LABOR CASES Art. 95 13th Month Pay Ver1 (1)

8/20/2019 LABOR CASES Art. 95 13th Month Pay Ver1 (1)

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ART. 95

1. SONGCO ET AL V NLRC

FACTS:

Zuelig fled an application or clearance to terminate the services o Songco, andothers, on the ground o retrenchment due to fnancial losses. During the hearing,

the parties agreed that the sole issue to be resolved as the basis o the separation

pa! due. The salesmen received monthl! salaries o at least "#$$.$$ and

commission or ever! sale the! made.

The Collective %argaining Agreements beteen Zuelig and the union o hich

Songco, et al. ere members contained the olloing provision: &An! emplo!ee

ho is separated rom emplo!ment due to old age, sic'ness, death or permanent

la!(o), not due to the ault o said emplo!ee, shall receive rom the compan! a

retirement gratuit! in an amount e*uivalent to one +- months salar! per !ear o

service.&

The /abor Arbiter ordered Zuelig to pa! Songco et al., separation pa! e*uivalent to

their one month salar! +e0clusive o commissions, alloances, etc.- or ever! !ear

o service ith the compan!.

The 1ational /abor 2elations Commission sustained the Arbiter.

3SS45:

6hether or not earned sales commissions and alloances should be included in the

monthl! salar! o Songco, et al. or the purpose o computing their separation pa!.

24/317:

3n the computation o bac'ages and separation pa!, account must be ta'en not

onl! o the basic salar! o the emplo!ee, but also o the transportation and

emergenc! living alloances.

5ven i the commissions ere in the orm o incentives or encouragement, so that

the salesman ould be inspired to put a little more industr! on 8obs particularl!

assigned to them, still these commissions are direct remunerations or services

rendered hich contributed to the increase o income o the emplo!ee. Commission

is the recompense compensation or reard o an agent, salesman, e0ecutor,trustee, receiver, actor, bro'er or bailee, hen the same is calculated as a

percentage on the amount o his transactions or on the proft to the principal. The

nature o the or' o a salesman and the reason or such t!pe o remuneration or

services rendered demonstrate that commissions are part o Songco, et als age or

salar!.



The Court ta'es 8udicial notice o the act that some salesmen do not receive an!

basic salar!, but depend on commissions and alloances or commissions alone,

although an emplo!er(emplo!ee relationships e0ists.

3 the opposite vie is adopted, i.e., that commissions do not orm part o the age

or salar!, then in e)ect, e ill be sa!ing that this 'ind o salesmen do not receive

an! salar! and, thereore, not entitled to separation pa! in the event o discharge

rom emplo!ment. This narro interpretation is not in accord ith the liberal spirit

o the labor las, and considering the purpose o separation pa! hich is, to

alleviate the di9culties hich conront a dismissed emplo!ee thron to the streets

to ace the harsh necessities o lie.

3n Soriano vs. 1/2C + SC2A ;#-, e held that the commissions also claimed b!

the emplo!ee +override commission plus net deposit incentive- are not properl!

includible in such base fgure since such commissions must be earned b! actualmar'et transactions attributable to the petitioner <salesman=. Since the

commissions in the present case ere earned b! actual transactions attributable to

Song, et al., these should be included in their separation pa!. 3n the computation

thereo, hat should be ta'en into account is the average commission earned

during their last !ear o emplo!ment.

2. MILLRES ET AL V NLRC3. SLL INTERNATIONAL ET AL V NLRC4. OUR HAUS REALTY DEVELOPMENT CORP. V PARIAN

ART. 100

1. AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES UNION V.

AMERICAN WIRE AND CABLE CO.

FACTS:

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 andCable

Monthly-Rated Employees Union and the American Wire and Cable Daily-Rated

Employees. An original action was filed before the NCMB of the Departmentof Labor

and Employment (DOLE) by the two unions for voluntary arbitration. Thepetitioner

submits that the withdrawal of the private respondent of the 35%premium pay for

selected days during the Holy Week and Christmas season, theholding of the Christmas



Party and its incidental benefits, and the giving of serviceawards, which they have long

enjoyed, violated Article 100 of the Labor Code.A decision was rendered by the

Voluntary Arbitrator in favor of the privaterespondent.On appeal, CA affirmed and

upheld the Arbitrator’s decision.

ISSUE:

Whether or not private respondent is guilty of violating Article 100 of the LaborCode, as

amended, when the benefits/entitlements given to the members of petitioner union were

withdrawn.

HELD:

The Court ruled that respondent is not guilty of violating Art. 100 of the Labor Code.

ART. 100. PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS. –

Nothing in this Book shall be construed to eliminate or in any way diminish supplements,

or other employee benefits being enjoyed at the time of promulgation of this Code.

