonuses being enjoyed by CAC workers. that is. 1981. VI-A. Sec. 5. Petition for certiorari and Prohibition) was still pending in the Supreme Court. 1982. MOLE.B. and amelioration bonus to the extent as the latter is required by law. The Petition had been dismissed on June 11. J: This is a petition for prohibition seeking to annul the decision dated February 20. On November 28. One day after the commencement of the strike. Under paragraph 4 thereof — The parties agree to abide by the final decision of the Supreme Court in any case involving the 13th Month Pay Law if it is clearly held that the employer is liable to pay a 13th month pay separate and distinct from the bonuses already given. CENTRAL AZUCARERA DE LA CARLOTA (CAC).EN BANC G. petitioner. 1981 — the decision of June 11. G. respondents. as Provincial Commander. 1982 reads: Wherefore. judgment is hereby rendered: 1. The dispositive part of his decision dated February 20. CAC filed a petition (R. 2. 1981. OVEJERA. Command. NFSW struck. 1981 — February 15. L-59743 May 31 1982 NATIONAL FEDERATION OF SUGAR WORKERS (NFSW). NFSW filed with the Ministry of Labor and Employment (MOLE) Regional Office in Bacolod City a notice to strike based on non-payment of the 13th month pay. 3. declared illegal the ongoing strike of the National Federation of Sugar Workers (NFSW) at the Central Azucarera de la Carlota (CAC). vs. 1982 of Labor Arbiter Ethelwoldo R. 1984. milling bonus. 1981. in addition to the Christmas. I. 1 A motion for reconsideration thereafter filed was denied in a resolution dated December 15.C. vs. 9. 8. CAC refused. Declaring the strike commenced by NFSW on January 28. Under Art. respectively. 1981 on the vote of seven Justices. Minister and Deputy Minister of Labor. and the strike was staged before the lapse of seven days from the submission to MOLE of the result of the strike-vote. As of November 30. and Marcopper Employees Labor Union. with only five Justices voting for denial. 7. Bacolod City.1981.R. 6. and to restrain the implementation thereof. at Bacolod City to declare the strike illegal. 0110-82) with the Regional Arbitration Branch VI-A. illegal. 1982. (3 dissented. On January 22. the strike was declared before the expiration of the 15-day cooling-off period for unfair labor practice (ULP) strikes. On February 8. Ovejera of the National Labor Relations Commission (NLRC) with station at the Regional Arbitration Branch No. a report of the strike-vote was filed by NFSW with MOLE. principally for being violative of Batas Pambansa Blg. 4. NFSW renewed its demand that CAC give the 13th month pay. Negros Occidental. 1982. ROGELIO DEINLA. ETHELWOLDO R. 2 reserved their votes: 4 did not take part. NFSW struck allegedly to compel the payment of the 13th month pay under PD 851. Blas Ople and Amado Inciong. The Christmas and milling bonuses amount to 1-½ months' salary. 5 of the said CBA — Bonuses — The parties also agree to maintain the present practice on the grant of Christmas bonus. 1982.A. PLANA. After the submission of position papers and hearing. After the Marcopper decision had become final.

after hearing. On February 26. 1982 memorandum on preventive suspension but without prejudice to the said employees' instituting appropriate actions before this Ministry relative to whatever causes of action they may have obtained proceeding from said memorandum. l982 null and void. Declaring the Decision of February 2O. until further orders of the Court. (See petitioner's memorandum of April 12. 2.. 1982. on the foregoing considerations. Awarding such other relief as may be just in the premises. 1982 decision which would violate fundamental rights of the petitioner. and 5. (c) In cases of bargaining deadlocks. II ISSUES — The parties have raised a number of issues. considering their relative importance and the impact of their resolution on ongoing labor disputes in a number of industry sectors.. 1. 3-4. 3. SO ORDERED. the NFSW — by passing the NLRC — filed the instant Petition for prohibition alleging that Labor Arbiter Ovejera.2. judgment be rendered after hearing. However. members. the certified or duly recognized bargaining representative may file a notice of strike with the Ministry (of Labor and Employment) at least thirty (30) LABOR LAW I CASES (Arts. — . 1982. milling and amelioration bonuses. 264. No restraining order was issued. III. 11. 2. CAC memorandum of April 2. Articles 264 and 265 of the Labor Code. Restraining implementation or enforcement of the Decision of February 20. 1982 memorandum during their period of preventive suspension. as well as sympathizers to immediately desist from committing acts that may impair or impede the milling operations of the Central The law enforcement authorities are hereby requested to assist in the peaceful enforcement and implementation of this Decision. an order. 1982 except those covered by the February 1. in view of the finding that the subject strike is illegal. NFSW. after which the parties submitted their memoranda. pp. 2. 1982. Whether the strike declared by NFSW is illegal. issue: 1. 3. DISCUSSION — 1. and on the Main Petition. 2. CAC is obliged to give its workers a 13th month salary in addition to Christmas. 4. as prescribed in the Labor Code. Directing the Central to accept back to work all employees appearing in its payroll as of January 28. Requiring maintenance of the status quo as of February 20. it is prayed of the Honorable Court that on the Petition for Preliminary Injunction. the resolution of which mainly depends on the mandatory or directory character of the cooling-off period and the 7day strike ban after report to MOLE of the result of a strike-vote. and praying that — WHEREFORE. p. picketing and lockouts. Hearing was held. Making the preliminary injunction permanent. its officers. including some procedural points. Strikes.) Resolution of this issue requires an examination of the thrusts and application of PD 851. 1982. insofar as pertinent. read: Art. Directing the Central to resume operations immediately upon receipt hereof. the aggregate of which admittedly exceeds by far the disputed 13th month pay. CAC and the PC Provincial Commander of Negros Occidental were threatening to immediately enforce the February 20. Directing the Central to pay effective from the date of resumption of operations the salaries of those to be placed on preventive suspension as per February 1. we have decided — in the interest of expediency and dispatch — to brush aside non-substantial items and reduce the remaining issues to but two fundamental ones: 1. 3. 10. Whether under Presidential Decree 851 (13th Month Pay Law). Directing.97-102) |77 . Enjoining respondents to refrain from the threatened acts violative of the rights of strikers and peaceful picketers. 1982.

(Emphasis supplied. subject to the cooling-off periodherein provided. pp. Similarly. the union of the employer shall furnish the Ministry the results of the voting at least seven (7) days before the intended strike or lockout.97-102) |78 . 17-18. the period of notice shall be shortened tofifteen (15) days. too. The submission of the report gives assurance that a strike vote has been taken and that. 265. — It shall be unlawful for any labor organization or employer to declare a strike or lockout without first having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required in the preceding Article or without the necessary strike or lockout vote first having been obtained and reported to the Ministry.without prejudice to the subsequent resolution of the legal dispute by competent authorities. The Ministry. (f) A decision to declae a strike must be approved by at least twothirds (2/3) of the total union membership in the bargaining unit concerened by secret ballots in meetings or referenda. ART. as when a strike is declaredimmediately after a strike notice is served. In cases of unfair labor practices. the majority of the members can take appropriate remedy before it is too late. It would indeed be self-defeating for the law to imperatively require the filing on a strike notice and strike-vote report without at the same time making the prescribed waiting periods mandatory." It must be stressed that the requirements of cooling-off period and 7-day strike ban must both be complied with. or when — as in the instant case — the strike-vote report is filed with MOLE after the strike had actually commenced Such interpretation of the law ought not and cannot be countenanced. Prohibited activities. the mandatory character of the 7day strike ban after the report on the strike-vote is manifest in the provision that "in every case. the decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken . the 7-day strike-vote report is not without a purpose. — The foregoing provisions hardly leave any room for doubt that the cooling-off period in Art. 264(f) were meant to be. If only the filing of the strike notice and the strike-vote report would be deemed mandatory. It thus directs the MOLE "to exert all efforts at mediation and conciliation to effect a voluntary settlement" during the cooling-off period . As applied to the CAC-NFSW dispute regarding the 13th month pay. (Emphasis supplied). but not the waiting periods so specifically and emphatically prescribed by law. MOLE intervention could have possibly induced CAC to provisionally give the 13th month pay in order to avert great business loss arising from the project strike. In every case. may at its own intitiative or upon the request of any affected party.) When the law says "the labor union may strike" should the dispute "remain unsettled until the lapse of the requisite number of days (cooling-off period) from the LABOR LAW I CASES (Arts. (Answer of public respondents. (d) During the cooling-off period. So. . the labor union may strike or the employer may declare a lockout. Should the dispute remain unsettled until the lapse of the requisite number of days from the mandatory filing of the notice." the unmistakable implication is that the union may not strike before the lapse of the cooling-off period. mandatory. It shall likewise be unlawful to declare a strike or lockout after assumption of jurisdiction by the President or the Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds for the strike or lockout. supervise the conduct of the secret balloting. subject to the (prescribed) cooling-off period. As pointed out by the Solicitor General — Many disastrous strikes have been staged in the past based merely on the insistence of minority groups within the union.) (a) Language of the law. it shall be the duty of the voluntary sttlement.days before the intended date thereof.— In requiring a strike notice and a cooling-off period. (b) Purposes of strike notice and strike-vote report. and should be deemed. the purposes (hereafter discussed) for which the filing of the strike notice and strike-vote report is required would not be achieved. the sugar planters and the sugar workers themselves. although the labor union may take a strike vote and report the same within the statutory cooling-off period. A decision to declae a lockout must be approved by at least two-thirds (2/3) of the board of direcotrs of the employer corporation or association or of the partners in a partnership obtained by secret ballot in a meeting called for the purpose. filing of the notice. if the report concerning it is false." the union shall furnish the MOLE with the results of the voting "at least seven (7) days before the intended strike. if the strike would coincide with the mining season... or mediation/conciliation could have convinced NFSW to at least postpone the intended strike so as to avoid great waste and loss to the sugar central. 264(c) and the 7-day strike ban after the strike-vote report prescribed in Art. the avowed intent of the law is to provide an opportunity for mediation and conciliation.

e. We hold that they constitute a valid exercise of the police power of the state. those to whom it applies should not be permitted to waive its provisions. 873-874. 265 of the Labor Code which provides: It shall likewise be unlawful to declare a strike or lockout after assumption of jurisdiction by the President or the Minister. Regional Arbitration Branch No.J.S. at 259 — The right to strike. in which the National Congress of Unions in the Sugar Industry of the Philippines (NACUSIP) and a number of CAC workers are the complainants. as prescribed in Art. before the lapse of the mandatory cooling-off period. 264 of the Labor Code. Emphasis supplied." Under the circumstances. Such settlement is valid when the law itself clearly authorizes it. i.. the periods prescribed for their attainment must. as it does not apply to ULP strikes. the NFSW strike arose from a dispute on the meaning and application of PD 851. — The NFSW declared the strike six (6) days after filing a strike notice. 264(e) of the Labor Code. 512-81. It also failed to file with the MOLE beforelaunching the strike a report on the strike-vote. the statute must be regarded as mandatory. Bacolod City. with NFSW as Intervenor seeking the dismissal of the arbitration case as regards unnamed CAC rank and file employees] has rendered illegal the above strike under Art. as aforesaid.. the cooling-off period provided in the Labor Code would not apply.. (82 C.97-102) |79 .) (c) Waiting period after strike notice and strike-vote report. NLRC. It is argued that mediation or conciliation in order to settle a criminal offense is not allowed. valid regulation of right to strike.. with NFSW claiming entitlement to a 13th month pay on top of bonuses given by CAC to its workers. In the case of a dispute on the payment of the 13th month pay. is more vulnerable to regulation than the right to organize and select representatives for lawful purposes of collective bargaining . be deemed mandatory. when it should have filed such report "at least seven (7) days before the intended strike. as indicated in (b) above or assume the form of measures designed to abort the intended strike. when a statute is founded on public policy [such as the policy to encourage voluntary settlement of disputes without resorting to strikes]. we are perforce constrained to conclude that the strike staged by petitioner is not in conformity with law. This conclusion makes it unnecessary for us to determine whether the pendency of an arbitration case against CAC on the same issue of payment of 13th month pay [R. when a fair interpretation of the statute. Wisconsin Employment Relations Board. or after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds for the strike or lockout. a simple decision on the legality or illegality of the strike would not spell the end of the LABOR LAW I CASES (Arts. shows the legislature intended a compliance with such provision to be essential to the validity of the act or proceeding. Secondly..If the purpose of the required strike notice and strike-vote report are to be achieved. the possible dispute settlement. are reasonable restrictions and their imposition is essential to attain the legitimate policy objectives embodied in the law. 336 U.S. 245. (Emphasis supplied. we are not prepared to say that its voluntary settlement is not authorized by the terms of Art. (e) NFSW strike is illegal. — . amicable settlement of criminal liability is not inexorably forbidden by law. Finally. could very well be along legally permissible lines. which directs acts or proceedings to be done in a certain way.B No. as against the diametrically opposite stance of CAC. because of its more serious impact upon the public interest. 9 of the Rules and regulations Implementing Presidential Decree No. Since the strike was just an offshoot of the said dispute.vote report. either permanent or temporary. Under Sec. VI-A. rather than compromise criminal liability. which makes it the duty of the MOLE to exert all efforts at mediation and conciliation to effect a voluntary settlement of labor disputes. — To quote Justice Jackson in International Union vs. it is at best unclear whether the refusal of CAC to give a 13th month pay to NFSW constitutes a criminal act. In the first place.A. So it has been held that. (d) State policy on amicable settlement of criminal liability.) (2) The Second Issue. — Petitioner contends that since the non-compliance (with PD 851) imputed to CAC is an unfair labor practice which is an offense against the state. 851 — Non-payment of the thirteenth-month pay provided by the Decree and these rules shall be treated as money claims cases and shall be processed in accordance with the Rules Implementing the Labor Code of the Philippines and the Rules of the National Labor Relations Commission. — At bottom. if any. or when some antecedent and prerequisite conditions must exist prior to the exercise of power or must be performed before certain other powers can be exercised.. The cooling-off period and the 7-day strike ban after the filing of a strike.

the original decision dismissing the petition in the aforecited Marcopper case had already been promulgated by this Court.) Having been issued by the agency charged with the implementation of PD 851 as its contemporaneous interpretation of the law. in the latter ease. This being so. the additional burden of a 13th month pay would amount to a penalty for his munificence or liberality. the quoted rule should be accorded great weight. LABOR LAW I CASES (Arts. Pragmatic considerations also weigh heavily in favor of crediting both voluntary and contractual bonuses for the purpose of determining liability for the 13th month pay.97-102) |80 . regardless of the conditional character of the grant (such as making the payment dependent on profit). In December 1981. shall include Christmas bonus.D. In the case at bar. Marcos issued Presidential Decree No. the intention was to grant some relief — not to all workers — but only to the unfortunate ones not actually paid a 13th month salary or what amounts to it.year and Christmas bonuses under a CBA) had been dismissed.. President Ferdinand E. To require employers (already giving their employees a 13th month salary or its equivalent) to give a second 13th month pay would be unfair and productive of undesirable results. But the resolution of denial was supported by the votes of only 5 Justices. The evident intention of the law. Where an employer pays less than agree(d) to abide by the final decision of the Supreme Court in any case involving the 13th Month Pay Law if it is clearly held that the employer is liable to pay a 13th month pay separate and distinct from the bonuses already given. To the employer who had acceded and is already bound to give bonuses to his employees.) 1/12th of the employee's basic salary. was to grant an additional income in the form of a 13th month pay to employees not already receiving the same. as revealed by the law itself. Otherwise put. midyear bonus. regardless of the nature of their employment. cost of living allowances and all other allowances regularly enjoyed by the employee. it is important for this Court to definitively resolve the problem: whether under PD 851. Keenly sensitive to the needs of the workingmen." Exempted from the obligation however are: Employers already paying their employees a 13th month pay or its equivalent .D. Under Section 3(e) thereof — The term "its equivalent" . 1981. Otherwise. NFSW and CAC concluded a compromise agreement by which they — This view is justified by the law itself which makes no distinction in the grant of exemption: "Employers already paying their employees a 13th month pay or its equivalent are not covered by this Decree. his prior concessions might not be given due credit. When a dispute arose last year as to whether CAC workers receiving the stipulated bonuses would additionally be entitled to a 13th month pay. the employer shall pay the difference. the original decision was affirmed when this Court finally denied the motion for reconsideration. (Section 2.1981." within The Rules Implementing P. as well as non-monetary benefits. 851 issued by MOLE immediately after the adoption of said law reinforce this stand. yet mindful of the mounting production cost that are the woe of capital which provides employment to labor. the aggregate of which is very much more than a worker's monthly pay. "all employers are hereby required to pay salary of not more than all their employees receiving a basic P1.) When this agreement was forged on November 30. The Marcopper decision is therefore a Court decision but without the necessary eight votes to be doctrinal. And considering further that there are other disputes and strikes — actual and impending — involving the interpretation and application of PD 851. including the distinguished Chief Justice. milling and amelioration bonuses stipulated in a collective bargaining agreement amounting to more than a month's pay. milling bonus and amelioration bonus. profit-sharing payments and other cash bonuses amounting to not less than 1/12th of the basic salary but shall not include cash and stock dividends. the petition of Marcopper Mining Corp.000 a month. Thereunder." (P. The probable reaction of one so circumstance would be to withdraw the bonuses or resist further voluntary grants for fear that if and when a law is passed giving the same benefits. 851. by whatever name called. so long as there is actual payment.. But a motion for reconsideration filed by Marcopper was pending as of November 30." (Italics supplied.. it cannot be said that the Marcopper decision "clearly held" that "the employer is liable to pay a 13th month pay separate and distinct from the bonuses already given. On the votes of only 7 Justices. the NFSW-CAC collective bargaining agreement provides for the grant to CAC workers of Christmas bonus. what was conceived to be a 13th month salary would in effect become a 14th or possibly 15th month pay. a 13th month pay not later than December 24 of every year. 851 on 16 December 1975.. seeking to annul the decision of Labor Deputy Minister Amado Inciong granting a 13th month pay to Marcopper employees (in addition to mid. but it was not envisioned that a double burden would be imposed on the employer already paying his employees a 13th month pay or its equivalent — whether out of pure generosity or on the basis of a binding agreement and. CAC is obliged to give its workers a 13th month salary in addition to Christmas.NFSW-CAC labor dispute. and this negative attitude would have an adverse impact on the employees.

WHEREFORE. in view of the rulings made herein. the petition is dismissed for lack of merit.the meaning of the NFSW-CAC compromise agreement. SO ORDERED. At any rate. No costs. LABOR LAW I CASES (Arts. NFSW cannot insist on its claim that its members are entitled to a 13th month pay in addition to the bonuses already paid by CAC.97-102) |81 .

SECOND DIVISION
G.R. No. L-60337 August 21, 1987
UNIVERSAL CORN PRODUCTS (A DIVISION OF UNIVERSAL ROBINA
CORPORATION), petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION and JOSE ARMAS,
ENGRACIO ASIS, AUSTERINAO ELEUTERIO, FAUSTINO ATIENZA, MARIO
ALTARES, JAIME ALTARES, ISIDRO ARANO, LEONILO ARANO, ALFREDO
ANCHETA, DOMINGO ANCHETA, RIZALITO, ABANTO, RIZALITO, CRESENCIO
ASCUTIA, JESUS ASCUTIA, FELICIANO ABORQUE, WILFREDO ARMENIO,
ALEJANDRO ABAGAT, PABLO ADLAWAN, FILEMON ABADINES, ROMEO
AREVALO, PABLO BUTIAL, BANAAG REMIGIO, LUCIO BERDIJO, ANTONIO
BIONSON, ABELARDO BRACAMONTE, SAMSON BORDEOS, TEODORO,
BARBIANA, FRANCISCO BABOR, HERCULANO BARRAMEDA, RODRIGO
BONGAIS, JAIME BERANA, EDUARDO, BUENAVENTURA, RODRIGO
BAUTISTA, FELEMON BAUTISTA, DIONISIO BERNALES, MARIANO BALAGTAS,
ALFREDO BERNADAS, EPIGENIO BORDEOS, BRIGIDO BAER, OSCAR
BONDOC, JOSE BONDOC, ROMEO BUCAYAN, VITALIANO BATOBATO,
DOMINGO BALLON, JOSE BORLEO, JOSE BORJA, RUFINO CLEMENTE, JUAN
CABALLERO, TRANQUILINA CAUSON, AUGORIO CALNEA, LEOPOLDO
CUARTERO, ALBERTO CATBAGAN, ROMEO CALIVO, ANDRES CUNTAPAY,
ALBERTO CASTRO, CASTOR RODRIGO, SIMPLICIO CACATIAN, NILO
DALANON, BIENVENIDO DUMAGAT, SR., BIENVENIDO DUMAGAT, JR.,
DOMINADOR DUMANTAY, TEODORO DULOMBAL, RODOLFO DANDAN,
SALVADOR DASIGO, ELIAS DASIGO, FRANCISCO ESTOLANO, LEOPOLDO
ESTIOCO, ROGELIO ESTANISLAO, MONTANO ESTANISLAO, ELIAS ESTRADA,
ERNESTO ESTABALLIO, FERNANDO FERNANDEZ, PEDRO GETEZO, ALFONSO
DE GUZMAN, LORENZO DE GUZMAN, MODESTO DE GUZMAN, ARELLANO
GARCIA, ALFREDO GARCIA, MANUEL GOROSPE, RAYMUNDO GELLIDO,
RODOLFO GALEON, ROMEO GONZALES, GERARDO GERMEDIA, BENITO
GALE, ROBERTO HASAL, EDILBERTO HERNANDEZ, RAFAEL IGUIZ,
MARGARITO JAVIER, PABLO JOSE, PEDRO JOVE, CELEDONIO JACA,
REYNALDO JALLA, EDUARDO JUMAQUIO, DOMINGO JUANO, AGUSTIN KHO,
ANTONIO LAMERA, RODOLFO LINEZO, MANUEL LAMBATIN, MANUEL LOPEZ,
BENEDICTO LOPEZ, MARIANO LARA, ELINO MISA, FRANCISCO MINA,
RODOLFO MIRABEL, ROGER MIRABEL, ROLANDO MIRABEL, OSCAR
MARTINEZ, MIGUEL MANACIO, PEDRO MANALO, LEOPOLDO MARQUEZ,
ANTONIO, MEDINA, SALVADOR MARAINAN, NAPOLEON MAGAYA, ALFREDO
MAQUI, EDUARDO MILLET, PABLO MENDEZ, DULCISIMO NATIVIDAD, ROMEO
NAGTALON, ALFONSO NOQUEZ, ALEJANDRO NOQUEZ, ANASTACIO NIVAL,
EMILIO ORTIZ, PONCIANO ORLANDA, GERARDO POSADAS, ATICO

PEDRIGOZA, ALFREDO PASCUA, LEONARDO PATRON, MIGUEL PACHECO,
DOMINGO PACHECO, FELIMON POLICARPIO, ERNESTO QUIJANO, EFREN
QUIBOTE, SIMEON RESCO, FERNANDO REYNOSO, EMILIO RIVERA,
GRACIANO RAMOS, REYNALDO RAMIREZ, PAQUITO RAMIREZ, THOMAS
ROSARIO, JR., ROMULO REYES, REYNALDO RAPSING, ALFREDO DEL
ROSARIO, FLORENCIO SASAN, ALFONSO SAMSON, LUIS SUAREZ,
GREGORIO SOMODO, FRANCISCO SAPLAN, LUCIANO SARNO, RICARDO
SOREL, CRESENCIO SANTOS, ARSENIO SERGA JR., BALTAZAR TALATO,
DIOSDADO TULANG, EUGENIO TOLENTINO, AMADOR TABULOG, LAZARO
TORRES, JAIME TRAJANO, GENEROSO TANTE, SERGIO TABUAC, ANASTACIO
TIMOG, DANIEL UDAN, HERMENIGILDO VITO, VICENTE VITO, BENJAMIN
VILLAMOR, ARTURO VALIENTE, ERNESTO VALIENTE, FELICISIMO
VERA, respondents.

SARMIENTO, J.:
The petitioner invokes National Federation of Sugar Workers (NFSW) v. Ovejera, 1 in
which we held that Presidential Decree No. 851, 2 the 13th-month pay law, does not
cover employers already paying their employees an "equivalent" to the 13th month
pay.
There is no dispute as to the facts.
Sometime in May, 1972, the petitioner and the Universal Corn Products Workers
Union entered into a collective bargaining agreement in which it was provided, among
other things, that:
xxx xxx xxx
The COMPANY agrees to grant all regular workers within the
bargaining unit with at least one (1) year of continuous service, a
Christmas bonus equivalent to the regular wages for seven (7)
working days, effective December, 1972. The bonus shall be given
to the workers on the second week of December.
In the event that the service of a worker is not continuous due to
factory shutdown, machine breakdown or prolonged absences or
leaves, the Christmas bonus shall be prorated in accordance with
the length of services that worker concerned has served during the
year . 3
LABOR LAW I CASES (Arts.97-102) |82

xxx xxx xxx
The agreement had a duration of three years, effective June 1, 1971, or until June 1,
1974.
On account however of differences between the parties with respect to certain
economic issues, the collective bargaining agreement in question expired without
being renewed. On June 1, 1979, the parties entered into an "addendum" stipulating
certain wage increases covering the years from 1974 to 1977. Simultaneously, they
entered into a collective bargaining agreement for the years from 1979 to 1981. Like
the "addendum," the new collective bargaining agreement did not refer to the
"Christmas bonus" theretofore paid but dealt only with salary adjustments. According
to the petitioner, the new agreements deliberately excluded the grant of Christmas
bonus with the enactment of Presidential Decree No. 851 4 on December 16, 1975. It
further claims that since 1975, it had been paying its employees 13th-month pay
pursuant to the Decree. 5
For failure of the petitioner to pay the seven-day Christmas bonus for 1975 to 1978
inclusive, in accordance with the 1972 CBA, the union went to the labor arbiter for
relief. In his decision, 6 the labor arbiter ruled that the payment of the 13th month pay
precluded the payment of further Christmas bonus. The union appealed to the
National Labor Relations Commission (NLRC). The NLRC set aside the decision of
the labor arbiter appealed from and entered another one, "directing respondent
company [now the petitioner] to pay the members concerned of complainants [sic]
union their 7-day wage bonus in accordance with the 1972 CBA from 1975 to 1978."
Justifying its reversal of the arbiter's decision, the NLRC held:
xxx xxx xxx
It is clear that the company implemented the aforequoted provision
of the CBA in 1972, 1973 and 1974. In view thereof it is our
considered opinion that the crediting of said benefit to the 13th
month pay cannot be sanctioned on the ground that it is contrary to
Section 10 of the Rules and Regulations Implementing Presidential
Decree No. 85 1, which provides, to wit;

More so because the benefit involved was not magnanimously
extended by the company to its employees but was obtained by the
latter thru bargaining negotiations. The aforementioned CBA was
the law between the parties and the provisions thereof must be
faithfully observed by them during its effectivity. In this connection, it
should be noted that the same parties entered into another 3-year
CBA on June 11, 1979, which no longer provides for a 7-day wage
Christmas bonus. In effect, therefore, the parties agreed to
discontinue the privilege, which agreement should also be
respected.7
xxx xxx xxx
We hold that in the case at bar, Ovejera (La Carlota) case does not apply.
We apply instead, United CMC Textile Workers Union v. Valenzuela 8 a recent
decision. In that case this Court, speaking through Mr. Justice Edgardo Paras, held:
xxx xxx xxx
... If the Christmas bonus was included in the 13th month pay, then
there would be no need for having a specific provision on
Christmas bonus in the CBA. But it did not provide for a bonus in
graduated amounts depending on the length of service of the
employee. The intention is clear therefore that the bonus provided
in the CBA was meant to be in addition to the legal requirement.
Moreover, why exclude the payment of the 1978 Christmas bonus
and pay only the 1979-1980 bonus. The classification of the
company's workers in the CBA according to their years of service
supports the allegation that the reason for the payment of bonus
was to give bigger award to the senior employees-a purpose which
is not found by P.D. 851. A bonus under the CBA is an obligation
created by the contract between the management and workers
while the 13th month pay is mandated by the law (P. D. 851). 9
xxx xxx xxx

Section 10. Prohibition against reduction or
elimination of benefits. — Nothing herein shall be
construed to authorize any employer to eliminate,
or diminish in any way, supplements, or other
employee benefits or favorable practice being
enjoyed by the employee at the time of
promulgation of this issuance.

In the same vein, we consider the seven-day bonus here demanded "to be in addition
to the legal requirement." Although unlike the Valenzuela CBA, which took effect after
the promulgation of Presidential Decree No. 851 in 1975, the subject agreement was
entered into as early as 1972, that is no bar to our application of Valenzuela.What is
significant for us is the fact that, like the Valenzuela, agreement, the Christmas bonus
provided in the collective bargaining agreement accords a reward, in this case, for
loyalty, to certain employees. This is evident from the stipulation granting the bonus in
LABOR LAW I CASES (Arts.97-102) |83

question to workers "with at least one (1) year of continuous service." As we said in
Valenzuela" this is "a purpose not found in P.D. 851." 10
It is claimed, however, that as a consequence of the impasse between the parties
beginning 1974 through 1979, no collective bargaining agreement was in force during
those intervening years. Hence, there is allegedly no basis for the money award
granted by the respondent labor body. But it is not disputed that under the 1972
collective bargaining agreement, [i]f no agreement and negotiations are continued, all
the provisions of this Agreement shall remain in full force up to the time a new
agreement is executed." 11 The fact, therefore, that the new agreements are silent on
the seven-day bonus demanded should not preclude the private respondents' claims
thereon. The 1972 agreement is basis enough for such claims for the whole writing is
" "instinct with an obligation," imperfectly express." 12
WHEREFORE, premises considered, the petition is hereby DISMISSED. The
Decision of the public respondent NLRC promulgated on February 11, 1982, and its
Resolution dated March 23, 1982, are hereby AFFIRMED. The temporary restraining
order issued on May 19, 1982 is LIFTED.
This Decision is IMMEDIATELY EXECUTORY.
No pronouncement as to costs.
SO ORDERED.

LABOR LAW I CASES (Arts.97-102) |84

244. the Labor Arbiter ruled in favor of ALPAP and ordered PAL to pay its pilots belonging to ALPAP their thirteenth month pay from 1988 to 1990. AIRLINE PILOTS G.948. petitioner. 6 On May 29. vs. 1991. NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE AIRLINES. Aquino. 003480-92. while that of the thirteenth month pay is mandatory in character and definite in its amount.167.00 as exemplary damages to each of their pilots. 5 Disputing PAL's contention. 1996 AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINES (ALPAP).R. Subsequently. ALPAP expanded the coverage of its claim from 1986 to 1990 upon filing its position paper. No. 851. as well as the non-imposition of legal interest in the payment of the amounts due to them from PAL. PAL contends that there is no demandable obligation in the absence of any contractual stipulation or a legal provision requiring it to give its pilots a thirteenth month pay as aside from a year-end bonus that the latter are already receiving. 28 issued by then President Corazon C. NATIONAL LABOR RELATIONS COMMISSION and ASSOCIATION OF THE PHILIPPINES (ALPAP). No. Both parties appealed to the National Labor Relations Commission which in turn affirmed with modifications the decision of the Labor Arbiter. petitioner ALPAP disputes the deletion of the award of moral and exemplary damages in its favor. J. On the other hand. 115224.R. respondents. INC.000.D. 115224 July 26.000." are not covered by PD 851. its Implementing Rules and Regulations and Memorandum Order No. Aside from their accumulated thirteenth month pay.:p For refusing to pay its pilots their thirteenth (13th) month pay. 00-09-005598-91] for unfair labor practice was filed against Philippine Airlines. No.97-102) |85 .R. in G.00 Exemplary 6. No. the court ordered the consolidation of both petitions. Upon motion of ALPAP's counsel.726. 1 ALPAP filed its complaint 2 on September. Their motions for reconsideration having been denied. for unlawfully refusing and failing to pay the pilots their thirteenth month pay from 1988 to 1990. 4 Additionally. plus attorney's fees equivalent to ten percent (10%) of the total awards adjudged. "employers already paying their employees a 13th month pay or more in a calendar year or its equivalent at the time of this issuance. 1994 in NLRC Case No. Respondent is therefore ordered to pay members of the complainant Airlines Pilots Association of the Philippines (ALPAP) the following sums of money: 13th month Moral damages Attorney's ——————— Grand Total P83.00 as moral damages and P100. 3 In answer to the complaint.611. 1992. ALPAP prayed for an award of P500. PAL invokes that under Section 2 of PD 851 and its Implementing Rules and Regulations.THIRD DIVISION G. judgment was rendered by the Labor Arbiter in ALPAP's favor and ordered PAL to pay the following amounts: WHEREFORE.000. 1993 and February 28. FRANCISCO.00 pay and fees P 69. declaring respondent Philippine Airlines (PAL) guilty of non-payment of the thirteenth month pay. (PAL). ALPAP argued that the payment of the year-end bonus cannot be equated within the thirteenth month pay since the payment of the former is conditional in character and not fixed in its amount. respondents. PAL and ALPAP proceeded to this Court with their respective petitions forcertiorari assailing the Resolutions promulgated by the NLRC on November 23. (PAL). however.542.00 7. (PAL) by the Airline Pilots Association of the Philippines (ALPAP).768. 114280 July 26. 851 as it was already paying said employees the equivalent of a thirteenth month pay in the form of a year-end bonus. Inc.. 1996 PHILIPPINE AIRLINES. R. judgment is hereby rendered in this case. In G.R. a complaint [docketed as NLRC Case No. INC. petitioner.00 LABOR LAW I CASES (Arts. PAL denied any liability to ALPAP and maintained that it was not obliged to give its pilots a thirteenth month pay under P. charging PAL of violating Presidential Decree No. vs. 114280. petitioner PAL takes exception to the findings of the NLRC holding it liable to the members of ALPAP for non-payment of their thirteenth month pay from 1988 to 1990.

1994. 2) There is no contractual obligation to pay the pilots any thirteenth month pay in the absence of any provision in their CBA. Pilots are excluded from the coverage because they are not rank and file employees but rather supervisory employees. 851 is hereby modified to the extent that all employers are hereby required to pay all their rank and file employees a 13th month pay not later than December 24 of every year. 1993 8 and ruled in this wise: WHEREFORE. excluding those from 1986 and 1987. This precludes us from taking cognizance of and resolving the aforementioned issue with respect to the employment status of the pilots as it would be violative of the proscription against the presentation of new issues on appeal. the coverage of the award for thirteenth month pay was confined to 1988 until 1990. theories. PAL contends that it is of no moment that its other employees. all other employees of PAL were receiving both the thirteenth moth pay and the year-end bonus. both parties appealed to the NLRC which in turn promulgated the assailed resolution on November 23. Worse. 14 By invoking the alleged supervisory status of the pilots during the pendency of its appeal and raising the issue only later in their Supplemental Memorandum. were both denied by the NLRC in this resolution dated February 28. The other argument of PAL is that there is no provision in the CBA of ALPAP which obligates the former to pay the members of the latter any thirteenth month pay. the dismissal of the claim for moral and exemplary damages. PAL's argument that is exempted from the coverage of PD 851 was ruled out because it was shown that except for the pilots. these petitions. due to ALPAP's failure to amend its complaint. however. This. 12 Interestingly. it was evident that this was a last ditch effort to shift to a new theory and raise a new matter in the hope of a favorable result. PAL maintains that pilots cannot be classified as rank and file employees since the nature of their job includes the exercise of supervision over the cabin crew and the power to recommend disciplinary actions over the latter. they are not entitled to any thirteenth month pay. 11 Hence. the payment of PAL of legal interest form the dates the 13th month pay of the ALPAP pilots accrued up to the time of actual payment. Furthermore. PAL cites Memorandum Order No. And even assuming that they are entitled to a thirteenth month pay.D. premises considered.97-102) |86 . as claimed by PAL. 1 of Presidential Decree No. 28 covers only rank and file employees. 851 and Memorandum Order No. However. however. 7 In the aforecited decision. the decision of (sic) dated 29. Anent the first argument. Thus. and the payment of attorney's fees of 10% of the total award. there is no legal basis for the said finding. and ordinarily will not be considered by a reviewing court as they cannot be raised for the first time on appeal 13because this would be offensive to the basic rules of fair play. in denying PAL's appeal. not withstanding that. 9 Still dissatisfied. the flight attendants belonging to the Flight Attendants' and Stewards' Association of the Philippines (FASAP) and the other rank and file employees belonging to Philippine Airlines Employees' Association (PALEA). Not satisfied. the Labor Arbiter discarded PAL's contentions and took note of the fact that the payment of the year-end bonus is conditional and uncertain. this issue was not even discussed in PAL's original Memorandum and was raised only much later when PAL filed a Supplemental Memorandum on Appeal through a new counsel. are being granted both the thirteenth month pay and the year-end bonus because the payment of the said benefits were the result of contractual negotiations in their respective CBA's. May 1992 is hereby AFFIRMED with the modification that the respondent PAL also pay the 13th month pay to the ALPAP pilots for the years 1986 and 1987. In fact. PAL is now barred from claiming that their pilots are not rank and file employees. is the pernicious practice that has consistently been rejected. the absence of such contractual grant to the members of ALPAP only shows that there was no intention to give the pilots the same benefits.All other claims are denied for lack of legal or factual basis. issues and arguments not adequately brought to the attention of the trial court need not be. namely. however. SO ORDERED. the contention was raised by PAL rather belatedly and invoked for the first time on appeal. 28 which provides as follows: Sec. PAL's contention is premised on the following arguments: 1) Payment of the thirteenth month pay under P. the NLRC did not even bother to consider the new issue raised by PAL. the parties sought reconsideration which. The rule is well-settled that points of law. Hence. justice and due process. 10 The NLRC also reduced the award of attorney's fees to five percent (5%) and deleted the payment of legal interest for lack of basis. PAL argues that even assuming that the pilots LABOR LAW I CASES (Arts. the payment of a year-end bonus is already equivalent to a thirteenth month pay. The pivotal issue in this petition is whether or not the NLRC committed grave abuse of discretion in holding PAL liable to the members of ALPAP for non-payment of their thirteenth month pay from 1988 to 1990.

It is therefore inconsequential if the payment of the thirteenth month pay is not expressly provided in the CBA. The law exempts from the payment of the 13th month pay employers who are already giving its equivalent. 28 is mandatory in so providing that "all employers are hereby required to pay all their rank and file employees a thirteenth month pay not later than December 24 of every year. which was crystallized as follows: Clearly. Feliciano Belmonte Jr. 851. Inc. [114 SCRA 354 (1982)].D. 18 The term "bonus" was in turn interpreted to mean: "[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. . from the discussions in National Federation of Sugar Workers (NFSW). while most employees will be paid thirteen (13) months salary. It cannot be disputed that the tenor of P.D. According to ALPAP what is squarely applicable herein are the pronouncements in the cases of United CMC Textile Workers Union vs. compliance with the same is mandatory and is deemed incorporate in the CBA. NLRC [143 SCRA 564 (1986)]. Although P. NLRC. 851 as amended by Memorandum Order No. 153 SCRA 191 (1987) and UST Faculty Union vs. what the law wants to prevent is the imposition of a "double burden" upon the employer who is already paying the equivalent of a 13th month pay." Non-compliance with this mandate cannot be excused by the simple expedient of pointing to the absence of a similar provision in the CBA for this would contravene the basic rule that an existing law enters into and forms part of a valid contract without the need for the parties to expressly make reference to it. profit-sharing payments and other cash bonuses amounting to not less that 1/12th of the basic salary but shall not include cash and stock dividend. It is an act of generosity of the employer . To bolster this claim. then the employer is still obligated to give the thirteenth month pay in addition to the bonus. 16 Not withstanding therefore the absence of any contractual agreement.97-102) |87 . 851. When an employer pays less than 1/12th of the employee's basic salary. 19 Applying the aforecited definitions. 20 Confirming this purpose is the declaration made by the PAL President. ALPAP also decries the fact that it is only their pilots who are deprived of both the thirteenth month pay and the year-end bonus. As advanced by ALPAP. the law exempts them from compliance with the same because the payment of a year-end/Christmas bonus is already equivalent to the thirteenth month pay. cost of living allowances and all other allowances regularly enjoyed by the employee. PAL relies on the doctrine laid down by this Court in the cases of National Federation of Sugar Workers (NFSW) vs Ovejera.are legally entitled to a thirteenth month pay. some by virtue of P. Dole and Brokenshire. in his letter addressed to the employees of PAL dated October 30. Otherwise the goal of uniformly providing employees with additional income will not be met. 149 SCRA 424 (1987). the rationale for PAL's grant of a year-end bonus was to give regard for the loyalty. 17 Construing the term "its equivalent". the same is mandatory in character and need not be embodied in any written agreement because it is deemed incorporated therein. 1991. mid-year bonus. it is also granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits. The absence of an express provision in the CBA between PAL and ALPAP obligating the former to pay the members of the latter a thirteenth month pay is immaterial. 190 SCRA 215 (1990 ). the rule is subject to certain exceptions. Excluded from the coverage are "employers already paying their employees a thirteenth month pay or more in a calendar year or its equivalent at the time of the issuance of the law. Universal Corn Products v. Dole Philippines. 851 as amended by Memorandum Order No. [117 SCRA 938 (1982)] and Brokenshire Memorial Hospital vs. Another inequity will result. which is to uniformly provide employees with additional income. . as opposed to the rest of the PAL's employees belonging to FASAP and PALEA who are enjoying both benefits. which uniformly ruled that where the purpose for the giving of a Christmas bonus is not the same as the reasons for the granting of a thirteenth month pay under P. Jr. Leogardo. the employer shall pay the difference. 28 requires all employers to pay all their rank and file employees a thirteenth month pay. ALPAP also doubts the applicability of the cases invoked by PAL considering the difference in the factual background of this case. Labor Arbiter. will be receiving salary for fourteen (14) months. 15 ALPAP however disputes the abovementioned contentions of PAL and maintains that the grant of a thirteenth month pay being statutory. the same was defined as inclusive of "Christmas bonus. But whether or not PAL can claim the exception provided under the law by equation the year-end bonus with the payment of the thirteenth month pay deserves a very close scrutiny in this case.D. as well as non-monetary benefits.D. vs. announcing the granting of a Christmas bonus equivalent to 125% of the employee's monthly pay for a "job well done" to wit: xxx xxx xxx LABOR LAW I CASES (Arts. it would seem that the year-end bonus being granted by PAL to the employees may be considered as an equivalent of the thirteenth month pay considering the similarity in the purpose for granting the same. NLRC. No. dedication and hardwork of the employee. the payment of a thirteenth month pay being a statutory grant.

With respect however to the deletion of the award of moral and exemplary damages. PAL's failure to extend the same benefits to its pilots is a blatant act of discrimination and is grossly unfair to the latter considering the heavy and delicate responsibilities that they bear in the airline business. Thus. or the provision on the year-end bonus should have been deleted because it would only be a mere superfluity. where it has been shown that the true purpose for the grant of the bonus to the employees is different from the avowed intention of P. while the same being granted to the other rank and field employees of PAL. it is essential that the claimant must have satisfactorily proved during the trial that the existence of the factual basis of the damages and its casual connection with the adverse party's acts. then the same should have been expressly declared in their 1988-1991 CBA. all other employees of PAL who are either members of FASAP or PALEA are enjoying both benefits of a thirteenth month pay and a year-end bonus. the non-imposition of legal interest on the awards. it is beyond dispute the except for the pilots belonging to ALPAP. 27 to wit: Art. requiring all employers to pay all rank and file employees. which if properly exercised will not be disturbed on appeal. In fact. But as it is. such indemnity could not be outrightly awarded. Moreover. bearing in mind that the award of these items are subject to sound the discretion of the court. 23 The claim for moral and exemplary damages was not properly dismissed in this case due to the absence of clear and convincing evidence to merit the same. In previous cases. II. — (a) in cases of unlawful withholding of wages the culpable party may be assessed attorney's fees equivalent to ten percent of the amount wages recovered. PAL argues that whatever benefits are being enjoyed by the members of the FASAP and PALEA resulted from negotiations in their respective CBA's The absence of a provision granting both benefits to the members of ALPAP confirms that there was no intention on the part of the PAL to extend additional benefits to the former over and above that required by law. and the award of attorney's fees. 851. For moral damages to be awarded. . 25 The same holds true with respect to the award of exemplary damages where it must be shown that the party acted in wanton. We find no merit in PAL's assertion. we find no cogent reason to reverse the conclusion reached by respondent NLRC. PAL was therefore fully aware that it was legally obliged to grant all its rank and file employees a thirteenth month pay. 24 If the court has no proof. particularly in ensuring the safety and comfort of thousands of passengers. The inclusion of a provision for the continued payment of the year-end bonus in the 1988-1991 CBA of ALPAP and PAL belies the latter contention that the grant of the year-end bonus was intended to be credited as compliance with the mandate to pay the pilots a thirteenth month pay. Sec. In this regard. and hereby exempt PAL from granting both benefits of a yearend bonus and a thirteenth month pay to its pilots. Book III of the Omnibus Rules Implementing the Labor Code. I believe it is only proper that appreciation for a job well done should be expressed in a tangible manner. we must therefore uphold their claims.D. 851. there is no rational basis for withholding from the members of ALPAP the benefit of a year-end bonus is addition to the thirteenth month pay. As early as said date. However. I am therefore pleased to announce that for this year. III. we denied the claim for an exemption under the guide of paying the equivalent of a thirteenth month pay under P. a thirteenth month pay. the provision for the continued payment of a yearend bonus was incorporated in the CBA without any qualification. 22 In the instant case. regardless of the amount of their salaries. 28 which amended P. was issued on August 13. oppressive or malevolent manner. Finally. we made a profit from our efforts to increase revenues and cut costs. 26 The award of attorney's fees on the basis of quantum meruit at the rate of five percent (5%) of the total monetary award is reasonable in this case considering the explicit provisions laid out in Article III of the Labor Code and in Rule VIII. 851. . from which the only logical conclusion that could be derived is that PAL intended to give the members of ALPAP a year-end bonus in addition to its obligation to grant a thirteenth month pay. Attorney's fees. that is to uniformly provide the low paid employee with additional income. it cannot be discounted that pilots are the lifeblood of every airline company. notwithstanding the above disquisitions. of evidence upon on which the claim for moral damages could not be based. 21 From the foregoing. Memorandum Order No. the peculiar circumstances in this case wavers against the outright application of the rule preventing the imposition of a double burden against the employer who is already paying the equivalent of the thirteenth month pay.97-102) |88 . 1986.D. It bears to stress that this Court is not precluded from going into a meticulous scrutiny of the attendant facts and circumstances from which we could extract the real intention and purpose behind the grant by PAL of the year-end bonus to its employees. management has decided to award a Christmas bonus equivalent to 125% of your monthly basic pay .D. This makes it imperative that due regard must be exercised in safeguarding their rights and welfare as employees. it appears that the rationale for the grant of the year-end bonus by PAL coincides with the nature of the bonus which can be equated with the payment of a thirteenth month pay. it is worth mentioning that herein pilots of ALPAP are not even seeking more benefits and treatment already being extended by PAL's management to the other employees.In simple terms. LABOR LAW I CASES (Arts. explaining this discrepancy. if PAL really intended to equate the year-end bonus with the thirteenth month pay.

11.97-102) |89 . WHEREFORE. 1993 and February 28.xxx xxx xxx Sec. 1994 are hereby AFFIRMED. SO ORDERED. LABOR LAW I CASES (Arts. finding no merit in the petitions. The fees may be deducted from the total amount due the winning party. Attorney's fees — Attorney's fees in any judicial or administrative proceedings for the recovery of wages shall not exceed 10% of the amount awarded. the same are hereby DENIED and the Resolutions of public respondent NLRC promulgated on November 23.

