Labor1 Digest Part4

8/9/2019 Labor1 Digest Part4

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Labor Law 1 A2010 - 143 - DisiniApparently in the Agreements with the drivers, Lei merely fillsin the blanks with the corresponding data such as the driversname and address, etc.

ISSUEWON the Agreement was valid HELDNO

Ratio Where from the circumstances it is apparent that theperiods were imposed in order to preclude the acquisition of tenurial security by the employee, they should be struck downor disregarded for being contrary to public policy, morals,etc.Reasoning- The Agreement is void ab initio for having a purpose contraryto public policy. The agreement was a clear attempt to exploitthe employee and deprive him of the protection of the LaborCode by making it appear that the stipulations are governed bythe Civil Code as in ordinary private transactions. In reality theagreement was a contract of employment into which were readthe provisions of the Labor Code and the social justice policy of the Constitution. That Cielo refused to sign the affidavit was nota just cause for his termination as he was only protecting hisinterest against unguarded waiver of the benefits due himunder the Labor Code. Said affidavit which stipulated paymentof wages even suggested that there was indeed an employer-employee relationship.Disposition NLRC decision set aside. LA decision reinstated.

GENERAL MILLING CORPORATION V TORRES196 SCRA 215

FELICIANO; April 22, 1991

NATUREPetition for certiorari review.

FACTS- DOLE NCR issued Alien Employment Permit in favor of petitioner Earl Timothy Cone, a United States citizen, as sportsconsultant and assistant coach for GMC. GMC and Cone enteredinto a contract of employment whereby the latter undertook tocoach GMC's basketball team. Board of Special Inquiry of theCommission on Immigration and Deportation approvedpetitioner Cone's application for a change of admission statusfrom temporary visitor to prearranged employee.- On 9 February 1990, petitioner GMC requested renewal of petitioner Cone's alien employment permit. GMC also requestedthat it be allowed to employ Cone as full-fledged coach. TheDOLE Regional Director, Luna Piezas, granted the request. AlienEmployment Permit was issued.- Private respondent Basketball Coaches Association of thePhilippines ("BCAP") appealed the issuance of said alienemployment permit to the respondent Secretary of Labor whoissued a decision ordering cancellation of petitioner Cone'semployment permit on the ground that there was no showingthat there is no person in the Philippines who is competent, ableand willing to perform the services required nor that the hiring

of petitioner Cone would redound to the national interest.

ISSUES1. WON Secretary of Labor gravely abused his discretion whenhe revoked petitioner Cone's alien employment permit2. WON Section 6 (c), Rule XIV, Book I of the Omnibus RulesImplementing the Labor Code is null and void as it is in violationof the enabling law as the Labor Code does not empowerrespondent Secretary to determine if the employment of analien would redound to national interest

HELD1. NO- Petitioners have failed to show any grave abuse of discretionor any act without or in excess of jurisdiction on the part of

respondent Secretary of Labor in rendering his decision,revoking petitioner Cone's Alien Employment Permit.- The alleged failure to notify petitioners of the appeal filed byprivate respondent BCAP was cured when petitioners wereallowed to file their Motion for Reconsideration beforerespondent Secretary of Labor.2. NO- The Labor Code itself specifically empowers respondentSecretary to make a determination as to the availability of the

services of a "person in the Philippines who is competent, ableand willing at the time of application to perform the services forwhich an alien is desired." In short, the Department of Labor isthe agency vested with jurisdiction to determine the question of availability of local workers.- Under Article 40 of the Labor Code, an employer seekingemployment of an alien must first obtain an employment permitfrom the Department of Labor. Petitioner GMC's right to choosewhom to employ is, of course, limited by the statutoryrequirement of an alien employment permit.- Petitioners will not find solace in the equal protection clause of the Constitution. As pointed out by the Solicitor-General, nocomparison can be made between petitioner Cone and Mr.Norman Black as the latter is "a long time resident of thecountry," and thus, not subject to the provisions of Article 40 of the Labor Code which apply only to "non-resident aliens." In anycase, the term "non-resident alien" and its obverse "residentalien," here must be given their technical connotation under ourlaw on immigration.- Neither can petitioners validly claim that implementation of respondent Secretary's decision would amount to animpairment of the obligations of contracts. The provisions of theLabor Code and its Implementing Rules and Regulationsrequiring alien employment permits were in existence longbefore petitioners entered into their contract of employment. Itis firmly settled that provisions of applicable laws, especiallyprovisions relating to matters affected with public policy, aredeemed written into contracts. Private parties cannotconstitutionally contract away the otherwise applicableprovisions of law.- In short, the Department of Labor is the agency vested with

jurisdiction to determine the question of availability of localworkers. The constitutional validity of legal provisions grantingsuch jurisdiction and authority and requiring proof of non-availability of local nationals able to carry out the duties of theposition involved, cannot be seriously questioned.- Petitioners apparently suggest that the Secretary of Labor isnot authorized to take into account the question of whether ornot employment of an alien applicant would "redound to thenational interest" because Article 40 does not explicitly refer tosuch assessment. This argument (which seems impliedly toconcede that the relationship of basketball coaching and thenational interest is tenuous and unreal) is not persuasive. In thefirst place, the second paragraph of Article 40 says: "[t]heemployment permit may be issued to a non-resident alien or tothe applicant employer after a determination of the non-availability of a person in the Philippines who is competent, ableand willing at the time of application to perform the services forwhich the alien is desired."