The benefits and entitlements mentioned in the instant case are all considered bonuses

which were given by the private respondent out of its generosity and munificence. 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. The granting of a bonus is a management prerogative, something given in

addition to what is ordinarily received by or strictly due the recipient. Thus, a bonus is

not a demandable and enforceable obligation, except when it is made part of the wage,

salary or compensation of the employee.

For a bonus to be enforceable, it must have been promised by the employer and

expressly agreed upon by the parties or it must have had a fixed amount and had been

a long and regular practice on the part of the employer. The assailed benefits were

never subjects of any agreement between the union and the company. It was never

incorporated in the CBA. To be considered a “regular practice,” the giving of the bonus

should have been done over a long period of time, and must be shown to have been

consistent and deliberate. The downtrend in the grant of these two bonuses over the



years demonstrates that there is nothing consistent about it. 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.

2. TSPIC CORP V. TSPIC EMPLOYEES UNION (FFW3. LEPANTO CERAMICS V. LEPANTO CERAMICS EMPLOYEES ASSOCIATION

Facts:

/epanto Ceramics, 3nc. entered into a collective bargaining agreement +C%A- ith /epanto

Ceramics 5mplo!ees Association hich provides or, among others, the grant o a Christmas

git pac'age>bonus to the members o the respondent Association. The Christmas bonus as

one o the enumerated e0isting beneft, practice o traditional rights hich shall remain in

ull orce and e)ect. This agreement shall become e)ective on September , ??? and shall

remain in ull orce and e)ect ithout change or a period o our +#- !ears or up to August

@, ;$$#. 3n ;$$;, petitioner gave a !ear(end cash beneft o Si0 undred "esos +"B$$.$$-

and o)ered a cash advance to interested emplo!ees e*uivalent to one +- month salar!

pa!able in one !ear. The respondent Association ob8ected to the "B$$.$$ cash beneft and

argued that this as in violation o the C%A it e0ecuted ith the petitioner. 4pon ailing to

settle amicabl! and conciliate, the complaint as fled to the oluntar! Arbitrator.

"etitioners contention:

The petitioner averred that the complaint or nonpa!ment o the ;$$; Christmas bonus had

no basis as the same as not a demandable and enorceable obligation. 3t argued that the

giving o e0tra compensation as based on the compan!s available resources or a given

!ear and the or'ers are not entitled to a bonus i the compan! does not ma'e profts.

2espondents contention:

2espondent Association insisted that it has been the traditional practice o the compan! to

grant its members Christmas bonuses during the end o the calendar !ear, each in the

amount o "@,$$$.$$ as an e0pression o gratitude to the emplo!ees or their participation in

the compan!s continued e0istence in the mar'et. ence, a violation o their C%A.

3ssue:

6>1 the emplo!ees is entitled to @$$$ Christmas %onus

oluntar! Arbitrator:

Declared that petitioner is bound to grant each o its or'ers a Christmas bonus o"@,$$$.$$ or the reason that the bonus as given prior to the e)ectivit! o the C%A

beteen the parties and that the fnancial losses o the compan! is not a su9cient reason to

e0empt it rom granting the same. 3t stressed that the C%A is a binding contract and

constitutes the la beteen the parties.

CA:

As adverted to earlier, the Court o Appeals a9rmed in toto the decision o the oluntar!

Arbitrator.



3n the case at bar, it is indubitable that petitioner o)ered private respondent a Christmas

bonus>git in ??E or beore the e0ecution o the ??? C%A hich incorporated the said

beneft as a traditional right o the emplo!ees. ence, the grant o said bonus to private

respondent can be deemed a practice as the same has not been given onl! in the ??? C%A.

Apparentl!, this is the reason h! petitioner specifcall! recognied the grant o a Christmas

bonus>git as a practice or tradition as stated in the C%A.

SC:

7enerall!, a bonus is not a demandable and enorceable obligation. For a bonus to

be enorceable, it must have been promised b! the emplo!er and e0pressl! agreed

upon b! the parties. 7iven that the bonus in this case is integrated in the C%A, the

same parta'es the nature o a demandable obligation. eril!, b! virtue o its

incorporation in the C%A, the Christmas bonus due to respondent Association has

become more than 8ust an act o generosit! on the part o the petitioner but a

contractual obligation it has underta'en.

Doctrine:3t is a amiliar and undamental doctrine in labor la that the C%A is the la beteen

the parties and the! are obliged to compl! ith its provisions.

4. EASTERN TELECOM PHILS V. EASTERN TELECOMS EMPLOYEES UNION

ART. 10!

1. GSIS V. NLRC2. ALIVIADO ET AL V. PROCTOR AND GAMBLE PHIL

3. MANDAUE V. ANDALES

FACTS"

"etitioner Gandaue 7alleon Trade, 3nc. +G7T3- and 7amallosons Traders, 3nc. +7T3-

are business entities engaged in rattan urniture manuacturing or e0port.