WILSON ENOPOSA.VICENTE BACONADOR. Deficiency payment of emergency living allowance at P60 per month under PD 1678 and another P60 per month under Ministry Order No. ELOISA SYCIP and LINCOLN SYCIP. they were not entitled to the benefits claimed by them. the Minister of Labor.00 per day to female workers under PD 925 ** from May 1. They admitted that their total assets and authorized capital stock exceeded P2 million. EDUARDO MARONE. LABOR LAW I CASES (Arts. With respect to the complainants' other claims. Rodolfo B. FRANCISCO INDORES. NAPOLEON BONDOCIO. GERARDO GALAGATE. TEODORO BLANCAFLOR. ARTURO PANOGOT .50 per day to female workers and P3.. 5. social amelioration bonus and underpayment of minimum wage were not controverted. 13th month pay. ROMEO BACONADOR. ROGELIO MITRA. whichever is higher and applicable. through Assistant Regional Director Dante Ardivilia adopting the recommendations of the Chief of the Labor Regulation Section. 6.00 per day to female workers and Pl -00 per day to male workers. service incentive leave pay.R. PAFLU SEPTEMBER CONVENTION. RAFAEL PADRANES. JUAN PANOGOT. JOSE SAGAYA. They also alleged that under the decrees. RENATO BACONADOR . in 1977 they had applied for exemption under PDs 525 and 1123 but no ruling has been issued by the Ministry of Labor on their application.FIRST DIVISION G. the milling season. Garbanzos. MINISTER OF LABOR. Deficiency payment of P2. Service incentive leave pay. Deficiency payment of P3. HON. RODOLFO ENOPOSA. However. the living allowance shall be paid on a monthly. to do piece-work on the farms. NELITO GALLEGO. EMILIO ANITO. WILLIAM GONZALES. not percentage. INC.94 only. The Solicitor General for public respondent. FERNANDO MATTE. respondents. Jr. EDGARDO ENOPOSA. 2. petitioners vs. 1976 to April 30. The claims for holiday pay. the petitioners submitted only random payrolls which showed that the women workers were underpaid as they were receiving an average daily wage of P5.DANILO MENDOZA.50 to male workers under Ministry Order No. P6. JUAN PADRANES. CASIMIRO ARRABIS. LOURDES DE LA CRUZ. 72616-17 March 8. 5.SILVERIO PANOGOT. 1980. 1980. 1979. GRIÑO-AQUINO. PABLO TUNDAG. eighteen (18) employees of the petitioners filed against their employer. basis depending on the total assets or authorized capital stock of the employer. and the other petitioners two labor standard cases which were docketed in the Regional Office of the Ministry of Labor in Bacolod City as FAD Cases Nos. per day. CLARITA DELORIA . In their answer to the amended complaint. 1979 to August 17. 5 effective at the start of grinding (sic) for the crop year 1979-80. SANCHO GALAGATE. ROMEO GARCIA. ALFREDO DICHOSA. No.ARMANDO SAGAYA ERNESTO TAGAMTAM. IGLESERIO PANOGOT . holiday pay and social amelioration bonus for 3 years for 1977 to 1979. JAIME ARNEJO. PANFILO BROÑOLA. 1980. MAGDALENA PANOGOT.50 per day to female workers and P4. under PD 1614 from April 1. Bacolod District Office. In an Order November 10.: 3. although the male workers received P10 more or less. ZOILO ESTANISLAO.50 to male workers up to the date of restitution. JESUS LABRADOR.97-102) |90 . directed the respondents (now petitioners) to pay the following: 1. ROSELLER MARONE. VIVENCIO NABAY. alleging that in 1977 to 1979 they were not paid emergency cost of living allowance (ECOLA) minimum wage. 179180 and 0792-80 ("PAFLU SEPTEMBER CONVENTION VS. In April 1980. Deficiency payment of P5. TEODORICO ATANGAN.RODOLFO BAYONITA. PANFILO LAORENTE. BALODOY ACADEMIA and GERARDO GALLEGO. ROGELIO BAYONITA . holiday pay. FRAMANLIS FARMS"). EDUARDO LOZADA. or only during 4. RAFAEL MARONE. and service incentive leave pay. J. Effective August 18. 1989 FRAMANLIS FARMS. MANILA. ROGELIO BONDOCIO. petitioners alleged that the private respondents were not regular workers on their hacienda but were migratory (sacadas) or pakyaw workers who worked on-and-off and were hired seasonally. for petitioners. hence.

they argued that they substantially complied with the law by giving their workers a yearly bonus and other non-monetary benefits amounting to not less than 1/12th of their basic salary. With regard to the 13th month pay. Jr.) Upon the petitioners' appeal of that Order.06 daily. The petition is not impressed with merit." (p. as well as for ECOLA under PD Nos. in not precisely stating who among the private respondents are pakyaw and non-pakyaw workers. the Deputy Minister of Labor Vicente Leogardo. holiday and service incentive leave for pakyaw workers who are not regular employees but are merely paid on piece-rate. profit-sharing payments LABOR LAW I CASES (Arts. all of which were allegedly "the equivalent" of the 13th month pay.00 per kilo and later increased to P11 per kilo in March 1980. 525 and 1123 shall. 1978 and 1979. instead of the market price of P10 to P15 per kilo. Rollo). in awarding pay differentials. effective July 1. and The Deputy Minister clarified that pakyaw workers were excluded from holiday and service incentive leave pay (p. Rollo. filed this petition for certiorari alleging that the Deputy Minister erred: 1." (Annex H. such benefits in the form of food or free electricity. 1. However.) 1. 82 of the Labor Code. PD No. pursuant to Section 3(c) of PD 851 which exempts the employer from paying 13th month pay when its equivalent has already been given.00 per day in 1978 to 1979. assuming they were given. Framanlis Farms. Employees covered — The Decree shall apply to all employees except to: x x x. PD 1389). 851. pending outcome of respondent's application for exemption therefrom. be held in abeyance. Unfortunately. 1983 by ordering the employer to pay: 1. 1978.7. free choice pork meat in May and December of every year. the respondent Minister did not err in requiring the petitioners to pay wage differentials to their pakyaw workers who worked for at least eight hours daily and earned less than P8. in the form of: The claims for 13th month pay for 1977. The claims for 13th month pay for 1977 and emergency living allowance under PD 1123 and 525 are held in abeyance due to the application for exemption which is unacted up to the present. Compliance must be made within ten (10) days from receipt of the Order. a weekly subsidy of choice pork meat for only P9. 3. all complainants their 13th month pay for the years 1978 and 1979. the minimum wage was increased to P8. Upon the denial of its motion for reconsideration. 3.00 increase in the daily wage of all workers effective April 1. petitioners admitted that they failed to pay their workers 13th month pay in 1978 and 1979. their pay differentials. In 1976. The petitioners admit that those were the minimum rates prevailing then. 2. modified it on January 18. all 'pakyaw' workers for the same period on days they worked for at least eight (8) hours and earned below P8. under Section 3 of PD No. Therefore. Inc. mid-year bonus. contrary to Art. 928 fixed a minimum wage of P7. PD 1614 provided for a P2. Subsequently. x x x x x x The term 'its equivalent' as used in paragraph (c) hereof shall include Christmas bonus. 2.97-102) |91 . p. in requiring the petitioners to pay 13th month pay despite the fact that they (petitioners) had substantially complied with the requirement by extending yearly bonuses and other benefits in kind and in cash to the complainants. However. 3. Rollo. PD 851 provides: Section 3. free light or electricity. 54.00 for agricultural workers in any plantation or agricultural enterprise irrespective of whether or not the worker was paid on a piece-rate basis. 2.00 (Sec. and 4. 55. 1979. all non-pakyaw workers their claim for holiday and incentive leave pay for the years 1977. 34. were not a proper substitute for the 13th month pay required by law.

" Neither may year-end rewards for loyalty and service be considered in lieu of 13th month pay. 851 provides: Section 10. or other employee benefits or favorable practice being enjoyed by the employee at the time of promulgation of this issuance. SO ORDERED. Where an employer pays less than 1/12 of the employee's basic salary. the employer shall pay the difference.97-102) |92 . cost of living allowances and all other allowances regularly enjoyed by the employee. WHEREFORE. Section 10 of the Rules and Regulations Implementing Presidential Decree No. as well as non-monetary benefits. supplements.and other cash bonuses amounting to not less than 1/12 of the basic salary but shall not include cash and stock dividends. LABOR LAW I CASES (Arts. or diminish in any way." The failure of the Minister's decision to identify the pakyaw and non-pakyaw workers does not render said decision invalid. The workers may be identified or determined in the proceedings for execution of the judgment. the petition for certiorari is dismissed with costs against the petitioners. Prohibition against reduction or elimination of benefitsNothing herein shall be construed to authorize any employer to eliminate.

FIRST DIVISION G. petitioner herein. private respondent herein. " which denied herein petitioner's motion for reconsideration and ordered the immediate execution of a prior Order 2 dated June 7. "in computing the mandatory bonus. including pay for regular holidays and night differentials should be considered. San Miguel Corporation.respondents. the basis is the total gross basic salary paid by the employer during the calendar year. and concludes that the inclusion of those payments in the computation of the 13th-month pay is clearly not sanctioned by Presidential Decree 851. L-49774 February 24. private respondent cited innumerable past rulings. petitioner. special and regular holidays do not form part of the basic salary. AMADO G. Cagayan Coca-Cola Free Workers Union. as well as premium paid for work performed on rest days. payments for sick. premium for work done on rest days and special holidays. with preliminary injunction to review the Order 1 dated December 19. or maternity leaves. X where the complaint was filed requiring herein petitioner San Miguel Corporation (Cagayan Coca-Cola Plant) "to pay the difference of whatever earnings and the amount actually received as 13th month pay excluding overtime premium and emergency cost of living allowance. Public respondent's consistent stand on the matter since the effectivity of Presidential Decree 851 is that "payments for sick leave. filed a complaint against San Miguel Corporation (Cagayan Coca-Cola Plant). 1978. Petitioner's motion for reconsideration having been denied. DE CASTRO. vacation leave. Inciong to the effect that. Deputy Minister of Labor and CAGAYAN COCACOLA FREE WORKERS UNION. Hon. Cagayan Coca-Cola Plant. (3) premium for work performed on rest days or holidays: (4) holiday pay for worked or unworked regular holiday. Section 2 of the Rules and Regulations for the implementation of Presidential Decree 851 provides: a) Thirteenth-month pay shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year b) Basic salary shall include all remunerations on earnings paid by an employer to an employee for services rendered but may not LABOR LAW I CASES (Arts. vacation or maternity leaves. regardless of the nature of the employment. on the other hand. night differential pay. alleging failure or refusal of the latter to include in the computation of 13th.: Petition for certiorari and prohibition.97-102) |93 .000 a month. and maternity benefits. vs. (2) payments for sick. No." 7 Petitioner. Inciong issued an Order 4 dated June 7. this Court issued a Temporary Restraining Order 5 enjoining respondents from enforcing the Order dated December 19. The crux of the present controversy is whether or not in the computation of the 13thmonth pay under Presidential Decree 851. 009-77 docketed as "Cagayan Coca-Cola Free Workers Union vs. special and regular holidays are included in the computation of the 13th-month pay. premium for work done on rest days and special holidays. On January 3. The Court finds petitioner's contention meritorious. " Herein petitioner appealed from that Order to the Minister of Labor in whose behalf the Deputy Minister of Labor Amado G. vigorously contends that Presidential Decree 851 speaks only of basic salary as basis for the determination of the 13th-month pay. assails as erroneous the aforesaid order. 1978 affirming the Order of Regional Office No. opinions and decisions rendered by then Acting Labor Secretary Amado G. vacation or maternity leaves. 1978 rendered by the Deputy Minister of Labor in STF ROX Case No. including pay for regular holidays and night differentials. INCIONG. a 13th-month pay not later than December 24 of every year. The provision in dispute is Section 1 of Presidential Decree 851 and provides: All employers are hereby required to pay all their employees receiving a basic salary of not more than Pl. and (5) emergency allowance if given in the form of a wage adjustment.month pay such items as sick. vacation and maternity leaves. it filed the instant petition. as well as salaries paid to employees for work performed on rest days. J. 1979. On February 14.R. 1978. X and dismissing the appeal for lack of merit. Such gross basic salary includes: (1) regular salary or wage. ruling and opinions. 1981 SAN MIGUEL CORPORATION (CAGAYAN COCA-COLA PLANT). An Order 3 dated February 15. vacation. 1977. 6 On its part. submits that payments for sick. 1977 was issued by Regional Office No.

overtime pay. for reason of which such is categorically excluded from the definition of basic salary under the Supplementary Rules and Regulations Implementing Presidential Decree 851. To cite a few provisions: Art. The all-embracing phrase "earnings and other renumeration" which are deemed not part of the basic salary includes within its meaning payments for sick. 1975. For similar reason it shall not be considered in the computation of the 13th. It is clear that overtime pay is an additional compensation other than and added to the regular wage or basic salary. this cloud is dissipated in the later and more controlling Supplementary Rules and Regulations which categorically. LABOR LAW I CASES (Arts. and profit sharing payments indicate the intention to strip basic salary of other payments which are properly considered as "fringe" benefits. earnings and other remunerations are excluded as part of the basic salary and in the computation of the 13th-month pay. or maternity leaves. The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of Instructions No. Moreover. profit sharing payments and all allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary of the employee at the time of the promulgation of the Decree on December 16. the Supplementary Rules and Regulations Implementing Presidential Decree 851 is even more emphatic in declaring that earnings and other remunerations which are not part of the basic salary shall not be included in the computation of the 13th-month pay. It is likewise clear that prernium for special holiday which is at least 30% of the regular wage is an additional compensation other than and added to the regular wage or basic salary. As such they are deemed not part of the basic salary and shall not be considered in the computation of the 13th-month they. paragraph c) work performed on any special holiday shall be paid an additional compensation of at least thirty percent (30%) of the regular wage of the employee. Under the Rules and Regulations Implementing Presidential Decree 851. were not so excluded. additional compensation equivalent to his regular wage plus at least twenty-five (25%) percent thereof. — overtime work. 174. the catch-all exclusionary phrase "all allowances and monetary benefits which are not considered or integrated as part of the basic salary" shows also the intention to strip basic salary of any and all additions which may be in the form of allowances or "fringe" benefits.include cost-of-living allowances granted pursuant to Presidential Decree No. 1975. 174. the following compensations are deemed not part of the basic salary: a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of Instructions No. This conclusion finds strong support under the Labor Code of the Philippines. Likewise. Under a later set of Supplementary Rules and Regulations Implementing Presidential Decree 851 issued by the then Labor Secretary Blas Ople. A cursory perusal of the two sets of Rules indicates that what has hitherto been the subject of a broad inclusion is now a subject of broad exclusion. b) Profit sharing payments. the basic salary of an employee is used as the basis in the determination of his 13th-month pay.97-102) |94 . 525 or Letter of Instructions No.month pay. Any compensations or remunerations which are deemed not part of the basic pay is excluded as basis in the computation of the mandatory bonus. exclude from the definition of basic salary earnings and other remunerations paid by employer to an employee. c) All allowances and monetary benefits which are not considered or integrated as part of the regular basic salary of tile employee at the time of the promulgation of the Decree on December 16. The Supplementary rules and Regulations cure the seeming tendency of the former rules to include all remunerations and earnings within the definition of basic salary. While doubt may have been created by the prior Rules and Regulations Implementing Presidential Decree 851 which defines basic salary to include all remunerations or earnings paid by an employer to an employee. Then the exclusionary provision would prove to be Idle and with no purpose. 87. In Article 93 of the same Code. it is hard to find any "earnings and other remunerations" expressly excluded in the computation of the 13th-month pay. vacation. Maternity premium for works performed on rest days and special holidays pays for regular holidays and night differentials. Under Presidential Decree 851 and its implementing rules. Work may be performed beyond eight hours a day provided what the employee is paid for the overtime work. 174.

LABOR LAW I CASES (Arts. the Orders of the Deputy Labor Minister dated June 7. SO ORDERED. No pronouncement as to costs. 1979 is hereby made permanent. 1978 and December 19. 1978 are hereby set aside and a new one entered as above indicated.WHEREFORE. The Temporary Restraining Order issued by this Court on February 14.97-102) |95 .

petitioner. The Third Division also denied with finality on 15 December 1993 the Motion for Reconsideration filed (on 12 December 1993) by petitioner. had rendered the decision in the instant case. The Third Division in Durplicators found that: In the instant case.respondents. Cresenciano B. in G. it appears that petitioner pays its salesmen a small fixed or guaranteed wage. Inc. The Court upheld the decision of public respondent National Labor Relations Commission (NLRC). respectively. at this late stage of the proceedings. after preliminary deliberation. Inc. the Third Division of this Court referred the petitioner's Second Motion for Reconsideration. we consider that these Motions must fail.e. on 15 December 1993. Garduque II directing petitioner to pay 13th month pay to private respondent employees computed on the basis of their fixed wages plus sales commissions.EN BANC G. INC. vs.R. constitute part of the compensation or remuneration paid to salesmen for serving as salesmen. by then Labor Secretary Franklin M. The decision rendered in Boie-Takeda cannot serve as a precedent under the doctrine of stare decisis. i. through its Second Division. in Duplicators and Boie-Takeda. cannot be allowed. either in its Petition for Certiorari or in its (First) Motion for Reconsideration. Nos. Hon. and after review of the doctrines embodied.97-102) |96 . No.R. the doctrines enunciated in these two (2) cases in fact co-exist one with the other. and its Motion for Leave to Admit the Second Motion for Reconsideration. No doubt this particular galary structure was intended for the benefit of the petitioner corporation. Indeed. the greater part of the salesmen's wages or salaries being composed of the sales or incentive commissions earned on actual sales closed by them. on the apparent assumption that thereby its LABOR LAW I CASES (Arts. No. before the Boie-Takeda decision became final on 5 January 1994. In view of the nature of the issues raised. On 17 January 1994.. petitioner Duplicators filed (a) a Motion for Leave to Admit Second Motion for Reconsideration and (b) a Second Motion for Reconsideration. Deliberating upon the arguments contained in petitioner's Second Motion for Reconsideration. we note that petitioner Duplicators did not put in issue the validity of the Revised Guidelines on the Implementary on of the 13th Month Pay Law. Any attempted change in petitioner's theory. issued on November 16. Dionisio de la Serna and Philippine Fuji Xerox Corp. the Second Division inter alia declared null and void the second paragraph of Section 5 (a) 1 of the Revised Guidelines issued by then Secretary of Labor Drilon. accepted G. the petitioner's (first) Motion for Reconsideration of the decision dated 10 November 1993 had already been denied. 1987. No. RESOLUTION FELICIANO. through its Third Division. In its decision.R. More importantly. Hon. to the Court en banc en consulta. To the contrary. rendered a decision dismissing the Petition forCertiorari filed by petitioner Philippine Duplicators. and inorder to settle the condition of the relevant case law. Petitioner submits that the decision in the Duplicators case should now be considered as having been abandoned or reversed by the Boie-Takeda decision. Preliminarily. (Duplicators) in G. this Court. 92174 and 102552. In fact. Also. The Boie-Takeda decision was promulgated a month after this Court. Drilon.Trajano.: On 11 November 1993. which affirmed the order of Labor Arbiter Felipe T. Petitioner prays that the decision rendered in Duplicators be set aside and another be entered directing the dismissal of the money claims of private respondent Philippine Duplicators' Employees' Union. on 10 December 1993 in the two (2) consolidated cases of BoieTakeda Chemicals. there is no question that the sales commission earned by the salesmen who make or close a sale of duplicating machines distributed by petitioner corporation. petitioner invoked the decision handed down by this Court. and hence as part of the "wage" or salary of petitioner's salesmen. 1995 PHILIPPINE DUPLICATORS. 110068 as a banc case. petitioner's counsel relied upon these Guidelines and asserted their validity in opposing the decision rendered by public respondent NLRC. J. 110068..R. (through its Third Division). This time. The two (2) cases present quite different factual situations (although the same word "commissions" was used or invoked) the legal characterizations of which must accordingly differ. considering that the latter went "directly opposite and contrary to" the conclusion reached in the former. NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE DUPLICATORS EMPLOYEES UNION-TUPAS. vs. vs. we do not agree with petitioner that the decision in Boie-Takeda is "directly opposite or contrary to" the decision in the present (Philippine Duplicators). respectively. with finality. 110068 February 15. The Court en banc. as well as its Motion for Leave to Admit the Second Motion for Reconsideration.

00 14.294.625.30 P1.04 15.00 1.00 146.192.00 1.00 16. Benedicto Bautista Salvador Brito.75 1.71 1.322.127. however.287. Reynaldo 1.266.406.00 50. Teofilo 101.10 Carrasco.17 54.406.350.065. Jorge Canilan.230.238.00 15.618.208.00 14.salesmen would be moved to greater enterprise and diligence and close more sales in the expectation of increasing their sales commissions. Jr. Rogelio Dasig.192.351.00 Quisumbing.00 1.856.00 108.00 15.65 1.434. Especially significant here also is the fact that the fixed or guaranteed portion of the wages paid to the Philippine Duplicators' salesmen represented only 15%-30% of an employee's total earnings in a year.00 Sopelario.378.00 Navarro.75 74.201.350.75* 15.00 1.643. We note the following facts on record: Salesmen's Total For the Year 1986 2 Earnings and 13th Month Name of Total Amount Paid Montly Salesman Earnings as 13th Month Pay Wages x 12 3 Baylon.00 403.406.238.75 1.75 89.192.382.872.678. Teresa 98.200.753. Emma 42. Pay Fixed P76.00 16.35 93. Cicero Punzalan.00 15.856.00 15.536.00 17.192.00 LABOR LAW I CASES (Arts.551. Wilfredo Garcia.872.872.864.622.00 1.00 Rubina. Pedro Villarin.00 Ochosa.856.182. Delfin 73.888.39 1.73 1. This.50 1.00 15.00 Salazar.275.266. Leynard Talampas. Ma. Jeordan Centeno.00 14.15 1.610.780. In other words.00 64.208.266. Melecio.85 1.200.97-102) |97 .00 16.528.00 De los Ricardo Santos del Mundo. Celso 64. does not detract from the character of such commissions as part of the salary or wage paid to each of its salesmen for rendering services to petitioner corporation.00 16.266.89 1. the sales commissions received for every duplicating machine sold constituted part of the basic compensation or remuneration of the salesmen of Philippine Duplicators for doing their job.00 16.00 1.16 51.20 24.200. Ludivico Tan.00 90.434. Tomas Bunagan.510.25 41.192.854.184.27 30. Constancio 52.266.350.00 P16. The portion of the salary structure representing commissions simply comprised an automatic increment to the monetary value initially assigned to each unit of work rendered by a salesman. Rolano 66.65 1.00 16.00 14.209.00 1.238.00 17.

Alberto Cruz. In Philippine Education Co. . 10(Emphasis supplied) If an employer cannot be compelled to pay a productivity bonus to his employees. comprising a pre-determined percent of the selling price of the goods sold by each salesman. or the amount of actual work accomplished. Atok-Big Wedge Mutual Benefit . 4567). ." 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 . of which we take judicial notice. nor profit-sharing payments nor any other fringe benefit.G. 61 O. . If it is an additional compensation which the employer promised and agreed to give without any conditions imposed for its payment. it should follow that such productivity bonus." 4 The Second Division characterized these payments as additional monetary benefits not properly included in the term "basic salary" in computing their 13th month pay. the non-demandable character of a bonus was stressed by the Court in Traders Royal Bank v.97-102) |98 .681. But if it is paid only if profits are realized or a certain amount of productivity achieved.National Labor Relations Commission: 9 A bonus is a "gratuity or act of liberality of the giver which the recipient has no right to demand as a matter of right. v. It is so when It is made part of the wage or salary or compensation. 7 the Court amplified: Inc. Court of Industrial Relations. In such a case the latter would be a fixed amount and the former would be a contingent one dependent upon the realization of profits. They LABOR LAW I CASES (Arts. . Medical representatives are not salesmen. . .. in the Philippines and elsewhere. such as success of business or greater production or output.00* 323. "It is something given in addition to what is ordinarily received by or strictly due the recipient. . . 8 (Emphasis supplied) More recently. It is also paid on the basis of actual or actual work accomplished. From the legal point of view a bonus is not and mandable and enforceable obligation." were excluded from the term "basic salary" because these were paid to the medical representatives and rank-and-file employees as "productivity bonuses. correctly. or capacity for revenue production. . Whether or not [a] bonus forms part of waqes depends upon the circumstances or conditions for its payment. More generally. ." (Aragon v. These commissions are not overtime payments. . It is an act of generosity of the employer for which the employee ought to be thankful and grateful. a bonus is an amount granted and paid ex gratia to the employee.Poblador. 6 (Emphasis supplied) In Atok-Big Wedge Mining Co. NLRC. .75 32. . . In Boie-Takeda the so-called commissions "paid to or received by medical representatives of Boie-Takeda Chemicals or by the rank and file employees of Philippine Fuji Xerox Co. they do not effect any sale of any article at all. the bonus does not accrue. Carlito 25. 177 SCRA 160 [1989]). Danilo Baltazar. then it is part of the wage. of a corporation. it cannot be considered part of wages. medical representatives are employees engaged in the promotion of pharmaceutical products or medical devices manufactured by their employer. such bonuses closely resemble profit-sharing payments and have no clear director necessary relation to the amount of work actually done by each individual employee. when given. rather than as a demandable or enforceable obligation." (Kamaya Point Hotel v. It is also important to note that the purported "commissions" paid by the Boie-Takeda Company to its medical representatives could not have been "sales commissions" in the same sense that Philippine Duplicators paid its salesmen Sales commissions.950. We note that productivity bonuses are generally tied to the productivity. Association. should not be deemed to fall within the "basic salary" of employees when the time comes to compute their 13th month pay.00* 323. that the sales commissions were an integral part of the basic salary structure of Philippine Duplicators' employees salesmen.516. . the salesmen's commissions. . (PECO) v. It is also granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits.35 323.. Cebu Portland Cement Co.00* Considering the above circumstances. its payment constitutes an act of enlightened generosity and self-interest on the part of the employer.45 15.. . . Inc. the Third Division held. were properly included in the term "basic salary" for purposes of computing their 13th month pay. If the desired goal of production is not obtained. In common commercial practice. Thus. 5 the Court explained the nature of a bonus in the following general terms: As a rule a bonus is an amount granted and paid to an employee for his industry loyalty which contributed to the success of the employer's business and made possible the realization of profits.

where these earnings and remuneration are closely akin to fringe benefits. may constitute part of the basic salary structure of salesmen and hence should be included in determining the 13th month pay. Sec. overtime pay or profit-sharing payments. the second paragraph is and remains valid. If and to the extent that such second paragraph is so interpreted and applied. No. in the light of the specific and detailed facts of each case. is properly understood as holding that that second paragraph provides no legal basis for including within the term "commission" there used additional payments to employees which are. the statement of the Second Division in Boie-Takeda declaring null and void the second paragraph of Section 5(a) of the Revised Guidelines Implementing the 13th Month Pay issued by former Labor Secretary Drilon. correctly recognizes that commissions. Finally. that additional payments made to employees. But there is reason to distinguish one from the other here. to the extent they partake of the nature of profit-sharing payments. as a matter of fact. the Motions for (a) Leave to File a Second Motion for Reconsideration and the (b) aforesaid Second Reconsideration are DENIED for lack of merit." However. 851 subsequently issued by former Labor Minister Ople sought to clarify the scope of items excluded in the computation of the 13th month pay. Thus. ACCORDINGLY. Overtime pay. prohibited from selling such samples to their patients. orally and with the aid of printed brochures. are properly excluded from the ambit of the term "basic salary" for purposes of computing the 13th month pay due to employees. earnings and other remunerations which are not part of the basic salary shall not be included in the computation of the 13th month pay. The Supplementary Rules and Regulations Implementing P. shall be included in determining his 13th month pay. We observe that the third item excluded from the term "basic salary" is cast in open ended and apparently circular terms: "other remunerations which are not part of the basic salary.97-102) |99 . but those samples are not "sold" to the physician and the physician is. Sales commissions. Such additional payments are not "commissions" within the meaning of the second paragraph of Section 5 (a) of the Revised Guidelines Implementing 13th Month Pay. of the existence and chemical composition and virtues of particular products of their company. 4. on the other hand. in the nature of profit-sharing payments or bonuses. like those paid inDuplicators.: Commissions are paid upon the specific results achieved by a salesman-employee. That same second paragraph however.D. Productivity bonuses are generally tied to the productivity or profit generation of the employer corporation. as a matter of professional ethics. We recognize that both productivity bonuses and sales commissions may have an incentive effect. are intimately related to or directly proportional to the extent or energy of an employee's endeavors. They commonly leave medical samples with each physician visited. LABOR LAW I CASES (Arts. viz. The doctrine set out in the decision of the Second Division is. it must be regarded as invalid as having been issued in excess of the statutory authority of the Secretary of Labor. Productivity bonuses are not directly dependent on the extent an individual employee exerts himself. accordingly. No further pleadings will be entertained. In principle. It is a percentage of the sales closed by a salesman and operates as an integral part of such salesman's basic pay.promote such products by visiting identified physicians and inform much physicians. to this extent. sales commissions which are effectively an integral portion of the basic salary structure of an employee. However. A productivity bonus is something extra for which no specific additional services are rendered by any particular employee and hence not legally demandable. they are properly excluded in computing the 13th month pay. the additional payments made to Boie-Takeda's medical representatives were not in fact sales commissions but rather partook of the nature of profit-sharing bonuses. absent a contractual undertaking to pay it. what particular types of earnings and remuneration are or are not properly included or integrated in the basic salary are questions to be resolved on a case to case basis. such as those paid in Duplicators.

The union.. the NLRC resolved said motion thusly: ACCORDINGLY. on 09 June 1989. in general. the reinstatement." The case was ultimately indorsed to the NLRC for compulsory arbitration. FLORIDAN BILAR. vs. On 22 February 1988. GREGORIO LAYSON.97-102) |100 . JR. Consistent with the disposition in the challenged resolution of June 9. of the National Labor Relations Commission ("NLRC"). On 21 December 1987. the National Conciliation and Mediation Board ("NCMB") succeeded in having the dispute amicably settled except for the 13th month pay differential which remained in contention. DENISON AMBOAYEN. Henceforth. back salaries. 1 dated 09 June 1989. alleging the commission of unfair labor practice and CBA violation by the corporation. LABOR RELATIONS COMMISSION. CHARITO ESTRERA. without qualification or deductions.R. The union insisted that the failure of the corporation to implement fully the 13th month pay provision of the CBA amounted to unfair labor practice. the immediate reinstatement without backwages of the 16 afore-named respondents to their former positions sans loss of seniority rights is hereby ordered. The cut-off date for the forbearance in the payment of backwages is up to July 24. EDISON ALMORADES.THIRD DIVISION should. On 25 March 1987. be made on the basis of a full one month basic salary. The wide publicity accorded the strike. VITUG. MELCHOR MARTINEZ. without back salaries. 1989. and the Resolution 2 of 30 April 1991 of the same division denying the motion for reconsideration and. 851. On 30 April 1991. to furnish the workers with safety shoes and free company laminated IDs and. requiring petitioner corporation to pay private respondents.: This petition for certiorari assails the Decision. JIMMY SACRO. The corporation argued that the 13th month pay was a mere money claim and therefore not a "strikeable issue.. through its president. After several conferences. petitioner Isalama Machine Works Corporation and private respondent Isalama Machine Works Corporation Labor Union-Workers Alliance Trade Union entered into a collective bargaining agreement ("CBA") covering the period from 01 November 1986 to 03 October 1989. The corporation countered that its own computation of the 13th month pay accorded with the CBA provisions and Presidential Decree No. according to petitioner. Region X. had caused a dearth of work orders and withdrawal of existing job orders that forced it to adopt a rotation system of work. ordering the reinstatement. to improve the employees' working conditions. CELESTINA CLEMEN. of the dismissed union members. petitioner. demanded that the 13th month pay The above notwithstanding. NATHAN PURACAN. NANDY VIRTUDAZO. the union filed a notice of strike with the Department of Labor and Employment. FIFTH DIVISION and ISALAMA MACHINE WORKS CORPORATION LABOR UNION-WORKERS ALLIANCE TRADE UNION AND/OR HENRY BAYGAN. RODOLFO IGNACIO and ALMIRANTE ZAGADO. in the event the afore-named respondents have not LABOR LAW I CASES (Arts. VENNIE OPORTO.e. BIENVENIDO CABIL. Cagayan de Oro. Cagayan de Oro City. G. J. No further motion for reconsideration shall henceforth be entertained. the corporation paid the workers the 13th month pay based on the average number of days actually worked during the year. 10-02-00107-88). without back salaries. 100167 March 2. NOEL LAYSON. Fifth Division. the union still went on strike on 15 February 1988. allegedly to no avail. On 16 May 1988. the Executive Labor Arbiter rendered a decision holding the strike to be illegal and declaring Baygan and the "participating" union members 3 to have thereby lost their employment status. consistent with the decision. MA. the Motion for Reconsideration is DENIED for lack of merit. in case the latter have not been reinstated actually or by payroll. of private respondents. except for Baygan. The dismissed employees appealed the decision of the Executive Labor Arbiter to the NLRC which. from 25 July 1989 until their reinstatement (RABX Case No. 1989 which on record is the date of receipt of said disputed Resolution. No. LEONCIO CUIZON. promulgated its herein questioned decision ordering. HON. the union made repeated demands on the corporation. Following the signing of the CBA. instead. The corporation filed a motion for reconsideration of the NLRC decision. with the exception of Henry Baygan. for it to comply with the CBA provisions.i. 10-02-00107-88). 1995 On 05 January 1988. private respondent Henry Baygan. respondents. it also filed with the Regional Arbitration Branch 10 of the NLRC a petition charging the union with conducting an illegal strike and engaging in an unfair labor practice (RABX Case No. ISALAMA MACHINE WORKS CORPORATION.

in turn. on 01 July 1991. appellee is directed to pay backwages without qualifications or deductions from July 25. perpetrated an unfair labor practice. Violations of collective bargaining agreements. Private respondents continue to claim. Accordingly. shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. except those which are gross in character.00 or less and he has worked for the employer for at least one month. violations of a Collective Bargaining Agreement. The above provision. Rule XIII.000. 261. the union filed with the NLRC a motion for execution of the judgment. a "no strike" clause. 851 but that a violation thereof will not constitute an unfair labor practice by an employer.) Hence. however." If an employee has worked for an employer for less than a year. the CBA likewise specifies that the company "agrees to grant one (1) month basic salary to all employees-workers as Christmas bonus" in compliance with Presidential Decree No. among other things.97-102) |101 . of the Omnibus Rules Implementing the Labor Code expresses: Sec. Book V.000. The Court issued." They have averred that the illegal work rotation scheme employed by petitioner has pushed them to the honest belief that the latter has. he may still be entitled to the full 13th month pay provided his monthly wage is P1. gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the other economic provisions of such agreement. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. Section 1. designation or employment status. Unfair labor practices of employers. 248. viz. of which change neither the employees nor the NLRC had been formally notified. that the questioned 13th month pay should be considered a "strikeable issue. provided that they have worked for at least one month during the calendar year. a temporary restraining order enjoining respondent NLRC from implementing its 09 June 1989 decision and 30 April 1991 resolution. asserting additionally that the corporation was operating under the new trade name. — A strike or lockout may be declared in cases of bargaining deadlocks and unfair labor practices. (Emphasis supplied. and the Union in turn. must be read together with Article 261 of the Labor Code. Section 3 of the "Omnibus Rules and Regulations Implementing Presidential Decree No. — The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies referred to in the immediately preceding article. "Golden Engineering. stipulate and agree that there shall be no strike or will they authorize. once again. For purposes of this article. ." owned and managed by the same family. SO ORDERED. 851" generally states that all employees (subject to its exclusionary clauses) shall be entitled to the 13th month pay. 5 (i) To violate a collective bargaining agreement. the corporation filed the instant petition. except flagrant and/or malicious refusal to comply with its economic provisions. before the motion for execution could be acted upon by the NLRC. thus — During the term of this Agreement. Grounds for strike and lockout.00 a month" shall enjoy the 13th month pay "regardless of their position. 1989 until they are reinstated. as well as its officers and agents.: Art. and irrespective of the method by which their wages are paid. Art. Its Section 4 provides that employees "who are receiving not more than P1. .been reinstated actually or by payroll. Petitioner submits that private respondents cannot claim good faith in staging their strike since the attention of both parties had been called by the conciliator at the hearings before the NCMB to the "non-strikeable" character of the 13th month pay. provides: On 23 May 1991. . The CBA contains. 1. however. Parenthetically. the Company stipulates and agrees that there shall be no lockouts. LABOR LAW I CASES (Arts. shall not be considered unfair labor practice and shall not be strikeable. instigate or engage in any work stoppage slowdown or any other form of interruption of work by the employees and laborers that may hamper or impede the operations of the business of the Company. — It shall be unlawful for an employer to commit any of the following unfair labor practice: xxx xxx xxx On 03 June 1991. 4 Article 248 of the Labor Code.

indeed. the questioned decision and resolution of the NLRC are AFFIRMED subject to the MODIFICATION that the back salaries ordered to be paid should be limited. accordingly.97-102) |102 . This case arose in 1988 or prior to the effectivity of Republic Act No. 9 and he had the responsibility to ensure that his followers respected the law. It is there. which has taken over the business. No costs. without deduction or qualification. Court of Appeals. if at all. Unfortunately for petitioner. the proper manner of its application and computation. and that Golden Engineering. 264 (e) 6 of the Labor Code when they blocked and barricaded the entrance of petitioner's premises preventing free ingress and egress.e.In this case. however. was warranted. in fact. following the rule inMaranaw Hotels and Resorts Corporation vs. specifically states that "(n)onpayment of the thirteenth-month pay provided by the Decree and (the) rules shall be treated as money claims cases and shall be processed in accordance with the Rules Implementing the Labor Code of the Philippines and the Rules of the National Labor Relations Commission." Private respondents. SO ORDERED. the back salaries of the dismissed employee should be limited to three years. 8The dismissal of Baygan. however. 10 Petitioner tells us that it can no longer accept the strikers due to its decision to close down its operations on account of damages and losses it has incurred because of the strike. to be constitutive of unfair labor practice. i. given the aforequoted provisions of the law and its implementing rules.11 This claim raises factual issues which evidently are still awaiting resolution by the NLRC in the motion for execution now pending before it. the real reason for the strike is clearly traceable to the unresolved dispute between the parties on 13th month pay differentials under Presidential Decree No. the NLRC said that no sufficient evidence could be found "to pin down the afore-named 16 respondents as having committed illegal acts during the strike. where these issues can be finally resolved. the identity of those who committed those illegal acts during the strike. LABOR LAW I CASES (Arts. Being the union president and leader of the strike.. The NLRC likewise found private respondents to have violated Art. to only three (3) years. 851. had not been adequately established. Specifically. 12 WHEREFORE. not here. without deduction or qualification. The Court does not see this issue." 7 that could warrant a loss of their employment status. his liability was greater than that of mere members. except for Baygan. 6715. Section 9 of Rules and Regulations Implementing Presidential Decree No. is presently owned by one Alfredo Chan and not Charlie Chan of petitioner corporation. in their precipitate and ill-considered strike. showed little prudence. 851.

. 851 which are required to pay an their employees receiving a basic salary of not more than P1. PVTA EMPLOYEES ASSOCIATION (AGW). THEREFORE.. MARCOS. Metropolitan Waterworks and Sewerage System (MWSS) Katipunan Road. Manila 4. All employers are hereby required to pay all their employees receiving a basic salary of not more than Pl. 3. GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS). SSS EMPLOYEES ASSOCIATION (AGW). Mesa. LABOR LAW I CASES (Arts.R. agencies.97-102) |103 . Polytechnic University of the Philippines (PUP) Hippodromo Street. SECTION 2.00 a month. schools. L-60403 August 3. vs. The Solicitor General for MOLE. Quezon City 5. PNC and PUP. 1983. there has been no increase case in the legal minimum wage rates since 1970. No. Quezon City 6. Manila 7. Philippine National Bank (PNB) Escolta Street. THE HONORABLE MINISTER OF LABOR and EMPLOYMENT.: Are the branches. GSIS WORKERS ASSOCIATION (AGW). Cubao. JR. Employers already paying their employees a 13thmonth pay or its equivalent are not covered by this Decree. it is necessary to further protect the level of real f wages from the ravage of world-wide inflation. Jesus C. NATIONAL ALLIANCE OF TEACHERS AND OFFICE WORKERS (AGW). KAISAHAN AT KAPATIRAN NG MGA MANGAGAWA AT KAWANI NG MWSS (AGW). by virtue of the powers vested in me by the Constitution do hereby decree as follows: SECTION 1. SOCIAL SECURITY SYSTEM (SSS). or government owned or controlled corporations: 1. Quezon City G. Social Security System (SSS) East Avenue. POLYTECHNIC UNIVERSITY OF THE PHILIPPINES (PUP). Presidential Decree No. a thirteenth (13th) month pay not later than December 24 of every year? Petitioner Alliance of Government Workers (AGW) is a registered labor federation while the other petitioners are its affiliate unions with members from among the employees of the following offices. PNB. PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION (PVTA) PHILIPPINE NORMAL COLLEGE (PNC). Sta.000 a month. J. METROPOLITAN WATERWORKS and SEWERAGE SYSTEM (MWSS). SSS. Manila WHEREAS. Gentiles for petitioner SSSEA-AGW. Philippine Normal College (PNC) Ayala Boulevard. WHEREAS. the Philippine Government Employees Association (PGEA) filed a motion to come in as an additional petitioner. Manila On February 28. the Christmas season is an opportune time for society to show its concern for the plight of the working masses so they may properly celebrate Christmas and New Year. GUTIERREZ. BALARA EMPLOYEES ASSOCIATION (AGW). Philippine Virginia Tobacco Administration (PVTA) Consolacion Building. 1983 ALLIANCE OF GOVERNMENT WORKERS (AGW). Government Service Insurance System (GSIS) Arroceros Street. including government owned or controlled corporations included among the 4 "employers"" under Presidential Decree No.000. PHILIPPINE NATIONAL BANK (PNB). Balara.respondents. PNB-FEMA BANK EMPLOYEES ASSOCIATION (AGW). and instrumentalities of the Government. a 13th-month pay not later than December 24 of every year. subdivisions. regardless of the nature of their employment. 851 provides in its entirety: WHEREAS. I. petitioners. Oliver Gesmundo for petitioners. NOW. FERDINAND E.EN BANC 2.

The decree states: xxx xxx xxx WHEREAS. the petitioners argue that regulations adopted under legislative authority must be in harmony with the provisions of the law and for the sole purpose of carrying into effect its general provisions. 851 shows that the President had in mind only workers in private employment when he issued the decree. Hon. Employers covered — The Decree shall apply to all employers except to: a) Distressed employers. They state that nowhere in the decree is the secretary. Members of the Board of' Administators (33 SCRA 585). Teoxon v. The petition has far reaching implications and raises questions that should be resolved. to consider the various comments as answers and to resolve the questions raised through a full length decision in the exercise of this Court's symbolic function as an aspect of the power of judicial review.. No. however. According to the petitioners. Collector of Internal Revenue (100 Phil. decided to treat the petition as one for mandamus.SECTION 3. has consistently declined by more than forty (40%) per cent of their normal income for the last two (2) )years. (109 Phil. now Minister of Labor and Employment. Inc. 112 SCRA 294). Rural Bank of Olongapo v. the petitioners are faced with a procedural barrier. Jurisdiction is conferred by law. 419). Aldanese and Trinidad (43 Phil. grants and other earnings from any source. " The petitioners contend that Section 3 of the Rules and Regulations Implementing Presidential Decree No. Our initial reaction was to deny due course to the petition in a minute resolution. . Osmena.97-102) |104 . contributions. whether from donations. At the outset. we have now decided to give due course to the petition. and Olsen & Co. considering the important issues propounded and the fact. an action not embraced within the original jurisdiction of the Supreme Court. The petitioners assail this rule as ultra vires and void. Have the respondents unlawfully excluded the petitioners from the use and enjoyment of rights to which they are entitled under the law? An analysis of the "whereases" of P. The petition is one for declaratory relief. Santos u. v.. 21 SCRA 837.D. 288). Commission of Land Registration. LABOR LAW I CASES (Arts. P. 101) and Aquino v. There is no statutory or jurisprudential basis for the petitioners' statement that the Supreme Court has original and exclusive jurisdiction over declaratory relief suits where only questions of law are involved. except where the workers are paid an piecerate basis in which case the employer shall be covered by this issuance :insofar ab such workers are concerned . Following similar action taken in Nacionalista Party v. Section 3 of the Rules and Regulations Implementing Presidential Decree No.. d) Employers of household helpers and persons in the personal service of another in relation to such workers: and e) Employers of those who are paid on purely commission. There was no intention to cover persons working in the government service. authorized to exempt other types of employers from the requirement. 851 included other types of employers not exempted by the decree. irrespective of the time consumed in the performance thereof. No. Hilado u.. (Remotigue v. They state that a legislative act cannot be amended by a rule and an administrative officer cannot change the law. c) Employers already paying their employees 13th-month pay or more in a calendar year or its equivalent at the of this issuance. Angelo Bautista (85 Phil. except)t those corporation. b) The Government and any of its political subdivisions. De la Llana v. (106 SCRA 444). On this ground alone. 851 provides: Section 3. or task basis and those who are paid a fixed for performing a specific work. Section 3 is challenged as a substantial modification by rule of a Presidential Decree and an unlawful exercise of legislative power. where their income. subject to the provision of Section 7 of this issuance. 259). 851 requires all employers to pay the 13thmonth pay to their employees with one sole exception found in Section 2 which states that "(E)mployers already paying their employees a 13th month pay or its equivalent are not covered by this Decree. Commission on Elections (62 SCRA 275) we have. Alba. there has been no increase in the legal minimum wage rates since 1970. This Decree shall take effect immediately. including government-owned and controlled corporations.. NIRC et al. Jr. The petitioners have not pointed to any provision of the Constitution or statute which sustains their sweeping assertion. such as (1) those which are currently incurring substantial losses or 112) in the case of non-profit institutions and organizations. boundary. operating essentially as private. Citing Philippine Apparel Workers'Union v. Done in the City of Manila. the petition could have been dismissed outright.D. Estenzo et al. 102 SCRA 794.subsidiaries of the government. however. this 16th day of December 1975.. that constitutional principles are involved.

and strikes by government employees to wrest concessions in compensation. 851.D. where employees in the government service were to benefit from labor standard laws. hiring and firing. 105 SCRA 75. Thus. xxx xxx xxx What the P.D. G. 752 granting government employees a year-end bonus equivalent to one week's pay.xxx xxx xxx Moreover. (See Dollar Savings Bank v. It is concerned with a revisiting of the traditional classification of government employment into governmental functions and proprietary functions and of the many ramifications that this dichotomous treatment presents in the handling of concerted activities. 442. no matter how broad their terms do not embrace the Sovereign. the Social Security System the Philippine Normal College. 11 WHEREAS. May 31. 6111. United Mine Workers of America. This could only refer to the private sector. That no such express provision was provided and no accompanying appropriation measure to was passed clearly show the intent to exclude government employees from the coverage of P. United States v. This is evident in (a) Presidential Decree No. 10 on medicare benefits. 85 1. It is an old rule of statutory construction that restrictive statutes and acts which impose burdens on the public treasury or which diminish rights and interests. 1123 which provides for increases in emergency allowance to employees in the private sector and in salary to government employees in Section 2 thereof.month pay and the intent behind the decree. said Decree should have expressly so provided and there should have been accompanying yearly appropriation measures to implement the same. 19 Wall (U. 851 intended to cover. 265). As pointed out by the Solicitor General in his comment for the Minister of Labor and Employment. the contention that govermment owned and controlled corporations and state colleges and universities are covered by the term "all employers" is belied by the nature of the 13. v. United States. Sec. Article 97 on the applicable minimum wage rates. there has been no increase in the legal minimum wage rates since 1970. the LABOR LAW I CASES (Arts. The Solicitor General states: "Presidential Decree No. 525. cannot be covered by a general term like "employer" unless the language used in the law is clear and specific to that effect.000. No. 1 which granted emergency cost of living allowance to employees in the national government. Section 4. and not to those in the government service because at the time of the enactment of Presidential Decree No.00 a month an additional thirteenth-month pay.S. unless the Sovereign is specifically mentioned. it is necessary to further protect the level of real wages from the ravage of world-wide inflation. (d) Presidential Decree No. Sec. Article 167 (g) on workmen's compensation. and other terms and conditions of employment. We agree. Title II. Title 11. The workers in the respondent institutions have not directly petitioned the heads of their respective offices nor their representatives in the Batasang Pambansa. and (f) Executive Order No. 1982) as explained in the'whereas'clause which read: WHEREAS. and National Federation of Sugar Workers v.R. 390. their coverage is explicitly stated in the statute or presidential enactment. 59743. Ovejera. collective bargaining. (c) Presidential Decree No -442. Ople.S. The issue raised in this petition. 330 U.97-102) |105 . In other words. (e) Presidential Decree No. fringe benefits. No. as sovereign. however. The Republic of the Philippines. (b) Republic Act No. D. the Christmas season is an opportune time for society to show its concern for the plight of the working masses so they may celebrate the Christmas and New Year. No. as explained in the prefatory statement of the Decree. The employees in the government service had already been granted in 1974 a ten percent across-the-board increase on their salaries as stated in P. 851 is a labor standard law which requires covered employers to pay their employees receiving not more than P1. 851 in 1975. This is emphasized by the "whereas" clause which states that 'there has been no increase in the legal minimum wage rates since 1970'. is more basic and fundamental than a mere ascertainment of intent or a construction of statutory provisions.) 227. are only those in the private sector whose real wages require protection from world-wide inflation. only the employees in the private sector had not been given any increase in their minimum wage. WHEREAS. and Polytechnic University. No. They have acted through a labor federation and its affiliated unions. Its purpose is to increase the real wage of the worker (Marcopper Mining Corp. had the intention been to include government employees under the coverage of Presidential Decree No.

And this Court has supported labor completely in the various strikes and concerted activities in firms and agencies discharging proprietary functions because the Constitution and the laws allowed these activities. the Industrial Peace Act. Under the present Constitution. They were protected by the laws governing government employment. 108 Phil. The petitioners state in their counter comment filed July 23. Alvendia.A. 442. government workers cannot use the same weapons employed by workers in the private sector to secure concessions from their employers. we are all bound by it. R. Personnel of government-owned or controlled corporations are now part of the civil service. The inclusion of the clause "including every government owned or controlled corporation" in the 1973 amendments to the Constitution was a deliberate amendment for an express purpose.A. and university are taking collective action through a labor federation which uses the bargaining power of organized labor to secure increased compensation for its members. They could also engage in collective bargaining and join in strikes to secure higher wages and fringe benefits which equally hardworking employees engaged in government functions could only envy but not enjoy. They could and they did engage in concerted activities and various strikes against government owned and controlled corporations and other government institutions discharging proprietary functions. There may be those who disagree with the intent of the framers of the amendment but because it is fundamental law. Soriano. The general rule in the past and up to the present is that "the terms and conditions of employment in the Government. as amended).97-102) |106 . the terms and conditions of employment in the unionized private sector are settled through the process of collective bargaining. No. Thus. P. And this is effected through statutes or administrative circulars. as amended). Presidential Decree No. Constitution). and other government workers are denied the right to engage in similar activities. however. govemment-owned or controlled corporations are specifically mentioned as embraced by the civil service. No. government employees performing proprietary functions could belong to labor organizations imposing the obligation to join in strikes or engage in other concerted action. The principle behind labor unionism in private industry is that industrial peace cannot be secured through compulsion by law. (Section 11. Government. it is the legislature and. the Labor Code. 1982 that the 1973 Constitution is categorical about the grant of the rights to self. policemen.organization and collective bargaining to all workers and that no amount of stretched interpretation of LABOR LAW I CASES (Arts. (Section 1. in the past. The exception. 505) and Social Security System (SSSEA v. college. The amendment was intended to correct the situation where more favored employees of the government could enjoy the benefits of two worlds. 7 SCRA 1016). the Civil Service Decree of the Philippines has implemented the 1973 Constitutional amendment. including any political subdivision or instrumentality thereof are governed by law" (Section 11.owned or controlled corporations whose positions are now embraced in the civil service shall continue in the service until they have been given a chance to qualify in an appropriate examination. Services of temporary personnel ma be y terminated any time. 875.—All permanent personnel of government. however belongs to the past. those who do not possess the appropriate civil service eligibility shall not be promoted until they qualify in an appropriate civil service examination. Among the institutions as falling under the exception in Section 11 of the Industrial Peace Act were respondents Government Service Insurance System (GSISEA v. Under the present state of the law and pursuant to the express language of the Constitution. Subject to the minimum requirements of wage laws and other labor and welfare legislation. the old Industrial Peace Act excepted employees and workers in proprietary functions of government from the above compulsion of law. 875. 807. In government employment. this resort to concerted activity with the ever present threat of a strike can no longer be allowed. Article XII-B. soldiers. Since the terms and conditions of government employment are fixed by law.workers and employees of these state firms. but in the meantime. It would not be fair to allow them to engage in concerted activities to wring higher salaries or fringe benefits from Government even as other civil service personnel such as the hundreds of thousands of public school teachers.owned or Controlled Corporations Personnel. as amended and Article 277. rules. lesser laws like the Labor Code and the Civil Service Act can overturn the clear message of the Constitution with respect to these rights to self-organization and collective bargaining. where properly given delegated power. These statements of the petitioners are error insofar as government workers are now concerned. It is categorical about the inclusion of personnel of government-owned or controlled corporations in the civil service and their being subject to civil service requirements: SECTION 56. the administrative heads of government which fix the terms and conditions of employment. and regulations. Relations between private employers and their employees rest on an essentially voluntary basis. R. health personnel. At the same time. not through collective bargaining agreements.D.