- The permissive language employed in the Labor Codeindicates that the authority granted involves theexercise of discretion on the part of the issuingauthority . In the second place, Article 12 of the Labor Codesets forth a statement of objectives that the Secretary of Laborshould, and indeed must, take into account in exercising hisauthority and jurisdiction granted by the Labor Code.Disposition Court Resolved to DISMISS the Petition forCertiorari for lack of merit.

MANILA TERMINAL COMPANY INC V CIR(MANILATERMINAL RELIEF AND MUTUAL AID ASSN)

91 PHIL 625PARAS; July 16, 1952


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Labor Law 1 A2010 - 144 - DisiniFACTS- Manila Terminal Co undertook arrastre service in Port Area,under control of US Army. It hired watchmen on 12 hr shifts.- Manila Terminal began post-war operation of arrastre serviceunder control of Bureau of Customs. The watchmen continuedin the service, with salary raise.A member of the Manila Terminal Relief and Mutual AidAssociation wrote to Dept of Labor requesting that the matter of overtime pay be investigated, but nothing happened.- Members of the Association filed demand with Department of Labor, including overtime pay, but nothing happened.- Manila Terminal Company instituted system of strict 8 hrshifts.- The Association was organized for the first time, and anamended petition was filed with CIR praying that the petitionerbe ordered to pay its watchmen or police force overtime pay.- The petitioners police force was consolidated with the ManilaHarbor Police of the Customs Patrol Service, a govt agencyunder Commissioner of Customs and Secretary of Finance.- CIR, while dismissing other demands, ordered the petitioner topay its police force regular or base pay and overtimecompensation. With reference to overtime pay after thewatchmen had been integrated into the Manila Harbor Police,the judge ruled that court has no jurisdiction because it affects

the Bureau of Customs.- In a separate opinion, Judge Lanting ruled:> decision should be affirmed in so far as it grantscompensation for overtime on regular days> as to compensation for work on Sundays and legal holidays,petitioner should pay compensation that corresponds to theovertime at the regular rate only> watchmen are not entitled to night differential

ISSUEWON overtime pay should be granted to the workers

HELD YES- Petitioner stressed that the contract between it and theAssociation stipulates 12 hrs a day at certain rates includingovertime, but the record does not bear out these allegations.- In times of acute employment, people go from office to officeto search for work, and the workers here found themselvesrequired to render 12 hrs a day. True, there was an agreement,but did the workers have freedom to bargain much less insist inthe observance of the Eight Hour Labor Law?- We note that after petitioner instituted 8 hr shifts, noreduction was made in salaries which its watchmen receivedunder the 12 hr agreement.- Petitioners allegation that the Association had acquiesced inthe 12 hr shifts for more than 18 mos is not accurate. Only oneof the members entered in September 1945. The rest followedduring the next few months.- The Association cant be said to have impliedly waived theright to overtime pay, for the obvious reason that it could nothave expressly waived it.- Estoppel and laches cant also be invoked against Association.

First, it is contrary to spirit of the Eight Hour Labor Law.Second, law obligates employer to observe it. Third, employeeis at a disadvantage as to be reluctant in asserting any claim.- The argument that the nullity of the employment contractprecludes recovery by the Association of overtime pay isuntenable. The employer may not be heard to plead its ownneglect as exemption or defense.- Also, Commonwealth Act 444 expressly provides for paymentof extra compensation in cases where overtime services arerequired.- The point that payment of overtime pay may lead to ruin of the petitioner cant be accepted. It is significant that not allwatchmen should receive back overtime pay for the wholeperiod, since the members entered the firm in different times.- The Eight-Hour Labor Law was designed not only to safeguardthe health and welfare of the laborer or employee, but in a way

to minimize unemployment by forcing employers, in caseswhere more than 8-hour operation is necessary, to utilizedifferent shifts of laborers or employees working only for eighthours each.