2espondent Andales fled a complaint ith /A against both petitioners or illegal

dismissal and non(pa!ment o @th moth pa! and service incentive leave pa!. is

other c$(or'ers numbering ;B$ fled a similar complaint against petitioner G7T3

onl!.

G7T3 denied the e0istence o 552 ith complainants, claiming that the! are or'ers

o independent contractors hose services ere engaged temporaril! and

seasonall! hen the demands or its products are high and could not be met b! its

regular or'orceH the independent contractors recruited and hired the complaints

prepared the pa!roll and paid their ages, supervised and directed their or', and

had authorit! to dismiss them.



/A rendered a Decision holding that E@ complaints are regular emplo!ees o G7T3

since the! ere made to perorm unctions hich are necessar! to contractors ere

not properl! identifed.

1/2C a9rmed the /As decision. 3t held that labor(onl! contracting and not 8ob(

contracting as present since the alleged contractors did not have substantialcapital in the orm o e*uipment, machineries and or' premises

The CA a9rmed the fndings o the 1/2C.

ISSUE"

6I1 the CA committed grave abuse and irreversible error in considering the

respondents as emplo!ees o the petitioner.

HELD"

The Court sees no reason to disturb the fndings o act o the 1/2C and the CA:

%ased on A2T $B o the /abor Code and Sections and J o the 3mplementing

2ules, Klabor(onl!L contracting e0ists hen the olloing criteria are present:

6here the contractor or subcontractor suppl!ing or'ers to emplo!er does not have

substantial capital or investment in orm o tools, e*uipment, machineries, or'

premises, among other thingsH and the or'ers recruited and places b! the

contractor or subcontractor are perorming activities hich are directl! related to

the principal business o such emplo!erH or

6here the contractor does not e0ercise the right to control the perormance o the

or' o the contractual emplo!ee.

3n the present case petitioners claim that their contractors are independent

contractors and thereore this case is one o permissible 8ob contracting, is ithout

based.

First, respondents or' as eavers, grinders, sanders and fnishers is directl!

related to G7TS principal business o rattan urniture manuacturing. 6here the

emplo!ees are tas'ed to underta'e activities usuall! desirable or necessar! in the

usual business o the emplo!er, the contractor is considered as a Klabor(onl!L

contractor and such emplo!ees are considered as regular>emplo!ees o the

emplo!er.

Second, G7T3 as unable to present an! proo that its contractors had substantial

capital. There as no evidence in tools, e*uipment o implement actuall! use in the

perormance or completion o the 8ob, or', or service that the! ere contacted to

render. The la casts the burden on the contractor to prove that it has substantial

capital, investment, tools, etc. 5mplo!ees on the other hand need not prove that



the contractor does not have substantial capital, investment, and tools to engage in

8ob(contracting.

Thus, the contractors are Klabor(onl!L contractors since the! do not have

substantial capital or investment hich relates to the service perormed and

respondents perormed activities hich ere directl! related to G7T3s mainbusiness.

G7T3, the principal emplo!er is solitaril! liable ith the labor(onl! contractors, or

the rightul claims o the emplo!ees.

4nder this set(up, Klabor(onl!L contractors are deemed agents o the principal,

G7T3, and the la ma'es the principal responsible to the emplo!ees o the Klabor(

onl!L contractor as i the principal responsible to the emplo!ees o the Klabor(onl!L

contractor as i the principal itsel directl! hired or emplo!ed the emplo!ees.

3n prohibiting Klabor(onl!L contracting and creating an emplo!er(emplo!ee

relationship beteen the principal and the supposed contractors emplo!ees, the

la intends to prevent emplo!ers rom circumventing labor las intended to protect

emplo!ees.

4. SPIC N #SPAM SERVICES V. PA$E5. VIGILLA V. PCCI!. BABAS V. LOREN%O SHIPPING CORP.&. FIRST INDUSTRIAL CORP. V. CALIMBAS

Facts:

Private respondent First Industrial Corporation (FPIC) is a domestic corporation

primarily engaged in the transportation of petroleum product by pipeline. Upon the other

hand, petitioners a!uel Calimbas and "uisa #ahilom $ere engaged by %e &u'man

#anpo$er ervices (%&#) to perform secretarial and clerical obs for FPIC. %&# is

engaged in the business of supplying manpo$er. FPIC informed Calimbas and #ahilom

that their services to the company $ould no longer be needed as a result of the *Pace+

etting study conducted by an outside consultant.

%espite having e-ecuted the said !uitclaims, the Calimbas and #ahilom still filed a

Complaint against FPIC for illegal dismissal and for the collection of monetary benefits,

damages and attorneys fees, alleging that they $ere regular employees of FPIC after

serving almost five years, and that they $ere dismissed $ithout cause.