The budget of the Ministry of Education. a recognized labor leader. In contrast. in his consolidated comment * for respondents GSIS. and government-owned or controlled corporations would also result in nightmarish budgetary problems. salaries and fringe benefits of those embraced by the civil service are fixed by law. 1971 Constitutional Convention.97-102) |107 . the Supreme Court is trying its best to alleviate the financial difficulties of courts. supra the issue of the inclusion of government-owned or controlled corporations figured prominently. 1971. It is further emphasized that government agencies in the performance of their duties have a right to demand undivided allegiance from their workers and must always maintain a pronounced esprit de corps or firm discipline among their staff members. It would be highly incompatible with these requirements of the public service. argued: It is meretricious to contend that because Govermnent owned or controlled corporations LABOR LAW I CASES (Arts. to get not a 13thmonth pay but promised increases in basic salaries and small allowances for school uniforms. submitted to the Committee on Labor. in a Position Paper dated November-22. vehemently objected to the inclusion of government-owned or controlled corporations in the Civil Service. of this Commission that by reason of the nature of the public employer and the peculiar character of the public service. then Acting Commissioner of Civil Service Epi Rev Pangramuyen declared: It is the stand. other labor experts and delegates to the 1971 Constitutional Convention enlightened the members of the Committee on Labor on the divergent situation of government workers under the 1935 Constitution.' (see: Records of 1971 Constitutional Convention). No. and not from concerted activity. and called for its rectification. such conflicting interests as are present in private labor relations could not exist in the relations between government and those whom they employ. if personnel took orders from union leaders or put solidarity with members of the working class above solidarity with the Government. judges. from appropriations or savings under the law. it must necessarily regard the right to strike given to unions in private industry as not applying to public employees and civil service employees. and court personnel in the entire country but it can do so only within the limits of budgetary appropriations. Thus. He argued that such inclusion would put asunder the right of workers in government corporations. For instance. determination of employment conditions as well as supervision of the management of the public service is in the hands of legislative bodies. it is asserted that public employees by joining labor unions may be compelled to support objectives which are political in nature and thus jeopardize the fundamental principle that the governmental machinery must be impartial and non-political in the sense of party politics. and that accordingly. Moreover. Public school teachers have been resorting to what was formerly unthinkable. to mass leaves and demonstrations. The late delegate Roberto S. therefore. recognized in jurisprudence under the 1935 Constitution. and PVTA gives the background of the amendment which includes every government-owned or controlled corporation in the embrace of the civil service: Records of the 1971 Constitutional Convention show that in the deliberations held relative to what is now Section 1(1) Article XIIB. Any increases must come from law. This would be inimical to the public interest. instrumentalities. Garcia. Culture and Sports has to be supplemented every now and then for this purpose. Justice Manuel Lazaro. Oca. to form and join labor unions for purposes of collective bargaining with their employers in the same manner as in the private section (see: records of 1971 Constitutional Convention). 851 includes the Government and all its agencies. The Government Corporate Counsel. Moreover. MWSS.D. It has been stated that the Government. Delegate Leandro P. expressing support for the inclusion of government-owned or controlled corporations in the Civil Service.To say that the words "all employers" in P. in contrast to the private employer. The point is. Similarly. protects the interests of all people in the public service.

Here of course this development was envisioned. (Bernas.defined boundaries and to be absorbed within activities that the government must undertake in its sovereign capacity if it is to meet the increasing social challenges of the times. the exercise of which is optional on the part of the government. The Government Corporate Counsel cites the precedent setting decision in Agricultural. Nov. the ghost of the laissez-faire concept no longer stalks the juridical stage. With our explicit disavowal of the 'constituent-ministrant' test. p. Summarizing the deliberations of the 1971 Constitutional Convention on the inclusion of Government owned or controlled corporations. Dean Joaquin G. SJ. such constituent functions are exercised by the State as attributes of sovereignty.. not to say obsolete. Moreover. 524). 2800] such as those relating to the maintenance of peace and the prevention of crime. 53 O.. Bernas. of the Ateneo de Manila University Professional School of Law. pp. The ACA is a government office or agency engaged in governmental. supra) continue to lose their well. 30 SCRA 649) as giving the rationale for coverage of government-owned or controlled corporations by the civil service. while the capital of these corporations belongs to the Government and government money is pumped into them whenever on the brink of disaster. stated that government-owned corporations came under attack as milking cows of a privileged few enjoying salaries far higher than their counterparts in the various branches of government. an influence that has not altogether vanished even after independence. Unless there be a clear showing of any invasion of rights guaranteed by the Constitution.owned and controlled cor orations which are not making profits. then an Associate Justice of this Court. Bacani vs. The Government of the Philippines. the laissez faire principle never found fun acceptance in this jurisdiction. National Coconut Corporation. indeed adopted as a national policy.1956. Here as almost everywhere else the tendency is undoubtedly towards a greater socialization of economic forces. their employees are entitled to better wages and fringe benefits than employees of Government other than Government. the Constitutional Convention saw to it that our fundamental law embodies a policy of the responsibility thrust on government to cope with social and economic problems and an earnest and sincere commitment to the promotion of the general welfare through state action. He stated: . No. The influence exerted by American constitutional doctrines unavoidable when the Philippines was still under American rule notwithstanding.G.. CUGCO that: government quite unrealistic. however. not proprietary functions. These functions may not be strictly what President Wilson described as "constituent" (as distinguished from 'ministrant'). 29. Notes and Cases. It would thus follow that the force of any legal objection to regulatory measures adversely affecting property rights or to statutes organizing public corporations that may engage in competition with private enterprise has been blunted. progress and prosperity of the people these latter functions being ministrant. have rendered this traditional classification of the functions of Our dismissal of this petiti/n should not. G. Under this traditional classification. observed in a concurring opinion that the traditional classification into constituent and ministrant functions reflects the primacy at that time of the now discredited and repudiated laissez faire concept carried over into government. and those relating to national defense and foreign relations. No fear need be entertained that thereby spheres hitherto deemed outside government domain have been encroached upon. those relating to the administration of justice and the determination of political duties of citizens. The 1973 Philippine Constitution. The areas which used to be left to private enterprise and initiative and which the government was called upon to enter optionally. L-9657. and they should therefore come under the strick surveillance of the Civil Service System." (Malcolm. Chief Justice Fernando.yield profits... There is no gainsaying the fact that the capital they use is the people's (see Records of the 1971 Constitutional Convention). their validity is a foregone conclusion. by any means. be interpreted to imply that workers in government-owned and controlled corporations or in state colleges and LABOR LAW I CASES (Arts. National Coconut Corporation. p." The growing complexities of modern society. 19-20. to erase any doubts. Confederation of Unions in Government Corporations and Offtces CUGCO et al. 1974 ed. even during the period of its full flowering in the United States.R. [Bacani vs. those regulating property and property rights. We stated ACCFA v. and not merely to promote the welfare. and only "because it was better equipped to administer for the public welfare than is any private individual or group of individuals.97-102) |108 .Credit and Cooperative Financing Administration (ACCFA v. by the Constitution itself in its declaration of principle concerning the promotion of social justice.

However. However. SEC. and other terms and conditions of employment being enjoyed by them at the time of the adoption of this code.97-102) |109 . This is a right which share with all public officers and employees and. 985. The workers whom the petitioners purport to represent have the right. Their salaries shall be standardized by the National Assembly as provided for in the new constitution. In determining rates of pay. However. 851 as including government employees would upset the compensation levels of government employees in violation of those fixed according to P. rules and regulations. bureaus. 6. It is the legislature or.D. The security of tenure guaranteed to those in the civil service by the Constitution and statutes. the knowledge that one is working for the most stable of employers and not for private persons. government salaries and wages have always been lower than salaries. in proper cases. the merit system in appointments and promotions. 1975 to the present. there is hereby established a system of compensation standardization and position classification in the national government for all departments. there shall be no reduction of existing wages. these payments must be pursuant to law or regulation. by everybody living in this country. including employees of government-owned and controlled corporations. Government employees. and qualification requirements of the positions. which may not be abridged. No. additional financial incentives may be established by government corporations and financial institutions for their employees to be supported fully from their corporate funds and for such technical positions as may be approved by the President in critical government agencies. It has been implemented and enforced from December 22. agencies. and other emoluments higher than or different frm that provided by law and regulation. Section 3 of the Rules and Regulations Implementing Presidential Decree No. There are government institutions which can afford to pay two weeks. and other conditions or terms of employment. SO ORDERED. For this purpose.. No. therefore. to form associations or societies for purposes not contrary to law. Apart from the emotional and psychic satisfactions. LABOR LAW I CASES (Arts. including those in government-owned or controlled corporations. But they may not join associations which impose the obligation to engage in concerted activities in order to get salaries. Presidential Decree No. civil servants have no cause for despair. 13th month pay. Here as in other countries. 2. and maternity leave privileges. there are various material advantages. which governs the registration and provides for the rights of legitimate labor organizations states: ART. and the qualifications required for the positions concerned. in fact. The National Assembly shall provide for the standardization of compensation of government officials and employees. Section 6.universities may not enjoy freedom of association. the scheme of vacation.— It is hereby declared to be the policy. That notwithstanding a standardized salary system established for all employees. 442 as amended. equal work and to base differences in pay upon substantive differences in duties and responsibilities. Article IV. The provision states: SEC. No. wages. or even 13th-month salaries to their personnel from their budgetary appropriations. and bonuses in the private sector. a correct interpretation of the decree. The very Labor Code. prevailing rates in private industry for comparable work. the petition is hereby DISMISSED for lack of merit. 985 as amended provides: xxx xxx xxx The Solicitor-General correctly points out that to interpret P. and officers including government-owned or controlled corporations and financial institutions: Provided. 277. fringe benefits. benefits. three weeks. shall be governed by the Civil Service Law. 851 is.D. The petitioners have shown no valid reason why it should be nullified because of their petition filed six and a half years after the issuance and implementation of the rule. and the prestige and dignity associated with public office are only a few of the joys of government employment.— The terms and conditions of employment of all government employees. Section 7). WHEREFORE. among others. Declaration of Policy. of the national government to provide equal pay for substantially. Service in the government may at times be a sacrifice but it is also a welcome privilege. taking into account the nature of the responsibilities pertaining to. due regard shall be given to. (Constitution. the administrative heads of government and not the collective bargaining process nor the concessions wrung by labor unions from management that determine how much the workers in government-owned or controlled corporations may receive in terms of salaries. P.D. Article XII-B of the Constitution gives added reasons why the government employees represented by the petitioners cannot expect treatment in matters of salaries different from that extended to all others government personnel. sick.

LABOR LAW I CASES (Arts.97-102) |110 .

No.700. and Crown Theaters for more than 10 years. The Resolutions of the Public Respondent issued on June 30. 63160. salary differential. no pay" policy.") When Lagrama asked what Tan was saying. Tan told him. THE HONORABLE COURT OF MENDOZA. Backwages (from 17 October 1998 to 17 June 1999) 47. annulling the resolutions of the National Labor Relations Commission (NLRC) and reinstating the ruling of the Labor Arbiter which found petitioner Rolando Tan guilty of illegally dismissing private respondent Leovigildo Lagrama and ordering him to pay the latter the amount of P136. 2000. Petitioner Tan denied that Lagrama was his employee. Tan shouted "Gawas" ("Get out"). 2000. the Court of Appeals rendered a decision. the dispositive portion of which reads: WHEREFORE. Although it found that Lagrama did work for other cinema owners.97-102) |111 . 949. 13th month pay (3 years) - 17. petitioner. He then filed a petition for certiorari under Rule 65 before the Court of Appeals. Labor Arbiter Rogelio P. As no amicable settlement had been reached. Service Incentive Leave Pay (3 years) - 2. Lagrama filed a complaint with the Sub-Regional Arbitration Branch No. 1998. rendered a decision4 finding Lagrama to be an independent contractor..R. on the basis of a "no mural/billboard drawn. Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general manager of Crown and Empire Theaters in Butuan City. leaving him with no other choice but to leave the premises.R. the dispositive portion of which reads: IN THE LIGHT OF ALL THE FOREGOING.00 B. X of the National Labor Relations Commission (NLRC) in Butuan City. Damages - 10. on May 31. Declaring complainant's [Lagrama's] dismissal illegal and 2. Separation Pay - P 59. the appeals court held it to be a mere sideline insufficient to prove that he was not an employee of Tan. 2001.000. and for this reason reversing the decision of the Labor Arbiter. Private respondent Leovigildo Lagrama is a painter. private respondent Lagrama was summoned by Tan and upbraided: "Nangihi na naman ka sulod sa imong drawinganan. he rendered a decision. Get out. which. premises considered judgment is hereby ordered: 1. 2001. The following are the facts. Y. J. and those supervising the construction of a church to prove that the services of Lagrama were contracted by them. the Petition is hereby GRANTED. Ordering respondents [Tan] to pay complainant the following: A.A." ("You again urinated inside your work area. SP.99] Complainant's other claims are dismissed for lack of merit. He denied having dismissed Lagrama and alleged that it was the latter who refused to paint for him after he was scolded for his habits. and the resolution. 1999. backwages.00 TOTAL [P136. even if the charge was true.SECOND DIVISION G. of the Court of Appeals in C. The appeals court also found no evidence of any intention on the part of Lagrama to leave his job or sever his employment relationship with Tan. 1988 to October 17. "Ayaw daghang estorya. i.849.3 Petitioner Rolando Tan appealed to the NLRC Fifth Division. Supreme.-G. Respondent Lagrama filed a motion for reconsideration. it was a minor infraction to warrant his dismissal.2 dated November 27.00 C.e. but it was denied for lack of merit by the NLRC in a resolution of September 29. from September 1. no more drawing. LEOVIGILDO LAGRAMA APPEALS.000. and damages. wala nay drawing. Cagayan de Oro City. On June 17.: This is a petition for review on certiorari of the decision. 2002 ROLANDO vs." ("Don't say anything further. and TAN. Dili ko gusto nga mo-drawing ka pa. Gawas.849. 1998. service incentive leave pay. I don't want you to draw anymore. No. He cited the admission of Lagrama during the conferences before the Labor Arbiter that he was paid on a fixed piece-work basis. The Court of Appeals found that petitioner exercised control over Lagrama's work by dictating the time when Lagrama should submit his billboards and murals and setting rules on the use of the work area and rest room. The Decision of the LABOR LAW I CASES (Arts. that he was paid for every painting turned out as ad billboard or mural for the pictures shown in the three theaters. an amusement park owner. while he (petitioner) was only interested in the result thereof. 151228 August 15. Legaspi directed the parties to file their position papers.99 by way of separation pay.99 E. From now on. However. He asserted that Lagrama was an independent contractor who did his work according to his methods.") Lagrama denied the charge against him.200. 2000 are ANNULLED.00 D. respondents. 2001. everytime he spoke. Guikan karon. On October 17. He alleged that he had been illegally dismissed and sought reinvestigation and payment of 13th month pay.1 dated May 31. 2000 and September 29. He submitted the affidavits of other cinema owners. He claimed that he was not the only one who entered the drawing area and that. and damages. making ad billboards and murals for the motion pictures shown at the Empress. Accordingly. on June 30.

SP NO. from 8 o'clock in the morning to 5 o'clock in the afternoon. respondent Court of Appeals' opening statement in its decision as to "employment." "monthly salary of P1. to go to the comfort rooms. the decision of respondent Court of Appeals in CAG. v. an employee is subject to the employer's power to control the means and methods by which the employee's work is to be performed and accomplished. 1999] relied upon by respondent Court of Appeals is not applicable to the peculiar circumstances of this case. With all due respect. naturally. albeit petitioner Tan claims that private respondent Lagrama was an independent contractor and never his employee.00 per week for the murals for the three theaters which the latter usually finished in 3 to 4 days in one week. the fact that Lagrama worked for at least 3 to 4 days a week proves regularity in his employment by petitioner. 9 Petitioner's control over Lagrama's work extended not only to the use of the work area. the case of Lambo.R. that requires discussion here. it would appear that petitioner not only provided the workplace. nay all the compelling reason. an independent contractor is one who carries on a distinct and independent business and undertakes to perform the job. but supplied as well the materials used for the paintings. V. the power of control. and the manner and means by which the work was to be accomplished. respondent Court of Appeals. the evidence shows that the latter performed his work as painter under the supervision and control of petitioner. or service on its own account and under its own responsibility according to its own manner and method. 63160 is bereft of any finding that Public Respondent NLRC. Given such circumstances. III.. absent any positive finding on its part that the Resolution of 30 June 2000 of the NLRC is not supported by substantial evidence.Honorable Labor Arbiter Rogelio P. 111042 October 26." to wit: (1) whether the alleged employer has the power of selection and engagement of employees. No. Petitioner moved for a reconsideration. 1999 is hereby REINSTATED. respondent Court of Appeals' discourse on "freelance artists and painters" in the decision in question is misplaced or has no factual or legal basis in the record. Of the four elements of the employer-employee relationship. 11 Even assuming this to be true. IV. et al. Compared to an employee.. to fire him from his painting job upon discovery and his LABOR LAW I CASES (Arts. Petitioner disputed this allegation and maintained that he paid Lagrama P1.475. had no jurisdiction or exceeded it or otherwise gravely abused its discretion in its Resolution of 30 June 2000 in NLRC CA-NO. But no. the pertinent portions of which stated: Complainant did not know how to use the available comfort rooms or toilets in and about his work premises. Legaspi on June 17. The rules included the observance of cleanliness and hygiene and a prohibition against urinating in the work area and any place other than the toilet or the rest rooms. but the Court of Appeals found no reason to reverse its decision and so denied his motion for lack of merit. It was petitioner who engaged the services of Lagrama without the intervention of a third party. the complainant had to make a virtual urinal out of his work place! The place then stunk to high heavens. and whether petitioner is guilty of illegally dismissing private respondent. It is the existence of the second element.475.5 Hence. as everybody else did and had he only wanted to. because he admitted that he paid Lagrama only for the latter's services. With all due respect. 317 SCRA 420 [G. M-00495099. The existence in this case of the first element is undisputed. (3) whether he has the power to dismiss. I. but also to the result of Lagrama's work. the "control test" is the most important.97-102) |112 . 7 These elements of the employer-employee relationship are present in this case. With all due respect.. Second. First. In determining whether there is an employer-employee relationship. is without authority to substitute its conclusion for that of said NLRC.8 Hence. (2) whether he has control of the employee with respect to the means and methods by which work is to be accomplished.6 The issues raised boil down to whether or not an employer-employee relationship existed between petitioner and private respondent.R. free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof. NLRC. With all due respect.. . this petition for review on certiorari based on the following assignments of errors: I. work.00" and "work schedule from Monday to Saturday. for the use of which petitioner prescribed rules. We find the answers to these issues to be in the affirmative. That petitioner had the right to hire and fire was admitted by him in his position paper submitted to the NLRC. 5th Division. et al. and (4) whether the employee was paid wages. while an independent contractor enjoys independence and freedom from the control and supervision of his principal.10 Private respondent Lagrama claimed that he worked daily. Lagrama worked in a designated work area inside the Crown Theater of petitioner. we have applied a "four-fold test. With all due respect. from 8:00 o'clock in the morning up to 5:00 o'clock in the afternoon" as "facts" is not supported by the evidence on record. II. to the consternation of respondents and everyone who could smell the malodor. In the case at bar. the respondents had every right. He was urinating right at the place where he was working when it was so easy for him. Moreover.

the employment is also considered regular.20 The fact that Lagrama was not reported as an employee to the SSS is not conclusive on the question of whether he was an employee of petitioner." 14 That Lagrama worked for Tan on a fixed piece-work basis is of no moment. or for services rendered or to be rendered. negate any intention to sever employment relationship. and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.21 Otherwise. .27 LABOR LAW I CASES (Arts. he is deemed a regular employee and is thus entitled to security of tenure. 26 In the case at bar. and may or may not acquire an employment status. with the Sub-Regional Arbitration Branch No. petitioner did not present the payroll to support his claim that Lagrama was not his employee. There is no evidence to show this. . 279 of Labor Code: Third. however designated. by clear proof. the repeated and continuing need for its performance is sufficient evidence of the necessity. as provided in Art. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages. for whom Lagrama ART. even if not continuously but intermittently. Payment of wages is one of the four factors to be considered in determining the existence of employer-employee relation. the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. Hence. whether fixed or ascertained on a time. . as petitioner himself said. and (2) a clear intention to sever the employeremployee relationship. To let the people know what movie was to be shown in a movie theater requires billboards.97-102) |113 . admitted in a sworn statement that he was told by Lagrama that the latter worked for petitioner. Security of Tenure." Such act has. if not indispensability. after the repeated refusal of the Private Respondent to give Petitioner murals or billboards to work on.admission of such acts. the Court of Appeals correctly ruled: Neither do we agree that Petitioner abandoned his job.24 It is claimed that Lagrama abandoned his work. 279. Samuel Villalba. X of the National Labor Relations Commission. raising speculations whether his failure to do so proves that its presentation would be adverse to his case. though thoroughly scolded. the fact that. Under the law. Payment by result is a method of compensation and does not define the essence of the relation. the Petitioner filed. — In cases of regular employment. . there is such a connection between the job of Lagrama painting billboards and murals and the business of petitioner. it was Private Respondent who told Petitioner that he did not want the latter to draw for him and thereafter refused to give him work to do or any mural or billboard to paint or draw on. the employee's rate of pay. This Court has held that if the employee has been performing the job for at least one year. . It was he who stopped to paint for respondents. In order for abandonment to be a just and valid ground for dismissal. of that activity to the business of his employer.18 The primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer.15 It is a method of computing compensation. and the amount actually paid to the employee. For the right to hire and fire is another important element of the employer-employee relationship. depending on whether the elements of an employer-employee relationship are present or not. as the Supreme Court declared. the employer must show. More. capable of being expressed in terms of money. Nonetheless. or other method of calculating the same.16 The Rules Implementing the Labor Code require every employer to pay his employees by means of payroll. One may be paid on the basis of results or time expended on the work. On the contrary. an employer would be rewarded for his failure or even neglect to perform his obligation. On the other hand. therefore. he was not fired. the frustration of which. Lagrama had been employed by petitioner since 1988. Wages are defined as "remuneration or earnings. inclusive of allowances.12 had rendered service. a Complaint for "Illegal Dismissal and Money Claims. which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done. piece. deductions made. the intention of the employee to abandon his job. Petitioner in fact admits that the billboards are important to his business. with the second element as the more determinative factor and being manifested by some overt acts. Abandonment requires two elements: (1) the failure to report for work or absence without valid or justifiable reason. the burden is on the employer to show a deliberate and unjustified refusal on the part of the employee to resume his employment without any intention of returning. and while such activity exists. What is more. or commission basis. can bring about some disciplinary action on the part of the employer. In the present recourse.19 In this case. That he did so only during weekends has not been denied by petitioner. the Private Respondent has not established clear proof of the intention of the Petitioner to abandon his job or to sever the employment relationship between him and the Private Respondent.23 By stating that he had the right to fire Lagrama. not a basis for determining the existence or absence of employeremployee relationship.13 Indeed.25 Mere absence is not sufficient.22 Neither does the fact that Lagrama painted for other persons affect or alter his employment relationship with petitioner. unless satisfactorily explained. For only an employee can nurture such an expectancy. task.17The payroll should show among other things. . he waited for Lagrama to report for work but the latter simply stopped reporting for work reinforces the conviction that Lagrama was indeed an employee of petitioner. petitioner in effect acknowledged Lagrama to be his employee. although with respect only to such activity. In the case at bar.

Here there is no evidence that Lagrama did urinate in a place other than a rest room in the premises of his work. in accordance with the ruling in Bustamante v. In this case. (1) those whose time and performance is supervised by the employer. as in this case. To begin. the grant of separation pay in lieu of reinstatement is appropriate. NLRC. that is. If a piece worker is supervised. Hence. such an employee is not entitled to service incentive leave pay since. the petition is DENIED for lack of showing that the Court of Appeals committed any reversible error. Instead of ordering his reinstatement as provided in Art. This is of course in addition to the payment of backwages which. namely. The illegality of the act of dismissal constitutes discharge without just cause. the employer has the burden of proving the lawfulness of his employee's dismissal. 279 of the Labor Code. by his refusal to give Lagrama work to do and ordering Lagrama to get out of his sight as the latter tried to explain his side. The parties do not dispute this finding.II. 282(1) of the Labor Code for purposes of terminating employment. However. regardless of the time he spent in accomplishing such work. Urinating in a work place other than the one designated for the purpose by the employer constitutes violation of reasonable regulations intended to promote a healthy environment under Art. dismissal under the grounds provided for under Article 282 of the Labor Code and (2) the legality in the manner of dismissal. there is an employer-employee relationship. The first involves an element of control and supervision over the manner the work is to be performed. The second issue is whether private respondent Lagrama was illegally dismissed. without any deduction or qualification. while the second does not.34 he is paid a fixed amount for work done. is AFFIRMED with the MODIFICATIONthat the backwages and other benefits awarded to private LABOR LAW I CASES (Arts. the Labor Arbiter found that the relationship between the employer and the employee has been so strained that the latter's reinstatement would no longer serve any purpose. while illegality in the manner of dismissal is dismissal without due process. reversing the decision of the National Labor Relations Commission and reinstating the decision of the Labor Arbiter. WHEREFORE. However. but the same must be shown by evidence. without any deduction and qualification. The Bureau of Working Conditions32 classifies workers paid by results into two groups.28 The validity of the charge must be clearly established in a manner consistent with due process. and (2) those whose time and performance is unsupervised by the employer. The Implementing Rules of the Labor Code29 provide that no worker shall be dismissed except for a just or authorized cause provided by law and after due process. based on the foregoing. This provision has two aspects: (1) the legality of the act of dismissal. as pointed out in Makati Haberdashery v. NLRC. the service incentive leave pay awarded to him is DELETED. The decision of the Court of Appeals. SO ORDERED.97-102) |114 . NLRC33 and Mark Roche International v. petitioner made it plain that Lagrama was dismissed.30 respondent Leovigildo Lagrama should be computed from the time of his dismissal up to the time of the finality of this decision.31 should be computed from the time of Lagrama's dismissal up to the time of the finality of this decision.

HOLIDAY PAY 1.00. J. As in the case of the other 100 employees of private respondents.896. in the light of the foregoing. 1989. petitioners were paid on a piece-work basis.m. respondents. Regardless of the number of pieces they finished in a day. holiday pay.C.97-102) |115 . According to the NLRC. during that meeting.: 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. —————— —————— TOTAL P94. 1999 II.212. The facts are as follows.992. representing 13th month pay. Tailor Shop and/or Johnny Co on September 10.R. NATIONAL LABOR RELATIONS COMMISSION and J. the NLRC reversed the decision of the Labor Arbiter.399. All other claims are dismissed for lack of merit.00 MENDOZA. 1985.896. 2 On appeal by private respondents.20 = P191." after petitioners. They worked from 8:00 a. SEPARATION PAY 9. service incentive leave pay.40 Add: 10% Attorney's Fees 19. OVERTIME PAY 13.992. to 7:00 p.00 4. 1989.64). petitioners filed a complaint against private respondents for illegal dismissal and sought recovery of overtime pay. and attorney’s fees. SO ORDERED. including Sundays and holidays.212. separation pay. walked out of a meeting with private respondents and other employees. daily. Gutierrez found private respondents guilty of illegal dismissal and accordingly ordered them to pay petitioners’ claims.102.992. BACKWAGES P64.24 —————— Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.30 IV.00 per dozen of tailored clothing materials.399.00 11.30 1.648. 13th month pay.SECOND DIVISION AVELINO LAMBO VICENTE BELOCURA I. 1985 and March 3. Only petitioners allegedly insisted that they be paid the minimum wage and other benefits.00 P64. III. The dispositive portion of the Labor Arbiter’s decision reads: WHEREFORE.90 AVELINO LAMBO and VICENTE BELOCURA.00 G. 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. respectively. The NLRC held petitioners guilty of LABOR LAW I CASES (Arts.C.110.719. vs.90 13.64 ========= or a total aggregate amount of TWO HUNDRED TEN THOUSAND TWO HUNDRED TWELVE AND 64/100 (P210. petitioners.m. according to the style of suits they made. the employees voted to maintain the company policy of paying them according to the volume of work finished at the rate of P18.447.00 V. Labor Arbiter Jose G. TAILOR SHOP and/or JOHNNY CO. 13TH MONTH PAY 4.383.20 P96.984.00 to each. judgment is hereby rendered declaring the complainants to have been illegally dismissed and ordering the respondents to pay the complainants the following monetary awards: GRAND TOTAL P210. On January 17.1âwphi1. except one for P4. premium pay on holiday and rest day.447. on January 17. No. 111042 October 26. they were each given a daily pay of at least P64.nêt After hearing.

such as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify. Piece-rate payment is generally practiced in garment factories where work is done in the company premises. The burden of proof is on the employer to show an unequivocal intent on the part of the employee to discontinue employment. 6 rate basis does not negate their status as regular employees of private respondents. including Sundays and holidays. 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. petitioners worked in the company’s premises from 8:00 a. and (2) those whose time and performance are unsupervised. that petitioners refused to report for work after learning that the J. and (4) the power to control the employee’s conduct. and Amado Cabañero. (2) petitioners worked for private respondents throughout the year. SO ORDERED. 97 of the Labor Code as remuneration or earnings.992.) Both classes of workers are paid per unit accomplished. 10 Mere absence is not sufficient. and that when a meeting was called to discuss this issue. Payment by the piece is just a method of compensation and does not define the essence of the relations.). 5 Of these elements. even before all employees could sign the petition and management could act upon the same. that petitioners had not been dismissed by private respondents but that practically all employees of the company. The petition is meritorious.97-102) |116 . task. 11 In this case. president of the union. (3) petitioners worked for private respondents for more than one year. Private respondents contend. In support of their claim. Caballero. in view of the foregoing. It must be accompanied by manifest acts unerringly pointing to the fact that the employee simply does not want to work anymore. (3) the power of dismissal. Indeed. were regular employees of private respondents: (1) within the contemplation of Art.m. private respondents exercised control over the work of petitioners. there must be proof of a deliberate and unjustified refusal on the part of an employee to resume his employment. supervised employees. The employees allegedly said they were against petitioners’ request for change of the mode of payment of their wages. 7 Nor does the fact that petitioners are not covered by the SSS affect the employer-employee relationship. Tailoring and Dress Shop Employees Union had demanded their (petitioners’) dismissal for conduct unbecoming of employees. the following factors show that petitioners. 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. a petition for the dismissal of petitioners was presented. piece or commission basis. There are two categories of employees paid by results: (1) those whose time and performance are supervised by the employer. however. while payment on pakyao and takay basis is commonly observed in the agricultural industry. The mere fact that they were paid on a pieceLABOR LAW I CASES (Arts. i. They deny that they abandoned their work. 8 Second. 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. including the members of the union had asked management to terminate the services of petitioners.C. the employer’s control is over the result of the work. sick leave and vacation leave. All other monetary awards are hereby deleted. 4 Petitioners belong to the first category. their work as tailors was necessary or desirable in the usual business of private respondents. (Here. 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 of P4. to 7:00 p.nêt To justify a finding of abandonment of work.abandonment of work and accordingly dismissed their claims except that for 13th month pay. private respondents presented the affidavits 9 of Emmanuel Y. although piece-rate workers. there is an element of control and supervision over the manner as to how the work is to be performed. the following elements must be considered: (1) the selection and engagement of the employee. First. member. which is engaged in the tailoring business. daily. capable of being expressed in terms of money whether fixed or ascertained on a time. and. Workers on pakyao and takay basis belong to this group. The dispositive portion of its decision reads: WHEREFORE. (Here..1âwphi1. As tailors. The term "wage" is broadly defined in Art. (2) the payment of wages.e. 280 of the Labor Code. A piece-rate worker belongs to this category especially if he performs his work in the company premises. In determining the existence of an employer-employee relationship. prompting the latter to walk out of their jobs and instead file a complaint for illegal dismissal against private respondents on January 17. their employment not being dependent on a specific project or season. 1989.m.00.

1993. Fourth. 22 These awards are based on the following computation of the Labor Arbiter: AVELINO LAMBO I. Pay: P1. 13th month pay. and even intimidations. 17/92 = 36 mos. the amount of P10. and results in his improvidently waiving benefits to which he is clearly entitled. BACKWAGES: Jan. x 3 yrs.00 May 1/87 .. separation pay should be awarded to petitioners at the rate of one month salary for every year of service. 17/86 . This fact negates any intention on their part to sever their employment relationship. 17/86 . 1989.00 to cover any and all monetary claims is clearly unconscionable.00 P64. 19 according to which the recovery of backwages should be limited to three years without qualifications or deductions.97-102) |117 . Other than the self-serving declarations in the affidavits of their two employees. not all quitclaims are per se invalid or against public policy. corresponding to 10% of the total monetary awards.00/yr. 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. petitioner absolved private respondents from liability for money claims or any other obligations. 14 dated March 2. quitclaims.15 However. & 26 days = LABOR LAW I CASES (Arts.00 ———— II. x 36 mos. considering that the Labor Arbiter had given petitioner Lambo a total award of P94.719. = 4. Considering that petitioners were dismissed from the service on January 17.April 30/87 = 15 mos. in favor of petitioners. it cannot be inferred or presumed from equivocal acts. On the contrary.664. 1989. 30/87 = 4 mos. 21 The awards for overtime pay. holiday pay and 13th month pay are in accordance with our finding that petitioners are regular employees.e. As petitioners were illegally dismissed.664. = P59. the evidence shows that petitioners lost no time in filing the case for illegal dismissal against private respondent. whereby in consideration of the sum of P10.00/hr. + P4.000. 16 the subordinate position of the individual employee vis-a-vis management renders him especially vulnerable to its blandishments. overtime pay. OVERTIME PAY: Jan./days = 804 hrs.00. x 804 hrs. 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’ 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. Private respondents invoke the compromise agreement.00/hr. 20 The Labor Arbiter correctly ordered private respondents to give separation pay.896.00/hr. Considerable time has lapsed since petitioners’ dismissal. separation pay and attorney’s fees.Jan. with a fraction of at least six (6) months of service being considered as one (1) year.020.00/mo. private respondents did not adduce proof of overt acts of petitioners showing their intention to abandon their work.00/hr. 13 Third.Sept. 17/89 . P 64. 17/89 Jan. Thus.992. 12 Abandonment is a matter of intention. Any award in excess of three years is null and void as to the excess. i.00/day x 26 days = 1. the law will step in to annul the questionable transaction. between them and petitioner Avelino Lambo.Private respondents failed to discharge this burden. they are entitled to reinstatement with backwages.00/day ÷ 8 hrs. = 4.00 13th Mo.Jan. As we have held in another case. x 26 days + 12 days) = 402 days *2 hours = 25% 402 days x 2 hrs. = 5.904. holiday pay. P 32. = 4. so that reinstatement would now be impractical and hardly in the best interest of the parties.000. & 12 day = (15 mos. To be sure. prior to March 21. The Labor Arbiter awarded backwages.20. In lieu of reinstatement. In these cases. 18 the Labor Arbiter correctly applied the rule in the Mercury Drug case. although paid on a piece-rate basis. x 25% = 1. importunings.

00/day x 30% = ———— 6.00) P384./day = 260 hrs. 14/87 . & 2 days = ———— (13 mos. = P6.80 Oct.00/day x 1 day = P98.90 Dec. = 98. = 32.00/day x 3 days = (123.664./day = 680 hrs. 13/87 = 2 mos. P 49. x 25% = 41.Jan. + P5.00/day x 200% = LABOR LAW I CASES (Arts.Jan.00/day x 200% = P 49.00 5.(4 mos. = 82. x 25% = 49.00/hr. 8 SHs 130 days x 2 hrs. = 41.12/hr.80 460. 17/86 .65/hr.00/hr.28/hr. = P1. P 32. 1/87 .12/hr. x 26 days + 11 days) = 63 days May 1/87 . x 126 hrs.00/day ÷ 8 hrs.90 159.00/day x 12 days = (384.30/day x 3 days = 36.00 1. 30/87 = 3 RHs.Dec.00 1. + P8. = P963.Dec.00 9.Sept. = 64.00/day x 12 days = 768.00/hr = ———— 10.53/hr. 17/86 .00) P123.90 12.00 8. 14/87 ./day = 126 hrs.Jan.447.00) 49. x 26 days + 2 days) = 340 days Oct. 17/89 P 64. 17/89 = 9 RHs. + P6.April 30/87 = 12 RHs.00/day ÷ 8 hrs.00/day ÷ 8 hrs. P 41.00/day x 200% = P 41.97-102) |118 . x 26 days + 26 days) = 130 days Jan. 13/87 = 1 RH 340 days x 2 hrs. & 11 days = ——— (2 mos.12/hr.00 2.00/day x 200% = P 64.00/day x 1 day = (49. 8 SHs III.12/hr.00/day 3 days = 246.800.00/day x 30% = ———— 7.00/hr. HOLIDAY PAY: Jan. x 260 hrs. x 25% = 32.40/hr.00 P13. 3 SHs 63 days x 2 hrs. x 680 hrs.60/day x 8 days = 76.90 Dec. 17/89 = 13 mos. 1/87 .00 6.

10/85 . Lambo 1. 13TH MO. OVERTIME PAY: Jan.00 64. 17/92 = 36 mos. 17/86 .00 I.00 II. 19.00/day x 9 days = (576.00/day x 30% = ———— Same computation as A. HOLIDAY PAY 1.383.90 III.00 TOTAL AWARD OF AVELINO LAMBO P94.00 ————— IV. 13TH MO.00/mo.Jan.20/day x 8 days = 153.90 III.00 IV. Same computation as A. OVERTIME PAY 13. 17/86 .00/yr. PAY: Jan. 17/86 .992.399.719. = 9.664.992. 17/89 Same computation as A.97-102) |119 .00/day x 9 days = P1.992.896.00) P576.984. SEPARATION PAY 9. 17/89 = 3 yrs.648.00/mo.Jan.399. 17/92 = 7 yrs.90 13. Lambo P64.Jan.30 1.399.00 P64.719.24 ————— LABOR LAW I CASES (Arts. = 4.20 OF VICENTE BELOCURA P 64. SEPARATION PAY: March 3/85 .30 ——— ——— P1.00 4.30 VICENTE BELOCURA IV. x 7 yrs.40 ADD: 10% Attorney's Fees 19.30 V. BACKWAGES P64.399.00 11.896.60 729.00 V. Lambo 13.20 P96.128.664. PAY 4.992. 13TH MO.896.60 1.20 ======== II.383.447.00 ———————— ————————— ———— I. = 11. TOTAL AWARD P96.20 = P191.Jan. Lambo 4. 17/89 Same computation as A.102.Jan.00 ————— ————— TOTAL P94.984.Jan. HOLIDAY PAY: Jan.447.110. 17/86 .664.00 SUMMARY V.648. 17/89 .447. PAY: Jan. x 3 yrs. BACKWAGES: Jan. SEPARATION PAY: Sept. 17/92 = 6 yrs. 17/89 64.Jan. x 6 yrs. AVELINO LAMBO VICENTE BELOCURA P1.152.00/day x 26 days = ========= 1.

the above computation is affirmed. BACKWAGES P64.20 Less 10.110. HOLIDAY PAY 1.896.GRAND TOTAL P210.nêt SO ORDERED.1âwphi1.399.102. AVELINO LAMBO VICENTE BELOCURA ———————— ————————— I.00 paid to him under the compromise agreement should be deducted from the total award of P94.000. With regard to petitioner Avelino Lambo.30 1.40 ========= LABOR LAW I CASES (Arts.102.00 4. OVERTIME PAY 13.97-102) |120 .20.719. Consequently.00 11.447.90 13.212.24.399.648. the amount of P10.992. 13TH MONTH PAY 4.00 ————— TOTAL P84.00 P64.20 P96.984.719. The award of attorney’s fees should be disallowed.20 GRAND TOTAL P181.896.30 IV.992. SEPARATION PAY 9.90 III.719.000.40).00 V. it appearing that petitioners were represented by the Public Attorney’s Office.64 ========= Except for the award of attorney’s fees in the amount of P19. the award to each petitioner should be as follows: WHEREFORE.383. 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. as computed above.447.00 ————— ————— P 94.00 II.

2-428-85 finding respondents guilty of illegal dismissal and ordering them to reinstate Dioscoro Pelobello and Casimiro Zapata to their respective or similar positions without loss of seniority rights. 1. National Capital Region). DIMPAS. an open package which was discovered to contain a "jusi" barong tagalog. ALEJANDRO A. Pablo S. (c) non-payment of overtime work. with full backwages from July 4. VIRAY. SANDIGAN NG MANGGAGAWANG PILIPINO (SANDIGAN)-TUCP and its members. basters (manlililip) and "plantsadoras". a salesman of petitioner Haberdashery. EUGENIO L. 4 On June 10. CASIMIRO ZAPATA. But in the afternoon.J. petitioners. when again questioned about said barong. private respondents herein. 1985. Makati Haberdashery and/or Toppers Makati. 1985 why no action should be taken against them for accepting a job order which is prejudicial and in direct competition with the business of the company. They countered by filing a complaint for illegal dismissal docketed as NLRC NCR Case No.00) pesos provided they report for work before 9:30 a. as tailors. Ledesma. In addition to their piece-rate. everyday. et al. up to 6:00 or 7:00 p. Inc. a labor organization of the respondent workers. JACINTO GARCIANO. C. Diosana rendered judgment. The charge of unfair labor practice is dismissed for lack of merit. JOSEFINA ALCOCEBA and MARIA ANGELES. Pelobello and Zapata denied ownership of the same. Private respondents are required to work from or before 9:30 a. JANET SANGDANG. Labor Arbiter Ceferina J. LABOR LAW I CASES (Arts. 2. have been working for petitioner Makati Haberdashery. GLORIA ESTRABO. private respondent Dioscoro Pelobello left with Salvador Rivera. respondents. 1986.THIRD DIVISION G. ESTRABO. et al. Saludo & Associates for petitioners. LILY OPINA.97-102) |121 . vs. 1985 up to actual reinstatement. 2 Both respondents allegedly did not submit their explanation and did not report for work. 7-2603-84. LAURETO.. and (g) benefits provided for under Wage Orders Nos. When confronted. v. 3 Hence. 1 During the pendency of NLRC NCR Case No. MACARIA G. Department of Labor and Employment.R. Bernardo for private respondents. (e) non-payment of service incentive pay.: This petition for certiorari involving two separate cases filed by private respondents against herein petitioners assails the decision of respondent National Labor Relations Commission in NLRC CASE No. 2-428-85 on February 5. (f) 13th month pay.m. NATIONAL LABOR RELATIONS COMMISSION. Pelobello replied that the same was ordered by respondent Casimiro Zapata for his customer. 4 and 5.m. Toppers Makati." and NLRC CASE No. The undisputed facts are as follows: Individual complainants. 7-260384 for (a) underpayment of the basic wage. LEONORA MENDOZA. 7-2603-84 entitled "Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP etc. INOCENCIO. FERNAN. JORGE LEDESMA and CECILIO G... filed a complaint docketed as NLRC NCR Case No. the Sandigan ng Manggagawang Pilipino. CEFERINA J. sewers.m. 2-428-85 entitled "Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP etc. affirming the decision of the Labor Arbiter who jointly heard and decided aforesaid cases. seamstress. ALFREDO C. the dispositive portion of which reads: WHEREFORE. et al.". VICTORIO Y. Nos. Consequently a memorandum was issued to each of them to explain on or before February 4. 3. 83380-81 November 15. et al. 1989 MAKATI HABERDASHERY. BASCO. INC. judgment is hereby rendered in NLRC NCR Case No. they were dismissed by petitioners on February 4. DIOSANA (Labor Arbiter. they are given a daily allowance of three (P 3. v. (d) non-payment of holiday pay. (b) underpayment of living allowance. On July 20. ESTER NARVAEZ. They are paid on a piece-rate basis except Maria Angeles and Leonila Serafina who are paid on a monthly basis. VEVENCIO TIRO. from Monday to Saturday and during peak periods even on Sundays and holidays. ROBLES. finding: (a) petitioners guilty of illegal dismissal and ordering them to reinstate the dismissed workers and (b) the existence of employer-employee relationship and granting respondent workers by reason thereof their various monetary claims. VISTA. BELEN N. Zapata allegedly admitted that he copied the design of petitioner Haberdashery. MERILYN A. 1984. 1985.

7-26030-84. 6 Furthermore. dated May 30. II THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT RESPONDENTS WORKERS ARE ENTITLED TO MONETARY CLAIMS DESPITE THE FINDING THAT THEY ARE NOT ENTITLED TO MINIMUM WAGE. Inocencio. We have repeatedly held in countless decisions that the test of employer-employee relationship is four-fold: (1) the selection and engagement of the employee. 1988 affirmed said decision but limited the backwages awarded the Dioscoro Pelobello and Casimiro Zapata to only one (1) year.In NLRC NCR Case No. Supervision is actively manifested in all these aspects — the manner and quality of cutting. pattern maker. sewer or "plantsadora" to take the customer's measurements. 1981 addressed to Topper's Makati Tailors which reads in part: 4. As gleaned from the operations of petitioner. Effective immediately. The facts at bar indubitably reveal that the most important requisite of control is present. the presence of control is immediately evident in this memorandum issued by Assistant Manager Cecilio B. 5 From the foregoing decision. due dates and other things to maximize the efficiency of our production. Fighting inside the shop is strictly prohibited. and (4) the power to control the employee's conduct. 7 The first issue which is the pivotal issue in this case is resolved in favor of private respondents. together with the number of the job order. LABOR LAW I CASES (Arts. Alteration-Before accepting alteration person attending on customs (sic) must ask first or must advise the tailors regarding the due dates so that we can eliminate what we call 'Bitin'. In view thereof. To follow instruction and orders from the undersigned Roger Valderama. (3) the power of dismissal. It is the so called "control test" that is the most important element.97-102) |122 . Ruben Delos Reyes and Ofel Bautista. job orders. E. B. SO ORDERED. when a customer enters into a contract with the haberdashery or its proprietor. The latter on March 30. petitioners appealed to the NLRC. new procedures shall be followed: After their motion for reconsideration was denied. If there is any problem regarding supervisors or co-tailor inside our shop. The materials should be checked (sic) if it is matched (sic) with the sample. Other than this person (sic) must ask permission to the above mentioned before giving orders or instructions to the tailors. C. Before accepting the job orders tailors must check the materials. (2) the payment of wages. consult with me at once settle the problem. 8 This simply means the determination of whether the employer A. petitioners filed the instant petition raising the following issues: I THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT AN EMPLOYEREMPLOYEE RELATIONSHIP EXISTS BETWEEN PETITIONER HABERDASHERY AND RESPONDENTS WORKERS. This can be done by proper scheduling of job order and if you will cooperate with your supervisors. and to sew the pants. 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 method by which the same is to be accomplished. coat or shirt as specified by the customer. sewing and ironing. Jr. the economic analyst of the Commission is directed to compute the monetary awards due each complainant based on the available records of the respondents retroactive as of three years prior to the filing of the instant case. service incentive leave pay and the 13th Month Pay. the latter directs an employee who may be a tailor. Any tailor violating this memorandum will be subject to disciplinary action. 9 Respondents are hereby found to have violated the decrees on the cost of living allowance. Effective immediately all job orders must be finished one day before the due date. advise Ruben or Ofel at once so that they can make necessary adjustment on due dates. III THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT RESPONDENTS PELOBELLO AND ZAPATA WERE ILLEGALLY DISMISSED. If you have many due dates for certain day. the complainants' claims for underpayment re violation of the minimum wage law is hereby ordered dismissed for lack of merit. D.

For it is a well-settled rule in this jurisdiction that "an appellee who has not himself appealed cannot obtain from the appellate court-. 11 Since private respondents are regular employees. the judgment may be said to have attained finality. the question as to whether or not there is in fact an underpayment of minimum wages to private respondents has already been resolved in the decision of the Labor Arbiter where he stated: "Hence.. for lack of sufficient evidence to support the claims of the complainants for alleged violation of the minimum wage.97-102) |123 . All workers in the private sector. 3. except where the workers are paid on piecerate basis in which case the employer shall be covered by this issuance insofar as such workers are concerned. and those who are paid a fixed amount for performing a specific work. 10 From this memorandum alone. 1. for it does show that a violation of the employer's rules has been committed and the evidence of such transgression.For strict compliance.m. 2. necessarily the argument that they are independent contractors must fail. regardless of their position. Employers covered.D. As to private respondents.m. accessories. while private respondents are entitled to Minimum Wage.) On the other hand. "All employees paid by the result shall receive not less than the applicable new minimum wage rates for eight (8) hours work a day. the equipment. there is no dispute that private respondents are entitled to the Minimum Wage as mandated by Section 2(g) of Letter of Instruction No. No. Implementing Regulations. . their blatant disregard of their employer's memorandum is undoubtedly an open defiance to the lawful orders of the latter. it is evident that petitioner has reserved the right to control its employees not only as to the result but also the means and methods by which the same are to be accomplished. Labor Code. When required by their employer to explain in a memorandum issued to each of them.. another justifiable LABOR LAW I CASES (Arts. they fall under one of the exceptions stated in Section 1(d). COLA and 13th Month Pay. and irrespective of the method by which their wages are paid. their claims for underpayment re violation of the Minimum Wage Law under Wage Orders Nos. except where a payment by result rate has been established by the Secretary of Labor. With respect to the last issue. or task basis.m. Rule IV. But all these notwithstanding. waited for the period to explain to expire and for petitioner to dismiss them. and which is forfeited when they arrive at or after 9:30 a. insofar as this case is concerned." 12No such rate has been established in this case." 13 The records show that private respondents did not appeal the above ruling of the Labor Arbiter to the NLRC.. Coming now to the second issue. and 5 must perforce fall. 4. neither did they file any petition raising that issue in the Supreme Court. Book III. (Emphasis supplied. Rule V. private respondents did not exercise independence in their own methods. it is apparent that public respondents have misread the evidence. 1614 and reiterated in Section 3(f). irrespective of the time consumed in the performance thereof. and are paid an additional allowance of P 3. that issue has been laid to rest. Book III. Accordingly. " 15 Private respondents are also entitled to claim their 13th Month Pay under Section 3(e) of the Rules and Regulations Implementing P. but on the contrary were subject to the control of petitioners from the beginning of their tasks to their completion. Private respondents are totally dependent on petitioners in all these aspects. the copied barong tagalog. Implementing Regulations. As established in the preceding paragraphs. For the same reason private respondents cannot also claim holiday pay (Section 1(e). That private respondents are regular employees is further proven by the fact that they have to report for work regularly from 9:30 a. thus: ". Assuming that such acts do not constitute abandonment of their jobs as insisted by private respondents. " 14 As a consequence of their status as regular employees of the petitioners. 829. — The Decree shall apply to all employers except to: xxx xxx xxx (e) Employers of those who are paid on purely commission. they are not entitled to service incentive leave pay because as piece-rate workers being paid at a fixed amount for performing work irrespective of time consumed in the performance thereof. Labor Code). Rules Implementing Presidential Decree No.00 daily if they report for work before 9:30 a. designation or status. to 6:00 or 7:00 p.m. any affirmative relief other than the ones granted in the decision of the court below. Rules Implementing Presidential Decree 1713 which explicitly states that. and paraphernalia used by private respondents are supplied and owned by petitioners. boundary. a justifiable ground for termination of employment by the employer expressly provided for in Article 283(a) of the Labor Code as well as a clear indication of guilt for the commission of acts inimical to the interests of the employer. was in the possession of Pelobello who pointed to Zapata as the owner.. 851 which provides: Section 3. They thereafter filed an action for illegal dismissal on the far-fetched ground that they were dismissed because of union activities. This is apparent from the provision defining the employees entitled to said allowance. Unlike independent contractors who generally rely on their own resources. tools. they not only failed to do so but instead went on AWOL (absence without official leave). they can claim cost of living allowance.

unbelievable. That there should be concern. SO ORDERED. 16 In fact the Labor Arbiter himself to whom the explanation of private respondents was submitted gave no credence to their version and found their excuses that said barong tagalog was the one they got from the embroiderer for the Assistant Manager who was investigating them. But that disregard of the employer's own rights and interests can be justified by that concern and solicitude is unjust and unacceptable. as well as the authority to determine the existence of said cause in accordance with the norms of due process. The law is protecting the rights of the laborer authorizes neither oppression nor selfdestruction of the employer. 1986 are hereby modified. respect and loyalty to his employer. We have ruled that: Under the foregoing facts. were the very ones who exhibited their lack of respect and regard for their employer's rules. doubts reasonably arising from the evidence. or in the interpretation of agreements and writings should be resolved in the former's favor. it should not be supposed that every labor dispute will automatically be decided in favor of labor. while the Constitution is committed to the policy of social justice and the protection of the working class. is meet and proper. No employer may rationally be expected to continue in employment a person whose lack of morals. it has been established that the right to dismiss or otherwise impose discriplinary sanctions upon an employee for just and valid cause. private respondents who vigorously insist on the existence of employer-employee relationship. pertains in the first place to the employer.97-102) |124 . it is evident that there is no illegal dismissal of said employees. Thus. LABOR LAW I CASES (Arts.17 More importantly. and solicitude for the rights and welfare of the working class. paragraph (c). regard for his employer's rules. the decision of the National Labor Relations Commission dated March 30. The complaint filed by Pelobello and Zapata for illegal dismissal docketed as NLRC NCR Case No. v. 18 Finally. is not an unreasonable or unfair rule. Award of service incentive leave pay to private respondents is deleted. 2-428-85 is dismissed for lack of factual and legal bases. That in controversies between a laborer and his master. 19 There is no evidence that the employer violated said norms. and appreciation of the dignity and responsibility of his office.ground for dismissal under the same Article of the Labor Code. (Stanford Microsystems. 1988 and that of the Labor Arbiter dated June 10. because of the supervision and control of their employer over them. 157 SCRA 414-415 [1988] ). NLRC. Under the circumstances. has so plainly and completely been bared. On the contrary. Inc. WHEREFORE. sympathy. Well established in our jurisprudence is the right of an employer to dismiss an employee whose continuance in the service is inimical to the employer's interest. it is evident that petitioner Haberdashery had valid grounds to terminate the services of private respondents.