Upon the other hand, FPIC insisted that their true employer $as %&# considering that

the petitioners $ere hired by %&# and assigned them to the company to render



services based on their contact/ that the received their $ages and other benefits from

%&#/ and that they e-ecuted !uitclaims in favor of %&#. 0lso, FPIC submitted that

the termination of the petitioners employment $ith their employer, %&#, $as valid

and la$ful since they e-ecuted !uitclaims $ith their employer.

Issues:

1hether or not Calimbas and #ahilom are employees of FPIC

2eld:

3es. 4he upreme Court ruled that Calimbas and #ahilom are FPICs employees and

that %&# is engaged in labor+only contracting.

4here is 5labor+only contracting $here the person supplying $or6ers to an employer

does not have substantial capital or investment in the form of tools, e!uipment,

machineries, $or6 premises, among others, and the $or6ers recruited and placed by

such person are performing activities $hich are directly related to the principal business

of such employer. In such cases, the person or intermediary shall be considered merely

as an agent of the employer $ho shall be responsible to the $or6ers in the same

manner and e-tent as if the latter $ere directly employed by him.

%&# has not sho$n any serious reason to disregard the ruling in the aforementioned

case. ecords li6e$ise reveal that %&# has no substantial e!uipment in the form of

tools and machinery. 0s a matter of fact, respondents $ere using office e!uipment and

materials o$ned by petitioner $hile they $ere rendering their services at its offices.

econd, petitioner e-ercised the po$er of control and supervision over the respondents.

It is a-iomatic that the test to determine the e-istence of independent contractor ship is

$hether one claiming to be an independent contractor has contracted to do the $or6

according to his o$n methods and $ithout being subected to the control of the

employer, e-cept only to the results of the $or6. 7bviously, petitioner cannot rightly

claim that %&# $as an independent ob contractor in as much as respondent $ere

subected to the control and supervision of petitioner $hile they $ere performing their

obs. 4hus, an employer+employee relationship e-ists bet$een petitioner and

respondents and having served for almost five years at petitioners company,

respondents had already attained the status of regular employees.

'. ALILIN V. PETRON9. FONERRA BRANDS PHIL. V. LAGARDO



"etitioner Fonterra %rands "hils., 3nc. +Fonterra- contracted the services o Z!tron Gar'eting

and "romotions Corp. +Z!tron- or the mar'eting and promotion o its mil' and dair!

products. "ursuant to the contract, Z!tron provided Fonterra ith trade merchandising

representatives +TG2s -, including respondents /eonardo /argado +/argado- and Teotimo

5strellado +5strellado -. The engagement o their services began on September , ;$$@ and

Ga! ;J, ;$$;, respectivel!, and ended on Mune B, ;$$B. Ater the termination o the

promotion contract, Fonterra then entered into an agreement or manpoer suppl! ith A.C.

Sicat Gar'eting and "romotional Services +A.C. Sicat-. Desirous o continuing their or' as

TG2s, respondents submitted their 8ob applications ith A.C. Sicat, hich hired them or a

term o fve +- months, beginning Mune J, ;$$B up to 1ovember B, ;$$B. 6hen respondents

(month contracts ith A.C. Sicat ere about to e0pire, the! allegedl! sought reneal

thereo, but ere allegedl! reused. This prompted respondents to fle complaints or illegal

dismissal, regulariation, non(pa!ment o service incentive leave and @th month pa!, and

actual and moral damages, against petitioner, Z!tron, and A.C. Sicat.

3ssue:

6>1 A.C. Sicat and Z!tron ere labor(onl! contractors, ma'ing Fonterra the emplo!er o the

respondents and 6>1 the respondents ere illegall! dismissed.

/abor Arbiter:

2espondents ere not illegall! dismissed. As a matter o act, the! ere the ones ho

reused to rene their contract and that the! voluntaril! complied ith the re*uirements or

them to claim their corresponding monetar! benefts in relation theretoH and +;- the! ere

consecutivel! emplo!ed b! Z!tron and A.C. Sicat, not b! Fonterra.

1/2C:

A9rmed /A

CA:

A.C. Sicat satisfes the re*uirements o legitimate 8ob contracting, but Z!tron does not on the

olloing grounds:

( Z!trons paid(in capital o N;$,$$$ cannot be considered as substantial capital

( its Certifcate o 2egistration as issued b! the DI/5 months ater respondents

supposed emplo!ment ended

( its claim that it has the necessar! tools and e*uipment or its business is

unsubstantiated

the CA held that respondents ere illegall! dismissed since Fonterra itsel ailed to prove

that their dismissal is laul.