97-102) |125 . EDNA CANLAS and ANGELA CANLAS. GRACE VILLANUEVA. HOURS Of WORK. AGNES CARESO. Sr. EMELITA CAYANAN. MARLENE MELQIADES. IMELDA MANALOTO. ANTONIA CALMA. LIBERTY GELISANGA. SONIA DIZON. 123938 May 21. LOLITA ESPIRITU. ERLINDA NAVARRO. CORA PATIO. JANETH CARREON. DOLORES DOLETIN. They also filed a petition for direct certification of petitioner Labor Congress of the Philippines as their bargaining representative (Case No. JR. NENITA DE GUZMAN. ROSEMARIE DEL ROSARIO. ROWENA MANALO. VIVIAN BAA. MYRA T. JANET DERACO. LAILA MANIAGO. EMPIRE FOOD PRODUCTS. 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. GLENDA SALITA. Santos dismissing their complaint for utter lack of merit. LENY GARCIA. AMALIA DELA CRUZ. among others. and private respondents Gonzalo Kehyeng and Evelyn Kehyeng in behalf of Empire Food Products. LOIDA BIE. LANIE GARCIA. GEMMA BONUS. MARIAN BENEDICTA. the following: 1. EMILY LAGMAN. ROWENA MENDOZA. JOSIE MANABAT. 3 are as follows: LABOR CONGRESS OF THE PHILIPPINES (LCP) for and in behalf of its members. which hired them on various dates (Paragraph 1. its Proprietor/President & Manager. On October 23. OLALIA. ANNABEL CARESO. PRECY MANALILI. 1998 NLRC RAB III Case No. IRENE JACINTO. That with regards [sic] to NLRC CASE NO. ARCELY PEREZ. Annex "B. EVA CUEVAS. AND OTHER TERMS AND CONDITIONS OF EMPLOYMENT. EVELYN KEHYENG. LERIZA PANLILIO. JOSEFINA BASILIO. EVELYN MANALO.FIRST DIVISION G. NYMPA TUAZON. ELIZABETH MERCADO. SUSANA SALOMON. JEANIE LANSANGAN. TERESA MANIAGO. 01-1964-91 which affirmed the Decision 2 of Labor Arbiter Ariel C. ANA MARIE OCAMPO. LOURDES PANLILIO. J. NANCY DERACO. R03009010-RU-005). No. Navarro. MR.. JOYDEE LANSANGAN. vs. Annex "F" of Petition). LABOR LAW I CASES (Arts. Inc. ERNA CANLAS. petitioners seek to reverse the 29 March 1995 resolution 1of the National Labor Relations Commission (NLRC) in Petitioners filed against private respondents a complaint for payment of money claim[s] and for violation of labor standard[s] laws (NLRC Case No. GINA JACINTO. REMEDIOS AGUAS. GIGI MANALOTO. ANGELINA QUIAMBAO. LUZVIMINDA CAYANAN." 2. CATHERINE ASPURNA. ANABEL MANALO. NANCY GARCIA. WINNIE PENA. In this special civil action for certiorari under Rule 65. MERLY CANLAS. ZENAIDA GARCIA. 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. IMELDA SARMIENTO. LENITA VIRAY. ERLINDA MANALANG. LILIAN MARFIL. Annex "A" of Petition. RAB-111-10-1817-90). respondents. VIRGINIA MAGBAG. CAROLYN DIZON. MARITESS OCAMPO. EMILY MANARANG." Page 2. 1990. ELVIRA PIEDRA. AGNES SALAS. MERCY CAYANAN. petitioners represented by LCP President Benigno B. JULIE DAVID. JANETH MANARANG. DAIZY TUASON. VIRGINIA MENDIOLA. ELIZA SALAZAR. JOSELYN MANALESE. MARY INTAL. MELODY JACINTO. The antecedents of this case.R. NORA PATIO. That in connection with the pending Petition for Direct Certification filed by the Labor Congress with the DOLE. as summarized by the Office of the Solicitor General in its Manifestation and Motion in Lieu of Comment. MARIFE PINLAC. IMELDA MENDOZA. LUISA PANLILIO. GONZALO KEHYENG and MRS. MARY ANN MAYATI. NATIONAL LABOR RELATIONS COMMISSION. RAB-III-10-1817-90 pending with the NLRC parties jointly and mutually agreed that the issues thereof. petitioners. ERLINDA BASILIO. ELENA RONOZ. shall be discussed by the parties and resolve[d] during the negotiation of the Collective Bargaining Agreement. DAVIDE. CORAZON RILLION. ANALIZA ESGUERRA. entered into a Memorandum of Agreement which provided. NORY VIRAY. ALDA DAVID. JULIE GACAD. BERNADETH RALAR. JANETH RALAR. FELISISIMA PATIO.: 3. ALMA CASTRO. The 99 persons named as petitioners in this proceeding were rankand-file employees of respondent Empire Food Products. ROSARIO DIMATULAC. ROSITA CANLAS.

RAB-III-01-1964-91 against private respondents for: b. petitioners filed a complaint docketed as NLRC Case No. shall always be maintained and subjected to inspection and visitation by LABOR LAW I CASES (Arts. etc. Labor Arbiter Santos. Labor Arbiter Ariel C. That in consideration [of] the foregoing covenant. 1990. That Employer. 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. Threats. Unfair Labor Practice by way of Illegal Lockout and/or Dismissal. That parties jointly and mutually agreed that upon signing of this Agreement. Union busting thru Harassments [sic]. while the Petition for direct certification of the LCP Labor Congress parties jointly move for the direct certification of the LCP Labor Congress. (Annex "A" of Petition). parties jointly and mutually agreed that NLRC CASE NO. No.A. Mediator Arbiter Antonio Cortez approved the memorandum of agreement and certified LCP "as the sole and exclusive bargaining agent among the rank-andfile employee of Empire Food Products for purposes of collective bargaining with respect to wages. and interfering with the rights of employees to self-organization. 1990. c. 8. On January 23. 7. Further agreed that violation by the parties of any provision herein shall constitute an act of ULP. No. e. Union dues not deducted during the period due. shall be refunded or reimbursed by the Employer/Management. violation of the memorandum of agreement. Santos absolved private respondents of the charges of unfair labor practice. That parties [to] this Memorandum of Agreement jointly and mutually agreed to respect. 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. On November 9.97-102) |126 . however. 6640 and R. payments. underpayment of wages and denied petitioners' prayer for actual. 1990. (Annex "D" of Petition) After the submission by the parties of their respective position papers and presentation of testimonial evidence. 6. no Harassments [sic]. RAB-III-10-1817-90 shall be considered provisionally withdrawn from the Calendar of the National Labor Relations Commission (NLRC). 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]. such as Wages promulgated by the Regional Wage Board. 6727. Interferences [sic] of their respective rights under the law. d. union busting. 1991. threats.A. no Vengeance or Revenge by each partner nor any act of ULP which might disrupt the operations of the business. Moral and Exemplary Damages. 5. and whatever problems and grievances may arise by and between the parties shall be resolved by them. petitioners through LCP President Navarro submitted to private respondents a proposal for collective bargaining (Annex "C" of Petition). hours of work and other terms and conditions of employment" (Annex "B" of Petition). moral and exemplary damages. abide and comply with all the terms and conditions hereof.4. Violation of the Memorandum of Agreement dated October 23. Parties jointly and mutually agreed that pending negotiations or formalization of the propose[d] CBA. Underpayment of Wages in violation of R. 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. Actual. a. In an Order dated October 24. 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.

evidence which is more than a scintilla is required in order to declare respondents/employers guilty of unfair labor practice. Labor Arbiter Santos made the following determination: Upon review of the minutes of the proceedings on record. . 183). 1972 [sic] and remanded the case to the Labor Arbiter for further proceedings for the following reasons: Toward this end. 2 Complainants failed to present with definiteness and clarity the particular act or acts constitutive of unfair labor practice. that "complainants failed to present any witness who may describe in what manner respondents have committed unfair labor practice . July 31. coercion or any form of threat as a result of this immediately executory reinstatement shall be dealt with accordingly. It is to be borne in mind that a declaration of unfair labor practice connotes a finding of prima facieevidence of probability that a criminal offense may have been committed so as to warrant the filing of a criminal information before the regular court. p. . . the National Labor Relations Commission vacated the Decision dated April 14. 183). p. that ". as Exhibit "A" and the annexes thereto as Exhibit "B". 185). through his decision. "B-1" to "B-9". Records). . (Annex "G" of petition) May 1991. Record. Other individual complainants should have been summoned with the end in view of receiving their testimonies. that ". complainants failed to rebut the authenticity of respondents' witness testimony. that ". 105)." (Record.97-102) |127 . threats and interference with the rights of employees to self-organization which is actually LABOR LAW I CASES (Arts. 11 June 1991. LOURDES PANTILLO. therefore. 103. it is Our considered view [that] the case should be remanded to the Labor Arbiter of origin for further proceedings. even the charge of illegal lockout has no leg to stand on because of the testimony of respondents through their guard Orlando Cairo (TSN." (Record.personnel of the Department of Labor and Employment. hence. RECORD. 183. 96. complainant did not present any single witness while respondent presented four (4) witnesses in the persons of Gonzalo Kehyeng. 92. p. . complainant LCP failed to present anyone of the so-called 99 complainants in order to testify who committed the threats and intimidation . Record. p. 1991. 91. Minutes of the proceedings on record show that complainant further presented other witnesses." (Record. p. SO ORDERED. As regards the issue of harassments [sic]. RECORD. . noted that ". p. complainant before the National Labor Relations Commission must prove with definiteness and clarity the offense charged. Judgment should be rendered only based on the conflicting positions of the parties. BENIGNO NAVARRO. the cheese curls ready for repacking were all spoiled to the prejudice of respondents. p. . RECORD. 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. 16 May 1991. 1991 (Record. LENIE GARCIA (16 April 1991. complainant failed to specify under what provision of the Labor Code particularly Art. The Labor Arbiter is called upon to consider and pass upon the issues of fact and law raised by the parties. As such penalty. . p. p. who adopted its POSITION PAPER AND CONSOLIDATED AFFIDAVIT. On appeal. Hence. In a Decision dated July 27. Besides. inclusive. intimidation. JR. The complainants should be afforded the time and opportunity to fully substantiate their claims against the respondents. 1994. . As a result of complainants['] failure to report for work. Record. Evelyn Kehyeng and Elvira Bulagan . . see back portion thereof . Record. . . . Under cross-examination." (Record. hence guilty of abandoning their post without permission from respondents. 93. 185). Formal offer of Documentary and Testimonial Evidence was made by complainant on June 24. . however. MARIFE PINLAC. (Annex "H" of Petition) The Labor Arbiter. ." (p. . namely: ERLINDA BASILIO (13 March 1991. p. . 102. 248 did respondents violate so as to constitute unfair labor practice . respondents should not escape liability for this technicality. . . (28 February 1991. 1991 hearing. 106-109) The Labor Arbiter must have overlooked the testimonies of some of the individual complainants which are now on record. p. p. 5-35) that on January 21. Failing in this regard is fatal to the cause of complainants. namely. Orlando Cairo. p. 8 March 1991. it appears that complainant presented witnesses. complainants refused and failed to report for work.

e. Anent the charge that there was underpayment of wages. in its Resolution dated 29 March 1995. PROTECTION TO LABOR. Their motion for reconsideration having been denied by the NLRC in its Resolution of 31 October 1995. RAB III-10-1817-90 pending with the NLRC. JUST AND HUMANE CONDITIONS OF WORK AND DUE PROCESS. On cross-examination. premises considered. particularly Section 2. Insofar as violation of [the] Memorandum of Agreement dated October 23. the complaint is hereby DISMISSED for utter lack of merit. 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 evidence points to the contrary. 12-30) during the July 31. p.an ingredient of unfair labor practice. This cannot be made the basis of an imposition of an obligation over which the National Labor Relations Commission has exclusive jurisdiction thereof. 1990 is concerned. both parties agreed that: 2 — That with regards [sic] to the NLRC Case No. WHEREFORE. III LABOR LAW I CASES (Arts. spoke of a resolutory condition which could or could not happen. (Annex "I" of Petition). 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. a lazy worker earns less than the minimum wage but the same cannot be attributable to respondents but to the lazy workers. a certain amount for every thousand pieces of cheese curls or other products repacked. and (d) petitioners were not underpaid. 5 affirmed in toto the decision of Labor Arbiter Santos. Finally. 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]. as the provisions thereof. Certainly. 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. 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. the claim for moral and exemplary damages has no leg to stand on when no malice.97-102) |128 . In so doing. 6petitioners filed the instant special civil action for certiorari raising the following issues: I WHETHER OR NOT THE PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION WHEN IT DISREGARDED OR IGNORED NOT ONLY THE EVIDENCE FAVORABLE TO HEREIN PETITIONERS. complainants failed to specify what type of threats or intimidation was committed and who committed the same. 4 On appeal. II WHETHER OR NOT THE PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION WHEN IT DEPRIVED THE PETITIONERS OF THEIR CONSTITUTIONAL RIGHT TO SELFORGANIZATION. 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. (b) the agreement of 23 October 1990 could not be made the basis of an obligation within the ambit of the NLRC's jurisdiction. bad faith or fraud was ever proven to have been perpetuated by respondents. 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. the NLRC. 1991 hearing. SECURITY OF TENURE. (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. 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.

For one thing. 7 We required respondents to file their respective Comments. they had only until 29 December 1995 to file the petition. two days after allegedly abandoning their work. the NLRC thus already entered judgment in private respondents' favor. Navarro. In their Reply. 8 it chastised the Labor Arbiter for his errors both in judgment and procedure. It pointed out that the Labor Arbiter. when in both instances. However. the NLRC summarized the grounds for the appeal to be: 1. STATUTORY BENEFITS. in the 21 July 1992 NLRC resolution. Finally. for which reason it remanded the records of the case to the Labor Arbiter for compliance with the pronouncements therein.97-102) |129 . staunchly declaring that it was "not about to substitute [its] judgment on matters that are within the province of the trier of facts. the NLRC confessed its reluctance to inquire into the veracity of the Labor Arbiter's factual findings. the OSG stressed. As petitioners admitted in their Notice to File Petition for Review on Certiorari that they received a copy of the resolution (denying their motion for reconsideration) on 13 December 1995. 2." Yet. a non-lawyer who filed the notice to file a petition for review on their behalf. Instead of using the "reasonable time" criterion forcertiorari under Rule 65. Invocation of the general rule that factual findings of the NLRC bind this Court is unavailing under the circumstances. Initially. In their Reply. In its Comment. that abandonment was not proved. In view of the stand of the OSG. 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. mistook which reglementary period to apply. and that much credit was given to self-serving statements of Gonzalo Kehyeng. WITH BACKWAGES. In said resolution. We find for petitioners. he had before him substantially the same evidence. DAMAGES AND ATTORNEY'S FEES. petitioners claim that the decisions of the NLRC and the Labor Arbiter were not supported by substantial evidence. petitioners averred that Mr. the Office of the Solicitor General (OSG) sided with petitioners. that the Labor Arbiter in rendering the decision committed serious errors in the findings of facts. 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. as to payment of just wages. with the NLRC merely adopting its Comment as its Memorandum. especially considering that respondents neither denied nor contradicted the facts and issues raised in the petition.WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY EASED OUT [OF] OR CONSTRUCTIVELY DISMISSED FROM THEIR ONLY MEANS OF LIVELIHOOD. However. in finding that petitioners abandoned their jobs. this refusal to report for work for a single day did not constitute abandonment. we gave due course to the petition and required the parties to file their respective memoranda. as it affirmed the factual findings and legal conclusions of the Labor Arbiter only after carefully reviewing. 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. In their Manifestation and Comment. inter alia. he used the 15-day period for petitions for review on certiorari under Rule 45. 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. owner of Empire Foods. which pertains to a clear. deliberate and unjustified refusal to resume employment. On 7 July 1997. private respondents asserted that the petition was filed out of time. we resolved to require the NLRC to file its own Comment. IV WHETHER OR NOT PETITIONERS SHOULD BE REINSTATED FROM THE DATE OF THEIR DISMISSAL UP TO THE TIME OF THEIR REINSTATEMENT. illegal lockout or illegal dismissal. 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. the OSG argued. LABOR LAW I CASES (Arts. In fact. weighing and evaluating the evidence in support thereof. 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. Having failed to do so. and not mere absence. we are unable to discern any compelling reason justifying the Labor Arbiter's volte facefrom his 14 April 1992 decision reinstating petitioners to his diametrically opposed 27 July 1994 decision. petitioners filed a complaint for. only petitioners and private respondents filed their memoranda. neither did he understand the purpose of the remand of the records to him. The NLRC further argues that grave abuse of discretion may not be imputed to it. 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. In its Manifestation and Motion in Lieu of Comment. as well as the pertinent provisions of law and jurisprudence.

. 102. . through his decision. . payment. It may be argued that the last paragraph of the decision may be categorized as the dispositive portion thereof: xxx xxx xxx The undersigned Labor Arbiter is not oblivious [to] the fact that respondents have violated a cardinal rule in every establishment that a payroll and other papers evidencing hour[s] of work. payment etc. Evelyn Kehyeng and Elvira Bulagan . hence. We take note that the decision does not contain a dispositive portion or fallo. p. 183). Formal offer of Documentary and Testimonial Evidence was made by the complainant on June 24. The Labor Arbiter must have overlooked the testimonies of some of the individual complainants which are now on record. complainant did not present any single witness while respondent presented four (4) witnesses in the persons of Gonzalo Kehyeng. 92). 2 May 1991. . . that "complainants failed to present any witness who may describe in what manner respondents have committed unfair labor practice . however. p. Record. RECORD. Further. (28 February 1991. 93. On another plane. Judgment should [have been] rendered only based on the conflicting positions of the parties. namely: ERLINDA BASILIO (13 March 1991. As such penalty. 183).106-109). complainant a [sic] LCP failed to present anyone of the so called 99 complainants in order to testify who committed the threats and intimidation .97-102) |130 . . p. 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 crossexamined by respondents' counsel. namely BENIGNO NAVARRO. RECORD. Toward this end. 16 May 1991. 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. Record. 183. . 105). 185). . that ". . . shall always be maintained and subjected to inspection and visitation by personnel of the Department of Labor and Employment. therefore. it is Our considered view the case should be remanded to the Labor Arbiter of origin for further proceedings. inclusive. such circumstance. p. . 91. 1991 (Record.. . JR. 96.185)." (Records. LABOR LAW I CASES (Arts. p." (Record. complainant before the National Labor Relations Commission must prove with definiteness and clarity the offense charged. The Labor Arbiter is called upon to consider and pass upon the issues of fact and law raised by the parties. Other individual complainants should have been summoned with the end in view of receiving their testimonies. noted that ". etc. it may be well said that the decision does not resolve the issues at hand. 11 June 1991. LOURDES PANTILLO. . p. who adopted its POSITION PAPER AND CONSOLIDATED AFFIDAVIT as Exhibit A and the annexes thereto as Exhibit B.After which. . B-1 to B-9. The complainants should [have been] afforded the time and opportunity to fully substantiate SO ORDERED. RECORD. see back portion thereof. p. complainant failed to specify under what provision of the Labor Code particularly Art. . respondents should not escape liability for this technicality. their claims against the respondents. 8 March 1991. It is Our considered view that even assuming arguendo that the respondents failed to maintain their payroll and other papers evidencing hours of work. 248 did respondents violate so as to constitute unfair labor practice . that ". . . it appears that complainant presented witnesses. Such being the case. that ". . Record. p. 103." (Record." (Record. Record. LENI GARCIA (16 April 1991. there is no portion of the decision which could be carried out by way of execution." (Record. The Labor Arbiter. Minutes of the proceedings on record show that complainant further presented other witnesses. p. p. . MARIFE PINLAC. Upon review of the minutes of the proceedings on record. p. coercion or any form of threat as a result of this immediately executory reinstatement shall be dealt with accordingly. p. Orlando Cairo. p.

On this score. In fact two (2) days after the reported abandonment of work or on January 23. thus negating Atlas' stand that he had abandoned his job. 203 SCRA 570 and Flexo Manufacturing v. Atlas Consolidated Mining and Development Corp. Thus does it appear to us that the Labor Arbiter. such as abandonment. NLRC. NLRC. the Labor Arbiter perceived that if not for petitioners. which he actually did but which proved to be futile after all. NLRC. petitioners refused to work. this Honorable Court held that the work of merchandisers of processed food. this Honorable Court stressed that it is the clear. NLRC. 190 SCRA 505. The absence of petitioner employees for one day on January 21. Ranara v. considering and resolving the same. the cheese curls ready for repacking on said date were spoiled. 231 SCRA 173. 10 It may likewise be stressed that the burden of proving the existence of just cause for dismissing an employee. we find the following observations of the OSG most persuasive: In finding that petitioner employees abandoned their work. 186 SCRA 586. 212 SCRA 631. Inc. Dagupan Bus Co. 11 a burden private respondents failed to discharge. It is [a] well settled rule that there must be a finding of illegal dismissal before reinstatement be mandated. which resulted in the spoilage of cheese curls does not amount to abandonment of work. i. would simply walk away from his job unmindful of the consequence of his act. the requisite dispositive portion. Labor Arbiter Santos did not state why he was abandoning his previous decision directing the reinstatement of petitioner employees. 135 SCRA 145). the Labor Arbiter impliedly held that they did not abandon their work but were not allowed to work without just cause. NLRC. 1991. By directing in his first decision the reinstatement of petitioner employees. 191 SCRA 328. ably supports his sincere intention to return to work. to abandon his work and then immediately file an action seeking for his reinstatement. illegal lockout and/or illegal dismissal. 1991. 1991 as testified [to] by Security Guard Orlando Cairo did not constitute abandonment. coercion or any form of threat as a result of this immediately executory reinstatement shall be dealt with accordingly. supra. after receiving evidence. the forfeiture of his accrued employment benefits. Mabaylan v. In his second decision. the LABOR ARBITER is hereby directed to include in his clarificatory decision. rests on the employer. v. In Tabas v. is a food and fruit processing company. v. In this regard. 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. We can not believe that Caballo. or at best. With more reason.e. spite. NLRC (supra). in concluding in his 27 July 1994 Decision that petitioners abandoned their work. California Manufacturing Co. he would not have fallen victim to this stinging rebuke at the hands of the NLRC. intimidation. this Honorable Court explicitly stated: It would be illogical for Caballo. In opting to finally to [sic] contest the legality of his dismissal instead of just claiming his separation pay and other benefits. Labor Arbiter Santos expressly directed the reinstatement of the petitioner employees and admonished the private respondents that "any harassment. was moved by. LABOR LAW I CASES (Arts. the Labor Arbiter and the NLRC relied on the testimony of Security Guard Rolando Cairo that on January 21. petitioners filed a complaint for. Inc. As a result of their failure to work. 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. Private respondent Empire Food Products.. NLRC. lackadaisically glossed over petitioner's evidence. Hua Bee Shirt Factory v.97-102) |131 . deliberate and unjustified refusal to resume employment and not mere absence that constitutes abandonment. (169 SCRA 497). In several cases. at worst. 9 Apparently. That petitioner employees are "pakyao" or piece workers does not imply that they are not regular employees entitled to reinstatement.standing alone. In Atlas Consolidated. who had worked for Atlas for two years and ten months. In De Ysasi III v. among others. the work of processed food repackers is necessary in the day-to-day operation[s] of respondent Empire Food Products. does not warrant the directive to reinstate complainants to their former positions. unfair labor practice. In his first decision. The failure to work for one day. NLRC.

is in order. and third. holiday pay. the notice shall be served at the worker's last known address. pay. 12 Section 2. second.D. irrespective of the time consumed in the performance thereof.A. "field personnel and other employees whose time and performance is unsupervised by the employer. reinstatement would be impractical and hardly promotive of the best interests of the parties. Rule IV. First. with a fraction of at least six (6) months of service considered as one (1) year. No. in Section 8 (b). that in no case shall the holiday pay be less than the applicable statutory minimum wage rate. piece workers are specifically mentioned as being entitled to holiday pay. as to the nature of petitioners' tasks. the length of time that has lapsed since their dismissal. 28. including those who are engaged on task or contract basis. except where the workers are paid on piece-rate LABOR LAW I CASES (Arts. 8. cannot be fully settled at this time. Thus. 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. or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof. the length of time 16 that petitioners worked for private respondents. 851: d. Petitioners. and the perceptible resentment and enmity between petitioners and private respondents which necessarily strained their relationship. the amount of back wages to which each petitioner is entitled. As mentioned earlier. such as payment on piece work. Book III which we quote hereunder. not only did petitioners labor under the control of private respondents as their employer. petitioners worked for private respondents throughout the year. this issue is best left to the National Labor Relations Commission. purely commission basis. and those who are paid a fixed amount for performing specific work. 2.97-102) |132 . however. likewise did petitioners toil throughout the year with the fulfillment of their quota as supposed basis for compensation.Private respondents. The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime pay. Employers of those who are paid on purely commission." Plainly. moreover. Rule XIV. Further. as amended by R. who were engaged in the manufacture and selling of such food products. in view of the modifications to P. Three (3) factors lead us to conclude that petitioners. 13 That being said. boundary or task basis. petitioners as piece-rate workers do not fall within this group. No. as piece-rate workers having been paid by the piece. the Revised Guidelines on the Implementation of the 13th Month Pay Law. Book V of the Omnibus Rules Implementing the Labor Code provides: Sec. In addition. 14 there is need to determine the varying degrees of production and days worked by each worker. In lieu of reinstatement then. 18 inter alia. No. namely. 13th month pay and service incentive leave which the labor arbiter failed to rule on but which petitioners prayed for in their complaint. although piece-rate workers. their employment not having been dependent on a specific project or season. were regular employees of private respondents." the status and nature of their employment was that of regular employees.D. As to the other benefits. — Petitioners are therefore entitled to reinstatement with full back wages pursuant to Article 279 of the Labor Code. 15 we hold that petitioners are so entitled to these benefits. separation pay at the rate of one month for every year of service. holiday pay. their job of repacking snack food was necessary or desirable in the usual business of private respondents. the records disclose that taking into account the number of employees involved. 851 19 by Memorandum Order No. service incentive leave 17 and 13th month (b) Where a covered employee is paid by results or output. In cases of abandonment of work. clearly exclude the employer of piece rate workers from those exempted from paying 13th month pay. to wit: 2. EXEMPTED EMPLOYERS The following employers are still not covered by P. premium pay. 6715. while petitioners' mode of compensation was on a "per piece basis. 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. however. Nevertheless. Clearly. Holiday pay of certain employees. 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. in considering petitioners' employment to have been terminated by abandonment. Sec.

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. petitioners presented their complaint 21 to prove the violation of labor laws committed by private respondents. the evidence on record does not support this claim. the instant petition is hereby GRANTED. private respondents did not allege adherence to the standards set forth in Sec. or task basis. Finally. Rule I. petitioners are beyond the ambit of exempted persons and are therefore entitled to overtime pay. Rule VII. Petitioners relied almost entirely on documentary evidence which. 20 As to overtime pay. 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. did not prove either compliance or non-compliance. the existence of the memorandum of agreement 26 offered to substantiate private respondents' noncompliance therewith. did not prove any wrongdoing on private respondents' part. They likewise offered their Consolidated Affidavit of Merit and Position Paper 23 which. the National Labor Relations Commission would be in a better position to determine the exact amounts owed petitioners. Book III of the Implementing Rules. Here. per se. however. 2(e). is merely "the pleading alleging the plaintiff's cause or causes of action. pakiao. (emphasis supplied) IN VIEW WHEREOF. 8. are not entitled to receive overtime pay. As to the claim that private respondents violated petitioners' right to self-organization. was a tautological exercise. taking into account the foregoing observations. absent evidence of concrete. LABOR LAW I CASES (Arts.basis in which case the employer shall grant the required 13th month pay to such workers. or where such rates have been fixed by the Secretary of Labor in accordance with the aforesaid section. For example. if their output rates are in accordance with the standards prescribed under Sec. According to Sec. takay. The complaint. 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. Costs against private respondents. Book III.97-102) |133 . the rules. if any. without regard to the time spent in producing the same. RAB-III-01-1964-91 are hereby SET ASIDE. overt acts in contravention of the provisions of the memorandum. DECLARING petitioners to have been illegally dismissed by private respondents. 2. 8 nor with the rates prescribed by the Secretary of Labor. workers who are paid by results including those who are paid on piece-work. SO ORDERED. of these regulations." 22 Its contents are merely allegations. In like manner. 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. As such. thus entitled to full back wages and other privileges. are different. Once more. however. 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. 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. like the offer of their Complaint. and another is hereby rendered: 1. and did not help nor prove their cause. the verity of which shall have to be proved during the trial.

that until March. private respondents were not illegally dismissed.00 for the said two years. Said respondents. as well as those up to March.000. 4.97-102) |134 . plus attorney's fee equivalent to ten percent (10%) of the award. as well as its resolution.00) PESOS. 1993. denying petitioners's motion for reconsideration. 1993 is hereby MODIFIED. 5 petitioners have come to us in this recourse.000. The other findings stand affirmed. father and son. Labor Arbiter Rogue B. 1987. as complainants therein. Complainant Fredelito Juanatas is hereby declared respondents' employee and shares in (the) commission and separation pay awarded to complainant Pedro Juanatas. the NLRC modified the decision of the labor arbiter and disposed as follows: PREMISES CONSIDERED.050.438.R. petitioners contend that respondent Fredelito Juanatas was not an employee of the firm but was merely a helper of his father Pedro.00. Consequently.00 from petitioners' total gross income of almost P1. and that petitioners' refusal to pay their aforestated commission was a ploy to unjustly terminate them. de Guzman rendered a decision dated March 9.86. that all commissions for 1988 and 1989. they were hired by herein petitioner Bernardo Jimenez as driver/mechanic and helper. 3.050. No. respectively.000.:p This petition for certiorari seeks the annulment of the decision of respondent National Labor Relations Commission (NLRC).261. 1 which assailed decision affirmed with modifications the adverse decision of the labor arbiter against herein petitioners. dated August 8. and with the submission of the parties' position/supporting papers. petitioners. Respondent JJ's Trucking and Dr. After hearings duly conducted. FREDELITO JUANATAS. with this decretal portion: WHEREFORE. 4 Petitioners' motion for reconsideration having been denied thereafter in public respondent's resolution dated August 8. vs. alleged that in December. separation pay and damages against JJ's Trucking and/or Dr.respondents.70). Bernardo Jimenez. excluding the partial payment of P7. 1990.387. On June 29. The complaint of Fredelito Juanatas is hereby dismissed for lack of merit. his father. Private respondents further alleged that for the years 1988 and 1989 they received only a partial commission of P84. Bernardo Jimenez are jointly and severally liable to pay complainants their unpaid commissions in the total amount of Eighty Four Thousand Three Hundred Eighty Seven Pesos and 05/100 (P84. JJ Trucking. initially fixed at 17% but later increased to 20% in 1988. The award of attorney's fees is reduced accordingly to eight thousand four hundred thirty eight pesos and 70/100 (P8. 1990. in his trucking firm. raising for resolution the issues as to whether or not respondent NLRC committed grave abuse of discretion in ruling (a) that private respondents were not LABOR LAW I CASES (Arts. herein private respondent Pedro and Fredelito Juanatas. NATIONAL LABOR RELATIONS COMMISSION.SECOND DIVISION Disputing the complaint. TRUCKING.309 which. 1994.000. were duly paid. with their commission for that period being computed at 20% of said income. to wit: 1. J. 3 On appeal filed by private respondents.211. filed a claim for unpaid wages/commissions. therefore. decision is hereby issued ordering respondents JJ's Trucking and/or Dr. and that the truck driven by respondent Pedro Juanatas was sold to one Winston Flores in 1991 and.05). 2. They were assigned to a ten-wheeler truck to haul soft drinks of Coca-Cola Bottling Company and paid on commission basis. as Operators PEDRO of JUANATAS JJ's and REGALADO. the Decision of March 9. 1990 when their services were illegally terminated. 2 G. 116960 April 2.86 due and payable to them. Bernardo Jimenez to pay jointly and severally complainant Pedro Juanatas a separation pay of FIFTEEN THOUSAND FIFTY (P15. 1994. 1994. added up to a grand total of P114. 1996 BERNARDO JIMENEZ and JOSE JIMENEZ. they were further entitled to P15. there was an unpaid balance to them of P106. dated May 27.

even when met by indefinite testimony of the debtor. Where the defendant sued for a debt admits that the debt was originally owed. Further. and is thus uncertain as to its origin and authenticity. rather than on the plaintiff to prove non-payment. in the case at bar. petitioners still have to present proof of full payment. The defendant still has the burden of establishing payments beyond those admitted by plaintiff. Similarly. 11 When the existence of a debt is fully established by the evidence contained in the record. of the gross income is not disputed by petitioners. Fredelito. and (b) that respondent Fredelito Juanatas was an employee of JJ's Trucking. because factual findings of agencies exercising quasi-judicial functions are accorded not only respect but even finality. Although private respondents admit receipt of partial payment. In the case at bar. Since the burden of evidence lies with the party who asserts an affirmative allegation. That a plaintiff admits that some payments have been made does not change the burden of proof. and the compensation he received was paid by his father out of the latter's commission. where his testimony is contradicted by the other party or by a disinterested witness. the aforementioned elements are not present. the issue may be determined against the debtor since he has the burden of proof. the plaintiff or complainant has to prove his affirmative allegations in the complaint and the defendant or respondent has to prove the affirmative allegations in his affirmative defenses and counterclaim. Although petitioners submitted a notebook showing the allegedvales of private respondents for the year 1990. this Court does not review supposed errors in the decision of the NLRC which raise factual issues. 10 The debtor has the burden of showing with legal certainty that the obligation has been discharged by payment. but. in his comment. petitioners defaulted in their defense and in effect admitted the allegations of private respondents. the burden of proving that it has been extinguished by payment devolves upon the debtor who offers such a defense to the claim of the creditor.paid their commissions in full. the testimony of the debtor may also be sufficient to show payment. Considering that petitioners herein assert that the disputed commissions have been paid. this by reason of the evident failure of herein petitioners to present evidence that fullpayment thereof has been made. 6 As a rule. 16 The positive testimony of a creditor may be sufficient of it self to show non-payment. 13 In the instant case. 12 Where the debtor introduces some evidence of payment. was an employee of petitioners. "Fredelito's LABOR LAW I CASES (Arts. one who pleads payment has the burden of proving it. It is a basic rule in evidence that each party must prove his affirmative allegation. With respect to the second issue. we find no reason to disturb the findings of respondent NLRC that the entire amount of commissions was not paid. 14 The testimony of petitioners which merely denied the claim of private respondents. the general rule is that the burden rests on the defendant to prove payment. Pedro. he would be responsible for the latter's compensation. and (4) the power to control the employee's conduct. The testimony of the debtor creating merely an inference of payment will not be regarded as conclusive on that issue. Even the Solicitor General. (2) the Payment of wages. citing Article 281 of the Labor Code.97-102) |135 . respondent Pedro Juanatas was entitled to the same percentage of commission. The agreement was between petitioner JJ's Trucking and respondent Pedro Juanatas. The review of labor cases elevated to us on certiorari is confined to questions of jurisdiction or grave abuse of discretion. for failure to present evidence to prove payment. Respondent Fredelito Juanatas was hired by his father. is undated and unsigned. who is then under a duty of producing some evidence to show non-payment. The hiring of a helper was discretionary on the part of Pedro. unsupported by documentary evidence. the right of respondent Pedro Juanatas to be paid a commission equivalent to 17%. 17 Hence. 18 with the control test assuming primacy in the overall consideration. the elements that are generally considered are the following: (1) the selection and engagement of the employee. it is incumbent upon him to prove such payment. is not sufficient to establish payment. to wit: Public respondent committed grave abuse of discretion in holding that said private respondent is an employee of JJ's Trucking on the ground that. Fredelito was not subject to the control and supervision of and dismissal by petitioners but of and by his father. 8 On the first issue. We have consistently ruled that in determining the existence of an employeremployee relationship. and pleads payment in whole or in part. they have the bounden duty to prove that fact. (3) the power of dismissal. should he employ a helper. However. we agree with petitioners that the NLRC erred in holding that the son. 9 Even where the plaintiff must allege non-payment. 7aside from the consideration that the Court is essentially not a trier of facts. With or without a helper. however. later increased to 20%. As a general rule. agreed with the finding of the labor arbiter that Fredelito was not an employee of petitioners. 15 the same is inadmissible and cannot be given probative value considering that it is not properly accomplished. Under their contract. a review of the records thereof with an assessment of the facts is necessary since the factual findings of the NLRC and the labor arbiter are at odds with each other. the burden of going forward with the evidence — as distinct from the general burden of proof — shifts to the creditor.

NLRC. who. Deferia vs. as a consequence. is hereby DELETED. The latter is the most important element" (Singer Sewing Machine Company vs. Drilon. 275. 525. the test in determining the existence of an employee-employer relationship is not the necessity and/or desirability of one's functions in relation to an employer's business." Secondly.97-102) |136 . 194 SCRA 531. and (4) the power to control the employee's conduct. "shall be considered a regular employee. Article 281 of the Labor Code does not refer to the basic factors that must underlie every existing employer-employee relationship. the absence of any of which will negate such existence. Instead the former's services were availed of by respondent Pedro Juanatas his father. In the first place. Thus. Ecal vs. 785). supervised and controlled his work and paid his commissions. (2) the payment of wages. Escano. 19 WHEREFORE. NLRC. LABOR LAW I CASES (Arts. 224 SCRA 781. Respondent NLRC's ruling did not traverse these findings of the labor arbiter. (3) the power of dismissal. 193 SCRA 270. It refers instead to the qualifications of "(A)n employee who is allowed to work after a probationary period" and who. the labor arbiter stated that respondent Fredelito Juanatas was never hired by petitioners. SO ORDERED. at the same time. the judgment of respondent National Labor Relations Commission is hereby AFFIRMED. Inc vs. Hijos De F. declaring Fredelito Juanatas an employee of petitioners and entitled to share in the award for commission and separation pay. The aforequoted pertinent findings of the Labor Arbiter indicate (that) the foregoing requirements do not exist between petitioner and private respondent Fredelito Juanatas. 228. 224.functions as helper was (sic) necessary and desirable to respondent's trucking business". NLRC. but "(1) the selection and engagement of the employee. with the MODIFICATION that paragraph 1 thereof.

IRENE JACINTO. JOSELYN MANALESE. CORA PATIO. ZENAIDA GARCIA. petitioners seek to reverse the 29 March 1995 resolution 1of the National Labor Relations Commission (NLRC) in Petitioners filed against private respondents a complaint for payment of money claim[s] and for violation of labor standard[s] laws (NLRC Case No. ANTONIA CALMA. LERIZA PANLILIO. EVELYN KEHYENG. JULIE GACAD. its Proprietor/President & Manager. JOSIE MANABAT. MERCY CAYANAN. PRECY MANALILI. FELISISIMA PATIO. EMILY LAGMAN. GIGI MANALOTO. EVA CUEVAS. the following: 1. On October 23. ELVIRA PIEDRA. Inc. TERESA MANIAGO. ANABEL MANALO. RAB-III-10-1817-90 pending with the NLRC parties jointly and mutually agreed that the issues thereof.FIRST DIVISION G. DOLORES DOLETIN. IMELDA MENDOZA. LENY GARCIA. 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. J. RAB-111-10-1817-90). MR. JR. NENITA DE GUZMAN. MYRA T. MARLENE MELQIADES. 123938 May 21. JOYDEE LANSANGAN. NANCY GARCIA. 3 are as follows: LABOR CONGRESS OF THE PHILIPPINES (LCP) for and in behalf of its members. petitioners. MARITESS OCAMPO. MARY INTAL.R. GINA JACINTO. The 99 persons named as petitioners in this proceeding were rankand-file employees of respondent Empire Food Products. HOURS Of WORK. That with regards [sic] to NLRC CASE NO. EMILY MANARANG. GLENDA SALITA. JOSEFINA BASILIO. ERLINDA BASILIO. CORAZON RILLION. NYMPA TUAZON. EVELYN MANALO. ALDA DAVID. LILIAN MARFIL. ANALIZA ESGUERRA. MARIFE PINLAC." 2. ANA MARIE OCAMPO. The antecedents of this case. JULIE DAVID. shall be discussed by the parties and resolve[d] during the negotiation of the Collective Bargaining Agreement. petitioners represented by LCP President Benigno B. WINNIE PENA. JANET DERACO. IMELDA MANALOTO. as summarized by the Office of the Solicitor General in its Manifestation and Motion in Lieu of Comment. NORY VIRAY. respondents. ERLINDA NAVARRO. GRACE VILLANUEVA. NANCY DERACO. MARIAN BENEDICTA. 1990. CAROLYN DIZON.. DAIZY TUASON. ROWENA MANALO. NATIONAL LABOR RELATIONS COMMISSION. AGNES SALAS. ROSEMARIE DEL ROSARIO. GONZALO KEHYENG and MRS. VIVIAN BAA. entered into a Memorandum of Agreement which provided. SUSANA SALOMON. JANETH MANARANG. ROSARIO DIMATULAC. R03009010-RU-005). ALMA CASTRO. which hired them on various dates (Paragraph 1. No. OLALIA. That in connection with the pending Petition for Direct Certification filed by the Labor Congress with the DOLE. ELIZABETH MERCADO. ROSITA CANLAS. DAVIDE. MELODY JACINTO. NORA PATIO. LOLITA ESPIRITU. LABOR LAW I CASES (Arts. LUZVIMINDA CAYANAN. 1998 NLRC RAB III Case No. LAILA MANIAGO. REMEDIOS AGUAS." Page 2. IMELDA SARMIENTO. AMALIA DELA CRUZ. EDNA CANLAS and ANGELA CANLAS. LENITA VIRAY. LOURDES PANLILIO. JEANIE LANSANGAN. CATHERINE ASPURNA. among others. vs. ROWENA MENDOZA. 01-1964-91 which affirmed the Decision 2 of Labor Arbiter Ariel C. AGNES CARESO. LIBERTY GELISANGA. ANNABEL CARESO. LANIE GARCIA. LUISA PANLILIO. Annex "B. Sr. MARY ANN MAYATI. JANETH CARREON. 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. Santos dismissing their complaint for utter lack of merit. SONIA DIZON. VIRGINIA MAGBAG. ELENA RONOZ. ELIZA SALAZAR. EMPIRE FOOD PRODUCTS.: 3. ANGELINA QUIAMBAO. VIRGINIA MENDIOLA.97-102) |137 . ERLINDA MANALANG. Navarro. Annex "A" of Petition. AND OTHER TERMS AND CONDITIONS OF EMPLOYMENT. ARCELY PEREZ. In this special civil action for certiorari under Rule 65. They also filed a petition for direct certification of petitioner Labor Congress of the Philippines as their bargaining representative (Case No. and private respondents Gonzalo Kehyeng and Evelyn Kehyeng in behalf of Empire Food Products. BERNADETH RALAR. ERNA CANLAS. LOIDA BIE. JANETH RALAR. GEMMA BONUS. Annex "F" of Petition). EMELITA CAYANAN. MERLY CANLAS.

Union dues not deducted during the period due. Unfair Labor Practice by way of Illegal Lockout and/or Dismissal. 6727. No. (Annex "D" of Petition) After the submission by the parties of their respective position papers and presentation of testimonial evidence. 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. 6. 8. RAB-III-01-1964-91 against private respondents for: b. while the Petition for direct certification of the LCP Labor Congress parties jointly move for the direct certification of the LCP Labor Congress. Underpayment of Wages in violation of R.97-102) |138 . (Annex "A" of Petition). 1990. 7. Parties jointly and mutually agreed that pending negotiations or formalization of the propose[d] CBA. etc. c. union busting. hours of work and other terms and conditions of employment" (Annex "B" of Petition). That parties [to] this Memorandum of Agreement jointly and mutually agreed to respect. Santos absolved private respondents of the charges of unfair labor practice. 5. underpayment of wages and denied petitioners' prayer for actual. 1990. such as Wages promulgated by the Regional Wage Board.A. shall be refunded or reimbursed by the Employer/Management. d. That in consideration [of] the foregoing covenant. No. a. payments. 1990. violation of the memorandum of agreement. On January 23. petitioners through LCP President Navarro submitted to private respondents a proposal for collective bargaining (Annex "C" of Petition). moral and exemplary damages.A. and interfering with the rights of employees to self-organization.4. no Vengeance or Revenge by each partner nor any act of ULP which might disrupt the operations of the business. Threats. petitioners filed a complaint docketed as NLRC Case No. Moral and Exemplary Damages. and whatever problems and grievances may arise by and between the parties shall be resolved by them. abide and comply with all the terms and conditions hereof. Violation of the Memorandum of Agreement dated October 23. Labor Arbiter Ariel C. threats. 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. Labor Arbiter Santos. Interferences [sic] of their respective rights under the law. 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]. 1991. parties jointly and mutually agreed that NLRC CASE NO. In an Order dated October 24. Union busting thru Harassments [sic]. 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. That parties jointly and mutually agreed that upon signing of this Agreement. That Employer. e. no Harassments [sic]. On November 9. 6640 and R. RAB-III-10-1817-90 shall be considered provisionally withdrawn from the Calendar of the National Labor Relations Commission (NLRC). shall always be maintained and subjected to inspection and visitation by LABOR LAW I CASES (Arts. 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. however. Further agreed that violation by the parties of any provision herein shall constitute an act of ULP. Mediator Arbiter Antonio Cortez approved the memorandum of agreement and certified LCP "as the sole and exclusive bargaining agent among the rank-andfile employee of Empire Food Products for purposes of collective bargaining with respect to wages. Actual.

" (p. . who adopted its POSITION PAPER AND CONSOLIDATED AFFIDAVIT. JR. . even the charge of illegal lockout has no leg to stand on because of the testimony of respondents through their guard Orlando Cairo (TSN. inclusive. It is to be borne in mind that a declaration of unfair labor practice connotes a finding of prima facieevidence of probability that a criminal offense may have been committed so as to warrant the filing of a criminal information before the regular court. therefore. p. 1991 (Record. it appears that complainant presented witnesses. 102." (Record. 1991. 16 May 1991. that ". Record. July 31. through his decision. 11 June 1991. respondents should not escape liability for this technicality. Records). complainant failed to specify under what provision of the Labor Code particularly Art. namely: ERLINDA BASILIO (13 March 1991. . Record. Formal offer of Documentary and Testimonial Evidence was made by complainant on June 24. evidence which is more than a scintilla is required in order to declare respondents/employers guilty of unfair labor practice. that ". As regards the issue of harassments [sic]. as Exhibit "A" and the annexes thereto as Exhibit "B". p. 92. . Failing in this regard is fatal to the cause of complainants. 91. 5-35) that on January 21.personnel of the Department of Labor and Employment. As a result of complainants['] failure to report for work. 1972 [sic] and remanded the case to the Labor Arbiter for further proceedings for the following reasons: Toward this end. hence guilty of abandoning their post without permission from respondents. 183. p. complainant did not present any single witness while respondent presented four (4) witnesses in the persons of Gonzalo Kehyeng. p. Minutes of the proceedings on record show that complainant further presented other witnesses. Labor Arbiter Santos made the following determination: Upon review of the minutes of the proceedings on record. 106-109) The Labor Arbiter must have overlooked the testimonies of some of the individual complainants which are now on record. 183). The Labor Arbiter is called upon to consider and pass upon the issues of fact and law raised by the parties." (Record. complainant before the National Labor Relations Commission must prove with definiteness and clarity the offense charged. p. . . (Annex "G" of petition) May 1991. . however. RECORD. (28 February 1991. . that ".97-102) |139 . Evelyn Kehyeng and Elvira Bulagan . LOURDES PANTILLO. p. Record. . the cheese curls ready for repacking were all spoiled to the prejudice of respondents. 105). coercion or any form of threat as a result of this immediately executory reinstatement shall be dealt with accordingly. p. . As such penalty. Record. threats and interference with the rights of employees to self-organization which is actually LABOR LAW I CASES (Arts. SO ORDERED. . 93. complainants failed to rebut the authenticity of respondents' witness testimony. . the National Labor Relations Commission vacated the Decision dated April 14. BENIGNO NAVARRO. 103. that "complainants failed to present any witness who may describe in what manner respondents have committed unfair labor practice . RECORD. . Besides. . p. . noted that ". MARIFE PINLAC. Hence. p. complainant LCP failed to present anyone of the so-called 99 complainants in order to testify who committed the threats and intimidation . 185). hence. . In a Decision dated July 27. On appeal. Under cross-examination. 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." (Record. . Other individual complainants should have been summoned with the end in view of receiving their testimonies. p. 1994. 1991 hearing. complainants refused and failed to report for work. . 183). 96. . namely. "B-1" to "B-9". p. 248 did respondents violate so as to constitute unfair labor practice . p. 185). see back portion thereof . Judgment should be rendered only based on the conflicting positions of the parties. 2 Complainants failed to present with definiteness and clarity the particular act or acts constitutive of unfair labor practice." (Record. p. Orlando Cairo. 8 March 1991. it is Our considered view [that] the case should be remanded to the Labor Arbiter of origin for further proceedings. LENIE GARCIA (16 April 1991. (Annex "H" of Petition) The Labor Arbiter. The complainants should be afforded the time and opportunity to fully substantiate their claims against the respondents. intimidation. RECORD.

and (d) petitioners were not underpaid. 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]. SECURITY OF TENURE. Finally. 1990 is concerned. This cannot be made the basis of an imposition of an obligation over which the National Labor Relations Commission has exclusive jurisdiction thereof. the complaint is hereby DISMISSED for utter lack of merit. III LABOR LAW I CASES (Arts. spoke of a resolutory condition which could or could not happen. And compliance therewith was satisfactorily explained by respondent Gonzalo Kehyeng in his testimony (TSN. both parties agreed that: 2 — That with regards [sic] to the NLRC Case No. 6petitioners filed the instant special civil action for certiorari raising the following issues: I WHETHER OR NOT THE PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION WHEN IT DISREGARDED OR IGNORED NOT ONLY THE EVIDENCE FAVORABLE TO HEREIN PETITIONERS. 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. p. (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. 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]. 5 affirmed in toto the decision of Labor Arbiter Santos. the evidence points to the contrary. a lazy worker earns less than the minimum wage but the same cannot be attributable to respondents but to the lazy workers. (Annex "I" of Petition). the NLRC. 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. Certainly.an ingredient of unfair labor practice. 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. premises considered. PROTECTION TO LABOR. the claim for moral and exemplary damages has no leg to stand on when no malice.e. JUST AND HUMANE CONDITIONS OF WORK AND DUE PROCESS. II WHETHER OR NOT THE PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION WHEN IT DEPRIVED THE PETITIONERS OF THEIR CONSTITUTIONAL RIGHT TO SELFORGANIZATION. 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. 4 On appeal. (b) the agreement of 23 October 1990 could not be made the basis of an obligation within the ambit of the NLRC's jurisdiction. Anent the charge that there was underpayment of wages. particularly Section 2. In so doing. a certain amount for every thousand pieces of cheese curls or other products repacked. parties jointly and mutually agreed that the issues thereof shall be discussed by the parties and resolve[d] during the negotiation of the CBA. Their motion for reconsideration having been denied by the NLRC in its Resolution of 31 October 1995. Insofar as violation of [the] Memorandum of Agreement dated October 23. complainants failed to specify what type of threats or intimidation was committed and who committed the same. RAB III-10-1817-90 pending with the NLRC. WHEREFORE. 12-30) during the July 31. 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. bad faith or fraud was ever proven to have been perpetuated by respondents. 1991 hearing. as the provisions thereof. in its Resolution dated 29 March 1995.97-102) |140 . On cross-examination.

STATUTORY BENEFITS. and that much credit was given to self-serving statements of Gonzalo Kehyeng. that the Labor Arbiter in rendering the decision committed serious errors in the findings of facts. mistook which reglementary period to apply. the NLRC summarized the grounds for the appeal to be: 1. and not mere absence. as well as the pertinent provisions of law and jurisprudence. the NLRC confessed its reluctance to inquire into the veracity of the Labor Arbiter's factual findings. especially considering that respondents neither denied nor contradicted the facts and issues raised in the petition. However. In view of the stand of the OSG. In said resolution. 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. 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. as it affirmed the factual findings and legal conclusions of the Labor Arbiter only after carefully reviewing. only petitioners and private respondents filed their memoranda. In their Reply. 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. staunchly declaring that it was "not about to substitute [its] judgment on matters that are within the province of the trier of facts. private respondents asserted that the petition was filed out of time. the OSG stressed. illegal lockout or illegal dismissal. the Office of the Solicitor General (OSG) sided with petitioners. On 7 July 1997. We find for petitioners. this refusal to report for work for a single day did not constitute abandonment. which pertains to a clear.WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY EASED OUT [OF] OR CONSTRUCTIVELY DISMISSED FROM THEIR ONLY MEANS OF LIVELIHOOD. In its Manifestation and Motion in Lieu of Comment. a non-lawyer who filed the notice to file a petition for review on their behalf. In their Manifestation and Comment. 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. IV WHETHER OR NOT PETITIONERS SHOULD BE REINSTATED FROM THE DATE OF THEIR DISMISSAL UP TO THE TIME OF THEIR REINSTATEMENT. For one thing." Yet. Finally. the OSG argued. However. 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. that abandonment was not proved. Invocation of the general rule that factual findings of the NLRC bind this Court is unavailing under the circumstances. 2. LABOR LAW I CASES (Arts. they had only until 29 December 1995 to file the petition. inter alia. for which reason it remanded the records of the case to the Labor Arbiter for compliance with the pronouncements therein. WITH BACKWAGES. Initially. we gave due course to the petition and required the parties to file their respective memoranda. In fact. deliberate and unjustified refusal to resume employment. he had before him substantially the same evidence. In its Comment. two days after allegedly abandoning their work. As petitioners admitted in their Notice to File Petition for Review on Certiorari that they received a copy of the resolution (denying their motion for reconsideration) on 13 December 1995. In their Reply. Navarro. neither did he understand the purpose of the remand of the records to him. in the 21 July 1992 NLRC resolution. DAMAGES AND ATTORNEY'S FEES. It pointed out that the Labor Arbiter. in finding that petitioners abandoned their jobs. with the NLRC merely adopting its Comment as its Memorandum. petitioners claim that the decisions of the NLRC and the Labor Arbiter were not supported by substantial evidence. when in both instances. 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. he used the 15-day period for petitions for review on certiorari under Rule 45. the NLRC thus already entered judgment in private respondents' favor. Having failed to do so. 8 it chastised the Labor Arbiter for his errors both in judgment and procedure. relied solely on the testimony of Security Guard Rolando Cairo that petitioners refused to work on 21 January 1991. owner of Empire Foods. 7 We required respondents to file their respective Comments. we are unable to discern any compelling reason justifying the Labor Arbiter's volte facefrom his 14 April 1992 decision reinstating petitioners to his diametrically opposed 27 July 1994 decision. petitioners filed a complaint for. petitioners averred that Mr. The NLRC further argues that grave abuse of discretion may not be imputed to it. weighing and evaluating the evidence in support thereof. we resolved to require the NLRC to file its own Comment.97-102) |141 . as to payment of just wages. resulting in the spoilage of cheese curls ready for repacking. Instead of using the "reasonable time" criterion forcertiorari under Rule 65.

" (Record. . it appears that complainant presented witnesses. such circumstance. hence. that "complainants failed to present any witness who may describe in what manner respondents have committed unfair labor practice . complainant failed to specify under what provision of the Labor Code particularly Art. Such being the case. 16 May 1991. 2 May 1991. see back portion thereof. namely BENIGNO NAVARRO." (Record. however.185). 183). coercion or any form of threat as a result of this immediately executory reinstatement shall be dealt with accordingly. . complainant a [sic] LCP failed to present anyone of the so called 99 complainants in order to testify who committed the threats and intimidation . Formal offer of Documentary and Testimonial Evidence was made by the complainant on June 24. that ". namely: ERLINDA BASILIO (13 March 1991. . Judgment should [have been] rendered only based on the conflicting positions of the parties. 185). B-1 to B-9. p. MARIFE PINLAC. p. . who adopted its POSITION PAPER AND CONSOLIDATED AFFIDAVIT as Exhibit A and the annexes thereto as Exhibit B. that ". Record. 102. their claims against the respondents. p. It may be argued that the last paragraph of the decision may be categorized as the dispositive portion thereof: xxx xxx xxx The undersigned Labor Arbiter is not oblivious [to] the fact that respondents have violated a cardinal rule in every establishment that a payroll and other papers evidencing hour[s] of work. RECORD. 105). The Labor Arbiter. On another plane. 248 did respondents violate so as to constitute unfair labor practice . LABOR LAW I CASES (Arts. . respondents should not escape liability for this technicality. Other individual complainants should have been summoned with the end in view of receiving their testimonies. . 93. 1991 (Record. it is Our considered view the case should be remanded to the Labor Arbiter of origin for further proceedings. Upon review of the minutes of the proceedings on record." (Record. 96. it may be well said that the decision does not resolve the issues at hand.After which. The Labor Arbiter must have overlooked the testimonies of some of the individual complainants which are now on record. We take note that the decision does not contain a dispositive portion or fallo. p. . through his decision." (Record. there is no portion of the decision which could be carried out by way of execution. RECORD. 183). RECORD. therefore. etc.97-102) |142 . (28 February 1991. . p. p. 91. . Record. p. p. As such penalty. . . payment etc. JR. noted that ". 8 March 1991. Record. 11 June 1991. Record. . intimidation. 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. . . LOURDES PANTILLO. Toward this end. Evelyn Kehyeng and Elvira Bulagan . 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 crossexamined by respondents' counsel. shall always be maintained and subjected to inspection and visitation by personnel of the Department of Labor and Employment. that ". payment. complainant did not present any single witness while respondent presented four (4) witnesses in the persons of Gonzalo Kehyeng. . . The complainants should [have been] afforded the time and opportunity to fully substantiate SO ORDERED. . . p. Minutes of the proceedings on record show that complainant further presented other witnesses. p. p. . Orlando Cairo. p.106-109). The Labor Arbiter is called upon to consider and pass upon the issues of fact and law raised by the parties. p. 92). 103. inclusive. It is Our considered view that even assuming arguendo that the respondents failed to maintain their payroll and other papers evidencing hours of work. complainant before the National Labor Relations Commission must prove with definiteness and clarity the offense charged." (Records.. LENI GARCIA (16 April 1991. 183. Further.

10 It may likewise be stressed that the burden of proving the existence of just cause for dismissing an employee. With more reason. As a result of their failure to work. rests on the employer. Labor Arbiter Santos did not state why he was abandoning his previous decision directing the reinstatement of petitioner employees.standing alone. the Labor Arbiter impliedly held that they did not abandon their work but were not allowed to work without just cause. In his second decision. 191 SCRA 328. NLRC (supra). NLRC. 231 SCRA 173. In his first decision. we find the following observations of the OSG most persuasive: In finding that petitioner employees abandoned their work. NLRC. illegal lockout and/or illegal dismissal. California Manufacturing Co. Hua Bee Shirt Factory v. to abandon his work and then immediately file an action seeking for his reinstatement. thus negating Atlas' stand that he had abandoned his job. Ranara v.e. 135 SCRA 145). 9 Apparently.97-102) |143 . By directing in his first decision the reinstatement of petitioner employees. In opting to finally to [sic] contest the legality of his dismissal instead of just claiming his separation pay and other benefits. would simply walk away from his job unmindful of the consequence of his act. On this score. Private respondent Empire Food Products. In De Ysasi III v. v. the work of processed food repackers is necessary in the day-to-day operation[s] of respondent Empire Food Products. is a food and fruit processing company. this Honorable Court explicitly stated: It would be illogical for Caballo. In several cases. NLRC. in concluding in his 27 July 1994 Decision that petitioners abandoned their work. 203 SCRA 570 and Flexo Manufacturing v. NLRC. intimidation. after receiving evidence. at worst. 1991. the LABOR ARBITER is hereby directed to include in his clarificatory decision. among others. the forfeiture of his accrued employment benefits. coercion or any form of threat as a result of this immediately executory reinstatement shall be dealt with accordingly. LABOR LAW I CASES (Arts. deliberate and unjustified refusal to resume employment and not mere absence that constitutes abandonment. was moved by. which he actually did but which proved to be futile after all. Inc. 190 SCRA 505. Atlas Consolidated Mining and Development Corp. supra. the Labor Arbiter perceived that if not for petitioners. does not warrant the directive to reinstate complainants to their former positions. Mabaylan v. Labor Arbiter Santos expressly directed the reinstatement of the petitioner employees and admonished the private respondents that "any harassment. the cheese curls ready for repacking on said date were spoiled. petitioners refused to work. NLRC. We can not believe that Caballo. he would not have fallen victim to this stinging rebuke at the hands of the NLRC. 1991 as testified [to] by Security Guard Orlando Cairo did not constitute abandonment. The absence of petitioner employees for one day on January 21. which resulted in the spoilage of cheese curls does not amount to abandonment of work. Thus does it appear to us that the Labor Arbiter. In Tabas v. petitioners filed a complaint for. Inc. i. such as abandonment. 212 SCRA 631. this Honorable Court held that the work of merchandisers of processed food. or at best. In fact two (2) days after the reported abandonment of work or on January 23. the requisite dispositive portion. 11 a burden private respondents failed to discharge. unfair labor practice. who had worked for Atlas for two years and ten months. In this regard. (169 SCRA 497). considering and resolving the same. The failure to work for one day. That petitioner employees are "pakyao" or piece workers does not imply that they are not regular employees entitled to reinstatement.. 186 SCRA 586. lackadaisically glossed over petitioner's evidence. this Honorable Court stressed that it is the clear. 1991. v. ably supports his sincere intention to return to work. In Atlas Consolidated. spite. 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. 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. NLRC. It is [a] well settled rule that there must be a finding of illegal dismissal before reinstatement be mandated. the Labor Arbiter and the NLRC relied on the testimony of Security Guard Rolando Cairo that on January 21. Dagupan Bus Co.

Holiday pay of certain employees. such as payment on piece work. In addition. cannot be fully settled at this time. 851 19 by Memorandum Order No. to wit: 2." the status and nature of their employment was that of regular employees.D. piece workers are specifically mentioned as being entitled to holiday pay. No. irrespective of the time consumed in the performance thereof. the notice shall be served at the worker's last known address. petitioners worked for private respondents throughout the year. Employers of those who are paid on purely commission. Book III which we quote hereunder. 13th month pay and service incentive leave which the labor arbiter failed to rule on but which petitioners prayed for in their complaint. 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. No.A. in Section 8 (b). Book V of the Omnibus Rules Implementing the Labor Code provides: Sec. separation pay at the rate of one month for every year of service. as amended by R. and the perceptible resentment and enmity between petitioners and private respondents which necessarily strained their relationship. — Petitioners are therefore entitled to reinstatement with full back wages pursuant to Article 279 of the Labor Code. 18 inter alia. First. in considering petitioners' employment to have been terminated by abandonment. the length of time that has lapsed since their dismissal. moreover. premium pay. 14 there is need to determine the varying degrees of production and days worked by each worker. In lieu of reinstatement then. holiday pay. their job of repacking snack food was necessary or desirable in the usual business of private respondents. Further. As mentioned earlier. boundary or task basis. 28. purely commission basis. this issue is best left to the National Labor Relations Commission. is in order. were regular employees of private respondents. service incentive leave 17 and 13th month (b) Where a covered employee is paid by results or output. except where the workers are paid on piece-rate LABOR LAW I CASES (Arts. including those who are engaged on task or contract basis. EXEMPTED EMPLOYERS The following employers are still not covered by P. however. or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.Private respondents. second. as piece-rate workers having been paid by the piece. Clearly. likewise did petitioners toil throughout the year with the fulfillment of their quota as supposed basis for compensation. as to the nature of petitioners' tasks. in view of the modifications to P.97-102) |144 . not only did petitioners labor under the control of private respondents as their employer. and those who are paid a fixed amount for performing specific work. Thus. 6715. namely. The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime pay. 851: d. Three (3) factors lead us to conclude that petitioners. holiday pay. clearly exclude the employer of piece rate workers from those exempted from paying 13th month pay. 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. 13 That being said. that in no case shall the holiday pay be less than the applicable statutory minimum wage rate. pay. their employment not having been dependent on a specific project or season. who were engaged in the manufacture and selling of such food products. 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.D. Rule IV. and third. with a fraction of at least six (6) months of service considered as one (1) year. No. while petitioners' mode of compensation was on a "per piece basis. however. 12 Section 2. "field personnel and other employees whose time and performance is unsupervised by the employer. Rule XIV. 2. reinstatement would be impractical and hardly promotive of the best interests of the parties. the Revised Guidelines on the Implementation of the 13th Month Pay Law. As to the other benefits. the length of time 16 that petitioners worked for private respondents. 15 we hold that petitioners are so entitled to these benefits. although piece-rate workers. Sec. Nevertheless. Petitioners." Plainly. the amount of back wages to which each petitioner is entitled. In cases of abandonment of work. the records disclose that taking into account the number of employees involved. petitioners as piece-rate workers do not fall within this group. 8.

Book III. SO ORDERED. overt acts in contravention of the provisions of the memorandum. RAB-III-01-1964-91 are hereby SET ASIDE. (emphasis supplied) IN VIEW WHEREOF. workers who are paid by results including those who are paid on piece-work. pakiao. As such. thus entitled to full back wages and other privileges. 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. are different. however. 8 nor with the rates prescribed by the Secretary of Labor. The complaint. did not prove either compliance or non-compliance. petitioners presented their complaint 21 to prove the violation of labor laws committed by private respondents.basis in which case the employer shall grant the required 13th month pay to such workers. the National Labor Relations Commission would be in a better position to determine the exact amounts owed petitioners. however. and another is hereby rendered: 1. was a tautological exercise. 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. Finally. is merely "the pleading alleging the plaintiff's cause or causes of action. Rule I. taking into account the foregoing observations. Book III of the Implementing Rules. and 3. if their output rates are in accordance with the standards prescribed under Sec. Costs against private respondents. 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. As to the claim that private respondents violated petitioners' right to self-organization. if any. DECLARING petitioners to have been illegally dismissed by private respondents. Here. absent evidence of concrete. the evidence on record does not support this claim. 8. Petitioners relied almost entirely on documentary evidence which. and did not help nor prove their cause. 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. without regard to the time spent in producing the same. LABOR LAW I CASES (Arts. 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. Once more. 20 As to overtime pay. like the offer of their Complaint. In like manner. petitioners are beyond the ambit of exempted persons and are therefore entitled to overtime pay. private respondents did not allege adherence to the standards set forth in Sec. the verity of which shall have to be proved during the trial. or where such rates have been fixed by the Secretary of Labor in accordance with the aforesaid section. or task basis. did not prove any wrongdoing on private respondents' part. the instant petition is hereby GRANTED. Rule VII. the rules. per se. the existence of the memorandum of agreement 26 offered to substantiate private respondents' noncompliance therewith. 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. 2(e). takay. 2. According to Sec. of these regulations. For example. are not entitled to receive overtime pay. They likewise offered their Consolidated Affidavit of Merit and Position Paper 23 which.97-102) |145 ." 22 Its contents are merely allegations.

denying petitioners's motion for reconsideration.050. Bernardo Jimenez. J. 1994.70). 2. After hearings duly conducted. father and son. 3 On appeal filed by private respondents. 4.00) PESOS. dated May 27. as well as its resolution. plus attorney's fee equivalent to ten percent (10%) of the award. 1990.438. separation pay and damages against JJ's Trucking and/or Dr.00 from petitioners' total gross income of almost P1. vs. as well as those up to March.SECOND DIVISION Disputing the complaint. Bernardo Jimenez to pay jointly and severally complainant Pedro Juanatas a separation pay of FIFTEEN THOUSAND FIFTY (P15. 1990 when their services were illegally terminated. 1994. 1993. On June 29. The complaint of Fredelito Juanatas is hereby dismissed for lack of merit. they were further entitled to P15. in his trucking firm. with this decretal portion: WHEREFORE. 1993 is hereby MODIFIED.00 for the said two years. Complainant Fredelito Juanatas is hereby declared respondents' employee and shares in (the) commission and separation pay awarded to complainant Pedro Juanatas. FREDELITO JUANATAS. the Decision of March 9. his father. excluding the partial payment of P7. and that the truck driven by respondent Pedro Juanatas was sold to one Winston Flores in 1991 and.97-102) |146 . NATIONAL LABOR RELATIONS COMMISSION. de Guzman rendered a decision dated March 9.309 which. were duly paid. and with the submission of the parties' position/supporting papers.000. Bernardo Jimenez are jointly and severally liable to pay complainants their unpaid commissions in the total amount of Eighty Four Thousand Three Hundred Eighty Seven Pesos and 05/100 (P84.R. JJ Trucking. 4 Petitioners' motion for reconsideration having been denied thereafter in public respondent's resolution dated August 8. the NLRC modified the decision of the labor arbiter and disposed as follows: PREMISES CONSIDERED. as Operators PEDRO of JUANATAS JJ's and REGALADO.86. to wit: 1. 2 G. Respondent JJ's Trucking and Dr. respectively. herein private respondent Pedro and Fredelito Juanatas. The other findings stand affirmed. 1996 BERNARDO JIMENEZ and JOSE JIMENEZ. with their commission for that period being computed at 20% of said income. petitioners contend that respondent Fredelito Juanatas was not an employee of the firm but was merely a helper of his father Pedro. 1990.000. filed a claim for unpaid wages/commissions. that until March.211. 116960 April 2. initially fixed at 17% but later increased to 20% in 1988. Private respondents further alleged that for the years 1988 and 1989 they received only a partial commission of P84. that all commissions for 1988 and 1989.00. added up to a grand total of P114. decision is hereby issued ordering respondents JJ's Trucking and/or Dr. petitioners. private respondents were not illegally dismissed. therefore. Labor Arbiter Rogue B. They were assigned to a ten-wheeler truck to haul soft drinks of Coca-Cola Bottling Company and paid on commission basis. 1 which assailed decision affirmed with modifications the adverse decision of the labor arbiter against herein petitioners.000. No. 1987. 3. and that petitioners' refusal to pay their aforestated commission was a ploy to unjustly terminate them. 5 petitioners have come to us in this recourse. The award of attorney's fees is reduced accordingly to eight thousand four hundred thirty eight pesos and 70/100 (P8. Said respondents. dated August 8.:p This petition for certiorari seeks the annulment of the decision of respondent National Labor Relations Commission (NLRC). alleged that in December. 1994.000. TRUCKING. raising for resolution the issues as to whether or not respondent NLRC committed grave abuse of discretion in ruling (a) that private respondents were not LABOR LAW I CASES (Arts. they were hired by herein petitioner Bernardo Jimenez as driver/mechanic and helper.86 due and payable to them. Consequently.261. as complainants therein.050.387.respondents.05). there was an unpaid balance to them of P106.

The review of labor cases elevated to us on certiorari is confined to questions of jurisdiction or grave abuse of discretion. should he employ a helper. even when met by indefinite testimony of the debtor. Although petitioners submitted a notebook showing the allegedvales of private respondents for the year 1990.paid their commissions in full. With or without a helper. We have consistently ruled that in determining the existence of an employeremployee relationship. 10 The debtor has the burden of showing with legal certainty that the obligation has been discharged by payment. Pedro. "Fredelito's LABOR LAW I CASES (Arts. the elements that are generally considered are the following: (1) the selection and engagement of the employee. Respondent Fredelito Juanatas was hired by his father. 7aside from the consideration that the Court is essentially not a trier of facts. Even the Solicitor General. 9 Even where the plaintiff must allege non-payment. With respect to the second issue. petitioners defaulted in their defense and in effect admitted the allegations of private respondents. where his testimony is contradicted by the other party or by a disinterested witness. Considering that petitioners herein assert that the disputed commissions have been paid. because factual findings of agencies exercising quasi-judicial functions are accorded not only respect but even finality. was an employee of petitioners. citing Article 281 of the Labor Code. we agree with petitioners that the NLRC erred in holding that the son. Similarly.97-102) |147 . 15 the same is inadmissible and cannot be given probative value considering that it is not properly accomplished. who is then under a duty of producing some evidence to show non-payment. 8 On the first issue. the issue may be determined against the debtor since he has the burden of proof. The defendant still has the burden of establishing payments beyond those admitted by plaintiff. and the compensation he received was paid by his father out of the latter's commission. in the case at bar. is undated and unsigned. it is incumbent upon him to prove such payment. the testimony of the debtor may also be sufficient to show payment. the burden of going forward with the evidence — as distinct from the general burden of proof — shifts to the creditor. is not sufficient to establish payment. 13 In the instant case. and pleads payment in whole or in part. (3) the power of dismissal. rather than on the plaintiff to prove non-payment. As a general rule. The agreement was between petitioner JJ's Trucking and respondent Pedro Juanatas. Further. 6 As a rule. a review of the records thereof with an assessment of the facts is necessary since the factual findings of the NLRC and the labor arbiter are at odds with each other. Where the defendant sued for a debt admits that the debt was originally owed. 11 When the existence of a debt is fully established by the evidence contained in the record. in his comment. 18 with the control test assuming primacy in the overall consideration. to wit: Public respondent committed grave abuse of discretion in holding that said private respondent is an employee of JJ's Trucking on the ground that. That a plaintiff admits that some payments have been made does not change the burden of proof. It is a basic rule in evidence that each party must prove his affirmative allegation. Since the burden of evidence lies with the party who asserts an affirmative allegation. the plaintiff or complainant has to prove his affirmative allegations in the complaint and the defendant or respondent has to prove the affirmative allegations in his affirmative defenses and counterclaim. one who pleads payment has the burden of proving it. and is thus uncertain as to its origin and authenticity. and (b) that respondent Fredelito Juanatas was an employee of JJ's Trucking. later increased to 20%. In the case at bar. 14 The testimony of petitioners which merely denied the claim of private respondents. of the gross income is not disputed by petitioners. petitioners still have to present proof of full payment. the aforementioned elements are not present. Under their contract. Fredelito was not subject to the control and supervision of and dismissal by petitioners but of and by his father. this by reason of the evident failure of herein petitioners to present evidence that fullpayment thereof has been made. agreed with the finding of the labor arbiter that Fredelito was not an employee of petitioners. Although private respondents admit receipt of partial payment. he would be responsible for the latter's compensation. However. they have the bounden duty to prove that fact. the burden of proving that it has been extinguished by payment devolves upon the debtor who offers such a defense to the claim of the creditor. 12 Where the debtor introduces some evidence of payment. the general rule is that the burden rests on the defendant to prove payment. we find no reason to disturb the findings of respondent NLRC that the entire amount of commissions was not paid. for failure to present evidence to prove payment. the right of respondent Pedro Juanatas to be paid a commission equivalent to 17%. however. 17 Hence. but. and (4) the power to control the employee's conduct. respondent Pedro Juanatas was entitled to the same percentage of commission. Fredelito. unsupported by documentary evidence. The hiring of a helper was discretionary on the part of Pedro. this Court does not review supposed errors in the decision of the NLRC which raise factual issues. 16 The positive testimony of a creditor may be sufficient of it self to show non-payment. (2) the Payment of wages. The testimony of the debtor creating merely an inference of payment will not be regarded as conclusive on that issue.

Ecal vs. LABOR LAW I CASES (Arts. "shall be considered a regular employee. the absence of any of which will negate such existence. 275. Article 281 of the Labor Code does not refer to the basic factors that must underlie every existing employer-employee relationship. who. 228. Hijos De F. It refers instead to the qualifications of "(A)n employee who is allowed to work after a probationary period" and who. 193 SCRA 270. is hereby DELETED. Inc vs. 525." Secondly. Instead the former's services were availed of by respondent Pedro Juanatas his father. 194 SCRA 531. (2) the payment of wages. Escano. at the same time. supervised and controlled his work and paid his commissions. SO ORDERED. Respondent NLRC's ruling did not traverse these findings of the labor arbiter. Thus. 785). 224. with the MODIFICATION that paragraph 1 thereof. The aforequoted pertinent findings of the Labor Arbiter indicate (that) the foregoing requirements do not exist between petitioner and private respondent Fredelito Juanatas. Deferia vs.97-102) |148 . 224 SCRA 781. the test in determining the existence of an employee-employer relationship is not the necessity and/or desirability of one's functions in relation to an employer's business. NLRC. NLRC. In the first place. but "(1) the selection and engagement of the employee. The latter is the most important element" (Singer Sewing Machine Company vs. 19 WHEREFORE. NLRC. declaring Fredelito Juanatas an employee of petitioners and entitled to share in the award for commission and separation pay. Drilon. the judgment of respondent National Labor Relations Commission is hereby AFFIRMED. and (4) the power to control the employee's conduct.functions as helper was (sic) necessary and desirable to respondent's trucking business". as a consequence. (3) the power of dismissal. the labor arbiter stated that respondent Fredelito Juanatas was never hired by petitioners.

DELFIN. that they were illegally dismissed. and respondent [petitioner herein] is hereby ordered to pay their separation pay based on the following computed amounts: HERMINIO D. were among the 121 employees not included in the list. is one of the two private concessionaires contracted by the Metropolitan Waterworks and Sewerage System (MWSS) to manage the water distribution system in the East Zone of Metro Manila. RIVERA. most of the 121 collectors were asked by the petitioner to transfer to the First Classic Courier Services. Carpio rendered a decision finding the dismissal of private respondents illegal.R. petitioner. EDILBERTO C. On May 31. DECISION YNARES-SANTIAGO.00 RIZALINO M. in CA-G.000. MARTEJA. 2004 MANILA WATER COMPANY. VICTOR C. INTAL P16. ESPINA.: This petition assails the decision1 of the Court of Appeals dated November 29. MARTEJA P12. Subsequently. J. judgment is hereby rendered. CANONIGO. petitioner did not have an employer-employee relationship with the private respondents. ZAFARALLA. (ACGI).000.000. IKE S. BALDOZA. P16. which was on August 1. No. ALLAN D. HERMINIO D. SP No. EDMUNDO B.. ESPINA P14. petitioner asserts that private respondents were employees of ACGI. nevertheless. on September 1.FIRST DIVISION G. PINGUL and FEDERICO M.000. MANLEGRO.00 JORGE D. premises considered. On the other hand. contending that they were petitioner’s employees as all the methods and procedures of their collections were controlled by the latter. being contractual collectors of the MWSS. while the employment of those not in the list was terminated on the day petitioner took over the operation of the East Zone. Under the Concession Agreement. Inc. but only a service contractor-client relationship with ACGI. JR. JOHN L. Private respondents. 2000. Petitioner continued to transact with ACGI to do its collection needs until February 8.000. Labor Arbiter Eduardo J. He held that private respondents were regular employees of petitioner not only because the tasks performed by them were controlled by it but. when petitioner terminated its contract with ACGI. MANLEGRO P16. PENA. vs. 1997.000. petitioner engaged their services without written contract from August 1. 2002. they signed a three-month contract to perform collection services for eight branches of petitioner in the East Zone.00 LABOR LAW I CASES (Arts.2 Before the end of the three-month contract. The dispositive portion of the decision reads: WHEREFORE. QUEBRAL P16. EDUARDO ONG. QUEBRAL. otherwise known as the National Water Crisis Act of 1995.00 ESTEBAN BALDOZA P12.4 Private respondents filed a complaint for illegal dismissal and money claims against petitioner. AGNESIO D. ESTEBAN B.00 MARLON B. petitioner undertook to absorb former employees of the MWSS whose names and positions were in the list furnished by the latter. the tasks were obviously necessary and desirable to petitioner’s principal business. RIZALINO M. MARLON B. 67134.00 AGNESIO D.000. Only private respondents herein remained with ACGI. Thereafter.00 JOHN L. MORADA P16. VICTA. 1997 to August 31.. PENA P15. JORGE D.3 which was contracted by petitioner to collect charges for the Balara Branch. an independent contractor. pursuant to Republic Act No. INTAL.00 IKE S.000. 8041.97-102) |149 . respondents.000. 158255 July 8. a newly registered corporation. CANONIGO. 1999. the 121 collectors incorporated the Association Collectors Group. 1997. Thus. JR. It maintained that it had no control and supervision over private respondents’ manner of performing their work except as to the results. DELFIN P12. also.00 ALLAN D. MORADA.R. finding that complainants were employees of respondent [petitioner herein]. which reversed the decision of the National Labor Relations Commission and reinstated the decision of the Labor Arbiter with modification.00 REY T.000. REY T. Inc.000.00 EDUARDO ONG P15. INC. 1997. Petitioner Manila Water Company.

8 Hence. e.. contending that the NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it reversed the decision of the Labor Arbiter. It likewise denied petitioner’s motion for reconsideration. and this applies with greater force in labor cases. The case of De los Santos v.g. IN CONCLUDING THAT PETITIONER COMPANY REQUIRED RESPONDENTS TO INCORPORATE THE ASSOCIATED COLLECTORS GROUP. it has no employment relationship with private respondents.7 It held that petitioner deliberately prevented the creation of an employment relationship with the private respondents.250. RIVERA TOTAL P15. INC.000. IN FINDING PETITIONER COMPANY GUILTY OF BAD FAITH NOTWITHSTANDING ABSENCE OF ANY SPECIFIC EVIDENCE IN SUPPORT OF THE SAME.11However. NOTWITHSTANDING THE ABSENCE OF ANY PROOF OF GRAVE ABUSE OF DISCRETION ON THE PART OF THE NATIONAL LABOR RELATIONS COMMISSION WHEN IT RENDERED THE DECISION ASSAILED BY HEREIN RESPONDENTS. may look into the records of the case and reexamine the questioned findings.00. in the exercise of its equity jurisdiction. PINGUL P19. this Court. letters and memoranda by the petitioner to ACGI regarding the poor performance of the collectors.. a disharmony between the factual findings of the Labor Arbiter and the National Labor Relations Commission opens the door to a review thereof by this Court. Petitioner asserts that ACGI. The Court of Appeals reversed the decision of the NLRC and reinstated with modification the decision of the Labor Arbiter. ZAFARALLA P15. particularly when they coincide with those of the Labor Arbiter and if supported by substantial evidence. be measured in terms of and determined by the criteria set by statute.500.00 Respondent [petitioner herein] is further directed to pay ten (10%) percent of the total award as attorney’s fee or the sum of P22. factual findings of quasijudicial bodies like the NLRC. whether it is an independent contractor or a labor-only contractor. when the findings of the National Labor Relations Commission contradict with those of the labor arbiter. D.10 As a rule. the Supreme Court is not a trier of facts.500.00 EDILBERTO C.e.00 VICTOR P.000. is an independent contractor which entered into a service contract for the collection of petitioner’s accounts starting November 30. B. this petition for review raising the following errors: THE HONORABLE COURT OF APPEALS IN RENDERING THE ASSAILED DECISION AND RESOLUTION COMMITTED GRAVE REVERSIBLE ERRORS: A. did not constitute proof of control since these documents merely identified the erring collectors.12 The resolution of the foregoing issues initially boils down to a determination of the true status of ACGI. are accorded respect and even finality by this Court. IN GOING BEYOND ITS JURISDICTION AND PROCEEDING TO GIVE DUE COURSE TO RESPONDENTS’ PETITION FOR CERTIORARI UNDER RULE 65 OF THE RULES OF COURT. Moreover. the appropriate disciplinary actions were left to the corporation to impose. it being crucial that ACGI’s status. Private respondents filed a petition for certiorari with the Court of Appeals. 1997 until the early part of February 1999.000.00 P222. Factual findings of administrative agencies are not infallible and will be set aside when they fail the test of arbitrariness. SO ORDERED. AND AWARDING MORAL AND EXEMPLARY DAMAGES TO HEREIN RESPONDENTS. a duly organized corporation primarily engaged in collection services. 6 Further.5 Both parties appealed to the NLRC.9 The pivotal issue to be resolved in this petition is whether or not there exists an employer-employee relationship between petitioner and private respondents. which reversed the decision of the Labor Arbiter and ruled that the documentary evidence. Thus. being employees of ACGI. The existence of an employment relationship between petitioner and private respondents cannot be negated by simply alleging that the latter are employees of ACGI as an independent contractor. Hence. The issue of whether or not an employer-employee relationship exists in a given case is essentially a question of fact. there was no evidence showing that the incorporation of ACGI was irregular. Corollary thereto is the issue of whether or not private respondents were illegally dismissed by petitioner. NLRC13 succinctly enunciates this statutory criteria – LABOR LAW I CASES (Arts. i. VICTA P13.00 FEDERICO M. C. WHEN IT MANIFESTLY OVERLOOKED THE EVIDENCE PRESENTED BY THE PETITIONER COMPANY AND RULING THAT THE PETITIONER’S DEFENSE OF LACK OF EMPLOYER-EMPLOYEE RELATIONS IS WITHOUT MERIT. and that ACGI was not an independent contractor. ["ACGI"] NOTWITHSTANDING ABSENCE OF ANY SPECIFIC EVIDENCE IN SUPPORT OF THE SAME. whether as "labor-only contractor" or "independent contractor".97-102) |150 .EDMUNDO B.

First. it can be concluded that ACGI was not an independent contractor since it did not carry a distinct business free from the control and supervision of petitioner. This form of control and supervision never changed although they were already under the seeming employ of ACGI. 1999. Peña.20 Since ACGI is only a labor-only contractor. in dealing with the consumers. Petitioner issued memoranda regarding the billing methods and distribution of books to the collectors. The 121 collectors subscribed to four shares each and paid only the amount of P625. Even the "four-fold test" will show that petitioner is the employer of private respondents. In labor-only contracting. machineries. (1) from August 1. and although it was ACGI which ultimately disciplined private respondents. Mr. 15 Further. The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee. and other materials which are necessary in the conduct of the business. the latter exercised control and supervision over the formers’ conduct. 1997 to November 30. or (ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee. and controlling not only the LABOR LAW I CASES (Arts. and 2) the contractor has substantial capital or investment in the form of tools. private respondents reported daily to the branch office of the petitioner because ACGI has no office or work premises. machineries. private respondents used the receipts and identification cards issued by petitioner. the corporate address of ACGI was the residence of its president. While it has an authorized capital stock of P1. the penalty to be imposed was dictated by petitioner as shown in the letters it sent to ACGI specifying the penalties to be meted on the erring private respondents.500. Rules Implementing Articles 106-109 of the Labor Code14 refers to an arrangement where the contractor or subcontractor merely recruits.00 is actually paid-in. (b) the payment of wages. the work of the private respondents was directly related to the principal business or operation of the petitioner. Although petitioner was not obliged to absorb the private respondents. ACGI did not carry on an independent business or undertake the performance of its service contract according to its own manner and method.97-102) |151 . work or service to be performed and the employees recruited. Department Order No. only P62.e. and in the pursuit of the latter’s business. i. is considered merely an agent of the petitioner. 18-02.Job contracting is permissible only if the following conditions are met: 1) the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method. subjecting them to its rules and imposing punishment in case of breach thereof. by engaging their services.000. and other materials. supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal. 1997 to August 31. 1997. ACGI does not have substantial capitalization or investment in the form of tools. they were already working for petitioner. "Labor-only contracting" as defined in Section 5. 1997. free from the control and supervision of its principal. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. supplies or places workers to perform job. Prior to private respondents’ alleged employment with ACGI. it monitored strictly their attendance as when a collector cannot perform his daily collection. Under this factual milieu. It was only when its business became settled that petitioner employed private respondents for a fixed term of three months. and any of the following elements is present: (i) The contractor or subcontractor does not have substantial capital or investment which relates to the job. paying their wages in the form of commission.21 We agree with the Labor Arbiter that in the three stages of private respondents’ services with the petitioner. but also as to the means and methods to accomplish it. we agree with the Labor Arbiter that ACGI was not an independent contractor. to qualify as an independent contractor. and as such. free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof. the collection of the charges therefor by private respondents for the petitioner can only be categorized as clearly related to. work premises. Given the above criteria.00. and (d) the employer’s power to control the employee’s conduct. he must notify petitioner or the branch office in the morning of the day that he will be absent.17 Second. the workers it supplied should be considered as employees of the petitioner. not only as to the result of the work to be done. and (3) from December 1.00 in order to comply with the incorporation requirements. In fact. there is no doubt that ACGI was engaged in labor-only contracting. Lastly. (2) from September 1. Being in the business of providing water to the consumers in the East Zone. 1997 to February 8.16 Moreover.19 These are indications that ACGI was not left alone in the supervision and control of its alleged employees. subject to its rules and regulations in regard to the manner and method of performing their tasks. 1997 was only temporary and done to accommodate their request to be absorbed since petitioner was still undergoing a transition period. which cannot be considered substantial capitalization.18 it required private respondents to report daily and to remit their collections on the same day to the branch office or to deposit them with Bank of the Philippine Islands. Consequently. Herminio D. The most important element is the employer’s control of the employee’s conduct. work or service for a principal. 1997 to August 30. petitioner. equipment. (c) the power of dismissal.000.. work premises. Petitioner contends that the employment of private respondents from August 1. equipment. the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws.

being reasonable. petitioner has the burden of proving that the dismissal was for a cause allowed under the law and that they were afforded procedural due process.25 This Court however cannot sustain the award of moral and exemplary damages in favor of private respondents. Having established that the schemes employed by petitioner were devious attempts to defeat the tenurial rights of private respondents and that it failed to comply with the requirements of termination under the Labor Code. or grave anxiety resulted therefrom. As private respondents’ employer. with respect to the period.26 Those circumstances have not been adequately established. It is a defiance of the teaching in Brent School. oppressive or malevolent manner. 2002. an employee who is unjustly dismissed from work is entitled to reinstatement without loss of seniority rights and other privileges. of course. as affirmed by the Court of Appeals. As such regular employees. Not all contracts of employment fixing a period are invalid. While this Court has upheld the legality of fixed-term employment.00 as attorney’s fees to private respondents. inclusive of allowances. the employer has the alternative of paying the employee his separation pay in lieu of reinstatement. in view of the foregoing. v. exemplary damages are recoverable only when the dismissal was effected in a wanton.97-102) |152 . The individual contracts in question were prepared by MWC in the form of the letter addressed to complainants. Inc. we hold that an employment relationship exists between petitioner and private respondents. so. v. the individual contracts are valid. when complainants were already working for MWC as collectors. The act of dismissal must be attended with bad faith. wounded feelings. pursuant to Article 280 of the Labor Code which reads: The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties. That is the doctrine in Brent School.end result but the manner of achieving the same as well. is sustained. private respondents are entitled to security of tenure which may not be circumvented by mere stipulation in a subsequent contract that their employment is one with a fixed period. Under Article 280. SP No. without any force. 1997. The choice is obvious. an employment relationship existed between them.000. regardless of whether the engagement was merely an accommodation of their request. that social humiliation. Under Article 279 of the Labor Code. Zamora. Notably. reversing the decision of the National Labor Relations Commission and reinstating the decision of the Labor Arbiter is AFFIRMED with the MODIFICATION that the awards of P10. The letter-contract is dated September 1. and survive. With their employment as their means of survival. Zamora if this Office rules that the individual contracts in question are valid. However. 67134. in deference to Brent School ruling. We now proceed to ascertain whether private respondents were dismissed in accordance with law.24 Petitioner failed to discharge this burden by substantial evidence as it maintained the defense that it was not the employer of private respondents. except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. private respondents performed activities which were necessary or desirable to its principal trade or business. It has no application where a fixed period of employment was agreed upon knowingly and voluntarily by the parties. Their choice then was not to negotiate for the terms of the contract but to lose or not to lose their employment – employment which they already had at that time. or where it satisfactorily appears that the employer and employee dealt with each other on more or less terms with no moral dominance whatever being exercised by the former over the latter. the dismissal of the private respondent is tainted with illegality. 181 SCRA 702. an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer.R. or fraud. private respondents are entitled to attorney’s fees as they were compelled to litigate with petitioners and incur expenses to enforce and protect their interests. and to his full backwages. However. in CA-G. they should be struck down or disregarded as contrary to public policy and morals. we find that the term fixed in the subsequent contract was used to defeat the tenurial security which private respondents already enjoy. to sign the ready made lettercontract to retain their employment. Such an award cannot be justified solely upon the premise that the employer dismissed his employee without just cause or due process. Thus.250. WHEREFORE.27 The award by the Labor Arbiter of P22. and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. good customs or public policy and.23 In view of the foregoing. the evil sought to be prevented is singled out: agreements entered into precisely to circumvent security of tenure. as what they did. Thus.22 In the case at bar. Additional facts must be pleaded and proved to warrant the grant of moral damages under the Civil Code. or was oppressive to labor or done in a manner contrary to morals. where from the circumstances it is apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee. they were regular employees of petitioner. Inc. when it held that: The next question if whether. the decision of the Court of Appeals dated November 29. this Office rules they are null and void. there was no room then for complainants to disagree with the presented letter-contracts. Similarly. duress or improper pressure being brought upon the employee and absent any circumstances vitiating his consent. if reinstatement is no longer possible. we concur with the Labor Arbiter.00 as moral LABOR LAW I CASES (Arts.

000. LABOR LAW I CASES (Arts. SO ORDERED.damages and P5.97-102) |153 .00 as exemplary damages are DELETED for lack of evidentiary basis.