SC:respondents voluntaril! terminated their emplo!ment ith Z!tron b! reusing to

rene their emplo!ment contracts ith the latter, appl!ing ith A.C. Sicat, and

or'ing as the latters emplo!ees, thereb! abandoning their previous emplo!ment

ith Z!tron. Too, it is ell to mention that or obvious reasons, resignation is

inconsistent ith illegal



dismissal. This being the case, Z!tron cannot be said to have illegall! dismissed

respondents. A.C. Sicat is engaged in legitimate 8ob contracting being proved b!

providing pertinent evidence. 2espondents, b! accepting the conditions o the

contract ith A.C. Sicat, ere ell aare o and even acceded to the condition that

their emplo!ment thereat ill end on said pre(determined date o termination. The!

cannot no argue that the! ere illegall! dismissed b! the latter hen it reused torene their contracts ater its e0piration

Doctrine:

f0ed(term emplo!ment contracts are not limited, as the! are under the present

/abor Code, to those b! nature seasonal or or specifc pro8ects ith predetermined

dates o completionH the! also include those to hich the parties b! ree choice

have assigned a specifc date o termination.

10. CASAP V. ADIDAS PHILS.11. PETRON CORP V. CABERTE

ART. 110

1. DBP V. NLRC

ART. 113

1. SHS PERFORATED V. DIA%

FACTS"

"etitioner SS "erorated Gaterials, 3nc.+SS-is a start(up corporation organied and

e0isting under the las o the 2epublic o the"hilippinesand registered ith the

"hilippine 5conomic Zone Authorit!. "etitioner 6inried

artmannshenn+artmannshenn-, a 7erman national, is its president, in hich

capacit! he determines the administration and direction o the da!(to(da! business

a)airs o SS. "etitioner inrich Mohann Schumacher+Schumacher-,also a 7erman

national, is the treasurer and one o the board directors. As such, he is authoried to

pa! all bills, pa!rolls, and other 8ust debts o SS o hatever nature upon maturit!.

Schumacher is also the 50ecutive ice("resident o the 5uropean Chamber o

Commerce o the"hilippines+5CC"-hich is a separate entit! romSS.%oth entities

have an arrangement here 5CC" handles the pa!roll re*uirements o SS to

simpli! business operations and minimie operational e0penses. Thus, the ages o

SS emplo!ees are paid out b! 5CC", through its Accounting Services Department

headed b! Muliet Taguiang+Taguiang-.



Ganuel F. Dia +respondent- as hired b! petitioner SS as Ganager or %usiness

Development on probationar! status rom Mul! E, ;$$toManuar! E, ;$$B, ith a

monthl! salar! o"$$,$$$.$$. 2espondents duties, responsibilities, and or' hours

ere described in the Contract o "robationar! 5mplo!ment.

2espondent as also instructed b! artmannshenn to report to the SS o9ce andplant at least to +;- da!s ever! or' ee' to observe technical processes involved

in the manuacturing o perorated materials, and to learn about the products o the

compan!, hich respondent as hired to mar'et and sell.

During respondents emplo!ment, artmannshenn as oten abroad and, because o

business e0igencies, his instructions to respondent ere either sent b! electronic

mail or rela!ed through telephone or mobile phone. 6hen he ould be in

the"hilippines, he and the respondent held meetings. As to respondents or', there

as no close supervision b! him.

During meetings ith the respondent, artmannshenn e0pressed his dissatisaction

over respondents poor perormance.2espondent allegedl! ailed to ma'e an!

concrete business proposal or implement an! specifc measure to improve the

productivit! o the SS o9ce and plant or deliver sales e0cept or a

meagre";,$$.$$ or a sample product. 3n numerous electronic mail messages,

respondent ac'noledged his poor perormance and o)ered to resign rom the

compan!.

2espondent, hoever, denied sending such messages but admitted that he had

reported to the SS o9ce and plant onl! eight +E- times rom Mul! E, ;$$ to

1ovember @$, ;$$.

In1ovember B, ;$$, in preparation or his trip to the"hilippines, artmannshenn

tried to call respondent on his mobile phone, but the latter ailed to anser.

In1ovember E, ;$$, artmannshenn arrived in the"hilippinesrom7erman!, and

on 1ovember ;; and ;#, ;$$, notifed respondent o his arrival through electronic

mail messages and advised him to get in touch ith him.2espondent claimed that

he never received the messages.

In1ovember ;?, ;$$, artmannshenn instructed Taguiang not to release

respondents salar!. /ater that aternoon, respondent called and in*uired about hissalar!. Taguiang inormed him that it as being ithheld and that he had to

immediatel! communicate ith artmannshenn. Again, respondent denied having

received such directive.

The ne0t da!, on1ovember @$, ;$$, respondent served on SS a demand letter

and a resignation letter.



To settle the issue amicabl!, petitioners counsel advised respondents counsel b!

telephone that a chec' had been prepared in the amount o"$,$$$.$$, and as

read! or pic'(up onDecember , ;$$. In the same date, a cop! o the ormal

repl! letter relating to the prepared pa!ment as sent to the respondents counsel

b! acsimile transmission. Despite being inormed o this, respondent never pic'ed

up the chec'.

2espondent countered that his counsel received petitioners ormal repl! letter onl!

onDecember ;$, ;$$, stating that his salar! ould be released subse*uent to the

turn(over o all materials oned b! the compan! in his possession. 2espondent

claimed that the onl! thing in his possession as a sample panels older hich he

had alread! returned and hich as dul! received b! Taguiang on1ovember @$,

;$$.

InDecember ?, ;$$,respondent fled a Complaint against the petitioners or illegal

dismissalH non(pa!ment o salaries>ages and @thmonth pa! ith pra!er or

reinstatement and ull bac'agesH e0emplar! damages, and attorne!s ees, costs o

suit, and legal interest.

InMune , ;$$B, the /A rendered his decision declaring complainant as having

been illegall! dismissed and urther ordering his immediate reinstatement ithout

loss o seniorit! rights and benefts. 3t is also ordered that complainant be deemed

as a regular emplo!ee.

In appeal, the 1/2Creversedthe decision o the /A in itsDecember ;?,

;$$B2esolution.

InManuar! ;, ;$$J, respondent fled a motion or reconsideration but the 1/2C

subse*uentl! denied it or lac' o merit in itsGa! ;@, ;$$J2esolution.

The CAreversedthe 1/2C resolutions in itsDecember ;@, ;$$EDecision.

Aggrieved, the petitioners come to this Court pra!ing or the reversal and setting

aside o the sub8ect CA decision.

ISSUES"

6hether or not respondent as constructivel! dismissed b! petitioners, hich

determination is, in turn, hinged on fnding out:

<= 6hether or not the temporar! ithholding o respondents salar!>ages b!

petitioners as a valid e0ercise o management prerogativeH and

<;= 6hether or not respondent voluntaril! resigned.



HELD"

As a rule, the actual fndings o the courts belo are conclusive in a petition or

revie oncertiorarihere onl! errors o la should be revieed. The case, hoever,

is an e0ception because the actual fndings o the CA and the /A are contradictor!

to that o the 1/2C. Thus, a revie o the records is necessar! to resolve the actualissues involved and render substantial 8ustice to the parties.

"etitioners contend that ithholding respondents salar! rom 1ovember B to

1ovember @$, ;$$, as 8ustifed because respondent as absent and did not sho

up or or' during that period. e also ailed to account or his hereabouts and

or' accomplishments during said period. 6hen there is an issue as to hether an

emplo!ee has, in act, or'ed and is entitled to his salar!, it is ithin management

prerogative to temporaril! ithhold an emplo!ees salar!>ages pending

determination o hether or not such emplo!ee did indeed or'.

6e disagree ith petitioners.

/A%I2 /A6

Ganagement prerogative reers to the right o an emplo!er to regulate all aspects o

emplo!ment, such as the reedom to prescribe or' assignments, or'ing methods,

processes to be olloed, regulation regarding transer o emplo!ees, supervision o

their or', la!(o) and discipline, and dismissal and recall o or'.Although

management prerogative reers to the right to regulate all aspects o emplo!ment,

it cannot be understood to include the right to temporaril! ithhold salar!>ages

ithout the consent o the emplo!ee. To sanction such an interpretation ould becontrar! to Article B o the /abor Code, hich provides:

A2T. B. 6ithholding o ages and 'ic'bac's prohibited. 3t shall be unlaul or an!

person, directl! or indirectl!, to ithhold an! amount rom the ages o a or'er or

induce him to give up an! part o his ages b! orce, stealth, intimidation, threat or

b! an! other means hatsoever ithout the or'ers consent.

An! ithholding o an emplo!ees ages b! an emplo!er ma! onl! be alloed in the

orm o age deductions under the circumstances provided in Article @ o the

/abor Code, as set orth belo:

A2T. @. 6age Deduction. 1o emplo!er, in his on behal or in behal o an!

person, shall ma'e an! deduction rom the ages o his emplo!ees, e0cept:

+a-3n cases here the or'er is insured ith his consent b! the emplo!er, and the

deduction is to recompense the emplo!er or the amount paid b! him as premium

on the insuranceH



+b-For union dues, in cases here the right o the or'er or his union to chec'(o)

has been recognied b! the emplo!er or authoried in riting b! the individual

or'er concernedH and

+c-3n cases here the emplo!er is authoried b! la or regulations issued b! the

Secretar! o /abor.

As correctl! pointed out b! the /A, absent a shoing that the ithholding o

complainants ages alls under the e0ceptions provided in Article @, the

ithholding thereo is thus unlaul.