LEONARD LEMONCHITO. INVENTOR. TORMIS. BOOC. JOSE TEMPOROSA. VIYO and JOSE JOFER C. PUGNA. JOHN D. ROMEO CHUA. CHITO L. UNTAL. ERNESTO P.R. C. RUBIO. CAMILO N. OTERO. Messengerial/Janitorial Monthly Fixed Service Charge of: Nineteen Thousand Five Hundred Pesos Only (P19. RIBON.THIRD DIVISION G. ROMMEL ESTREBOR. JOEY R. VISTA. CAHINOD.. CAHINOD. MENDOZA. VICENTE M. VICTOR A. RAMIE A. tools and apparatus. JIMENEZ. BRIONES. Asong. ARROLLADO. LABOR LAW I CASES (Arts. RONILO E. To carry out the undertaking specified in the immediately preceding paragraph. TINGSON. HILA-US. BALATERIA. CAHINOD. JOSEPH D. JOEL C. LUCERO. ABALLA. BERNIE O. HENRY S. UNTAL. TALITE. JOEBERT G. JUDY S. Sanitation/Washing/Cold Storage2 2.34/kg. CLIFFORD A. petitioner vs. WILLIAM P. – Piece rate of P0. The pertinent provisions of the contract read: 1. In consideration of the above undertaking the company expressly agrees to pay the cooperative the following rates per activity: A. RONILO C. DOLORFINO. Sanitation/Washing and Cold Storage P125. JONATHAN T. J. BALATERIA. ABARING. DESPI. materials.00) B. MARTIL.97-102) |154 . JOSE COLLY S. NAVARRO. REYNALDO T. LARRY DUMA-OP. LEO A. ARROLLADO. DUQUEZA. SONNY V. ORLANDO DERDER. RIC E. xxx 3. Harvesting/Shrimp Receiving. DESPI. ROLAND B. WINIFREDO TALITE. BIENVENIDO C. represented by its Assistant Vice President and Visayas Area Manager for Aquaculture Operations Leopoldo S. ELMAR TABLIGAN. ASONG. 1993. RICKY PALANOG. VIYO and the COURT OF APPEALS.00/person for 3 shifts. RENATO LAMINA. ROLDAN V. Shrimp Harvesting/Receiving C. WILFREDO B. JOAN C. ADLA-ON. respondents.00 minimum per person/activity whichever is higher. ARNEL C. with provisions as follows: P25. DANILO COBRA. MARLON D. RENE A. JERRY D. OSCAR TALITE. to efficiently. This will be pre-set every harvest based on harvest plan approved by the Senior Buyer. RAUL A. DE PEDRO. to be renewed on a month to month basis until terminated by either party. CELESTE. PANCHO CAÑETE. ROBERTO G. entered into a one-year Contract of Services1 commencing on January 1. INVENTOR. BERONDO. on a non-exclusive basis for a period of one year the following services for the Bacolod Shrimp Processing Plant: A. ALVIN C. JOSEPH S. DIONISE A. the cooperative shall employ the necessary personnel and provide adequate equipment. PROSPERO A. CELANIO D. ROBERTO HOFILEÑA. BASAS.00 every meal time in case harvest duration exceeds one meal. ASPERA.: Petitioner San Miguel Corporation (SMC). JOEL D. LAGARTO. 2005 SAN MIGUEL CORPORATION. Titular. ADELINO C. DEDOYCO. TRISTAN A. CALIXTON. MAXIMO L. JUNNY CASTEL. SR. ALBERTO O. RANDY TINGALA. DELA CRUZ. represented by the Chairman of its Board of Directors Roy G. CALVEZ. NOEL DUMOL. RODERICK C. DUNGOG. MATILLANO. PAROCHILIN. ALCALDE. HERNANDO MATILLANO. GALPO. Messengerial/Janitorial B. EDGAR SANTIAGO. RUDERICK R. fully and speedily accomplish the work and services undertaken by the cooperative. 149011 June 28. ROBERTO E. TANNY C. WILSON P. ALVIN LAS POBRES. VICENTE INDENCIO. BONNY J. ROLANDO L. No. JOSE JOLLEN BALLADOS. DEON. EDWIN G. ENRIQUE CABALIDA. ALBERT LAS POBRES. MANSUETO GILLE. DELFIN. DIOSCORO R. SAYSON. HOFILEÑA. ROGELIO TOMESA. RENELITO P. CHRISTOPHER D. The cooperative agrees and undertakes to perform and/or provide for the company. and Sunflower Multi-Purpose Cooperative (Sunflower). Or P100. EDWIN M. EDWIN E.00 Fixed Fee per person Additional meal allowance P15. EDDIE A. PAROCHILIN. ARMANDO C. GERARDO J. BRIONES. ROBERTLY Y. SAYAM. RENE SUARNABA.500. RENANTE S. DESPI. JERRY LIM. JOE-MARIE S. REYNALDO C. PETER PAUL T. PILLO. SAMILLANO. SANTILLANA. BEATINGO. PILLO. TEMPOROSA. DECISION CARPIO-MORALES. FELIX T. NAVARRO. ANTONIO D. OLVIDO. DINGLE.

whenever possible. premiums and protection in accordance with the provisions of the labor code. control and supervision of the work and services herein agreed upon. The contract was deemed renewed by the parties every month after its expiration on January 1. 1994 and private respondents continued to perform their tasks until September 11. The cooperative shall have exclusive discretion in the selection. It is subject to the control and direction of the company only as to the result to be accomplished by the work or services herein specified. dues and other impositions that shall become due as a result of this contract. if any. Fe. There is no employer-employee relationship between the company and the cooperative. The cooperative shall. granted by Labor Arbiter Ray Alan T. The cooperative is an association of self-employed members.One-half of the payment for all services rendered shall be payable on the fifteenth and the other half. render services at SMC’s Bacolod Shrimp Processing Plant at Sta. engagement and discharge of its member-workers or otherwise in the direction and control thereof. an independent contractor.97-102) |155 . In July 1995. The cooperative undertakes to pay the wages or salaries of its memberworkers. The cooperative shall pay taxes. the cooperative hereby warrants that it will perform such work or services in such manner as will be consistent with the achievement of the result herein contracted for. The cooperative and its members recognize that it is taking a business risk in accepting a fixed service fee to provide the services contracted for and its realization of profit or loss from its undertaking. and not as to the work herein contracted. Although it is understood and agreed between the parties hereto that the cooperative. Bacolod City. It is further understood that the cooperative is an independent contractor. this Contract will be deemed renewed on a month-tomonth basis until terminated by either party by sending a written notice to the other at least thirty (30) days prior to the intended date of termination. private respondents filed a complaint before the NLRC. xxx 12. xxx 4. The cooperative shall have the entire charge. is subject to the control or direction of the company merely as a (sic) result to be accomplished by the work or services herein specified. a statement made. 1995. Sunflower engaged private respondents to. Unless sooner terminated for the reasons stated in paragraph 9 this contract shall be for a period of one (1) year commencing on January 1. Private respondents subsequently filed on September 25. 5. salaries and compensation of the member-workers of the cooperative shall be within its full control. to the effect that the cooperative has paid all wages or salaries due to its employees or personnel for services rendered by them during the month immediately preceding. and an entrepreneur. or the cooperative and any of its members. Bacolod City. on the end of each month. will depend on how efficiently it deploys and fields its members and how they perform the work and manage its operations. in relation to all its other undertakings. and not as to the means and methods of accomplishing such result. 1993. as they did. Drilon. 6. 1995 5 which resulted in the termination of their services. and as such. LABOR LAW I CASES (Arts. The determination of the wages. 1995. the cooperative agrees to comply with all the requirements of all pertinent laws and ordinances. or the company and any members of the cooperative. as well as all benefits. rules and regulations. maintain and keep under its control the premises where the work under this contract shall be performed. in the performance of its obligations. The cooperative further undertakes to submit to the company within the first ten (10) days of every month. cooperative code and other applicable laws and decrees and the rules and regulations promulgated by competent authorities. by Order7 of December 11. assuming all responsibility therefor. with claims for recovery of all benefits and privileges enjoyed by SMC rank and file employees. xxx 8. Regional Arbitration Branch No. SMC filed a Motion for Leave to File Attached Third Party Complaint6 dated November 27. fees. and that such payments were all in accordance with the requirements of law. 1995 an Amended Complaint4 to include illegal dismissal as additional cause of action following SMC’s closure of its Bacolod Shrimp Processing Plant on September 15. xxx3 (Underscoring supplied) Pursuant to the contract. praying to be declared as regular employees of SMC. VI. signed and sworn to by its duly authorized representative before a notary public or other officer authorized by law to administer oaths. including overtime. 1995 to implead Sunflower as Third Party Defendant which was. Thereafter.

on September 30. up to the time of the finality of this decision. Fourth Division. unless the closing is for the purpose of circumventing the provisions of the law on security of tenure. 2001. as well as the payment of wages. By Decision of February 7. Labor Arbiter Drilon dismissed private respondents’ complaint for lack of merit. 06-0710316-95. xxx In the absence of clear and convincing evidence showing that third-party respondent acted merely as a labor only contractor. who were accordingly terminated following the legal requisites prescribed by law. as much as it recognizes the right of the employer to terminate the employment of any employee due to closure or cessation of business operations. due to serious business losses which has (sic) clearly been established. SMC filed before the Regional Office at Iloilo City of the Department of Labor and Employment (DOLE) a Notice of Closure 8 of its aquaculture operations effective on even date. Private respondents’ Motion for Reconsideration11 having been denied by the NLRC for lack of merit by Resolution of September 10. Job contracting is permissible under the Labor Code under specific conditions and we do not see how this activity could not be legally undertaken by an independent service cooperative like the third-party respondent herein. the appellate court reversed the NLRC decision and accordingly found for private respondents. It has been held that the definition of regular employees as those who perform activities which are necessary and desirable for the business of the employer is not always determinative because any agreement may provide for one (1) party to render services for and in behalf of another for a consideration even without being hired as an employee. The charge of the complainants that third-party respondent is a mere labor-only contractor is a sweeping generalization and completely unsubstantiated. By Decision of September 23. the NLRC dismissed the appeal for lack of merit. 1998. San Miguel Corporation. beginning such time up to their termination from employment on 11 September 1995. the law allows job contracting. The law recognizes the right of the employer to close his business or cease his operations for bonafide reasons. SMC subsequently filed its Comment14 to the petition on March 30.In the meantime. There is no basis to the demand for regularization simply on the theory that complainants performed activities which are necessary and desirable in the business of respondent. the time their actual compensation was withheld from them. (2) ORDERING the respondent. inclusive of allowances and other benefits or their monetary equivalent. We sustain the stand of the respondent SMC that it could properly exercise its management prerogative to contract out the preparation and processing aspects of its aquaculture operations. xxx By Decision of December 29. we are firmly convinced of the legitimacy and the integrity of its service contract with respondent SMC. to GRANT petitioners: (a) separation pay in accordance with the computation given to the regular SMC employees working at its Bacolod Shrimp Processing Plant with full backwages. 1997. The closure. and power of dismissal. in so far as the complainants are concerned. resulted in the termination of SMC’s service contract with their cooperative xxx9(Underscoring supplied) Private respondents appealed to the NLRC.97-102) |156 . Before the CA. the petition is GRANTED. from 11 September 1995. Accordingly. and ORDERING private respondent SMC to PAY unto the petitioners attorney’s fees equivalent to ten (10%) percent of the total award. is a management prerogative which could hardly be interfered with. Judicial notice has already been taken regarding the general practice adopted in government and private institutions and industries of hiring independent contractors to perform special services. ratiocinating as follows: xxx The closure did affect the regular employees and workers of the Bacolod Processing Plant. disposing as follows: WHEREFORE. it finding that third party respondent Sunflower was an independent contractor in light of its observation that "[i]n all the activities of private respondents. they filed a petition for certiorari12 before the Court of Appeals (CA). 1996. judgment is hereby RENDERED: (1) REVERSING and SETTING ASIDE both the 29 December 1998 decision and 10 September 1999 resolution of the National Labor Relations Commission (NLRC). they were under the actual direction."10 xxx Indeed. SMC filed a Motion to Dismiss 13 private respondents’ petition for noncompliance with the Rules on Civil Procedure and failure to show grave abuse of discretion on the part of the NLRC. control and supervision of third party respondent Sunflower. V-0361-97 as well as the 23 September 1997 decision of the labor arbiter in RAB Case No. however. citing serious business losses. Cebu City in NLRC Case No. 1999. the closure of the Bacolod Shrimp Processing Plant was a management decision purely dictated by economic factors which was (sic) mainly serious business losses. LABOR LAW I CASES (Arts. (b) differentials pays (sic) effective as of and from the time petitioners acquired regular employment status pursuant to the disquisition mentioned above. The decision of respondent SMC to close its Bacolod Shrimp Processing Plant. 2000. or by law. and all such other and further benefits as provided by applicable collective bargaining agreement(s) or other relations. In the same vein.

messengers and shrimp harvesters. SO ORDERED. p. it appears that petitioners were under the direct control and supervision of SMC supervisors both as to the manner they performed their functions and as to the end results thereof. 500). packers and handlers were directly related to the aquaculture business of SMC (See Guarin vs. from the time LABOR LAW I CASES (Arts. it should be taken into account that the activities undertaken by the petitioners as cleaners. 169 SCRA 497. the extent to which the parties successfully realized this intent in the light of the applicable law is the controlling factor in determining the real and actual relationship between or among the parties. G. Inc. Besides. implements. NLRC. inclusive of allowances and other benefits or their monetary equivalent. vs. California Manufacturing. 111651. no other logical conclusion can be reached except that [Sunflower] acted as an agent of SMC. xxx xxx xxx it becomes apparent that [Sunflower] and the petitioners do not qualify as independent contractors. 525-525) and. Inc. NLRC. In addition. Consistent with the pronouncement in Bustamante. vs. is a considerable workforce and raises the suspicion that the non-exclusive service contract between SMC and [Sunflower] was "designed to evade the obligations inherent in an employer-employee relationship" (See Rhone-Poulenc Agrochemicals Philippines. it is safe to assume that SMC would never have allowed the petitioners to work within its premises. the appellate court reasoned: Although the terms of the non-exclusive contract of service between SMC and [Sunflower] showed a clear intent to abstain from establishing an employer-employee relationship between SMC and [Sunflower] or the latter’s members. There being a finding of "labor-only" contracting. 9). SMC however should be heldsolely liable for [Sunflower] became non-existent with the closure of the aquaculture business of SMC. et cetera necessary to actually perform the service under their own account. the real employer of the petitioners. the only equipment it owned was a typewriter (rollo. janitors. a period of close to three (3) years. equipment and tools. alongside SMC employees discharging similar or identical activities unless it exercised a substantial degree of control and supervision over the petitioners not only as to the manner they performed their functions but also as to the end results of such functions. 273). xxx Even without these instances indicative of control by SMC over the petitioners. were under the control and supervision of SMC both as to the manner and method in discharging their functions and as to the resultsthereof. It was only after petitioners lodged a complaint to have their status declared as regular employees of SMC that certain members of [Sunflower] began to countersign petitioners’ daily time records to make it appear that they (petitioners) were under the control and supervision of [Sunflower] team leaders (rollo. The only "work premises" maintained by [Sunflower] was a small office within the confines of a small "carinderia" or refreshment parlor owned by the mother of its chair. petitioners are thus entitled to separation pay (in the computation similar to those given to regular SMC employees at its Bacolod Shrimp Processing Plant) "with full backwages. reinstatement is no longer feasible. as shown earlier.15 (Underscoring supplied) Justifying its reversal of the findings of the labor arbiter and the NLRC.97-102) |157 . the only assets it provided SMC were the bare bodies of its members. 198 SCRA 267.No pronouncement as to costs. responsibility. equipment. Roy Asong. facilitating the manpower requirements of the latter. 217 SCRA 249.[Sunflower] and the petitioners did not have substantial capital or investment in the form of tools. and method. et al. p. the petitioners here numbering ninety seven (97). p. Moreover. NLRC. Such existence is a question of law which cannot be made the subject of agreement to the detriment of the petitioners (Tabas vs. xxx With these observations. the petitioners herein (rollo. liability must be shouldered either by SMC or [Sunflower] or shared by both (See Tabas vs. since the closure of the aquaculture operations of SMC appears to be valid. California Manufacturing. Equally suspicious is the fact that the notary public who signed the by-laws of [Sunflower] and its [Sunflower] retained counsel are both partners of the local counsel of SMC (rollo.. 523).R. We simply cannot allow these two entities through the convenience of a non-exclusive service contract to stipulate on the existence of employer-employee relation. by itself. using its own facilities. supra.. work premises. petitioners. xxx With respect to the power to control petitioners’ conduct. who worked inside the premises of SMC. This is confirmed by the renewal of the service contract from January 1993 to September 1995.. 502). 259). 523-527). Inc. No. Furthermore. pp. pp. 28 November 1996.

acting as representative. 2001. should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective. the merits of the substantive aspects of the case may also be deemed as "special circumstance" or "compelling reason" to take cognizance of a petition although the certification against forum shopping was not executed and signed by all of the petitioners. for one of the plaintiffs. They shared a common interest in the subject matter of the case. Buat could validly sign the certificate of non-forum shopping in behalf of all his co-plaintiffs. THE CLOSURE OF THE BACOLOD SHRIMP PROCESSING PLANT WAS DUE TO SERIOUS BUSINESS LOSSES. it is sufficient. which were designed to promote and facilitate the orderly administration of justice." raising only one common cause of action or defense. Samaon M. IN DOING SO. Emily Homes Subdivision Homeowners Association. being the aggrieved residents of the poorly constructed and developed Emily Homes Subdivision. in order not to defeat the ends of justice.19 this Court has stressed that the rules on forum shopping. IN DOING SO. to sign the certificate provided that xxx the plaintiffs share a common interest in the subject matter of the case or filed the case as a "collective."26 Additionally. represented by their homeowners’ association president who was likewise one of the plaintiffs. In cases therefore where it is highly impractical to require all the plaintiffs to sign the certificate of non-forum shopping. "subsequently proven to be true as shown by the signatures of the majority of the petitioners appearing in their memorandum filed before Us.97-102) |158 . Mr.21It does not. raising one common cause of action against SMC.their actual compensation was withheld from them" up to the time of the finality of this decision.20 Strict compliance with the provisions regarding the certificate of non-forum shopping merely underscores its mandatory nature in that the certification cannot be altogether dispensed with or its requirements completely disregarded. III THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT RESPONDENTS ARE EMPLOYEES OF SMC. Due to the collective nature of the case. the execution by private respondents Winifredo Talite. or by law.25 That the three indeed represented their co-petitioners before the appellate court is. IV THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDNG (sic) THAT RESPONDENTS ARE NOT ENTITLED TO ANY RELIEF. and all such other and further benefits as provided by applicable collective bargaining agreement(s) or other relations.22 Thus in the recent case of HLC Construction and Development Corporation v. While the general rule is that the certificate of non-forum shopping must be signed by all the plaintiffs or petitioners in a case and the signature of only one of them is insufficient. thereby interdict substantial compliance with its provisions under justifiable circumstances. beginning such time up to their termination from employment on 11 September 1995.16 (Emphasis and underscoring supplied) SMC’s Motion for Reconsideration17 having been denied for lack of merit by Resolution of July 11. there was no doubt that Mr. it comes before this Court via the present petition for review on certiorari assigning to the CA the following errors: I THE COURT OF APPEALS GRAVELY ERRED IN GIVING DUE COURSE AND GRANTING RESPONDENTS’ PATENTLY DEFECTIVE PETITION FOR CERTIORARI. Buat. as it correctly found. This is without prejudice to differentials pays (sic) effective as of and from the time petitioners acquired regular employment status pursuant to the discussion mentioned above. THE COURT OF APPEALS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS. THE COURT OF APPEALS DECIDED THIS CASE IN A MANNER NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT. Samaon M. however.18 (Underscoring supplied) SMC bewails the failure of the appellate court to outrightly dismiss the petition for certiorari as only three out of the ninety seven named petitioners signed the verification and certification against forum-shopping.27 LABOR LAW I CASES (Arts. II THE COURT OF APPEALS GRAVELY ERRED IN RECOGNIZING ALL THE RESPONDENTS AS COMPLAINANTS IN THE CASE BEFORE THE LABOR ARBITER.23 this Court held: Respondents (who were plaintiffs in the trial court) filed the complaint against petitioners as a group. Renelito Deon and Jose Temporosa in behalf of all the other private respondents of the certificate of non-forum shopping constitutes substantial compliance with the Rules.24 (Emphasis and underscoring supplied) Given the collective nature of the petition filed before the appellate court by herein private respondents.Respondents raised one cause of action which was the breach of contractual obligations and payment of damages.

Their strict and rigid application. Rule III of the 1990 Rules of Procedure of the NLRC. The general rule.36 Rules of procedure should indeed be viewed as mere tools designed to facilitate the attainment of justice. appended to it was an Authority/Confirmation of Authority 45 signed by the ninety one others conferring authority to their counsel "to file RAB Case No.34 It discerns whether on the basis of what have been submitted it could already judiciously determine the merits of the petition.31 their Motion for Reconsideration dated March 26." Following Section 6. Inc. entitled Winifredo Talite et al.37 SMC further argues that the appellate court exceeded its jurisdiction in reversing the decisions of the labor arbiter and the NLRC as "findings of facts of quasi-judicial bodies like the NLRC are accorded great respect and finality. 1997 Decision of the Labor Arbiter. Atty. now Section 8. Rule V of the 1990 NLRC Rules of Procedure 46 is LABOR LAW I CASES (Arts. Rule 65 of the Rules of Court.29 their Notice of Appeal with Appeal Memorandum dated October 16. San Miguel Corporation presently pending before the sala of Labor Arbiter Ray Alan Drilon at the NLRC Regional Arbitration Branch No. now Section 7. which states: Section 7. 30 the December 29. 06-0710316-95. – Attorneys and other representatives of parties shall have authority to bind their clients in all matters of procedure. enter into a compromise agreement with the opposing party in full or partial discharge of a client’s claim.97-102) |159 . the CA found that the petition was adequately supported by relevant and pertinent documents. the appellate court may make an independent evaluation of the facts of the case. Rule 3 of the 1999 NLRC Rules. NLRC.SMC goes on to argue that the petition filed before the CA is fatally defective as it was not accompanied by "copies of all pleadings and documents relevant and pertinent thereto" in contravention of Section 1. is that findings of facts of an administrative agency which has acquired expertise in the particular field of its endeavor are accorded great weight on appeal. when the findings of fact of the labor arbiter and the NLRC are not supported by substantial evidence or their judgment was based on a misapprehension of facts. this Court has allowed a liberal construction of the rule on the accomplishment of a certificate of non-forum shopping in the following cases: (1) where a rigid application will result in manifest failure or miscarriage of justice. 1999 filed with the NLRC32 and the September 10. Thus. Specifically with respect to the Joint-Affidavit of private respondents. VI in Bacolod City" and appointing him as their retained counsel to represent them in the said case. At all events. Ortiz as "counsel for the complainants.44 SMC’s position does not lie. and (4) where the injustice to the adverse party is not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed. That there has been substantial compliance with the requirement on verification of position papers under Section 3." and that this principle acquires greater weight and application in the case at bar as the labor arbiter and the NLRC have the same factual findings.38 The rule is not absolute and admits of certain well-recognized exceptions. (Underscoring supplied) As regards private respondents’ position paper which bore the signatures of only six of them. (2) where the interest of substantial justice will be served. without a special power of attorney or express consent. however. (3) where the resolution of the motion is addressed solely to the sound and judicious discretion of the court. That the verification wherein it is manifested that private respondent Talite was one of the complainants and was causing the preparation of the complaint "with the authority of my co-complainants" indubitably shows that Talite was representing the rest of his co-complainants in signing the verification in accordance with Section 7. 1998NLRC D E C I S I O N. and that their Joint-Affidavit42 was executed only by twelve43 of the complainants. must always be eschewed. citing this Court’s ruling in Southern Cotabato Development and Construction. A perusal of the complaint shows that the ninety seven complainants were being represented by their counsel of choice. Ortiz is presumed to be properly authorized by private respondents in filing the complaint.35 In the case at bar. Thus the first sentence of their complaint alleges: "xxx complainants.39 SMC further faults the appellate court in giving due course to private respondents’ petition despite the fact that the complaint filed before the labor arbiter was signed and verified only by private respondent Winifredo Talite. v. that private respondents’ position paper40 was verified by only six41 out of the ninety seven complainants. Rule III of the 1999 NLRC Rules. 1999 NLRC Resolution." And the complaint was signed by Atty. SMC asserts that it should not have been considered by the appellate court in establishing the claims of those who did not sign the same. Jose Max S. no doubt. Rule III of the 1990 NLRC Rules. Authority to bind party. but they cannot. 1997 filed before the NLRC.28 This Court is not persuaded. v. by counsel and unto this Honorable Office respectfully state xxx.33 It bears stressing at any rate that it is the appellate court which ultimately determines if the supporting documents are sufficient to make out a prima facie case. The records show that private respondents appended the following documents to their petition before the appellate court: the September 23. which would result in technicalities that tend to frustrate rather than promote substantial justice.

if any shall be paid in accordance with the provisions of this Code. LABOR LAW I CASES (Arts.47 (Emphasis supplied. Thus. In the same vein. their application may be relaxed to serve the demands of substantial justice. the said affidavit was enough to prove the claims of the rest of the complainants. 106. a reading of the joint affidavit signed by twelve (12) of the ninety-seven (97) complainants (petitioners herein) would readily reveal that the affidavit was offered as evidence not only for the signatories therein but for all of the complainants. Contractor or subcontracting. as to those who opted to move for the dismissal of their complaints. this Court quotes with approval the appellate court’s ratiocinations: A perusal of the Southern Cotabato Development Case would reveal that movant did not quote the whole text of paragraph 5 on page 865 of 280 SCRA.48 On the merits. the employees of the contractor and of the latter’s subcontractor. Article 106 of the Labor Code provides: ART. 221. an independent contractor. The implication is that as long as the affidavits of the complainants were offered as evidence for those who did not submit theirs. There is no showing at all that any of the affidavits of the thirty-four (34) complainants were offered as evidence for those who did not submit their affidavits. – The proceedings before a Labor Arbiter shall be non-litigious in nature. The Secretary of Labor may. In so prohibiting or restricting. – Whenever an employer enters into a contract with another person for the performance of the former’s work. Rule V of the 1990 NLRC Rules. the petition just the same fails. Technical rules not binding and prior resort to amicable settlement. Nature of Proceedings. restrict or prohibit the contracting out of labor to protect the rights of workers established under the Code. (underscoring supplied) As regards private respondents’ Joint-Affidavit which is being assailed in view of the failure of some complainants to affix their signatures thereon. Here. underscoring in the original) In any event. or the affidavits were material and relevant to the rights and interest of the latter. all in the interest of due process. The whole paragraph reads: "Clearly then. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code. The Labor Arbiter may avail himself of all reasonable means to ascertain the facts of the controversy speedily. by appropriate regulations. now Section 9. the technicalities of law and procedure and the rules obtaining in the courts of law shall not strictly apply thereto. the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract. On the other hand. private respondent’s position paper was not of any help to these delinquent complainants. private respondents assert that Sunflower is a labor-only contractor. or did not submit their affidavits nor appear during trial and in whose favor no other independent evidence was adduced. SMC insists that private respondents are the employees of Sunflower. So Article 221 of the Labor Code enjoins: ART. (These ninety-seven (97) individuals were previously identified during the mandatory conference as the only complainants in the proceedings before the labor arbiter) Moreover.not difficult to appreciate in light of the provision of Section 7. he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code. Rule V of the 1999 NLRC Rules which reads: Section 7. Subject to the requirements of due process. the rules of evidence prevailing in courts of law or equity shall not be controlling and it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure. xxx As such. – In any proceeding before the Commission or any of the Labor Arbiters.97-102) |160 . including ocular inspection and examination of well-informed persons. or that such affidavits had any bearing at all on the rights and interest of the latter. no award for back wages could have been validly and properly made for want of factual basis. to prevent any violation or circumvention of any provision of this Code. such affidavits may be sufficient to establish the claims of those who did not give their affidavits. in the same manner and extent that he is liable to employees directly employed by him. SMC is reminded that the rules of evidence prevailing in courts of law or equity do not control proceedings before the Labor Arbiter. the affidavit touched on the common interest of all of the complainants as it supported their claim of the existence of an employer-employee relationship between them and respondent SMC.

to ensure that the employees are paid their wages. rather it is the totality of the facts and surrounding circumstances of the case.There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools. and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. otherwise known as the Cooperative Code. Prohibition against labor-only contracting.52 A party cannot dictate. equipment.000. there are three parties involved in these arrangements. the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. i. work or service for a principal. work premises and other materials to qualify it as an independent contractor. it being crucial that its character be measured in terms of and determined by the criteria set by statute. but also the manner and means to be used in reaching that end. however. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. and a contract of employment between the contractor or subcontractor and its workers. and the contractual workers engaged by the contractor or subcontractor to accomplish the job. or ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee.. machineries and work premises. Other than that. In such cases. distinguishes between legitimate and laboronly contracting: Section 3. i. the contractor or subcontractor which has the capacity to independently undertake the performance of the job. In legitimate contracting. work or service contracted out.. 6938. supplies or places workers to perform a job.97-102) |161 . the character of its business. Hence.53 SMC argues that Sunflower could not have been issued a certificate of registration as a cooperative if it had no substantial capital. IL0-875 55 on February 10. and any of the following elements are present: i) The contractor or subcontractor does not have substantial capital or investment which relates to the job. 1992 by the Cooperative Development Authority. machineries. whether as labor-only contractor or job contractor. equipment. implements. this merely shows that it had at least P2. actually and directly used by the contractor or subcontractor in the performance or completion of the job. "Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of corporations.e. work or service between the principal and the contractor or subcontractor. the principal employer is not responsible for any claim made by the employees. equipment. work or service. only for the payment of the employees’ wages whenever the contractor fails to pay the same. tools.51 The Contract of Services between SMC and Sunflower shows that the parties clearly disavowed the existence of an employer-employee relationship between SMC and private respondents. the principal which decides to farm out a job or service to a contractor or subcontractor. Section 5. Labor-only contracting Sis hereby declared prohibited. For this purpose.54 While indeed Sunflower was issued Certificate of Registration No. The language of a contract is not. Trilateral Relationship in Contracting Arrangements. as amended by Department Order No. labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits. LABOR LAW I CASES (Arts. Rule VIII-A. Book III of the Omnibus Rules Implementing the Labor Code. as amended. The foregoing provisions shall be without prejudice to the application of Article 248 (c) of the Labor Code. which amount cannot be considered substantial capitalization.50 In labor-only contracting. the law creates an employer-employee relationship for a limited purpose.e. machineries.49 In legitimate labor contracting. 18. supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal. there exists a trilateral relationship under which there is a contract for a specific job. What appears is that Sunflower does not have substantial capitalization or investment in the form of tools. except only as to the results of the work. by the mere expedient of a unilateral declaration in a contract. determinative of the parties’ relationship.00 in paid-up share capital as mandated by Section 5 of Article 1456 of Republic Act No. work premises. the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The principal employer becomes jointly and severally liable with the job contractor. The "right to control" shall refer to the right reserved to the person for whom the services of the contractual workers are performed. among others. to determine not only the end to be achieved. The test to determine the existence of independent contractorship is whether one claiming to be an independent contractor has contracted to do the work according to his own methods and without being subject to the control of the employer. work or service. work or service to be performed and the employees recruited.

the loss of jobs for the whole MAERC workforce and the resulting actions instituted by the workers. receiving and packing formed an integral part of the shrimp processing operations of SMC. The lot. 67 They should thus be awarded differential pay corresponding to the difference between the wages and benefits given them and those accorded SMC’s other regular employees. hoose (sic). the work assigned to private respondents was directly relatedto the aquaculture operations of SMC. This Court’s ruling in San Miguel Corporation v.62 Simply stated. Consider the following uncontroverted allegations of private respondents in the Joint Affidavit: Stephen Palabrica. MAERC Integrated Services. building. machineries. Everything was owned and provided by respondent SMC. Edison Arguello. equipment. sizer machine. thus convincing us that it was created solely to service the needs of SMC. All the foregoing considerations affirm by more than substantial evidence the existence of an employer-employee relationship between SMC and private respondents. . trays. Furthermore. Sunflower likewise ceased to exist. they should be deemed regular employees of the latter 66 and as such are entitled to all the benefits and rights appurtenant to regular employment. 57 And from the job description provided by SMC itself. xxx In said . . Joemari Raca. electric floor cleaners. no showing to the contrary having been proffered by SMC. Since private respondents who were engaged in shrimp processing performed tasks usually necessary or desirable in the aquaculture business of SMC. Private respondents had been working in the aqua processing plant inside the SMC compound alongside regular SMC shrimp processing workers performing identical jobs under the same SMC supervisors. storage. which fact shows that SMC exercised the power of control and supervision over its employees. Sunflower did not carry on an independent business or undertake the performance of its service contract according to its own manner and method. did not own a single machinery. lysol and the like used by the complainants assigned as cleaners were all owned and provided by respondent SMC. Even the mops.On the other hand. Inc.zw+ Respecting the private respondents who were tasked with janitorial and messengerial duties. none of its workers was also ever assigned to any other establishment. Erwin Tumonong. SMC. during the existence of its service contract with respondent SMC. Sunflower did not cater to clients other than SMC. The machineries and equipments (sic) like washer machine. that they are considered directly related to the principal business of the employer 58 has been jurisprudentially recognized.64 is thus instructive. All the boxes. and chairs were all owned by respondent SMC. its apparent role having been merely to recruit persons to work for SMC. Naturally. liquid stain removers. oven or cooking machine. freezer. hydrolic (sic) jack. Undoubtedly. More.1awphi1. the only equipment used and owned by [Sunflower] was a typewriter. 63 and with the closure of SMC’s Bacolod Shrimp Processing Plant.97-102) |162 . third-party respondent did not own even a small capital in the form of tools. Joemel Haro. Although janitorial and messengerial services are considered directly related to the aquaculture business of SMC. this Court quotes with approval the appellate court’s ruling thereon: Those performing janitorial and messengerial services however acquired regular status only after rendering one-year service pursuant to Article 280 of the Labor Code. Not only was it set up to specifically meet the pressing needs of SMC which was then having labor problems in its segregation division. 65(Underscoring supplied) xxx The alleged office of [Sunflower] is found within the confines of a small "carinderia" or "refreshment" (sic) owned by the mother of the Cooperative Chairman Roy Asong. the building. with the severance of relationship between MAERC and SMC followed MAERC’s cessation of operations. As for janitorial and messengerial services. chlorine. The gloves and boots used by the complainants were also owned by respondent SMC. tables.60 [Sunflower]. These tend to disprove the independence of the contractor. office. floor waxes. or facilities used in said prawn processing xxx Nor do we believe MAERC to have an independent business. and chilling tanks. or working tool used in the processing plant.59 And control of the premises in which private respondents worked was by SMC. machineries and all other working tools utilized by private respondents in carrying out their tasks were owned and provided by SMC. brush.61 This circumstance is another indicium of the existence of a labor-only contractorship. the nature of the work performed by private respondents in shrimp harvesting. molding pan used in the processing are also owned by respondent SMC. free from the control and supervision of its principal. and working facilities are owned by respondent SMC. Thus. they are deemed unnecessary in the conduct of its LABOR LAW I CASES (Arts. and And as private respondents alleged in their Joint Affidavit which did not escape the observation of the CA. it is gathered that the lot. soaps. it is gathered from the evidence adduced by private respondents before the labor arbiter that their daily time records were signed by SMC supervisors Ike Puentebella. push carts.

company losses were duly established by financial documents audited by Joaquin Cunanan & Co. hence.74 Normally. 359). were merely verbally informed on September 10. (Underscoring supplied) For retrenchment to be considered valid the following substantial requirements must be met: (a) the losses expected should be substantial and not merely de minimis in extent. and not closure of. v.393. whichever is higher. whether continuous or broken. 283.70 Regarding the closure of SMC’s aquaculture operations and the consequent termination of private respondents. as opposed to a dismissal based on a just cause under Article 282 with the same procedural infirmity where the sanction to be imposed upon LABOR LAW I CASES (Arts. the distinction (See Coca Cola Bottlers Phils. 1995 by SMC Prawn Manager Ponciano Capay that effective the following day or on September 11. supra.principal business. profit and loss statements and annual income tax returns. retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title.P11. the condition of business losses is shown by audited financial documents like yearly balance sheets. and (d) the alleged losses.. however.97-102) |163 .172.77 In the case at bar. The financial statements must be prepared and signed by independent auditors failing which they can be assailed as self-serving documents. subject to faithful compliance with the substantive and procedural requirements laid down by law and jurisprudence. In case of termination due to the installation of labor saving devices or redundancy.00 in 1992 resulting in the closure of its Calatrava Aquaculture Center in Negros Occidental. they fall under the second category and are thus entitled to differential pay and benefits extended to other SMC regular employees from the day immediately following their first year of service. whichever is higher. by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. they were no longer to report for work as SMC would be closing its operations.72 Where the dismissal is based on an authorized cause under Article 283 of the Labor Code but the employer failed to comply with the notice requirement. the separation pay shall be equivalent to one (1) month pay or to at least one-half (1/2) month pay for every year of service. 307 SCRA 131.78 Retrenchment is a management prerogative consistently recognized and affirmed by this Court. it is the employer who has the onus.75 In the case at bar. however.68 The law of course provides for two kinds of regular employees.76 in order to give employees some time to prepare for the eventual loss of their jobs. For termination due to retrenchment to be valid. It is. the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses. NLRC. SMC has thus proven substantial business reverses justifying retrenchment of its employees. Article 283 of the Labor Code provides: ART. the sanction should be stiff as the dismissal process was initiated by the employer’s exercise of his management prerogative.325.848. the enterprise or the company itself as SMC has not totally ceased operations but is still very much an on-going and highly viable business concern. A fraction of at least six (6) months shall be considered one (1) whole year.00 in 1993 and P80. – The employer may also terminate the employment of any employee due to the installation of labor saving devices. and (2) those who have rendered at least one year of service. showing that the aquaculture operations of SMC’s Agribusiness Division accumulated losses amounting toP145.69 As for those of private respondents who were engaged in janitorial and messengerial tasks. redundancy.71 Private respondents. 1995. 136-137 and Philippine Bank of Communications v. must be proved by sufficient and convincing evidence. and the expected imminent losses sought to be forestalled. (b) the substantial losses apprehended must be reasonably imminent such as can be perceived objectively and in good faith by the employer. Closure of establishment and reduction of personnel. Inc. NLRC. however.071.608.73 In the discharge of these requirements. the law requires that written notices of the intended retrenchment be served by the employer on the worker and on the DOLE at least one (1) month before the actual date of the retrenchment. if already incurred. a particular department under the SMC group of companies was closed allegedly due to serious business reverses. p. namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses.00 in 1994 which led to the closure of its San Fernando Shrimp Processing Plant in Pampanga and the Bacolod Shrimp Processing Plant in 1995. being in the nature of an affirmative defense. as well as to give DOLE the opportunity to ascertain the verity of the alleged cause of termination. with respect to the activity in which they are employed. This constitutes retrenchment by.

79 In light of the factual circumstances of the case at bar. The assailed Decision dated February 7. depending on which is most beneficial to private respondents. whichever is higher. The award of backwages is DELETED.85 and paragraph 7. in actions for recovery of wages or where an employee was forced to litigate and thus incurred expenses to protect his rights and interests. Article 2208 of the Civil Code. Considering that private respondents were not illegally dismissed.000. as in this case.00. The grant of separation pay as an incidence of termination of employment due to retrenchment to prevent losses is a statutory obligation on the part of the employer and a demandable right on the part of the employee. as mandated by Article 283 of the Labor Code or the separation pay awarded by SMC to other regular SMC employees that were terminated as a result of the retrenchment. this Court awards P50.the employer should be tempered as the dismissal process was. 84 Section 8. With respect to attorney’s fees. Book III of its Implementing Rules. pursuant to Rule VIII-A. pay for every year of service. as mandated by Article 283 of the Labor Code or the separation pay awarded by SMC to other regular SMC employees that were terminated as a result of the retrenchment. 2001 and Resolution dated July 11.97-102) |164 .00 to each private respondent as nominal damages.87 Absent any evidence showing that Sunflower has been dissolved in accordance with law. there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. Petitioner San Miguel Corporation is further ORDERED to pay each private respondent the amount ofP50. and ten percent (10%) attorney’s fees based on the herein modified award. separation pay equivalent to at least one (1) month pay or to at least one-half month LABOR LAW I CASES (Arts. whichever is higher. representing nominal damages for noncompliance with statutory due process. Section 1988 of the Omnibus Rules Implementing the Labor Code. Sunflower is held solidarily liable with SMC for all the rightful claims of private respondents. 80 The appellate court thus erred in awarding backwages to private respondents upon the authority of Bustamante v. Petitioner San Miguel Corporation and Sunflower Multi-Purpose Cooperative are hereby ORDERED to jointly and severally pay each private respondent differential pay from the time they became regular employees up to the date of their termination.82 a maximum of ten percent (10%) of the total monetary award 83 by way of attorney’s fees is justifiable under Article 111 of the Labor Code. Rule VIII. 2001 of the Court of Appeals are AFFIRMED with MODIFICATION. NLRC. Private respondents should thus be awarded separation pay equivalent to at least one (1) month pay or to at least onehalf month pay for every year of service. WHEREFORE. It is well settled that backwages may be granted only when there is a finding of illegal dismissal.86 Although an express finding of facts and law is still necessary to prove the merit of the award. however. initiated by an act imputable to the employee. depending on which is most beneficial to private respondents. There need only be a showing that the lawful wages were not paid accordingly. SO ORDERED.000.81 what was involved in that case being one of illegal dismissal. the petition is DENIED. in effect. no backwages need be awarded.

Attached to the letter agreement was a "List of Messengers assigned at Philippine Bank of Communications" which list included. on 2 April 1984.: Petitioner Philippine Bank of Communications and the Corporate Executive Search Inc. 5 thereof." The petitioner in truth undertook to pay a "daily service rate of P18." On 29 October 1976. the letter agreement was dated January 1976. HONORABLE ARBITER TEODORICO L. RB-IV-11187-77 entitled "Ricardo Orpiada. 851. (CESI) entered into a letter agreement dated January 1976 under which (CESI) undertook to provide "Tempo[rary] Services" to petitioner Consisting of the "temporary services" of eleven (11) messengers. the bank filed the present petition for certiorari with this Court seeking to annul and set aside (a) the decision of respondent Labor Arbiter Dogelio dated 12 September 1977 in Labor Case No. Both the bank and (CESI) stoutly maintained that (CESI) (and not the bank) was the employer of Orpiada. J. As such. R04-1010184-76-E. the petitioner requested (CESI) to withdraw Orpiada's assignment because. Regional Office No. Ricardo Orpiada was thus assigned to work with the petitioner bank. the dispositive portion of which read as follows: WHEREFORE. Despite the foregoing order. There was some question as to when Ricardo Orpiada commenced rendering services to the bank. The contract period is described as being "from January 1976—. premises considered. issued an order dismissing Orpiada's complaint for failure of Mr. petitioner. Orpiada instituted a complaint in the Department of Labor (now Ministry of Labor and Employment) against the petitioner for illegal dismissal and failure to pay the 13th month pay provided for in Presidential Decree No. However. " Be that as it may. The main issue as litigated by the parties in this case relates to whether or not an employer-employee relationship existed between the petitioner bank and private respondent Ricardo Orpiada. the position paper submitted by (CESI) to the National Labor Relations Commission stated that (CESI) hired Ricardo Orpiada on 25 June 1975 as a Tempo Service employee. More than six years later—and the record is silent on why the proceeding in the NLRC should have taken more than six years to resolve the NLRC promulgated its decision affirming the award of the Labor Arbiter and stating as follows: WHEREFORE. Philippine Bank of Communications. On 12 September 1977. the bank appealed the decision of the Labor Arbiter to the respondent NLRC. Jr. complaint vs. No. As noted above. FELICIANO. 1986 PHILIPPINE BANK OF COMMUNICATIONS. he rendered services to the bank. on or about October 1976. in the allegation of the bank." During the compulsory arbitration proceedings. within the premises of the bank and alongside other people also rendering services to the bank. except for the modification reducing the complainant's back wages to two (2) years without qualification. the Office of the Regional Director. L-66598 December 19. CE SI was brought into the picture as an additional respondent by the bank. DOGELIO and RICARDO ORPIADA respondents. RB-IV-11187-77. as item No. Orpiada succeeded in having his complaint certified for compulsory arbitration in Case No. the Decision appealed from is hereby AFFIRMED in an other respects. respondent Labor Arbiter Dogelio rendered a decision in Case No. On 26 October 1977.97-102) |165 . IV of the Department of Labor. Orpiada to show the existence of an employer-employee relationship between the bank and himself. This Court granted a temporary restraining order on 11 April 1984. RB-IV-1118-77 and (b) the decision of the NLRC promulgated on 29 December 1983 affirming with some modifications the decision of the Labor Arbiter.G. Orpiada's services "were no longer needed. respondent.R. vs. After investigation. Accordingly. THE NATIONAL LABOR RELATIONS COMMISSION. and assigned him to work with the petitioner bank "as evidenced by the appointment memo issued to him on 25 June 1975. This complaint was docketed as Case No. respondent bank is hereby ordered to reinstate complainant to the same or equivalent position with full back wages and to pay the latter's 13th month pay for the year 1976. " on a per person basis. Marcelino Lontok. for respondents. The petitioner bank maintains that no employer-employee relationship was established between itself and Ricardo Orpiada and that Ricardo Orpiada was an employee of (CESI) and not of the LABOR LAW I CASES (Arts. the name of private respondent Ricardo Orpiada.

the Philippine Bank of Communications. it seems safe to assume that (CESI) had required some amount in excess of the wages paid by (CESI) to Orpiada and the others to cover its own overhead expenses and provide some contribution to profit. retain all liabilities arising from the new Labor Code as amended Social Security Act and other applicable Governmental decrees. 99 Phil. the herein Respondent.e. These factors are: 1) The selection and engagement of the putative employee. The bank alleged that Orpiada did not appear in its payroll and this allegation was not denied by Orpiada. and (CESI) paid to Orpiada and the others the wages pertaining to to them. (CESI) will assign to us i. the bank remitted to CE SI amounts corresponding to the "daily service rate" of Orpiada and the others similarly assigned by (CESI) to the bank. 408 (1956). Inc. provided that. Orpiada was assigned to work in the bank by (CESI) Orpiada could not have found his way to the bank's offices had he not been first hired by (CESI) and later assigned to work in the bank's offices. It is not clear from the record whether the amounts remitted to (CESI) included some factor for CESIs fees. — (Emphasis supplied) The above language of the agreement between the bank and CE SI is of course relevant and important as manifesting an intent to refrain from constituting an employer-employee relationship between the bank and the persons assigned or seconded to the bank by (CESI) That extent to which the parties were successful in realizing their intent is another matter. The selection of Orpiada by (CESI) was. and methods of work (sic). In the position paper dated August 5. R04-184-76-B found that Orpiada was listed in the payroll of (CESI) with (CESI) deducting amounts representing his Medicare and Social Security System premiums. he was hired by Corporate Executive Search. The bank documents its position by pointing to the following provisions of its letter agreement with CE SI 4) The power to control the putative employees' conduct. AI-Lagdan and Pica. The individual/s you i. Orpiada was also terminated by (CESI) Indeed.bank.. the Labor Arbiter in Case No. (CESI) explained the relationship between itself and Orpiada in lucid terms: 5.412. Orpiada was not previously selected by the bank. b. Orpiada's employment with (CESI) was also severed. by Orpiada himself to Regional Office No. In the present case.. to faithfully reflect all hours worked in our behalf whether such work be within or beyond eight hours of any day. Emphasis supplied) 1.. withdraw such assignment. A copy of the (CESI) payroll was presented. hours. ceased to exist and that LABOR LAW I CASES (Arts. strangely enough. Upon such withdrawal from his assignment with the bank. although the latter is the most important element. however. was being assigned to work with the latter's client Respondent herein that the rationale behind his hiring was the existence of a service contract between Corporate Executive Search Inc. In respect of the power of dismissal we note that the bank requested (CESI) to withdraw Orpiada's assignment and that (CESI) did. That as Petitioner herein was very well aware of from the very beginning. Rather. 3) The power of dismissal. then the reason for his employment with Corporate Executive Search. Notify you of any change in the work assignment or contract period affecting any of your employers assigned to us within 24 hours. (99 Phil. IV. one that is dependent upon applicable law and not merely upon the terms of their contract. it appears clear that Orpiada was hired by (CESI) specifically for assignment with the bank and that upon his withdrawal from such assignment upon request of the bank. . In the case of Viana vs. as a temporary employee and as such. until some other client of (CESI) showed up in the horizon to which Orpiada could once more be assigned. Require your employers assigned to us to properly accomplish your daily time record. Inc. we shaIl a.and With respect to the payment of Orpiada's wages. 2) The payment of wages. after such change is made. petitioner) will be subject to our acceptance and will observe work-days. in fact. subject to the acceptance of the bank and the bank did accept him As will be seen shortly. on the other hand.e. rules and regulations. (CESI) had hired Orpiada from the outside world precisely for the purpose of assigning or seconding him to the bank. Indeed. at 411. they will not be asked to perform job (sic) not normally related to the position/s for which Tempo Services were contracted.97-102) |166 . Such individuals will nevertheless remain your own employees and you will therefore. on our part. 1977 submitted by (CESI) before the NLRC. this Court listed certain factors to be taken into account in determining the existence of an employeremployee relationship. and that when this service contract was 0terminated. and its client-company. 2.

restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. It is therefore necessary to confront the task of determining the appropriate characterization of the relationship between the bank and (CESI) was that relationship one of employer and job (independent) contractor or one of employer and "labor-only" contractor? Articles 106 and 107 of the Labor Code of the Philippines (Presidential Decree No. shall be paid in accordance with the provisions in this Code. and for the very purpose of making possible. (CESI) and Orpiada is that the employer-employee relationship between (CESI) and Orpiada was established precisely in anticipation of. Nonetheless when a contractor fails to pay the wages of his employees in accordance with the Labor Code. Orpiada must have been subject to at least the same control and supervision that the bank exercises over any other person physically within its premises and rendering services to or for the bank. part. Perhaps the most important circumstance which emerges from an examination of the facts of the tri-lateral relationship between the bank. had no alternative but to discontinue his employment until another opportune time for his hiring would present itself. and since the company had lost contact with the Petitioner by reason of his having ceased to be connected with it as of 22 October 1976. an employer who enters into a contract with a contractor for the performance of work for the employer. In so prohibiting or restricting. as amended) provides as follows: ART. by appropriate regulations.97-102) |167 . he was not among those given the 13th-month pay. task. gave the 13th month pay for 1976 to its employees in December 1976. contracts with an independent contractor for the performance of any work. any employee or staff member of the bank. because Corporate Executive Search Inc. among others. job or project. if any. 851. — The provisions of the immediately preceding Article shall likewise apply to any person. the employer who contracted out the job to the contractor becomes jointly and severally liable with his contractor to the employees of the latter "to the extent of the work performed under the contract" as such employer were the employer of the contractor's LABOR LAW I CASES (Arts. not being an employer. 6. the employer shall be jointly and severally liable with his contractor or sub-contructor to such employees to the extent of the work performed under the contract in the same manner and extent that he is liable to employees directly employed by him The Secretary of Labor may. 106. in other words. In the event that the contractor or sub-contractor fails to pay the wages of his employees in accordance with this Code.employer relationship between the bank and Orpiada. to prevent any violation or circumvention of any provisions of this Code. machineries. 442. (Emphasis supplied) Turning to the power to control Orpiada's conduct. Contractor or sub-contractor. or in respect of the end results of their functions or activities. it should be noted immediately that Orpiada performed his sections within the bank's premises. work premises. whether in respect of the manner in which they discharged their functions. or both. and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. the employees of the contractor remain the contractor's employees and his alone. the first ("selection and engagement") and fourth ("control of employee's conduct") factors indicate that some direct relationship did exist between Orpiada and the bank and that such relationship may be assimilated to employment.—Whenever an employer enters into a contract with another person for the performance of the former's work. nership association or corporation which.therefore Corporate Executive Search Inc. Indirect employer. he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code. Thus. Upon the other hand. and not within the office premises of (CESI) As such. does not thereby create an employer-employes relationship between himself and the employees of the contractor. without subjecting them to a substantial measure of control and supervision. That Petitioner was not given his 13th-month pay under P. the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. In such cases. 107. the secondment of Orpiada to the bank. Application of the above factors in the specific context of this case appears to yield mixed results so far as concerns the existence of an employer. The second ("payment of wages") and third ("power of dismissal") factors suggest that the relevant relationship was that subsisting between (CESI) and Orpiada. a relationship conceded by (CESI) to be one between employer and employee. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools. (Emphasis supplied) Under the general rule set out in the first and second paragraphs of Article 106. ART. equipment. It seems unreasonable to suppose that the bank would have allowed Orpiada and the other persons assigned to the bank by CE SI to remain within the bank's premises and there render services to the bank.D. the employees of the contractor and of the latter's subcontractor.

(1) Does not have substantial capital or investment in the form of tools. Section 9 of Rule VIII of Book III entitled "Conditions of Employment. 114 SCRA 826 (1982) if indeed distinguishing way is needed. establishes an employer-employee relationship between the employer and the job contractor's employees for a limited purpose. The "labor-only" contractor-i. — There is job contracting permissible under the Code if the following conditions are met: (1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof. the Secretary of Labor shall determine through appropriate orders whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the workers involved. Orpiada utilized the premises and office equipment of the bank and not those of (CESI) Messengerial work-the delivery of documents to designated persons whether within or without the bank premises — is of course directly related to the day-to-day operations of the bank. it is a recruitment and placement corporation placing bodies. The definition of "labor-only" contracting in Rule VIII. LABOR LAW I CASES (Arts. In contrast. where "labor only" contracting exists in a given case. (Emphasis supplied) Both the petitioner bank and (CESI) have insisted that (CESI) was not a "labor only" contractor. In the present case. (b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him (c) For cases not file under this Article. Job contracting. " The employer is made by the statute responsible to the employees of the "labor only" contractor as if such employees had been directly employed by the employer. The undertaking given by CESI in favor of the bank was not the performance of a specific — job for instance." of the Omnibus Rules Implementing the Labor Code provides as follows: The bank and (CESI) urge that (CESI) is not properly regarded as a "labor-only" contractor upon n the ground that (CESI) is possessed of substantial capital or investment in the form of office equipment. 9. and who deliver such materials utilizing their own delivery vans or motorcycles to the addresses. to our mind. machineries. equipment. The law itself. Sec. the carriage and delivery of documents and parcels to the addresses thereof. i. distinguishes this case from American President v. and other materials which are necessary in the conduct of his business. in order to ensure that the latter get paid the wages due to them. Clave et al. job contracting-contracting out a particular job to an independent contractor is defined by the Implementing Rules as follows: Sec..employees. Labor-only contracting. tools and trained service personnel. In such case. this time for a comprehensive purpose: "employer for purposes of this Code.97-102) |168 . " The law in effect holds both the employer and the "labor-only" contractor responsible to the latter's employees for the more effective safeguarding of the employees' rights under the Labor Code. Book III of the Implementing Rules must be read in conjunction with the definition of job contracting given in Section 8 of the same Rules. Such undertaking of CESI was complied with when the requisite number of persons were assigned or seconded to the petitioner bank. (Emphasis supplied) Succinctly put.e. equipment. A similar situation obtains where there is "labor only" contracting. 8. machineries. as it were. CESI is not a parcel delivery company: as its name indicates. work premises and other materials. Section 9(2) quoted above does notrequire for its applicability that the petitioner must be engaged in the delivery of items as a distinct and separate line of business. It is this factor that. the statute itself implies or establishes an employer-employee relationship between the employer (the owner of the project) and the employees of the "labor only" contractor.e "the person or intermediary" is considered "merely as an agent of the employer. the undertaking of (CESI) was toprovide its client-thebank-with a certain number of persons able to carry out the work of messengers. work premises. There appear to be many companies today which perform this discrete service. and (2) The contractor has substantial capital or investment in the form of tools. companies with their own personnel who pick up documents and packages from the offices of a client or customer. to prevent any violation or circumvention of any provision of this Code. and (2) The workers recruited and placed by such person are performing activities which are to the principal business or operations of the c workers are habitually employed. — (a) Any person who undertakes to supply workers to an employer shag be deemed to be engaged in labor-only contracting where such person: We are unable to agree with the bank and (CESI) on this score. Thus. he may prescribe conditions and restrictions to insure the protection and welfare of the workers. in d ifferent client companies for longer or shorter periods of time. in other words.