The Court fnds petitioners evidence insu9cient to prove that respondent did not

or' rom 1ovember B to1ovember @$, ;$$. As can be gleaned rom respondents

Contract o "robationar! 5mplo!ment and the e0changes o electronic mail

messagesbeteen artmannshenn and respondent, the latters duties as manager

or business development entailed cultivating business ties, connections, and clients

in order to ma'e sales. Such duties called or meetings ith prospective clientsoutside the o9ce rather than reporting or or' on a regular schedule. 3n other

ords, the nature o respondents 8ob did not allo close supervision and monitoring

b! petitioners. 1either as there an! prescribed dail! monitoring procedure

established b! petitioners to ensure that respondent as doing his 8ob. Thereore,

granting that respondent ailed to anser artmannshenns mobile calls and to repl!

to to electronic mail messages and given the act that he admittedl! ailed to

report to or' at the SS plant tice each ee' during the sub8ect period, such

cannot be ta'en to signi! that he did not or' rom 1ovember B to 1ovember @$,

;$$.

Furthermore, the electronic mail reports sent to artmannshenn and the receipt

presented b! respondent as evidence o his having or'ed during the sub8ect

period ere not controverted b! petitioners. The eight notaried letters o

prospective clients vouching or meetings the! had ith respondent during the

sub8ect period ma! also be given credence. Although respondent onl! presented

such letters in support o his Gotion or 2econsideration fled ith the 1/2C, the!

ma! be considered b! this Court in light o Section $, 2ule 33, o the ;$$ 1e

2ules o "rocedure o the 1/2C, hich provides in part that the rules o procedure

and evidence prevailing in courts o la and e*uit! shall not be controlling and the

Commission shall use ever! and all reasonable means to ascertain the acts in each

case speedil! and ob8ectivel!, ithout regard to technicalities o la or procedure,all in the interest o due process. 6hile administrative tribunals e0ercising *uasi(

8udicial unctions are ree rom the rigidit! o certain procedural re*uirements, the!

are bound b! la and practice to observe the undamental and essential

re*uirements o due process in 8usticiable cases presented beore them. 3n this

case, due process as a)orded petitioners as respondent fled ith the 1/2C a

Gotion to Set Case or 2eception o Additional 5vidence as regards the said letters,



hich petitioners had the opportunit! to, and did, oppose.

Although it cannot be determined ith certaint! hether respondent or'ed or the

entire period rom 1ovember B to 1ovember @$, ;$$, the consistent rule is that i

doubt e0ists beteen the evidence presented b! the emplo!er and that b! the

emplo!ee, the scales o 8ustice must be tilted in avor o the latter in line ith thepolic! mandated b! Articles ; and @ o the /abor Code to a)ord protection to labor

and construe doubts in avor o labor.For petitioners ailure to satis! their burden o

proo, respondent is presumed to have or'ed during the period in *uestion and is,

accordingl!, entitled to his salar!. Thereore, the ithholding o respondents salar!

b! petitioners is contrar! to Article B o the /abor Code and, thus, unlaul.

/A%I2 /A6

The Court, hoever, agrees ith the /A and the CA that respondent as orced to

resign and as, thus, constructivel! dismissed.3nDuldulao v. Court o Appeals,it as

ritten:

There is constructive dismissal i an act o clear discrimination, insensibilit!, or

disdain b! an emplo!er becomes so unbearable on the part o the emplo!ee that it

ould oreclose an! choice b! him e0cept to orego his continued emplo!ment.3t

e0ists here there is cessation o or' because continued emplo!ment is rendered

impossible, unreasonable or unli'el!, as an o)er involving a demotion in ran' and a

diminution in pa!.

6hat made it impossible, unreasonable or unli'el! or respondent to continue

or'ing or SS as the unlaul ithholding o his salar!. For said reason, he asorced to resign. 3t is o no moment that he served his resignation letter

on1ovember @$, ;$$, the last da! o the pa!roll period and a non(or'ing holida!,

since his salar! as alread! due him on1ovember ;?, ;$$, being the last or'ing

da! o said period.3n act, he as then inormed that the ages o all the other SS

emplo!ees ere alread! released, and onl! his as being ithheld.6hat is

signifcant is that the respondent prepared and served his resignation letter right

ater he as inormed that his salar! as being ithheld.3t ould be absurd to

re*uire respondent to tolerate the unlaul ithholding o his salar! or a longer

period beore his emplo!ment can be considered as so impossible, unreasonable or

unli'el! as to constitute constructive dismissal.5ven granting that the ithholding o respondents salar! on1ovember @$, ;$$, ould not constitute an unlaul act, the

continued reusal to release his salar! ater the pa!roll period as clearl!

unlaul.The petitioners claim that the! prepared the chec' read! or pic'(up

cannot undo the unlaul ithholding.