Assuming. but this it is not necessary to determine here. shall be considered a regular employee (Article 281. or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season" (Article 281. (CESI) was engaged in "labor-only" or attracting vis-a-vis the petitioner and in respect c Ricardo Orpiada.<äre||anº•1àw> The letter agreement itself. Labor Code). Second paragraph). any employee who has rendered at least one year of service. that Orpiada could properly be regarded as a casual (as distinguished from a regular) employee of the bank. employed not only by (CESI) but also by the bank. Costs against petitioner. Article 106 of the Labor Code is precisely designed to prevent such a result. he became entitled to be regarded as a regular employee of the bank as soon as he had completed one year of service to the bank. the petition for certiorari is DENIED and the decision promulgated on 29 December 1983 of the National Labor Relations Commission is AFFIRMED. We hold that. Under the Labor Code. It may well be that the bank may in turn proceed against (CESI) to obtain reimbursement of. to replace temporary workers who were out on vacation or sick leave. Ricardo Orpiada himself was assigned to the bank's offices from 25 June 1975 and rendered services to the bank until sometime in October 1976. in the circumstances 'instances of this case. and to handle specialized work. or some contribution to. of course. thus to deny them security of tenure in their jobs. the amounts which the bank will have to pay to Orpiada. There is. merely required (CESI) to furnish the bank with eleven 11) messengers for " a contract period from January 19. nothing illegal about hiring persons to carry out "a specific project or undertaking the completion or termination of which [was] determined at the time of the engagement of [the] employee. SO ORDERED. Employers may not terminate the service of a regular employee except for a just cause or when authorized under the Labor Code (Article 280.The bank urged that the letter agreement entered into with CESI was designed to enable the bank to obtain the temporary services of people necessary to enable the bank to cope with peak loads. LABOR LAW I CASES (Arts. whether such service is continuous or not. however. the petitioner bank is liable to Orpiada as if Orpiada had been directly. The Temporary Restraining Order issued by this Court on 11 April 1984 is hereby lifted. WHEREFORE." The eleven (11) messengers were thus supposed to render "temporary" services for an indefinite or unstated period of time. It is not difficult to see that to uphold the contractual arrangement between the bank and (CESI) would in effect be to permit employers to avoid the necessity of hiring regular or permanent employees and to enable them to keep their employees indefinitely on a temporary or casual status. and that consequently.97-102) |169 . Labor Code). therefore. or a period of about sixteen months. 1976 —. however.

SARMIENTO. The labor arbiter's decision. ISLES.SECOND DIVISION G. Among other things. ELMER ARMADA.. the agreement provided that California "has no control or supervisions whatsoever over [Livi's] workers with respect to how they accomplish their work or perform [Californias] obligation".97-102) |170 . ESPINO. thirteen-month pay. ERISPE.: On July 21. any liability for payment of money claims. They likewise claim that pending further proceedings below. Raneses. 1986. and so on. the relationship of principal[-]agent or employer[-]employee'. the California Manufacturing Company. Sy. consequently. . they received P38. LILY-VICTORIA A. however. the petitioners' employer and that the "retrenchment" had been forced by business losses as well as expiration of contracts. CALIFORNIA MANUFACTURING COMPANY. and July 28.56 plus P15. V. Flores. 7 It was further expressly stipulated that the assignment of workers to California shall be on a "seasonal and contractual basis". TUMANON. rules and regulations pertinent to employment of labor" 6 and that "[California] is free and harmless from any liability arising from such laws or from any accident that may befall workers and employees of [Livi] while in the performance of their duties for [California]. and that "[p]ayroll for the preceeding [sic] week [shall] be delivered by [Livi] at [California's] premises.823. California admits having refused to accept the petitioners back to work but deny liability therefor for the reason that it is not. 5 that "it is hereby agreed that it is the sole responsibility of [Livi] to comply with all existing as well as future laws. BRIONES. AZARCON. 2 On motion of the petitioners. It appears that the petitioners were. as a consequence whereof. Unlike regular California employees. TABAS. supra. petitioners. In the same breath. 9 It appears that thereafter. AMARO BONA. VIOLY ESTEBAN and LYDIA ORTEGA. 1 On October 7. to begin with. ROBERTO P. employees of Livi Manpower Services. NATIONAL LABOR RELATIONS COMMISSION. they were notified by California that they would not be rehired. upon the expiration of which they signed new agreements with the same period. INC. NOMER MATAGA. the Court finds the single most important issue to be: Whether the petitioners are California's or Livi's employees. and HON. EDUARDO BONDOC. 11 a decision affirmed on appeal. Miralles." 8 The petitioners were then made to sign employment contracts with durations of six months. holiday pay. 1986. was impleaded as a party-respondent. 1986. 1989 DANILO B. respondents. that "[c]ost of living allowance and the 10 legal holidays will be charged directly to [California] at cost ". 12 ruled against the existence of any employer-employee relation between the petitioners and California ostensibly in the light of the manpower supply contract. including minimum wage.00 a month in addition to a host of fringe benefits and bonuses. Taquio and Associates for petitioners. prior to their stint with California. and consequently. Ramos for respondent Lily Victoria A. Azarcon.R. FERDINAND CRUZ. MIGUELITA QUIAMBOA. the California Manufacturing Company (California) filed a motion to dismiss as well as a position paper denying the existence of an employer-employee relation between the petitioners and the company and. L-80680 January 26. Inc. EMERSON C. . overtime pay. BELITA. J. JOEL MADRIAGA. 1986.00 in allowance daily. ARTHUR M. vs. No. The Solicitor General for public respondent. EDUARDO UDOG. Del Rosario & Associates for respondent CMC. 4 the Livi "is an independent contractor and nothing herein contained shall be construed as creating between [California] and [Livi] . the labor arbiter absolved Livi from any obligation because the LABOR LAW I CASES (Arts. and emergency cost of living allowance pay. Inc. 10 Amid these factual antecedents.E. which subsequently assigned them to work as "promotional merchandisers" 3 for the former firm pursuant to a manpower supply agreement. against the latter's liability as and for the money claims demanded. the petitioners petitioned the National Labor Relations Commission for reinstatement and payment of various benefits. Livi Manpower Services. they filed an amended complaint charging California with illegal dismissal. similar benefits. Banzuela. against the respondent. RAMON M. (Livi). after the cases had been consolidated. FEDERICO A. As a result. Mildred A. who received not less than P2. EDUARDO R. July 23. The petitioners now allege that they had become regular California employees and demand. Livi re-absorbed them into its labor pool on a "wait-in or standby" status. PETER TIANSING.

We hold that it is one notwithstanding its vehement claims to the contrary. they alone are bound by it.97-102) |171 . among others." the firm. by appropriate regulations. the employer shall be jointly and severally liable with his contractor or sub-contractor to such employees to the extent of the work performed under the contract. the former has the responsibility. 18 There is no doubt that in the case at bar. It is not. for any valid labor claims. nevertheless. it cannot be made the subject of agreement. In the event that the contractor or sub-contractor fails to pay wages of his employees in accordance with this Code. that is. The reason. Hence. The Secretary of Labor may. At any rate. then. as if Livi had served as its (California's) promotions or sales arm or agent. he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code. and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. together with the "labor-only" contractor. the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. separation pay and attorney's fees." 20 The nature of one's business is not determined by self-serving appellations one attaches thereto but by the tests provided by statute and prevailing case law. work premises. that notwithstanding the absence of a direct employer-employee relationship between the employer in whose favor work had been contracted out by a "labor-only" contractor. since the agreement was between Livi and California. The existence of an employer-employees relation is a question of law and being such. " 23 The petitioner's had been charged with "merchandizing [sic] promotion or sale of the products of [California] in the different sales outlets in Metro Manila including task and occational [sic] price tagging." 22 California's purported "principal operation activity. For one thing." 17 and liability must be shouldered by either one or shared by both. rendered a piece of work it (California) could not have itself done. This Court has consistently ruled that the determination of whether or not there is an employer-employee relation depends upon four standards: (1) the manner of selection and engagement of the putative employee. had simply supplied it with the manpower necessary to carry out its (California's) merchandising activities. (2) the mode of payment of wages. hereinbelow reproduced: ART. will not erase either party's obligations as an employer. the right-of-control test has been held to be the decisive factor. restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. machineries. 15 On the other hand. and (4) the presence or absence of a power to control the putative employee's conduct. as a placement agency. the employees of the contractor and of the latter's sub-contractor. the fact that the LABOR LAW I CASES (Arts. The fact that the petitioners have allegedly admitted being Livi's "direct employees" 26 in their complaints is nothing conclusive. 25 Neither Livi nor California can therefore escape liability. and notwithstanding the provision of the contract that it is "an independent contractor. 14 Of the four. equipment. to prevent any violation or circumvention of any provisions of this Code. Contractor or sub-contractor. Livi. an integral part of the manufacturing business. and the employees. in the same manner and extent that he is liable to employees directly employed by him. is that the "labor-only" contractor is considered "merely an agent of the employer. — Whenever an employee enters into a contract with another person for the performance of the former's work. 21 The bare fact that Livi maintains a separate line of business does not extinguish the equal fact that it has provided California with workers to pursue the latter's own business. 13 He assessed against We reverse. Livi performs "manpower services". we have likewise held. if any. if an employeremployee relation otherwise exists between the workers and either firm. it contracts out labor in favor of clients. In so prohibiting or restricting. so we held. based on Article 106 of the Labor Code. shall be paid in accordance with the provisions of this Code. 106. In such cases. assuming one exists."retrenchment" in question was allegedly "beyond its control . In this connection." 24 an activity that is doubtless. using its (California's) premises and equipment. we do not agree that the petitioners had been made to perform activities 'which are not directly related to the general business of manufacturing. 19 meaning to say. and the petitioners cannot be made to suffer from its adverse consequences. the fact that the manpower supply agreement between Livi and California had specifically designated the former as the petitioners' employer and had absolved the latter from any liability as an employer. There is 'labor-only' contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools. 16 by operation of law. or otherwise. (3) the presence or absence of a power of dismissal.

As to the second.. Succinctly put. amid an LABOR LAW I CASES (Arts. Livi would have been truly the employer of its employees. we are not convinced that California has shown enough evidence. that it had in fact suffered serious business reverses as a result alone of the prevailing political and economic climate. they cannot be separated without due process of law. we have. have acquired a regular status. but of the restaurant. As we held in Philippine Bank of Communications v. under Article 218 of the Labor Code. by reason of financial distress brought about by "unfavorable political and economic atmosphere" 31"coupled by the February Revolution. California resists reinstatement on the ground. . For then that would compromise the rights of the workers. would have been a mere patron. although at the service of customers. Such undertaking of CESI was complied with when the requisite number of persons were assigned or seconded to the petitioner bank. For then. It is not that by dismissing the terms and conditions of the manpower supply agreement. the Court will be justified in expressing its concern. The client. The Court need not therefore consider whether it is Livi or California which exercises control over the petitioner vis-a-vis the four barometers referred to earlier. other than its bare say so. 27 a temporary or casual employee. hence. For another. the undertaking of CESI was to provide its client the bank with a certain number of persons able to carry out the work of messengers. provided they are genuine job contracts. unless he has been contracted for a specific project. It would have been different.97-102) |172 . first. and California. and as we Id. it supplied California with personnel. There appear to be many companies today which perform this discrete service. and not by declarations of parties. when such arrangements are resorted to "in anticipation of. it is a recruitment and placement corporation placing bodies. that the petitioners are not its employees. either or both shoulder responsibility. who. The employees would not in that event be unlike waiters. and who deliver such materials utilizing their own delivery vans or motorcycles to the addressees. The undertaking given by CESI in favor of the bank was not the performance of a specific job for instance. " 29 When it thus provided California with manpower. 28 In the case at bar. but more so. has serious consequences not only on the State's initiatives to maintain a stable employment record for the country. Messengerial work the delivery of documents to designated persons whether within or without the bank premises-is of course directly related to the day-to-day operations of the bank. Hence. as if such personnel had been directly hired by California. had Livi been discretely a promotions firm. as it were. Hence. and as we indicated. the carriage and delivery of documents and parcels to the addresses thereof. in that case. we believe. on the workingman himself. supra. Livi is admittedly an "independent contractor providing temporary services of manpower to its client.. especially their right to security of tenure. the secondment" 30 of the employees from the true employer. Orpiada utilized the premises and office equipment of the bank and not those of CESI. as we held in Philippine Bank of Communications. considered it illegal. genuine job contracts are permissible. We further find the attribution to the February Revolution as a cause for its alleged losses to be gratuitous and without basis in fact. and that California had hired it to perform the latter's merchandising activities. The fact that the petitioners have been hired on a "temporary or seasonal" basis merely is no argument either. companies with their own personnel who pick up documents and packages from the offices of a client or customer. by virtue of the required one-year length-of-service. NLRC. becomes regular after service of one year. And we cannot say that merchandising is a specific project for the obvious reason that it is an activity related to the day-to-day operations of California. they had become regular employees-of-California-and had acquired a secure tenure. and not an employer. In the present case. California should be warned that retrenchment of workers. Section 9(2) quoted above does not require for its applicability that the petitioner must be engaged in the delivery of items as a distinct and separate line of business." 32 As to the first objection. and for the very purpose of making possible. As we pointed out in the Philippine Bank of Communicationscase: xxx xxx xxx . and second. are not the latter's employees. renewed for another six months. under Article 281 of the Code. unless clearly warranted.petitioners were (are).. since by fiction of law. the relations of parties must be judged from case to case and the decree of law. Accordingly. Under the Labor Code. But. will not absolve California since liability has been imposed by legal operation. CESI is not a parcel delivery company: as its name indicates. in different client companies for longer or shorter periods of time. its client. Article 106 of the Code applies.. we reiterate that the petitioners are its employees and who. This brings us to the question: What is the liability of either Livi or California? The records show that the petitioners bad been given an initial six-month contract.

the California Manufacturing Company. 1987. dated August 19. and (b) all such other and further benefits as may be provided by existing collective bargaining agreement(s) or other relations. Inc. to REINSTATE the petitioners with full status and rights of regular employees. to PAY. Livi Manpower Service. jointly and severally. And. IT IS SO ORDERED. Judgment is hereby RENDERED: (1): SETTING ASIDE the decision. and (3) ORDERING the respondent. 1987. the petition is GRANTED. or by law. the California Manufacturing Company.97-102) |173 . beginning such time. in addition to those money claims. The private respondents are likewise ORDERED to PAY the costs of this suit. LABOR LAW I CASES (Arts. the National Labor Relations Commission should have known better than to fall for such unwarranted excuses and nebulous claims. and (4) ORDERING the private respondents to PAY unto the petitioners attorney's fees equivalent to ten (10%) percent of all money claims hereby awarded.environment that is desperately scarce in jobs. of the Labor Code. WHEREFORE. and the resolution. (2) ORDERING the respondent. of Section 281. and the respondents. and/or Lily-Victoria Azarcon. unto the petitioners: (a) backwages and differential pays effective as and from the time they had acquired a regular status under the second paragraph. dated March 20. but not to exceed three (3) years.

appointed Mafinco as its sole distributor of Cosmos soft drinks in Manila. of legal age. The PEDDLER himself shall. Jose T. The voluminous record reveals the following facts: Peddling contracts and their termination. hereinafter called Cosmos. vs. Malabon.. Rizal. petitioner. overtime pay. and their compensation including salaries. Tanada. The NATIONAL LABOR RELATIONS COMMISSION RODRIGO REPOMANTA and REY MORALDE. MAFINCO has been appointed as the exclusive distributor of 'COSMOS' Soft Drink Products for and within the City of Manila. wages. married/single. in his capacity as Secretary of Labor. That in consideration of the competence of the PEDDLER and his ability to promote mutual benefits for the parties hereto. MAFINCO shall provide the PEDDLER with a delivery truck with which the latter shall exclusively peddle the soft drinks of the former.. AQUINO. PICA. Tanada & Tanada for petitioner. Rey Moralde entered into a similar contract. carefully and in strict observance to traffic regulations. bonus or other remuneration and privileges shall be for the PEDDLER'S own account. The PEDDLER shall be responsible for any damage to property. drive the truck furnished him by MAFINCO or should he employ a driver or helpers such driver or helpers shall be his employees under his direction and responsibility and not that of MAFINCO. the parties hereto has agreed as follows: 1. the PEDDLER is desirous of buying and selling in Manila the 'COSMOS' Soft Drink Products handled by MAFINCO. L-37790 March 25. a firm based at Malabon. In that decision the Secretary reversed an order of the old National Labor Relations Commission (NLRC) and held that the NLRC had jurisdiction over the complaint lodged by the Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas (FOITAF) against Mafinco for having dismissed Rodrigo Repomanta and Rey Moralde (NLRC Case No. SALVADOR C. OPLE. WITNESSETH: MAFINCO TRADING CORPORATION. a domestic corporation duly organized and existing under the laws of the Philippines. The contracts were to remain in force for one year unless sooner terminated by either party upon five days notice to the other.R. death or injuries to persons or damage to the truck used by him caused by his own acts or omission or that of his driver and helpers. 1972 Rodrigo Repomanta and Mafinco executed a peddling contract whereby Repomanta agreed to "buy and sell" Cosmos soft drinks. LR-086). respondents. 715 Equitable Bank Bldg. Juan Luna St. Potrero. duly authorized for the purpose and hereinafter referred to as MAFINCO. 1973. under the terms set forth herein. — On April 30. MacArthur Highway. The PEDDLER shall likewise bind himself to comply with the provisions of the Social Security Act and all the applicable labor laws in relation to his employees. J. 2. No. On May 31. entered into by and between: G. WHEREAS. WHEREAS. Mendoza for all other respondents. 1968 Cosmos Aerated Water Factory. 1 The contract with Repomanta reads as follows: PEDDLING CONTRACT NOW THEREFORE. and a resident of 70-D Bo.SECOND DIVISION This CONTRACT. Inc.97-102) |174 . 1976 The MAFINCO TRADING CORPORATION. under the style MAFINCO represented in this act by its General Manager. and RODRIGO REPOMANTA. Sanchez. doing business at Rm. Maghari for private respondents. Rizal hereinafter referred to as PEDDLER. for and in consideration of the foregoing premises and the covenants and conditions hereinafter set forth. KNOW ALL MEN BY THESE PRESENTS: LABOR LAW I CASES (Arts.. separation pay. THE HON. BLAS F. Manila. 3.: Mafinco Trading Corporation (Mafinco for short) filed these special civil actions of certiorari and prohibition in order to annul the decision of the Secretary of Labor dated April 16. Solicitor General Estelito P.

that may have been entered into between the parties. the parties hereto have signed this instrument at the City of Manila. termination of this contract. the applicable labor laws and for damages suffered by third persons. All purchases by the PEDDLER shall be charged to him at a price of P2. 1972 Repomanta and Moralde.. 21. filed a complaint with the NLRC. — Four days later or on December 11. (Sgd. terminated the same.00 against which MAFINCO shall charge the PEDDLER with any unpaid account at the end of each day or with any damage to the truck of other account which is properly chargeable to the PEDDLER. Yours truly. the delivery truck and such other equipment furnished by MAFINCO to the PEDDLER shall be returned by the latter in good order and workable condition. the PEDDLER shall give a cash bond in the amount of P1.00 in favor of MAFINCO from a SURETY COMPANY acceptable to MAFINCO. shall be returned to the PEDDLER. 10.) SALVADOR C. unless the same is renewed. Please be informed that in accordance with the provisions of paragraph 9 of the said peddling contract. Upon the execution of this contract. Upon the. PICA General Manager Complaints of Repomanta and Moralde and NLRCs dismissal thereof. within 30 days after the termination of this contract. The notice to Repomanta reads as follows: Dear Mr. which created the NLRC and which was intended "to promote industrial peace. either of the parties may terminate the same upon five (5) days prior notice to the other. 1972.4. charging the general manager of Mafinco with having violated Presidential Decree No. Chairman 11. PEDDLER shall furnish a performance bond of P1. MAFINCO shall furnish the gasoline and oil to run the said truck in business trips. 9. we are hereby serving notice of termination thereof effective on December 12. he shall be entitled further to a Peddler's Discount of P11.97-102) |175 . ex-warehouse. ordinary wear and tear excepted. PROVIDED. after deducting proper charges. To assure performance by the PEDDLER of his obligation to his employees under the Social Security Act. und shall promptly settle his outstanding account if any. with MAFINCO. issued on October 14. and his failure to do so shall subject his cash bond at once to answer for any unliquidated accounts. By: 5. National Labor Relations Commission Phoenix Bldg. 1973 and supersedes any or all other previous contracts. through their union. if any. 1972 Mafinco.000. However. 8. the cash bond. bear the cost of maintenance and repairs of the said truck arising from ordinary wear and tear. 1972. Manila Sir: MAFINCO TRADING CORPORATION LABOR LAW I CASES (Arts. Philippines. 1972. (Sgd.) SALVADOR C.00. that if the PEDDLER purchases a total of not less than 250 cases a day. Repomanta: This has reference to the Peddling Contract you executed with the Mafinco Trading Corporation on May 31.) RODRIGO REPOMANTA (Sgd. The PEDDLER shall secure at his own expense all necessary licenses and permits required by law or ordinance and shall bear any and all expenses which may be incurred by him in the sales of the soft drink products covered by the contract. However. Peddler General Manager 6. pursuant to section 9 of the contract. 1972. IN WITNESS WHEREOF. The brief complaint reads as follows: Hon. 7.500. maximize productivity and secure social justice for all". This contract shall be effective up to May 31.52 per case of 24 bottles. Intramuros. PICA (Witnesses and notarial acknowledgment are omitted) On December 7. this May 31. the FOITAF. The PEDDLER shall liquidate and pay all his accounts to MAFINCO'S authorized representative at the end of each day. Amado Gat Inciong.

The peddler clears his accounts with the distributor at the end of each day. held in its decision dated July 17. Ruling upon this type of contracts. Rey Moralde. the FOITAF files a complaint against SALVADOR C.R. which analyzes the peddling contract and reviews the court rulings on the matter.. Mr. Notice of termination is herewith attach (sic). Rapajon vs.97-102) |176 . said that it did not create a relationship of employer and employee. a ruling which this Court refused to review (L-14072-74. and sell in Manila. Rodrigo Refumanta and Mr. adopted that recommendation in its order dated February 2. the Manila-Cosmos Aerated Water Factory. the Court of Appeals. is quoted below: The question of whether peddling contracts of the kind entered into between the parties give rise to an employer-employee relationship is not new. 1973 found. he is entitled to a fixed amount of peddler's discount. composed of Amado G. The complaint was referred to a factfinder who in a lengthy report dated January 22. PICA. Manila. General Manager of MAFINCO TRADING CORP. Equitable Bank Bldg. the latter are his employees and he assumes all the responsibilities of an employer in relation to them. 19477-R and 21397-R.R. No. Resolution dated July 16.R. Nos. that the peddlers were employers or "independent businessmen'. 1973. 1966 by the Registrar of Labor Organizations in Registration Proceeding No. The old NLRC.Pursuant to the Presidential Decree No. not a dismissal of an employee. The factfinder recommended the dismissal of the complaint.. have entered into contracts with peddlers. If a peddler buys a certain number of cases or more a day. Diego P. It alleged that Moralde was in the same situation as Repomanta. We anticipate your due attention and assistance. 2 August 1958). that the peddlers under such contract were not employees of the manufacturer or distributor. and the practices and relationships that attended its implementation. as held by the Court of Industrial Relations and the Court of Appeals. 21. the former's soft drink products. as a peddler. Fung Kui. in CA-G. Manila Cosmos Aerated Water Factory. it pointed out that he was registered with the Social Security System as an employer who. For at least twenty years respondent MAFINCO and its predecessor and/or principal. paid premiums for his employees. In the Matter of Cosmos Supervisors Association-PTGWO). In Repomanta's case. 1967 that the peddlers were not employees of Cosmos. and unpaid accounts are charged against the cash deposit or bond which he gives the distributor upon the execution of the peddling contract. Sections 2 and 11. Inc. No. for the petition for review was dismissed by the Supreme Court 'for being factual and for lack of merit! LABOR LAW I CASES (Arts. Inciong. located at Room 715. That order. 4399-ULP. after "exhaustively and impartially" considering the contentions of the parties. Atienza and Ricardo O. among others. and accordingly dismissed the complaints in the said case. The distributor provides the peddler with a delivery truck with the distributor answering for the cost of fuel and maintenance. the decision of the Court of Appeals was in effect affirmed. (The peddler-complainants in that case were claiming overtime pay and damages. Nor are the contracts themselves of recent vintage. It stressed that there was termination of the contract.) Elevated to the Supreme Court on review (G. L-14072 to L-14074. CA-G. 4. that he secured the mayor's permit to do business and the corresponding peddler's license and paid the privilege tax and that he obtained workmen's compensation insurance for his own employees or helpers. and that the Court of Appeals held in Rapajon vs. 19477-R. and that that holding has the force of res judicata. Cosmos Supervisors' Association — PTGWO vs. Fong Kui and Figueras vs. 1958). (Signed by National Secretary of FOITAF) Mafinco filed a motion to dismiss the complaint on the ground that the NLRC had no jurisdiction because Repomanta and Moralde were not its employees but were independent contractors. for terminating union officials (sic). that the Court of Industrial Relations in Case No. Mafinco further alleged that the Bureau of Labor Relations denied the application of peedlers for registration as a labor union because they were not employees but employers in their own right of delivery helpers (Decision dated January 4. which is a violation of the above mentioned decree. 1958 that the delivery helpers of the peddlers were not employees of Cosmos. under the terms of which the latter buy from the former at a special price. The peddler himself drives the truck but if he engages a driver or helpers. Respectfully yours. He also obtains at his own expense all licenses and permits required by law of salesmen. Asierto. Castro. Juan Luna. He answers for damages caused by him or his employees to third persons. March 18.

(2) that the complainants were originally plant drivers' of the company. These precedents apply squarely to the case at hand. some employers. If at all. generally. Gocheco Lumber Co. Complainants' appeal and the Labor Secretary's decision that they were employees of Mafinco. 4399ULP that the peddlers of the Manila-Cosmos Aerated Water Factory were not employees of the latter. The Secretary relied on this Court's ruling that a person who possesses no capital or money of his own to pay his obligations to his workers but relies-entirely upon the contract price to be paid by the company.97-102) |177 . the Court said in Case No. written employment contracts are held sufficient in determining the nature of employment.The Court of Industrial Relations is of the same persuasion. (9) that the company shouldered the cost of maintenance and repair of the said trucks arising from an ordinary wear and tear.. For example. the Court of Appeals and the Supreme Court in the cases cited above. consequently. however. 96 Phil. (2) in relying on the peddler's contract to determine the existence of employer-employee relationship. We are not prepared to depart from this rule of long standing. 21 does not I apply to them. Such 'written contracts as distinguished from oral Agreements. (3) that the complainants had no capital of their own. That finding was based on the following considerations: (1) That the contracts are Identical. purporting to make persons independent contractors. enter into pseudo contracts with their employees who are named as 'employers' or 'independent contractors'. The Secretary directed the NLRC to hear the case on the merits. Indeed. no matter how 'adroitly framed'. We therefore hold that the complainants in this case were not employees of MAFINCO and Presidential Decree No. (3) in anchoring its decisions on precedents which have only persuasive force and which did not rule squarely on the issue of employer-employee relationship. He said: While. He observed that "behind the peddling cloak there was in fact employee-employer relationship". the Secretary in his decision reversed al the NLRC order. cannot be always held conclusive where the actual circumstances of employment indicate otherwise. (10) that the company required them to secure the necessary licenses and permits. The points raised by the complainants in their pleadings regarding these practices were extensively discussed by the CIR in the ULP case above referred to. a comparison between the contracts involved in those cases and those in the instant litigation do not show any difference that would warrant a different conclusion than that reached by those courts. such contracts. After inquiring extensively into substantially the same terms and conditions of peddling contracts and the practices and relationships that went into their implementation. (11) that the company prohibited them from selling the company's products higher than the fixed price of the company. can be carefully scanned and the LABOR LAW I CASES (Arts. (5) that the use of the trucks were 'exclusively' for peddling the products of the company. (4) that their delivery trucks were provided by the company. driving the trucks and distributing the products of the company" and that they were not independent contractors because they had no capital of their own. They argued that the NLRC erred (1) in holding that they were independent contractors and not employees. (6) that they were required to observe regulations. The complainants here have not shown that their peddling contracts with the respondent differ in any substantial degree from those that were at issue in the Court of Industrial Relations. not employees of the respondent. (8) that the company furnished the gasoline and oil to run the said trucks in business trips. — Complainants Repomanta and Moralde appealed to the Secretary of Labor. the NLRC had jurisdiction over their complaint. (7) that they were required to drive the trucks. falls short of the requisites or conditions necessary for an independent contractor (Mansal vs. It is the law of the case. 941). and (12) that they and their helpers were paid on commission basis. The Secretary found that the complainants "were driver-salesmen of the company. in order to avoid or evade coverage of the Workmen's Compensation Act. Nor has there been shown any substantial change in the old practices of peddlers vis-a-vis the distributor or manufacturer. As stated at the outset. He ruled that Repomanta and Moralde were employees of Mafinco and that. and (4) in dismissing their complaint. the additional stipulations in the present contracts strengthen the position that the complainant peddlers are independent contractors or businessman.

LR-086 interviewed twenty peddlers. with modifications only with respect to the factory price. Workmen's Compensation Act. If the Peddling Contract were carefully scanned. That the Peddler has agreed to buy and sell the products of the MANUFACTURER under the following conditions: To rule otherwise would be to open the floodgate to employers in this territory to evade liabilities to their workers by simply letting contracts for the doing of their business. this type of Agreement or Contract has its roots since some twenty (20) years earlier. tempted to argue. The report reads in part as follows: In fact. The committee in its report dated September 17. when we consider that this type of Agreement or Contract has been substantially the same since the beginning of this relationship. viz: WHEREAS. 1973 Mafinco moved for the clarification of the decision by inquiring whether the question of employee-employer relationship would be included in the hearing on the merits. Vicente R. as its prefatory statement but before the enumeration of its terms and conditions. however. the amount of over prices or what the peddlers refer to as commission. Moreover. but would defeat its intent and purposes in their entirety. Nevertheless. 7 of the Workmen's Compensation Act. There is more than meets the eye in item 2 of the Peddling Contract which required the peddlers to do that which the law intends the employer to have done. The motion for the reconsideration of the decision was denied by the Secretary in his order of July 16.. that this Agreement or Contract might have been contrived as a device to evade responsibilities imposed upon Cosmos or Mafinco under our labor laws as well as under other national or municipal laws. which appear to vary depending upon the market demands. Action on the said motion was deferred until the receipt of the report of the committee created to study the status of peddlers of Cosmos products. On September 3. as the one in question. regulation or device of any sort intended to exempt the employer from all or part of the liability created by this Act shall be null and void. — Of vital importance to the mind of your committee is the fact that this Agreement entered into between Cosmos and the Peddlers has. on one hand. p. We are. an officer of Cosmos and an officer of Mafinco. a close reading thereof will show a flaw in this line of insistence. 69). is not one of employer and employee and "that the peddlers are independent contractors". 'Such construction could not only narrow the provisions of the Act.97-102) |178 . as amended. as did the Peddlers. The committee after a perusal of the record of NLRC Case No. 254 N. In the conduct of the interviews it 44 observed judicious adherence to impartiality and openmindedness but with a modicum of friendliness and much of informality". and the peddlers of Cosmos products.1973. which states: (1) Implications of the 'Agreement To Peddler Soft Drinks'. the conclusion may be drawn that the contract is but a device and subterfuge to evade coverage under the labor laws. the 'Peddling Contract' entered into between Mafinco and the Peddlers. and the amount pertaining to the dealer's discount. such contracts. 60 (1930). Morabe & Inton. 1973the Secretary directed the committee composed of Ernesto Valencia. Similarly. — On July 25.. the PEDDLER is desirious of buying and selling in Manila the 'COSMOS' Soft Drink Products handled by MAFINCO: It is immediately clear from the beginning that the relationship that the parties would want to establish between them is one of buyer and seller of the Cosmos Products. Netherlands Dairy Co. More than this. contains peculiarly Identical wordings. exempting or tending to exempt the employers from their legal obligations to their workers are null and void under Sec. supra). Guzman and Eleo Cayapas to conduct an in-depth study of the actual relationship existing between the Cosmos Bottling Co.Y. and its peddlers. The Committee's report that the peddlers are independent contractors. (Andoyo vs. it has withstood the test of time by LABOR LAW I CASES (Arts.real relationship ascertained' (Glielmi vs. 1973 arrived at the conclusion that the relationship actually existing between Cosmos and Mafinco. Manila Railroad Co. the following: Any contract. on the other.

'Eustaquio Repajon. therefore. promulgated on March 18. piece. — It shall be the duty of every employer to notify his employees at the time of hiring of the wage conditions under which they are employed. or other facilities customarily furnished by the employer to the employee. capable of being expressed in terms of money whether fixed or ascertained on a time. In the interviews. and that there is no right to interpret an agreement as meaning something different from what the parties intended as expressed by the language they saw fit to employ. wages. bonus and other remuneration and privileges.pronouncements of the CIR in ULP Case No. Victoria Ariz and M. There must be meeting of the minds in order to consummate the Agreement or Contract and no evidence of coercion or imposition of the will of one over the other is evident or apparent from the Peddlers' or Managements' interviews had by the members of your Committee. it is not the sole prerogative of either one of the parties. their rallying cause was the Agreement or Contract itself. they vehemently take the position that the 'dealer's discount' which was given to them at the rate of Pll.' As a matter of fact. or rewrite contracts because they operate harshly or inequitably as to one of the parties.. To strengthen these provisions of the Civil Code and the Rules of Court. Section 10 (k) of the same law provides as follows: (k) Notification of wage conditions. (2) The payment of wages. the question being. but what intention is expressed by the language used. Upon the other hand. LABOR LAW I CASES (Arts. 602. commission basis. neither can an inference be made that any salary or wage is given to Peddlers. For its adjective interpretation. constitutes their 'wages'. et al. task.50 in excess of 200 cases of Cosmos products they sell a day. are conclusive..' July 17. however designated. The selection of the Peddlers who will buy and sell Cosmos products is left entirely between the parties. in the absence of averment and proof of mistake.97-102) |179 . no mention is made of the wages of the Peddlers. lodging. the Agreement or Contract itself provides that the Peddlers can hire helpers and drivers under their direction and responsibility. — On the basis of the clear terms of the Agreement or Contract. drivers were employed by Mrs. as amended) is as follows: (g) 'Wage' paid to any employee shall mean the remuneration or earnings. separation pay. which shall include the following particulars: (1) The rate of wages payable. and impliedly by resolution of the Supreme Court in G. In fact. 1958. our Rules of Court specifically provides: (Here parol evidence rule in see. and to whom they shall be liable for payment of 'salaries. that the terms of the contract. or other method of calculating the same. Rule 130. stabilized jurisprudence have held that it is elementary rule of contract that the laws in force at the time the contract was made must govern its interpretation and application.R. of board. (2) The method of calculation of wages. Act No. by judicial review of the Court of Appeals in CAG. who are peddlers in their own right. overtime pay. as determined by the Secretary of Labor. xxx xxx xxx (1) The selection and engagement of the employees. therefore. one of an independent contractorship. and. Manila Cosmos Aerated Water Factory. 7. that interpretation of an agreement does not include its modifications or the creation of a new or different one.'. that Courts cannot make for the parties better agreements than they themselves have been satisfied to make. finds substantive support in our Civil Code which provides: (here arts. This test. which is payable by an employer to an under a written or unwritten contract of employement for work done or to be done or for services rendered or to be rendered. Nos. 19477-R. Cosmos Supervisors Association vs. 4399. not what intention existed in the minds of the parties. 19478-R and 21397-R. and includes the fair and reasonable value. Nos. with the Peddlers. Inc. where unambiguous. vs. Manila Cosmos Aerated Water Factory. . Rules of Court is quoted) It must b restated at this point for purposes of emphasis that the validity of the aforesaid Agreement or Contract has not been seriously assailed by the parties.R. But the more basic and indeed forceful ratiocination in favor of the validity of the Agreement or Contract which covenants that the relationship between the Peddlers and Cosmos or Mafinco is one of buyer and seller of the Cosmos Products on the part of the Peddlers. The term 'wages' as defined in Section 2 of the Minimum Wage Law (Rep. 1967. 1370 and 1374 of the Civil Code regarding interpretation of contracts are quoted). will reveal and we cannot logically infer therefrom. cannot be invoked by the Peddlers in their attempt at presenting arguments to the effect that they are employees of Cosmos or Mafinco. This evidently shows the discretion granted the peddlers to hire employees of their own.-Nothing in the Agreement to Peddler Soft Drinks in the case of Cosmos and in the Peddling Contract in the case of Mafinco. L-14072 to L-14074 when the Court of Appeals cases were appealed to that Tribunal. that the Peddlers were engaged as employees of Cosmos or Mafinco. however. Inc. Fong Kui.

amounted to P12.M. the hour and pIace of payment.97-102) |180 . The absence of such notification to the Peddlers and the lack of periodicity of such payment in the manner and procedure contemplated in the Minimum Wage Law destroy. A search of the alleged dismissal however shows that the Identical letters both dated December 7. (3) The power of dismissal. impliedly firing. Alberto S. we is a prerogative of the Peddlers and not of Cosmos or Mafinco. Garcia.633. the Peddlers' declarations reveal that the wages of their helpers are taken from the overprice or what is ordinarily termed as 'commission' of ten centavos (P0. for the same period. There was no compulsion on the part of the Peddlers to report for work at that time. to attribute a power of dismissal to Cosmos or Mafinco where none exists is careless imprudence and a height of inaccuracy. 10 of Act No. who is a Peddler. they did not sign any time record. all these requirements have not been shown to exist in the relationship between the Peddlers and the Cosmos or Mafinco. To the Committee's mind.520. an allegation by the Peddlers that the hiring and firing of the helpers ultimately rest on Cosmos or Mafinco.' NLRC Case No.M. which are all in accordance with the terms and conditions of the Agreement or Contract and indicative of an attribute of one who is an independent merchant. This power of dismissal by Cosmos or Mafinco is not countenanced in the Agreement or Contract. Take note that the 'dealer's discount' was given only about a week after the end of the month. then they must be notifed fully of the wage conditions.. This allegation nevertheless. 1972 addressed to the said complainants were not actually what complainants pictured them to be. (See Par. as amended). If it were true that the Pedders' 'dealer's discount' is in the nature of wages. LR-086.70. There is. Moreover. which served as one of our bases for this study.42. however. — From the interviews had by your Committee with both the Peddlers and the representatives of Cosmos and Mafinco. we gather that the following findings on the power of control are substantially correct: (a) That the delivery trucks assigned to the Peddlers are available to them early in the morning and are free to get them. amounted to P13. for based on the Agreement or Contract none whatsoever exists. Nonetheless. only their Peddling Contracts with Mafinco were. which they usually do between 5:30 A. and from the evidence submitted by Cosmos. the complainants therein appear to have complained before the National Labor Relations Commission for being allegedly illegally dismissed or that their services were terminated without cause. Certainly. The practice of getting the delivery trucks early in the morning is more beneficial to the Peddlers than to Cosmos or Mafinco since they can finish the peddling of Cosmos products much earlier and spend the rest of the day at their own pleasure. The power of dismissal is not lodged with either Mafinco or Cosmos. the earnings of Mr. Upon the other hand. it appears clearly that the 'dealer's discount' varies from month to month. 602. Thus. and that they also purchase workmen's compensation policies in their names as Employers of their own helpers for purposes of workmen's compensation insurance of their liabilities. (h) of See.(3) The periodicity of wage payment. the day. complainants' services were not terminated. such 'wages' must be paid to them periodically at least once every two weeks or twice a month. 1973. but the termination of the peddling in accordance with paragraph 9 of said Contract. quiet evidently. Mafinco Trading Corp. The signing of the 'logbooks' is both pertinent and necessary since the trucks used in the delivery of Cosmos products are owned by Cosmos or Mafinco and are simply utilized by Peddlers as a measure of convenience and for LABOR LAW I CASES (Arts. from January to August. In addition. Salvador Abonales. while that of Mr. we checked the basic document — the Agreement or Contract — and we find that the hiring and. the Peddlers are reported as Employers of these helpers with the Social Security System. as in fact. — In the case of 'Rodrigo Repomanta and Rey Moralde vs. their allegation that the 'dealer's discount' was their 'wage'. to 6:30 A. (4) The power to control the employee's conduct. xxx xxx xxx Thus. This factor defeats factually the insistence of the Peddlers that they are employees of Cosmos or Mafinco. is controverted by Cosmos and Mafinco. and 4 their earnings every month vary decisively. and (4) Any change with respect to any of the foregoing items.10) per case that they get-a factor which indicates that they are themselves employers of their helpers.

R.. A person who has no capital or money of his own to pay his laborers or to comply with his obligations to them. 1967. the resolutions of the Cosmos Peddlers Association.97-102) |181 . who files no bond to answer for the fulfillment of his contract with his employer. For. but the former sell Cosmos products according to their own methods. As to the aspect of employer-employee relation. your Committee does not have sufficient basis to reasonably sustain the stand of the Peddlers that there is such relationship. The earlier case of Andoyo vs. promulgated on March 28. vs. including the sales. These requisites and conditions were reiterated in the postwar cases of Philippine Manufacturing Co. time schedule. the following may be gathered from the relationship between the Peddlers.R. But peddlers are not precluded from getting trucks of their own should they so desire. it adopted another resolution penalizing Peddlers who failed to wear their uniform in the amount of P2. your Committee found no substantial evidence on this point. Inc. ruled: An independent contractor is one who exercises independent employment and contracts to do a piece of work according to his own methods and without being subject to control of his employer except as to the resuIt of thework. We do not see any evidence of control on the part of Cosmos or Mafinco over the activities. Obviously. as it were. is to the mind of the Committee. to the issue of employer-employee relationship your committee has taken the task of testing such relationship against the attributes of an independent contractor which. G. 1969. L-14903. report is made direct to the Office of Cosmos or Mafinco. and possessing an entirely distinct existence. areas and zones. promulgated on November 29. L-6968.R. subject to the pre-arranged routes. No. if found short. cannot be taken as impositions from Cosmos or Mafinco. G.00 per violation.). 1954. and also an ordinary business practice which necessarily requires liquidation of the day's accounts. Darlucio et. from the documents submitted to this Committee. extends only as to observance of traffic regulations which is inherent in ownership of the delivery truck by Cosmos or Mafinco and the end result which is LABOR LAW I CASES (Arts. of the Cosmos products by the Peddlers themselves who are. from the interviews and documents submitted by the parties. promulgated on August. giving effect to the valid terms and conditions of the Agreement or Contract. (b) That liaison officers (supervisors) are assigned by Cosmos or Mafinco in definite areas routes or zones. as principally for market analysis since soft drinks selling is a highly competitive business. on the one hand. and Cosmos or Mafinco. 29. adopted a resolution to 'always wear their uniform while in the performance of their sales work.' and in their meeting on January 25.advertising purposes. much less supervised. and also to inquire or check on sales. if their attention is incidentally called on this matter it is for the observance of their agreements which is present in any contractual relations. G. (e) That in the matter of reprimand or discipline which the peddlers attempt to project when they failed to report for work. 34722. Analyzing the definition of 'independent contractor'. 1932. routes or zones were already agreed upon or pre-arranged among them through the Cosmos Peddlers Association. vs. and the result of which. but a voluntary arrangement among the Peddlers themselves. left to their own choices of routes. Certainly. No. (c) That the use of the uniform does not seem to be an imposition by management of Cosmos or Mafinco upon the Peddlers. falls short of the requisites or conditions necessary to classify him as independent contractor. any absence that they may incur means so much reduction from their earnings. in a meeting held on August 5. between Cosmos or Mafinco and the Peddlers. and Koppel (Phil. and go back to the Company compound to return the delivery truck and to make accounting of the day's sales collection at any time in the morning or in the afternoon. Inc. No. with no definite. the latter furnishing the delivery truck. on the other: (1) Peddlers contract to sell and buy Cosmos products from Cosmos or Mafinco. furnishes us the definition of an 'independent contractor. Inc. (c) Attributes of an independent contractor. is charged against the Peddler's cash bond. it appears that the Cosmos Peddlers Association. — As a countercheck. control..' Our Supreme Court of pre-war composition. of which all Peddlers are members. The evidence shows that the peddlers are free to choose their time. apparently. 1960. Essentially. not so much of supervision over Peddlers. (d) That the matter of turning in of sales of collection which. if at all. therefore. areas or zones as pre-arranged. al. Manila Railroad Co. an independent association of Peddlers and duly registered with the Securities and Exchange Commission. Thus.. Geronimo. since their areas. appear to exists on the part of the Peddlers.

in case Performance Bond within 30 days from the date of signing of this Contract. L-39195. contains only 292 articles. L-39741. Control over the details of the Peddlers' sales activities seems to be farfetched in this case.500. where it was held that the regular court. the amount of the Performance Bond is not so relevant and material as to the purpose for which the same is executed. 570-A. inasmuch as their complaint is pending in the new NLRC. This is an attribute of an independent contractor to which the Peddlers are bound under the Agreement or Contract. Auditor General. 100 Phil. not the NLRC. — Mafinco filed the instant actions on November 14. The instant petition. and have paid their corresponding professional or occupation tax to the Bureau of Internal Avenue. He clarified that the NLRC should determine whether the two complainants were illegally dismissed and that the jurisdictional issue should not be taken up anymore. to wit: (1) that the NLRC had no jurisdiction over the case because Repomanta and Moralde had not sought reinstatement or backwages.the liquidation of the sales collection. Again. Valencia. (4) Peddlers are doing business for themselves since they took out licenses in the City of Manila. such failure shall be sufficient ground for the MANUFACTURER to suspend the business relationship with the Peddler until the Peddler complies with this provision. (3) The Peddlers are required under the Agreement to Peddler Soft Drinks and Peddling Contract to put up not only the cash bond of P1. This fact strengthens the Committee findings that the peddlers are carrying on a business as independent merchants. Mafinco filed a motion in this Court for the dismissal of the complaint in the defunct NLRC on three grounds.97-102) |182 . 21. Article 327 was superseded by article 278 of the amended Code. November 29. and (3) that the contempt provisions of that decree were abrogated by the Labor Code. although it appears that the wages of helpers are uniform at P6. L-21352. an appeal to the President should be made only "in national interest cases". the issue and the ruling thereon.000. arbitrary or capricious (San Miguel Corporation vs. judicial review of the decision of an administrative agency or official exercising quasi-judicial functions is proper in cases of lack of jurisdiction. They Pointed out that. 58 SCRA 771. 1975. then it can be taken to mean 'capital' within its signification that it allocates to every day business dealing. LR-086. error of law. grave abuse of discretion.00 in favor of the MANUFACTURER from a surety Company acceptable to the MANUFACTURER. However. has jurisdiction over an employee's action for damages against his employer's act of demoting him. and that the NLRC and the Secretary be enjoined from further proceeding in NLRC Case No. The Secretary in his resolution of October 18. the applicable labor laws.00 as embodied in said Agreement to Peddler Soft Drinks as follows: (4) To assure performance by the PEDDLER of his obligation to his employees under the Social Security Act. And. May 16. Inc.which is to assure performance of the Peddlers' obligations as employer of his helpers.00 by the Peddlers constitute their capital? For big-time businessmen.. 21 the Secretary's decision "is appealable" to the President of the Philippines (Nation Multi Service Labor Union vs. that the Secretary's decision should be set aside. Sta.000. Secretary of Labor. but also a performance bond of P1. 1973 ignored the committee's conclusion. to us. May 30. After the parties had submitted their illuminating memoranda. 1974. Parenthetically. (2) Capital or money of the Peddlers to pay their own helpers is evidently within their prerogative. Respondent Repomanta and Moralde opposed that motion to dismiss. 165. L-38088. 64 SCRA 56. fraud or collusion or in case the administrative action or resolution is "corrupt. August 30. and for damages suffered by third persons PEDDLER shall furnish a performance bond of P1. under section 22 of the old NLRC regulations. The amount of capital. 626 and 643. LABOR LAW I CASES (Arts. But can we safely say that the cash bond of Pl. They also observed that article 327 was eliminated from the Labor Code which. as amended by Presidential Decrees Nos. 1975. this Court cannot dismiss it. to the mind of your Committee. (2) that the employer's failure to secure written clearance from the Secretary of Labor before dismissing an employee might constitute a crime punishable under article 327 of the Labor Code and not mere contempt. The truth is that Mafinco's motion merely adduced additional grounds to support its stand that the Secretary of Labor had no jurisdiction over the complaint of Repomanta and Moralde. it should be noted that under section 5 of Presidential Decree No. as contemplated in section 10 of Presidential Decree No. Villegas vs. this small amount may not be considered capital. 891). Agcaoili. 1966. 64 SCRA 274).500.00 per trip. 18 SCRA 877. 1973. it is the purpose for which the same is deposited that is most significant. On the other hand. It prayed for a declaration that the Secretary of Labor and the NLRC had no jurisdiction to entertain the complaints of Repomanta and Moralde. Ines-Melale Veneer & Plywood. is immaterial.00. Commissioner of Customs vs. but when it is taken as a 'deposit on consignment' since the same answers for any deficiencies that the Peddlers may incur during the day's sales collection. Mafinco in support of its motion for dismissal cited Quisaba vs.

In a certiorari and prohibition case. xxx xxx xxx SEC. Annexed to their memorandum is a joint affidavit of sixty-three sales agents of Cosmos products who described therein the nature of their work. mandamus and prohibition the petitioner should allege "facts with certainty". Although the Code abolished the old NLRC (Art. as held by the old NLRC. The parties in their pleadings and memoranda injected conflicting factual allegations to support their diametrically opposite contentions. What is certain and indubitable is that a notarized peddling contract was executed. It would be difficult. then the Secretary of Labor had no jurisdiction to remand the case to the NLRC for a hearing on the merits of the complaint. 289). The issue is whether the dismissal of Repomanta and Moralde was within the jurisdiction of the old NLRC. it created a new NLRC (Art. LABOR LAW I CASES (Arts.This case was not rendered moot by the Labor Code. Annexed to their answer is Resolution No. Sections 1. 5.D. From the factual angle. order or decision duly issued by the Commission in accordance with this Decree and its implementing rules and regulations and for any violation of the provisions of this Decree. the crucial issue is whether Repomanta and Moralde were employees of Mafinco under the peddling contract already quoted. In this case the facts have become uncertain. The Solicitor General. termination pay and unionism. like the instant case. SEC. the organization of their union and the dismissal of Repomanta and Moralde. and that the contracts were a part of an "intricate network of devices (of Mafinco and Cosmos) developed. if not anomalous. 10. Like the Solicitor General. Controversial evidentiary facts have been alleged. Presidential Decree No. P. it had no jurisdiction over their complaint because they were not employees of Mafinco but independent contractors. and perfected through the years to conceal the true nature of their relationship to their sales agents". as counsel for the old NLRC and the Secretary of Labor. social security. Labor. only legal issues affecting the jurisdiction of the tribunal. have tried to avoid the bringing about of an employer-employee relationship in some of their enterprises because that juridical relation spawns obligations connected with workmen's compensation. See Sec. may order the arrest and detention of any person held in contempt by the Commission for non-compliance and defiance of any subpoena. that other relevant facts aliunde or dehors the said contracts should be taken into account. 921 of the Social Security Commission dated November 16. Hence. If. No. Businessmen. 2 and 3. the case has become highly controversial. 602 wherein it was held that peddlers and their helpers were employees of Cosmos. Is the contract an employment contract or a contract to sell or distribute Cosmos products? The question of whether an employer-employee relationship exists in a certain situation has bedevilled the courts. Repomanta and Moralde contend that their peddling contracts were terminated because of their activities in organizing a union among the peddlers. Rule 65 of the Rules of Court require that in the verified petition for certiorari. 290. medicare. 11.97-102) |183 . to decide the jurisdictional issue on the basis of the parties' contradictory factual submissions. This Court is not a trier of facts. The Commission shall have original and exclusive jurisdiction over the following: 1) All matters involving employee-employer relations including all disputes and grievances which may otherwise lead to strikes and lockouts under Republic Act No. and processed by. the corresponding labor relations division or the new NLRC and should be decided in accordance with Presidential Decree No. No employer may shut down his establishment or dismiss or terminate the services of regular employees with at least one year of service without the written clearance of the Secretary of . 875. 1972 in SSS Case No. 21 provides: SEC. 2. on recommendation of the Commission and the Secretary of Labor. minimum wage. 21 and the rules and regulations adopted thereunder (Art. 213) and provided that cases pending before the old NLRC should be transferred to. 626). with the aid of lawyers. board or officer involved may be resolved on the basis of undisputed facts. The President of the Philippines. argues that the question of whether Repomanta and Morale are independent contractors or employees is factual in character and cannot be resolved by merely construing the peddling contracts. The record has become voluminous because of their efforts to persuade this Court to accept their discordant factual statements. Repomanta and Moralde harp on the argument that the peddling contracts were a scheme to camouflage an employer-employee relationship and thus evade the coverage of labor laws.

they were bound by its stipulations and the consequences thereof under existing labor laws. the control of the premises.J. no employer-employee LABOR LAW I CASES (Arts.52 per case of 24 bottles. the skill required. exwarehouse.97-102) |184 . Mafinco would bear the cost of gasoline and maintenance of the truck (Par. We are convinced that on the basis of the peddling contract. (56 C.P. 4). the term and duration of the relationship. sui generis case lying on the shadowy borderline that separates an employee from an independent contractor. Under the peddling contract. Using the contract itself as the sole criterion. 1973. But having signed it. A different approach would lead this Court astray into the field of factual controversy where its legal pronouncements would not rest on solid grounds. 7) and another cash bond of P1..500 to answer for his obligations to Mafinco (Par. 46). Whether the termination in this case was an unwarranted dismissal of an employee. an independent contractor is "one who exercises independent employment and contracts to do a piece of work according to his own methods and without being subject to control of his employer except as to the result of the work" (Mansal vs. They were distributors of Cosmos soft drinks with their own capital and employees.Pro hac vice the issue of whether Repomanta and Moralde were employees of Mafinco or were independent contractors should be resolved mainly in the light of their peddling contracts. Jur. We hold that under their peddling contracts Repomanta and Moralde were not employees of Mafinco but were independent contractors as found by the NLRC and its fact-finder and by the committee appointed by the Secretary of Labor to look into the status of Cosmos and Mafinco peddlers. namely: (1) the selection and engagement of the employee. citing 35 Am. supra). Either party might terminate it upon five days' prior notice to the other (Par. he would be entitled to a peddler's discount of eleven pesos (Par. "In determining the existence of employer-employee relationship. the termination should perforce be characterized as simply the exercise of a right freely stipulated upon by the parties. tools. 411. is a point that cannot be resolved without submission of evidence. On the other hand. the duty to supply the premises.S. They were to sign or not to sign that contract. he would be responsible for their compensation and social security contributions and he should comply with applicable labor laws "in relation to his employees" (Par. Gocheco Lumber Co. an employee or a mere peddler does not execute a formal contract of employment. The contract would be effective up to May 31. The soft drinks would be charged to the peddler at P2. A restatement of the provisions of the peddling contract is necessary in order to find out whether under that instrument Repomanta and Moralde were independent contractors or mere employees of Mafinco. and (4) the power to control the employees' conduct-although the latter is the most important element" (Viana vs. That Circumstance signifies that they were acting as independent businessmen.J. and terms of payment. If they did not want to sell Cosmos products under the conditions defined in that contract. "each case must be determined on its own facts and all the features of the relationship are to be considered" (56 C. 1). firing. Those tests to determine the existence of an employer-employee relationship or whether the person doing a particular work for another is an independent contractor cannot be satisfactorily applied in the instant case. He should liquidate his accounts at the end of each day (Par. material and labor. Repomanta and Moralde voluntarily executed with Mafinco formal peddling contracts which indicate the manner in which they would sell Cosmos soft drinks. the nature and extent of the work. the existence of a contract for the performance of a specified piece of work. the right to assign the performance of the work to another. (3) the power of dismissal. P. as contended by Repomanta and Moralde. 45). In determining whether the relationship is that of employer and employee or whether one is an independent contractor. Al-Lagadan and Piga. The peddler would be responsible for any damage to persons or property or to the truck caused by his own acts or omissions or those of his driver and helpers (Par. One such stipulation is the right of the parties to terminate the contract upon five days' prior notice (Par. they were free to reject it. 11). 9). the power to terminate the relationship. 8). The peddler would secure at his own expense the necessary licenses and permits and bear the expenses to be incurred in the sale of Cosmos products (Par. It should be obvious by now that the instant case is a penumbral. The peddler would post a cash bond in the sum of P1. Among the factors to be considered are whether the contractor is carrying on an independent business. 408. the employer's powers and duties with respect to the hiring. Should he purchase at least 250 cases a day. manner. Mafinco would provide the peddler with a delivery truck to be used in the distribution of Cosmos soft drinks (Par. the control and supervision of the work. He is simply hired and he works under the direction and control of the employer. 2). 99 Phil. appliances.000 to answer for his obligations to his employees (Par. and payment of the contractor's servants. Should the peddler employ a driver and helpers. 5).S. 9). 6). (2) the payment of wages. Ordinarily. the following elements are generally considered. 445). 3). whether the work is part of the employer's general business. and the mode.

he would receive "compensation. Either party may terminate this contract by giving to the other notice in writing to that effect. without any previous notice to the Agent... The Agent shall be free to exercise his own judgment as to time. in the form of commissions .. SO ORDERED.. the decision. Where there is a right. ILLEGAL AND UNETHICAL PRACTICES. ubi remedium). the acts prohibited to him. are set aside and the order of the NLRC dated February 2. or from making any misrepresentation or over-selling. from doing or committing acts prohibited in the Agent's Manual and in circulars of the Office of the Insurance Commissioner. Hence. The Company may terminate the contract at will. (explicitly specified causes). However. is affirmed. The Agent shall not have any right to any commission on renewal of premiums that may be paid after the termination of this agreement for any cause whatsoever. NATIONAL LABOR RELATIONS COMMISSION and respondents.. (the Company's) Rate Book and its Agent's Manual. and. Tirol & Tirol for petitioner. NARVASA. there is a remedy (Ubi jus. respectively. WHEREFORE. (hereinafter simply called the Company) and Melecio T. and the modes of termination of the agreement. order and resolution of the Secretary of Labor in NLRC Case No. petitioner. MELECIO BASIAO. dismissing the case for lack of jurisdiction. The Agent is prohibited from giving. However. the Agent shall observe and conform to all rules and regulations which the Company may from time to time prescribe. J.. the old NLRC had no jurisdiction over the termination of the peddling contract. . It shall become ipso facto cancelled if the Insurance Commissioner should revoke a Certificate of Authority previously issued or should the Agent fail to renew his existing Certificate of Authority upon its expiration. LTD. No costs. Enojas. Ltd. the "rules in ..97-102) |185 . . TERMINATION. rebates in any form.. in general." and 3. Defensor & Teodosio Cabado Law Offices for private respondent." were made part of said contract. as contemplated in article 1701 of the Civil Code. supra.. As to commission corresponding to any LABOR LAW I CASES (Arts. 1973.: On July 2.. and those which may from time to time be promulgated by it. 1989 INSULAR LIFE ASSURANCE CO.. Basiao entered into a contract 1 by which: 1. for or on account of . FIRST DIVISION G. as provided in the Schedule of Commissions" of the contract to "constitute a part of the consideration of .: RELATION WITH THE COMPANY. viz. then they should file the proper action for damages in the regular courts. among others.. as well as all its circulars . The contract also contained. Paragphrasing the dictum in the Quisaba case.. 1973. (said) agreement.R.. vs. 84484 November 15.relationship was created. the actual juridical relationship between them and Mafinco or Cosmos is that of employer and employee. if Mafinco and Cosmos had acted oppressively towards their peddlers.. the duties of the Agent. Basiao was "authorized to solicit within the Philippines applications for insurance policies and annuities in accordance with the existing rules and regulations" of the Company.. In that action a fulldress trial may be held and the parties may introduce the evidence necessary to sustain their respective contentions. Insular Life Assurance Co. LR-086 dated April 16. directly or indirectly. this ruling is without prejudice to the right of Repomanta and Moralde and the other peddlers to sue in the proper Court of First Instance and to ask for a reformation of the instrument evidencing the contract or for its annulment or to secure a declaration that. except when the termination is due to disability or death in line of service. No.. place and means of soliciting insurance. 2. disregarding the peddling contract. 1968. July 16 and October 18. Nothing herein contained shall therefore be construed to create the relationship of employee and employer between the Agent and the Company. provisions governing the relations of the parties.

the Agent shall be entitled to it if the balance of the first year premium is paid. (2) the payment of wages. 3 Basiao thereafter filed with the then Ministry of Labor a complaint 4 against the Company and its president. it is without question a valid test of the character of a contract or agreement to render service. . 2 In May. that no employer-employee relation in the legal and generally accepted sense existed between it and Basiao. 11 Indeed. Basiao and Associates. set no accomplishment quotas and compensated him on the basis of results obtained." plus 10% attorney's fees. and (4) the power to control the employees' conduct — although the latter is the most important element (35 Am. contrarily..97-102) |186 .. either expressly or by necessary implication. while concurrently fulfilling his commitments under the first contract with the Company. unless the termination is due to a violation of this contract. The Company's thesis. 1979.. thereby placing his claim for unpaid commissions within the original and exclusive jurisdiction of the Labor Arbiter under the provisions of Section 217 of the Labor Code. Jur. 5 The Labor Arbiter to whom the case was assigned found for Basiao. on appeal by the Company. in legal contemplation. place and means of soliciting insurance.. the present petition for certiorari and prohibition.. plus attorney's fees." as well as to the fact that the Company prescribed the qualifications of applicants for insurance. Basiao sued the Company in a civil action and this. however. Without contesting the termination of the first contract.. the Company terminated the Agency Manager's Contract. . Without denying that the above were indeed the expressed implicit conditions of Basiao's contract with the Company. He was not bound to observe any schedule of working hours or report to any regular station. if the recognized distinction between an employee and an LABOR LAW I CASES (Arts.. invoking precedents to the effect that the critical feature distinguishing the status of an employee from that of an independent contractor is control. 1980. prompted the latter to terminate also his engagement under the first contract and to stop payment of his commissions starting April 1. 445). ASSIGNMENT. left to his judgment the time. (him) in favor of the respondent company . has been followed and applied in later cases. made Basiao the master of his own time and selling methods. and was free to adopt the selling methods he deemed most effective. involving criminal liability or breach of trust. is drawn from the terms of the contract they had entered into.balance of the first year's premiums remaining unpaid at the termination of this agreement. Some four years later. but by the regular courts in an ordinary civil action. he had become the Company's employee by virtue of the contract invoked by him. In determining the existence of employer-employee relationship. The chief issue here is one of jurisdiction: whether. (3) the power of dismissal. that is. he could seek and work on his prospects anywhere and at anytime he chose to. as Basiao asserts. 6 This decision was. Pursuing the argument. the complaint sought to recover commissions allegedly unpaid thereunder. 8 or. and this conferred jurisdiction on the Ministry of Labor to adjudicate his claim.. an employee of the Company.. equivalent to the balance of the first year's premium remaining unpaid. processed their applications and determined the amounts of insurance cover to be issued as indicative of the control. in April 1972. Alejo Al-Lagadan 10 . the respondents draw attention to the provisions of Basiao's contract obliging him to ". less actual cost of collection. He ruled that the underwriting agreement had established an employer-employee relationship between him and the Company. which made Basiao. A line must be drawn somewhere. of all the insurance policies solicited by . the respondents contend that they do not constitute the decisive determinant of the nature of his engagement.. No Assignment of the Agency herein created or of commissions or other compensations shall be valid without the prior consent in writing of the Company. the following elements are generally considered. he was later to claim. but an independent contractor and that the Company had no obligation to him for unpaid commissions under the terms and conditions of his contract. The respondents disputed the Ministry's jurisdiction over Basiao's claim. observe and conform to all rules and regulations which the Company may from time to time prescribe .. as the Company would have it. at the time of his termination. not by the Labor Arbiter in a labor case. affirmed by the National Labor Relations Commission.. It should. the parties entered into another contract — an Agency Manager's Contract — and to implement his end of it Basiao organized an agency or office to which he gave the name M. be obvious that not every form of control that the hiring party reserves to himself over the conduct of the party hired in relation to the services rendered may be accorded the effect of establishing an employer-employee relationship between them in the legal or technical sense of the term. some fairly recent. that under said contract Basiao's status was that of an independent contractor whose claim was thus cognizable. 9 It is true that the "control test" expressed in the following pronouncement of the Court in the 1956 case of Viana vs. whether or not the party who engages the services of another has the power to control the latter's conduct in rendering such services.. namely: (1) the selection and engagement of the employee. 7 Hence... asserting that he was not the Company's employee. Said official's decision directed payment of his unpaid commissions ". which.. After vainly seeking a reconsideration..

did work at his own pleasure without any supervision or control on the part of his principal and relied on his own resources in the performance of his work. place and means of soliciting insurance. 12 Rules and regulations governing the conduct of the business are provided for in the Insurance Code and enforced by the Insurance Commissioner. but that the former was an independent contractor where said agent and others similarly placed were: (a) paid compensation in the form of commissions based on percentages of their sales. create no employer-employee relationship unlike the second. as is the business of insurance. using a truck supplied by the latter. Absent such showing. 1968. but with the right to employ his own workers. shouldered their own selling and transportation expenses. (d) not required to report for work at any time. No pronouncement as to costs. LABOR LAW I CASES (Arts. Basiao was not an employee of the petitioner. usual and expected for an insurance company to promulgate a set of rules to guide its commission agents in selling its policies that they may not run afoul of the law and what it requires or prohibits. In Mafinco Trading Corporation vs. VI-0010-83 is dismissed.. which aim only to promote the result. in Sara vs. therefore. Of such a character are the rules which prescribe the qualifications of persons who may be insured. More recently. The first. but a commission agent. the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it. Basiao in RAB Case No. was a plain commission agent. the obvious reply would be that what is germane here is Basiao's status under the contract of July 2. any balance of commissions earned being payable to their legal representatives in the event of death or registration. said claim.97-102) |187 . Social Security System 14 a case almost on all fours with the present one. None of these really invades the agent's contractual prerogative to adopt his own selling methods or to sell insurance at his own time and convenience. not the length of his relationship with the Company.. the Court will not speculate that any exceptions or qualifications were imposed on the express provision of the contract leaving Basiao ". There is no dearth of authority holding persons similarly placed as respondent Basiao to be independent contractors. Realistically. The respondents limit themselves to pointing out that Basiao's contract with the Company bound him to observe and conform to such rules and regulations as the latter might from time to time prescribe. and is on that account subject to regulation by the State with respect. subject insurance applications to processing and approval by the Company. This conclusion renders it unnecessary and premature to consider Basiao's claim for commissions on its merits. not only to the relations between insurer and insured but also to the internal affairs of the insurance company. In Investment Planning Corporation of the Philippines us. finally. It is. and who. The distinction acquires particular relevance in the case of an enterprise affected with public interest. all in consideration of a peddler's discount given by the other party for at least 250 cases of soft drinks sold daily. was not an employee but an independent contractor. free to exercise his own judgment as to the time. therefore. and those that control or fix the methodology and bind or restrict the party hired to the use of such means. WHEREFORE. this Court held that there was no employer-employee relationship between a commission agent and an investment company.13 the Court ruled that a person engaged to sell soft drinks for another. Ople. an independent contractor whose claim for unpaid commissions should have been litigated in an ordinary civil action.individual contractor is not to vanish altogether. it would be a rare contract of service that gives untrammelled freedom to the party hired and eschews any intervention whatsoever in his performance of the engagement. The Labor Arbiter erred in taking cognizance of. an independent contractor and not an employee. NLRC. and also reserve to the Company the determination of the premiums to be paid and the schedules of payment. Whatever this is meant to imply. rules that under the contract invoked by him. hence cannot justifiably be said to establish an employeremployee relationship between him and the company. which address both the result and the means used to achieve it. nor to devote their time exclusively to working for the company nor to submit a record of their activities. SO ORDERED. 15 it was held that one who had been engaged by a rice miller to buy and sell rice and palay without compensation except a certain percentage of what he was able to buy or sell. observing no working hours fixed by the other party and obliged to secure his own licenses and defray his own selling expenses. The Court. (c) subject to a set of rules and regulations governing the performance of their duties under the agreement with the company and termination of their services for certain causes. No showing has been made that any such rules or regulations were in fact promulgated. Logically. and that complaint of private respondent Melecio T. instead of employees of the parties for whom they worked. sell according to his own methods subject only to prearranged routes. as did the respondent NLRC in affirming the Arbiter's decision." The Labor Arbiter's decision makes reference to Basiao's claim of having been connected with the Company for twenty-five years. much less that any rules existed or were issued which effectively controlled or restricted his choice of methods — or the methods themselves — of selling insurance. (b) required to put up performance bonds. and adjudicating. being without jurisdiction to do so. the appealed Resolution of the National Labor Relations Commission is set aside.

LABOR LAW I CASES (Arts.97-102) |188 .

Nos. only the claims of respondents Roman and Orain remained unsettled. 1988. France of Union Carbides Inc. Inc. Mandaluyong. In 1987. was recalled by CSI on February 15. 1993 RHONE-POULENC AGROCHEMICALS PHILIPPINES. the petitioner acquired from Union Carbide Philippines Far East. 1988. These janitors then filed separate complaints for illegal dismissal. Sobrevinas and Divinagracia S. effective April 1. Inc. Midway through the transition period. of all its agricultural-chemical divisions worldwide in favor of Rhone-Poulenc Agrochemie. Private respondent Paulino Roman. Inc. Hence. Roman refused to acknowledge receipt of the recall memorandum. respondents. During the transition period. as a consequence of the sale by Union Carbide. On April 1. LABOR LAW I CASES (Arts.. CSI thereafter issued a memorandum dated March 20. six of the original complainants tendered their resignations to CSI in consideration of the latter's settlement of all their claims. Union Carbide instructed CSI to reduce the number of janitors working at the plant from eight (8) to seven (7). ORAIN. the Marilag Business and Industrial Services. in anticipation of the March 31. payment of 13th month salary. Inc. the eight janitors reported for work at the Namayan plant but were refused admission and were told that another group of janitors had replaced them.: Petitioner Rhone-Poulenc Agrochemicals Philippines. NATIONAL LABOR RELATIONS COMMISSION. Meanwhile. petitioner Rhone-Poulenc found itself sharing the Namayan plant with Union Carbide while the factory was being serviced and maintained by janitors supplied by CSI. Rhone-Poulenc and CSI. JR. Union Carbide had entered into a contract with CSI for the latter's supply of janitorial services. Its business operations involve the formulation. 102633-35 January 19. The dispositive portion of the labor arbiter's decision is quoted below: WHEREFORE. one of the janitors. vs. On January 1. URCISIO A. passed the bidding committee's standards and obtained the janitorial services contract. (Rhone-Poulenc for brevity) assails the finding by the National Labor Relations Commission (NLRC) that Contemporary Services. Agrochemie.97-102) |189 . 1988. J. Rhone-Poulenc and Union Carbide agreed on a three-month transition period for the turnover of the Namayan plant to the former. Inc. (CSI). Thus. and PAULINO G.R. distribution and sale in the local market of its agro-chemical products.'s agro-chemical business. a supplier of janitorial services. After the cases were submitted for decision. 1988. 1988 pull-out by Union Carbide. INC. However. GUTIERREZ. (Union Carbide for short) the latter's agro-chemical formulation plant in Namayan. Like Roman. petitioner. France. On March 9. recalling and advising them to report to the CSI office for reassignment. Trial on the merits ensued wherein the labor arbiter conducted full-blown hearings on factual issues. another contractor. Union Carbide formally notified CSI of the termination of their janitorial service agreement.HIRD DIVISION G. Labor Arbiter Asuncion ruled that CSI is a legitimate service contractor and that Roman and Orain were employees of CSI. l988 for reassignment. both Union Carbide and Rhone-Poulenc shared and operated the same facilities. production. However. Union Carbide continued to avail itself of CSI's janitorial services. citing as reason the global buyout by Rhone-Poulenc. the petitioner started screening proposals by prospective service contractors. RhonePoulenc likewise invited CSI to submit to its Bidding Committee a cost quotation of its janitorial services.. The petitioner is a domestic corporation engaged in the manufacture of agrochemicals. service leave and overtime pay against Union Carbide. the janitors refused to acknowledge receipt of the recall memorandum. ROMAN. 1988 to the seven remaining janitors assigned to the Namayan plant. Hence. Francis V. from January 1 to March 31. the respondent CSI is ordered to pay the complainants Orain and Roman their separation pays computed at one-half of their salaries for every year of service. 1989. prior to the sale. The rest of the claims are dismissed for lack of merit. On November 8. the petitioner's mother corporation. These cases were consolidated by order of Labor Arbiter Manuel Asuncion dated May 23. Metro Manila. 1988. 1988. is a labor-only contractor. San Juan for petitioner. including respondent Urcisio Orain.

janitresses. Its refusal to readmit the complainants constitutes an illegal dismissal. in a way. For while it is true that there is no law requiring that a purchaser should absorb the employees of the selling company (Central Azucarera del Davao v. Applying the Guarin ruling to the case at bar. to the circumstances obtaining in the case at bar. Rollo). In its Comment. The Court. if not identical. be addressed to the respondent RPAPI and not to the respondent CSI. constitutes an illegal dismissal plain and simple. NLRC. a "labor only" contractor. NLRC. Java. Blaylocks . the mandate to reinstate the complainants should. In the case of Philippine Bank of Communications v. p. found that CSI was a mere agent of Union Carbide and Rhone-Poulenc and held that RhonePoulenc was guilty of illegal dismissal. 178 SCRA 267 (1987). firemen.The respondents UCFEI and RPAPI were (sic) absolved from any liability it being shown that they were not the employers of the complainants. temporarily though. which according to it "involves circumstances similar. in a petition for certiorari. at p. personnel. dyeing. that there was no employeremployee relationship between Novelty and the workers assigned by Lipercon to the former. it is equally true that employees absorbed by the successor-employers enjoy continuity of employment status (Cruz v.97-102) |190 . and so hold. janitors. janitors. gardeners. Inc. respondent RPAPI admits in its opposition to the appeal (p. 137 SCRA 295). accounting. mechanics and helpers are directly related to the business of manufacturing garments" (p. the NLRC reversed the labor arbiter's ruling. 78. Novelty Philippines. 30 June 1976. delivery and similar activities. 146 SCRA 347. No. 71 SCRA 621. PAFLU. Said act of utilizing. The labor arbiter adjudged that the petitioners were regular employees of Novelty and declared their dismissal illegal. 4 SCRA 457. designs. Consequently." In that case. In a resolution dated March 13. et al. and Visayan Trans. quality control. Under these conditions. and that Lipercon shall have exclusive discretion in the selection. a service contractor. 178 SCRA 267. CA. 52). firemen and grasscutters were directly related to the business of Novelty as a garment manufacturer. engagement and discharge of its employees and shall have full control over said employees. v. mechanics to keep the machines functioning properly. (Guarin v. 1991. finance.. Respondents Roman and Orain appealed the decision to the NLRC. 273). 67635. As we have stated earlier. G. The one hundred twenty (120) petitioners in Guarin were hired by Lipercon and assigned to Novelty as helpers. PAFLU v. we ruled that the work of a messenger is directly related to a bank's operations. were the real employers of the complainants. nor to the UCFEI LABOR LAW I CASES (Arts. "[i]t is only by stretching the imagination that one may conclude that the services of janitors. are directly related to the daily operations of a garment factory. firemen and mechanics until the termination by Novelty of the service agreement resulting in their dismissal. attests to the necessity or desirability of the complainants' service to the operation of the respondent's business) constitutes an absorption that gave them the right to be retained. The agreement provided. 1985). a domestic corporation engaged in garment manufacturing. the NLRC pronounced: It is in the light of the foregoing that we are constrained to rule. upheld the labor arbiter's decision and ruled: The jobs assigned to the petitioners as mechanics.. CIR. 4) that it made use of the services of the complainants during its transition period from 04 January to 31 March 1983. Novelty contends that the services which are directly related to manufacturing garments are sewing. Leogardo. They sued both Novelty and Lipercon for illegal dismissal. that respondent CSI is a mere agent of respondent UCFEI and RPAPI who. entered into a contract with Lipercon Services. and that allegedly. respondent RPAPI's (the successor-in-interest by sale of respondent UCFEI) refusal to take in the complainants (after admittedly absorbing or utilizing their services during the transition period from 04 January to 31 March 1988) on the ground that it already had engaged the services of another service contractor. grasscutters. 962). the services of the complainants (which. 42 SCRA 68. labor contracts are not enforceable against a transferee of an enterprise (Fernando v. Inc. Respondent NLRC cited the case of Guarin v. (Rollo. and Sumandi v. textile cutting. The NLRC reversed this decision and declared that Lipercon was an independent contractor and that the petitioners were its employees. 93 Phil. and firemen to look out for fires. Guerrero's Transport Services v. National Labor Relations Commission. a period of three (3) years. Not so. and unless expressly assumed. among others. 17 Jan.. 5 SCRA 249. Co. That fact is confirmed by Novelty's rehiring the workers or renewing the contract with Lipercon every year from 1983 to 1986. customs. Angat Labor Union. therefore. administration.R. in the context of the aforecited pronouncement of the Supreme Court. for the work of gardeners in maintaining clean and well-kept grounds around the factory.

Brotherhood Labor Unity Movement in the Philippines v. if any. not being an employer. xxx xxx xxx There is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment. 1991 and September 11. 147 SCRA 49 [1986]. On December 2. Social Security System v. in the form of tools. or to grant them separation pay if reinstatement was not feasible. Court of Appeals. CSI is a legitimate independent contractor providing janitorial services to a wide range of clientele including Union Carbide. 109. among others and the workers recruited and placed by such persons. which is the actual employer of the respondent janitors. Al-Lagadan and Piga. work premises. But the law has likewise provided for situations where. 193 SCRA 270 [1991]. the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. In such cases. equipment. NLRC. contracts with an independent contractor for the performance of any work. Moreover. a person or employer who contracts with another for the performance of the former's work or of any work. though not limited. nevertheless becomes liable to the employees of the contractor. labor relations and post-employment. 195 SCRA 224 [1991]. As to the respondents' claim for 13th month pay. For purposes of determining the extent of their civil liability under this Chapter. Rhone-Poulenc filed a motion for reconsideration which was denied by the public respondent in its resolution of September 11. 1991. and (3) Whether or not petitioner Rhone-Poulenc absorbed the janitors into its workforce. these were dismissed by the NLRC for lack of sufficient factual basis. LABOR LAW I CASES (Arts. and (4) the power to control the employee's conduct — although the latter is the most important element. in the same manner and extent that he is liable to employees directly employed by him. 39 SCRA 629 [1971]. the employer becomes bound by the statutory requirements pertaining. task. association or corporation which. pp. (Rollo. incentive leave and overtime pay. In determining the existence of employer-employee relationship. 106. partnership. (See Ecal V. namely: (1) the selection and engagement of employees (2) the payment of wages. pp.which had ceased to be the employer of the complainants because of the sale of its business. every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. Art. are performing activities which are directly related to the principal business of such employer.97-102) |191 . 1991. as successor. Hence. the employees of the contractor and of the latter's subcontractor. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code. contrary to the NLRC's findings. Drilon. Articles 106. The NLRC then ordered the petitioner to reinstate respondents Roman and Orain and to pay one year backwages. — The provisions of the immediately preceding Article shall likewise apply to any person. the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract. (2) Whether or not CSI is a labor-only contractor. to terms and conditions of employment. 408 [1956]). 54-56) Petitioner Rhone-Poulenc maintains that it is CSI. the following elements are generally considered. Rhone-Poulenc insists that. shall be paid in accordance with the provisions of this Code. 107 and 109 of the Labor Code provide: Art. Art. 99 Phil. The issues to be resolved in this petition are: (1) Whether or not the janitors were employees of Union Carbide. Viaña v. job or project. they shall be considered as direct employers. Singer Sewing Machine Company v. Contractor or subcontractor — Whenever an employer enters into a contract with another person for the performance of the former's work. although the application of the aforementioned four-fold test will not establish an employeremployee relationship. the Court resolved to issue a temporary restraining order enjoining the NLRC from enforcing and/or carrying out its resolutions dated March 13. 39-40). Where the employer-employee relationship has been ascertained. 107. (3) the power of dismissal. Zamora. machineries. and not Union Carbide and RhonePoulenc. Indirect employer. this petition for certiorari. the petitioner avers that it was grave abuse of discretion on the part of the public respondent to conclude that Rhone-Poutlenc absorbed Roman and Orain into its workforce. Solidary liability — The provisions of existing laws to the contrary notwithstanding. (Rollo. 199l.

in other words. the employer who contracted out the job to the contractor becomes jointly and severally liable with his contractor to the employees of the latter "to the extent of work performed under the contract" as if such employer were the employer of the contractor's employees. work premises and other materials. Thus. work premises. The "labor-only" contractor — i. an employer who enter's into a contract with a contractor for the performance of work for the employer. A similar situation obtains where there is "labor only" contracting. does not thereby create an employer-employee relationship between himself and the employees of the contractor. as it had done in a number of occasions. in order to ensure that the latter get paid the wages due to them. (at p. 146 SCRA 347 (1986): Under the general rule set out in the first and second paragraphs of Article 106."the person or intermediary" — is considered "merely as an agent of the employer. free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof. machineries." The employer is made by the statute responsible to the employees of the "labor only" contractor as if such employees had been directly employed by the employer. which provide: Sec. when a contractor fails to pay the wages of his employees in accordance with the Labor Code. CSI had the power to assign its janitors to various clients and to pull out. Moreover. Sec. Nonetheless. the Court is constrained to rule for the petitioner. to prevent any violation or circumvention of any provision of this Code. any of its janitors working at Union Carbide. where "labor only" contracting exists in a given case. equipment. this time for acomprehensive purpose: "employer for purposes of this Code. xxx xxx xxx Applying the foregoing principles to the case at bar.e. equipment. i. who gave orders and instructions to CSI janitors assigned to the Namayan plant. There is no employer-employee relationship between Union Carbide and the respondent janitors.The import Of the foregoing provisions was enunciated in the case of Philippine Bank of Communications v. Job contracting. CSI exercised control over these janitors through Richard Barroga. the statute itself implies or establishes an employeremployee relationship between the employer (the owner of the project) and the employees of the "labor only" contractor. Thus. The janitors drew their salaries from CSI and not from Union Carbide.97-102) |192 . establishes an employer-employee relationship between the employer and the job contractor's employees for a limited purpose. The law itself. emphasis supplied) And in determining whether a contractor is engaged in labor-only contracting or in job contracting. — There is job contracting permissible under the Code if the following conditions are met: (1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method. 9. LABOR LAW I CASES (Arts.. CSI likewise acknowledged that the two janitors were its employees." The law in effect holds both the employer and the "labor only" contractor responsible to the latter's employees for the more effective safeguarding of the employees' rights under the Labor Code. and other materials which are necessary in the conduct of his business. and (2) The workers recruited and placed by such person are performing activities which are directly related to the principal business or operations of the employer in which workers are habitually employed. — (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person. National Labor Relations Commission. The respondents themselves admitted that they were selected and hired by CSI and were assigned to Union Carbide. machineries. (1) Does not have substantial capital or investment in the form of tools. (b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. also a CSI employee. reference may be made to Sections 8 and 9 of the Implementing Rules. Labor-only contracting. 356. 8.e. the employees of the contractor remain the contractor's employees and his alone. and (2) The contractor has substantial capital or investment in the form of tools.

Under these circumstances. SO ORDERED. The NLRC also overlooked the fact that it was still Union Carbide who paid CSI for the services of these janitors. The decision of the labor arbiter dated November 8. that it owns office equipment such as. who were assigned as helpers. indeed. equipment. These two substantial differences. Even on the supposition that the janitors were. numbered one hundred twenty (120) in all which. there is no showing of regularity or permanence of such assignment. Also. 185 SCRA 190 [1990]. taken together. it has been established that CSI. however. the resolutions of the respondent National Labor Relations Commission dated March 13. and that it furnishes its janitors the cleaning equipment such as carpet vacuums and polishing machines. we find sufficient basis from the records to conclude that CSI is engaged in job contracting. xerox machines. however. Yet. RhonePoulenc had every right to choose its own service contractor. As correctly declared by the labor arbiter: Moreover. are sufficient to remove the present case from the ambit of the Guarin ruling. The facts in Guarin. but not limited to. Court of Appeals. It has a contract with UCFEI to assign janitorial and ground services to the latter for a fee. CSI is a legitimate service contractor. Respondent NLRC relied heavily on the ruling in Guarin.As to whether CSI is engaged in labor-only contracting or in job contracting. in anticipation of the pullout of Union Carbide and its hired service agencies. the petitioner may not be deemed to have absorbed the respondent janitors as its own employees. petitioner Rhone-Poulenc. 1991 is made PERMANENT.97-102) |193 . even prior to the expiration of the transition period. janitors. The NLRC. in deducing that CSI was a labor-only contractor. as purchaser of Union Carbide's business is not compelled to absorb these janitors into its workforce. the Court took judicial notice of the general practice adopted in several government and private institutions and industries of hiring a janitorial service on an independent contractor basis. As new owner. calculators. Whatever benefit the petitioner derived from the continuous availment by Union Carbide of the services of CSI's janitors was merely incidental. 1991 and September 11. mimeographing machines. the contractor. 51-52) Moreover. and not petitioner Rhone-Poulenc. started screening its own service contractors. The temporary restraining order issued by this Court on December 2. 1991 are SET ASIDE. The complainants' work were basically janitorial and gardening chores. (Rollo. The public respondent failed to consider the fact that during the three-month transition period prior to Union Carbide's turnover of the facilities. pp. LABOR LAW I CASES (Arts. It must be stressed that the janitorial service agreement between Union Carbide and CSI binds only the two. typewriters. (Central Azucarera del Davao v. Of course. concluded that since Rhone-Poulenc made use of the services of the janitors during the three-month transition period. It is registered as one and doing business as such with a number of known companies in the country. by itself. employees of Union Carbide or that CSI is a labor-only contractor. are different from those obtaining in the present case. airconditioning units and transportation vehicles. owns and maintains its own office. 137 SCRA 295 [1985]). in Kimberly Independent Labor Union v. work premises and other materials. Moreover. we are aware of the complainants' claim that they were made to do chores which are production jobs. the petitioner. An innocent transferee of a business establishment has no liability to the employees of the transferor to continue employing them. The tools of their trade were supplied by CSI. In Guarin. supra. the petitioners inGuarin. then said act of utilizing their services constitutes absorption of the janitors into the petitioner's workforce which gives them the right to be retained. amounts to a considerable workforce and gives rise to the suspicion that the service agreement between Novelty and Lipercon was designed to evade the obligations inherent in an employeremployee relationship. Those occasional errands cannot be considered as genuine control of UCFEI over the complainants. In contrasts there were only eight (8) janitors supplied by CSI to Union Carbide. In the case at bar. thus making Union Carbide a direct employer of these janitors. Drilon. the contractor failed to prove that it had substantial capital or investment in the form of tools. the service contract between Union Carbide and CSI was still in force. WHEREFORE. 1989 is hereby REINSTATED. This ratiocination is not correct. machineries. applying the test prescribed by the Labor Code and the implementing rules. firemen and mechanics.

INC. ALBERT CANLAS. Their salaries were being paid by CMC.L. denied the existence of an employer-employee relationship between petitioner and itself. respondents. DOMINGO. the sales and merchandising of goods and services and conduct survey and opinion polls. (D. EMER B.. Admark and at the same time the latter filed a motion to intervene. DODJIE TAJONERA. such as price markers.L. ANDREW ESPINOSA. MAGTIBAY. J. CESAR AMPER. DANTE ESTRELLADO. petitioners. L. NESTOR ANDRES. ANTONIO MIJARES. the hiring. VIBAR. NATIONAL LABOR RELATIONS COMMISSION. EDGARDO FRANCISCO. FABIAN. DECISION KAPUNAN.FIRST DIVISION G. RONALD ESGUERA. MANILA.L. ALEJANDRO MABAWAD.. LORETO BALDEMOR. ALEJANDRO ORTIZ.97-102) |194 . RAZ GARIZALDE. ARNALDO RAFAEL. Among the tasks assigned to them were the withdrawing of stocks from the warehouse. RAMON ORTIZ. Admark) is a duly registered promotional firm.: Before this Court is a petition for certiorari under Rule 65. CMC contended that it is D. OSCAR SORIANO. Private respondent Donna Louise Advertising and Marketing Associates. It. Both motions were granted. ANICETO CADESIM. EDUARDO BOLONIA. FIDELES REYES. JR. LIQUIGAN. RONALDO BACOLOR.R. MAURING MANUEL. Rather. and ruled that the petitioners are employees of Donna Louise Advertising and Marketing Associates. and ordered the reinstatement of petitioners and the payment of backwages. MELQUIADES ANGELES. ESCARIO. JOEL CATAPANG. Thereafter. the fixing of prices. Private respondent California Marketing Co. ELIZALDE ESTASIO. twenty-seven more persons joined as complainants. DOMINADOR B. NESTOR DELA CRUZ. management and supervision of CMC. pentel pen. 124055 June 8. Inc. CAYETANO IBASCO. VERNON VELASQUEZ. Its primary purpose is to carry on the business of advertising. promotion and publicity. CAROLINO M. On 7 February 1992. BOLONIA. toys. JOSELITO TIONLOC. ROSANO VALLO. ROLANDO ZALDUA. EDUARDO DUNGO ESCARIO REY. LABOR LAW I CASES (Arts. streamers and posters were provided by CMC. ALBERT BALAO. LEONILO MEDINA. ROMEO E. PONTINO CHRISTOPHER. price-tagging. While CMC is engaged in the manufacturing of food products and distribution of such to wholesalers and retailers.L. D. RENATO JANER. AND DONNA LOUISE ADVERTISING AND MARKETING ASSOCIATES INCORPORATED. NORMAN VALLO. MAURLIE C. GOMER GOMEZ. Admark sent to petitioners notice of termination of their employment effective 16 March 1992. CALIFORNIA MANUFACTURING CO. CMC filed a motion to implead as party-defendant D. The parties presented conflicting versions of the facts. During the pendency of the case before the Labor Arbiter. WELFREDO RAMOS. JESSIE SEVILLA. to provide the necessary promotional activities for its product lines.L. NOEL STO. ARNEL UMALI. No. EDGAR CABARDO. Petitioners worked as merchandisers for the products of CMC. it is not allowed by law to engage in retail or direct sales to end consumers.L. Admark in order for CMC to avoid its liability under the law. Inc. The assailed decision reversed the decision of the Labor Arbiter. ROMEO M. and the inventory of stocks. ARMANDO IBASCO. NELSON BERUELA. hired independent job contractors such as D. RODOLFO TUAZON. were all coursed by CMC through its agent D. of the National Labor Relations Commission (NLRC). LEOPOLDO OLEGARIO. which seeks to annul and set aside the decision. 2000 ROLANDO E. promulgated on 10 May 1995. MARCIANO VERGARA. RODOLFO VALENTIN. NOEL B. their complaint was amended so as to include illegal dismissal as cause of action. JOSEPH REYES. ROBERTO SANTOS. Petitioners allege that they were employed by CMC as merchandisers. gun taggers. FERNANDO M. MANIO. displaying of merchandise. ANTONIO CACAM. TEODORO LUGADA. HENRY PONCE. control and supervision of the workers and the payment of salaries. JOSE MARCELO. MELCHOR BUELA. Admark. AUGUSTO RAMOS. Their services were terminated on 16 March 1992. petitioners filed a case against CMC before the Labor Arbiter for the regularization of their employment status. vs. Admark who is the employer of the petitioners. on the other hand. JR. (CMC) is a domestic corporation principally engaged in the manufacturing of food products and distribution of such products to wholesalers and retailers. however. According to petitioners. Admark asserted that it is the employer of the petitioners. DANTE IRANZO. Hence. MARIO DIZER. MENDOZA. VIRGILIO A. REYNANTE PEJO. GREGORIO TALABONG. CMC. JOSELITO ODO. FERNANDO VILLARUEL. AND RICARDO MORTEL. MALLILLIN. TIMOTEO NOTARION. REYNALDO RODRIGUEZ.. JR. MIGUEL TUAZON. D. The materials and equipment necessary in the performance of their job. CAMILO VELASCO. Inc. GARY RELOS. VICTOR ALVAREZ. FREDERICK RAMOS. As an independent contractor it serves several clients among which include Purefoods. These were done under the control. For its part.

we believe. 4 On 29 July 1994. In this connection. an integral part of the manufacturing business. we ruled that therein contractor Livi Manpower Services was a mere placement agency and had simply supplied herein petitioner with the manpower necessary to carry out the company’s merchandising activity. however. three (3) agencies namely: the same Livi Manpower Services. premises considered. We. Intervenor DL ADMARK is ordered to reinstate the eighty one (81) complainants mentioned in the appealed decision to their former positions with backwages from March 16. 2. LABOR LAW I CASES (Arts. Admark. held that D.97-102) |195 ." an activity that is doubtless.2 In the main. which they claim is applicable to the case at bar for the following reasons: 1. CMC which. Inc. its client. Admark is a legitimate independent contractor. to wit: Hence. In this case. It. The dispositive portion of the decision reads: We cannot sustain the petition." The nature of one’s business is not determined by self-serving appellations one attaches thereto but by the tests provided by statute and prevailing case law. CMC can validly farm out its merchandising activities to a legitimate independent contractor. It ruled that no employer-employee relationship existed between the petitioners and CMC. the employer of the petitioners.L. the Rank Manpower Services and D. there are at least. true in the Tabas Case. 1992 until they are actually reinstated. as if Livi had served as its (California’s) promotions or sales arm or agent. further stated that : In other words. the NLRC set aside the decision of the Labor Arbiter. it is necessary to determine whether D. Admark is a labor-only contractor and cites this Court’s ruling in the case of Tabas. The respondent in this case is California Manufacturing Co. while respondent in the Tabas case is the same California Manufacturing Co. Splash Cosmetics and herein private respondent California Marketing. The supervision. the appealed judgment is modified. this Court ruled that therein petitioner merchandisers were employees of CMC. the Labor Arbiter rendered a decision finding that petitioners are the employees of CMC as they were engaged in activities that are necessary and desirable in the usual business or trade of CMC. In the Tabas case. the Labor Arbiter cited the case of Tabas vs. It is not. The agency in the Tabas case is Livi Manpower Services. involved private respondent CMC. Livi would have been truly the employer of its employees and California. or otherwise rendered a piece of work it (California) could not itself have done. it contracts out labor in favor of clients.L.L.L. The award of attorney’s fees equivalent to ten (10%) of the award is deleted for lack of basis." meaning to say.1 In justifying its ruling. likewise. Inc.lawphi1 4. Finding no valid grounds existed for the dismissal of the petitioners by D. The petitioners had been charged with merchandising [sic] promotion or sale of the products of [California] in the different sales outlets in Metro Manila including task and occational [sic] price tagging.3 It would have been different.6 Petitioners’ reliance on the Tabas case is misplaced.withstanding its vehement claims to the contrary. Petitioners are of the position that D. this petition. had simply supplied it with manpower necessary to carry out its (California’s) merchandising activities.L. WHEREFORE. Livi as a placement agency.5 On appeal. 3. In said case. and notwithstanding the provision of the contract that it is "an independent contractor. Inc. management and/or control rest upon respondent California Manufacturing Co. Admark is a labor-only contractor or an independent contractor.L.Corona Supply. had Livi been discretely a promotions firm. hence. Admark whose participation is to give and pay the salaries of the petitioners and that the money came from the respondent CMC as in the Tabas case. as found by the Honorable Labor Arbiter which is also. There is no doubt that in the case at bar. using its (California’s) premises and equipment. Livi performs "manpower services." California’s purported "principal operation activity. For then. Petitioners filed a motion for reconsideration but the same was denied by the NLRC for lack of merit. Firstbrand. x x x. We hold that it is one not withstanding its vehement claims to the contrary and not. The bare fact that Livi maintains a separate line of business does not extinguish the equal fact that it has provided California with workers to pursue the latter’s own business. then. it ordered their reinstatement. and that California had hired it to perform the latter’s merchandising activities. the issue brought to fore is whether petitioners are employees of CMC or D. likewise. Admark. The petitioners are merchandisers and the petitioners in the Tabas case are also merchandisers who have the same nature of work. In resolving this. we do not agree that the petitioner has been made to perform activities "which are not directly related to the general business of manufacturing.

there is permissible job contracting when a principal agrees to put out or farm out with a contractor or a subcontractor the performance or completion of a specific job.11 3) D.10 Based on the foregoing criterion. all tending to show that D. In addition. such as advertising. among others. Nabisco Biscuits.L. Admark is a legitimate independent contractor.."12 4) It had its own capital assets to carry out its promotion business. (f) the control and supervision of the workers.L. Moreover..L. (i) the duty to supply premises. sample SSS contribution forms filed and submitted by D. and other materials which are necessary in the conduct of his business. materials and equipment to service its clients. Admark states that it is a firm engaged in promotional.17 such cost breakdown is a standard content of service contracts designed to insure that under the contract. petitioners did not submit an iota of evidence that it was CMC who paid for their salaries. 9 this Court ruled that in order to be considered an independent contractor it is not enough to show substantial capitalization or investment in the form of tools. firing and payment of workers of the contractor.L. advertising. (d) the term and duration of the relationship. the following elements are present: (a) The person supplying workers to an employer does not have substantial capital or investment in the form of tools. equipment. The fact that the agreement between CMC and D. Admark was able to present in evidence the payroll of petitioners. we find that D. (b) the nature and extent of the work. machineries.L.. In this arrangement. Admark clearly provides that the agreement is for the supply of sales promoting merchandising services rather than one of manpower placement. As correctly pointed out by both CMC16 and the Office of the Solicitor General. and labor. and the application for employment by R. In contrast. and Licron.There is labor-only contracting when the contractor or sub-contractor merely recruits.13 It had an authorized capital stock of P500. and (4) the power to control the employee’s conduct. NLRC et al.L. (g) the power of the employer with respect to the hiring. publication.020 for the office space it occupied..The contractor carries on a distinct and independent business and undertakes the contract work on his account under his own responsibility according to his own manner and method. The elements of this test are (1) the selection and engagement of employee. appliances. free from the control and direction of his employer or principal in all matters connected with the performance of his work except as to the results thereof. the NLRC noted that D. 2) The service contract between CMC and D. Admark. Admark as the true employer of petitioners is further established. marketing and merchandising activities. 7 In contrast.00. Admark to the SSS. machineries (sic). regardless of whether such job or work or service is to be performed or completed within or outside the premises of the principal. (2) the payment of wages. and (b) The workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer. Admark as a legitimate job contractor are: 1) The SEC registration certificate of D.97-102) |196 . work premises. (c) the skill required.L. (e) the right to assign the performance of specified pieces of work. the following conditions must concur: (a). (3) the power of dismissal. It then had current assets amounting to P6 million and is therefore a highly capitalized venture. and (b). It paid rentals of P30.L. work or service within a definite or predetermined period.The contractor has substantial capital or investment in the form of tools. Admark contains the billing rate and cost breakdown of payment for core merchandisers and coordinators does not in any way establish that it was CMC who was paying for their salaries. (h) the control of the premises. petitioners themselves admitted that they were selected and hired by D. LABOR LAW I CASES (Arts. materials. Corona Supply. In laboronly contracting.. work premises. It was likewise engaged in the publication business as evidenced by it magazine the "Phenomenon. manner and terms of payment.000. It had several merchandising contracts with companies like Purefoods. work or service for a principal. equipment.8 In the recent case of Alexander Vinoya vs. de los Reyes. marketing and merchandising. Admark was actually engaged in several activities. tools. It owned several motor vehicles and other tools. machinery and work premises.. Admark was paying for the petitioners’ salaries.14 As regards the first element. by applying the four-fold test used in determining employer-employee relationship. and (j) the mode.. promotions.L.L.L.15 As to the second element. employees of the job contractor will receive benefits mandated by law. Among the circumstances that tend to establish the status of D. the status of D. the following factors need be considered: (a) whether the contractor is carrying on an independent business. equipment. supplies or places workers to perform a job.

a careful scrutiny of the documents adverted to. the assailed decision is AFFIRMED in toto. cannot validly claim to be the ones referred to in said memos. Again petitioners admitted that it was D. Thus. On the issue of illegal dismissal. petitioners. will reveal that nothing therein would remotely suggest that CMC was supervising and controlling the work of the petitioners: x x x The memorandums (Exhibit "B") were addressed to the store or grocery owners telling them about the forthcoming sales promotions of CMC products. it is no longer relevant to determine whether the activities performed by the latter are necessary or desirable to the usual business or trade of CMC. there is no showing that due process was afforded the petitioners. likewise. Admark who terminated their employment. finding no grave abuse of discretion on the part of the National Labor Relations Commission." Undoubtedly. notes that the documents fail to show anything that would remotely suggest control and supervision exercised by CMC over petitioners on the matter on how they should perform their work. The Labor Arbiter found that these memos "indubitably show that the complainants were under the supervision and control of the CMC people. petitioners presented the memoranda of CMC’s sales and promotions manager."19 However. IN VIEW OF THE FOREGOING.20 were addressed either to the store owners or "regular" merchandisers and demonstrators of CMC.L. It would be different if in the memorandums were sent or given to the complainants and their duties or roles in the said sales campaign are therein defined. yet it does not necessarily mean to refer to the complainants.L." x x x we are not convinced that the documents sufficiently prove employer-employee relationship between complainants and respondents CMC. The Office of the Solicitor General. It is also noted that in one of the memorandums it was addressed to: "All regular merchandisers/demonstrators. SO ORDERED.18 To prove the fourth and most important element of control. Admark and petitioners.97-102) |197 . as correctly pointed out by the NLRC.Neither did the petitioners prove the existence of the third element. Moreover. the reason given is not just cause to terminate petitioners.L. conceding that they are not regular employees of the latter. since CMC has also regular merchandisers and demonstrators. Admark’s belated claim that the petitioners were not terminated but simply did not report to work23 is not supported by the evidence on record. The memoranda LABOR LAW I CASES (Arts. While in one of the memorandums a statement is made that "our merchandisers and demonstrators will be assigned to pack the premium with your stocks in the shelves x x x.22 D.21 Having proven the existence of an employer-employee relationship between D.L. who filed a complaint for regularization against respondent CMC. we agree with the findings of the NLRC that D. thereby. as they claim. Admark "admits having dismissed the petitioners for allegedly disowning and rejecting them as their employer.