3t is orth! to note that in his resignation letter, respondent cited petitioners illegal

and unair labor practiceas his cause or resignation. As correctl! noted b! the CA,



respondent lost no time in submitting his resignation letter and eventuall! fling a

complaint or illegal dismissal 8ust a e da!s ater his salar! as ithheld.These

circumstances are inconsistent ith voluntar! resignation and bolster the fnding o

constructive dismissal.

3n this case, the ithholding o respondents salar! does not all under an! o thecircumstances provided under Article @. 1either as it established ith certaint!

that respondent did not or' rom 1ovember B to1ovember @$, ;$$.ence, the

Court agrees ith the /A and the CA that the unlaul ithholding o respondents

salar! amounts to constructive dismissal.

2espondent as constructivel! dismissed and, thereore, illegall!

dismissed.Although respondent as a probationar! emplo!ee, he as still entitled

to securit! o tenure.Section @ +;- Article @ o the Constitution guarantees the right

o all or'ers to securit! o tenure.3n using the e0pression all or'ers, the

Constitution puts no distinction beteen a probationar! and a permanent or regular

emplo!ee. This means that probationar! emplo!ees cannot be dismissed e0cept or

cause or or ailure to *uali! as regular emplo!ees.

This Court has held that probationar! emplo!ees ho are un8ustl! dismissed during

the probationar! period are entitled to reinstatement and pa!ment o ull

bac'ages and other benefts and privileges rom the time the! ere dismissed up

to their actual reinstatement. 2espondent is, thus, entitled to reinstatement ithout

loss o seniorit! rights and other privileges as ell as to ull bac'ages, inclusive o

alloances, andother benefts or their monetar! e*uivalent computed rom the time

his compensation as ithheld up to the time o actual reinstatement.2espondent,

hoever, is not entitled to the additional amount or @thmonth pa!, as it is clearl!provided in respondents "robationar! Contract o 5mplo!ment that such is deemed

included in his salar!. Thus:

5mplo!ee ill be paid a net salar! o Ine undred Thousand +"hp$$,$$$.$$- "esos

per month pa!able ever! th da! and end o the month.

The compensation pac'age defned in this paragraph shall represent all that is due

and demandable under this Contract and includes all benefts re*uired b! la such

as the @thmonth pa!.1o other benefts, bonus or alloance shall be due the

emplo!ee.

2espondents reinstatement, hoever, is no longer easible as antagonism has

caused a severe strain in their or'ing relationship. 4nder the doctrine o strained

relations, the pa!ment o separation pa! is considered an acceptable alternative to

reinstatement hen the latter option is no longer desirable or viable."a!ment

liberates the emplo!ee rom hat could be a highl! oppressive or' environment,

and at the same time releases the emplo!er rom the obligation o 'eeping in its



emplo! a or'er it no longer trusts.Thereore, a more e*uitable disposition ould be

an aard o separation pa! e*uivalent to at least one month pa!, in addition to his

ull bac'ages, alloances and other benefts.

6ith respect to the personal liabilit! o artmannshenn and Schumacher, this Court

has held that corporate directors and o9cers are onl! solidaril! liable ith thecorporation or termination o emplo!ment o corporate emplo!ees i e)ected ith

malice or in bad aith.%ad aith does not connote bad 8udgment or negligenceH it

imports dishonest purpose or some moral obli*uit! and conscious doing o rongH it

means breach o un'non dut! through some motive or interest or ill illH it

parta'es o the nature o raud. To sustain such a fnding, there should be evidence

on record that an o9cer or director acted maliciousl! or in bad aith in terminating

the emplo!ee.

"etitioners ithheld respondents salar! in the sincere belie that respondent did not

or' or the period in *uestion and as, thereore, not entitled to it.There as no

dishonest purpose or ill ill involved as the! believed there as a 8ustifable reason

to ithhold his salar!.Thus, although the! unlaull! ithheld respondents salar!, it

cannot be concluded that such as made in bad aith.Accordingl!, corporate

o9cers, artmannshenn and Schumacher, cannot be held personall! liable or the

corporate obligations o SS.

ART. 124

1. P.I. MANUFACTURING INC. V. P.I. MANUFACTURING SUPERVISORS AND

FORMAN ASSOCIATION2. BANARD EMPLOYEES UNION WORERS ALLIANCE TRADE UNIONS V.

NLRC

13TH MONTH PAY

. CENTRAL A%UCARERA DE TARLAC V. CENTRAL A%UCARERA DE

TARLAC LABOR UNION

LABOR CASES Art. 95 13th Month Pay Ver1 (1)

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Transcript of LABOR CASES Art. 95 13th Month Pay Ver1 (1)