AKLAN ELECTRIC COOPERATIVE INC V NLRC(RETISO)

323 SCRA 258GONZAGA-REYES; January 25, 2000

NATUREPetition for certiorari and prohibition with prayer for writ of preliminary injunction and/or temporary restraining order

FACTS- January 22, 1991 by way of a resolution of the Board of Directors of AKELCO it allowed the temporary holding of officeat Amon Theater, Kalibo, Aklan upon the recommendation of Atty. Leovigildo Mationg, then project supervisor, on the ground

that the office at Lezo was dangerous and unsafe.- Majority of the employees including the herein complainants,continued to report for work at Lezo, Aklan and were paid of their salaries. The complainants claimed that transfer of officefrom Lezo, Aklan to Kalibo, Aklan was illegal because it failed tocomply with the legal requirements under P.D. 269, thus thethey remained and continued to work at the Lezo Office untilthey were illegally locked out therefrom by the respondents.Despite the illegal lock out however, complainants continued toreport daily to the location of the Lezo Office, prepared tocontinue in the performance of their regularduties.Complainants who continuously reported for work atLezo, Aklan were not paid their salaries from June 1992 up toMarch 18, 1993.- LA dismissed the complaints- NLRC reversed and set aside the LAs decision and held thatprivate respondents are entitled to unpaid wages from June 16,1992 to March 18, 1993- Petitioner claims :> compensable service is best shown by timecards, payslipsand other similar documents and it was an error for publicrespondent to consider the computation of the claims for wagesand benefits submitted merely by private respondents assubstantial evidence.

ISSUEWON private respondents are entitled to payment of wages forthe period of June 1992 up to March 18,1993 (what is theirproof)

HELDNO- NLRC based its conclusion on the following: (a) the letter of Leyson, Office Manager of AKELCO addressed to AKELCO'sGeneral Manager, Atty. Mationg, requesting for the payment of private respondents' unpaid wages from June 16, 1992 to March18, 1993; (b) the memorandum of said Atty. Mationg in answerto the letter request of Leyson where he made an assurancethat he will recommend such request; (c) the privaterespondents' own computation of their unpaid wages.- We find that the foregoing does not constitute substantialevidence to support the conclusion that private respondents areentitled to the payment of wages from June 16, 1992 to March18, 1993.- Substantial evidence is that amount of relevantevidence which a reasonable mind might accept asadequate to justify a conclusion . These evidences reliedupon by public respondent did not establish the fact that


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Labor Law 1 A2010 - 145 - Disiniprivate respondents actually rendered services in the Kalibooffice during the stated period.a. Letter of Pedrito Leyson to Atty. Mationg> Pedrito Leyson is one of the herein private respondents whoare claiming for unpaid wages and we find his actuation of requesting in behalf of the other private respondents for thepayment of their backwages to be biased and self-serving, thusnot credible.> On the other hand, petitioner was able to show that private

respondents did not render services during the stated period.Petitioner's evidences show that on January 22, 1992,petitioner's Board of Directors passed a resolution temporarilytransferring the Office from Lezo, Aklan to Amon Theater,Kalibo, Aklan .With the transfer of petitioner's business officefrom its former office, Lezo, to Kalibo, Aklan, its equipments,records and facilities were also removed from Lezo and broughtto the Kalibo office where petitioner's official business wasbeing conducted; thus private respondents' allegations thatthey continued to report for work at Lezo to support their claimfor wages has no basis.b. Response of Atty. Mationg to the letter-request of office manager Leyson> Mationg's offer to recommend the payment of privaterespondents' wages is hardly approval of their claim for wages.It is just an undertaking to recommend payment. Moreover, theoffer is conditional. It is subject to the condition that petitioner'sBoard of Directors will give its approval and that funds wereavailable. Mationg's reply to Leyson's letter for payment of wages did not constitute approval or assurance of payment. Thefact is that, the Board of Directors of petitioner rejected privaterespondents demand for payment (Board Resolution No. 496, s.1993).c. the private respondents' own computation of theirunpaid wages> We hold that public respondent erred in merely relying on thecomputations of compensable services submitted by privaterespondents. There must be competent proof such as timecards or office records to show that they actually renderedcompensable service during the stated period to entitle them towages. It has been established that the petitioner's businessoffice was transferred to Kalibo and all its equipments, recordsand facilities were transferred thereat and that it conducted itsofficial business in Kalibo during the period in question. It wasincumbent upon private respondents to prove that they indeedrendered services for petitioner, which they failed to do.

SSS V CA (AYALDE)348 SCRA 1

YNARES-SANTIAGO; December 14, 2000

NATUREPetition for review on certiorari

FACTS- In a petition before the Social Security Commission, Margarita

Tana, widow of the late Ignacio Tana, Sr., alleged that herhusband was, before his demise, an employee of Conchita

Ayalde as a farmhand in the two (2) sugarcane plantations sheowned in Pontevedra, La Carlota City (Hda. B-70) and leasedfrom the University of the Philippines (Hda. B-15-M). She furtheralleged that Tana worked continuously six (6) days a week, four(4) weeks a month, and for twelve (12) months every yearbetween January 1961 to April 1979. For his labor, Tanaallegedly received a regular salary according to the minimumwage prevailing at the time.- She further alleged that throughout the given period, socialsecurity contributions, as well as medicare and employeescompensation premiums were deducted from Tana's wages. Itwas only after his death that Margarita discovered that Tanawas never reported for coverage, nor were hiscontributions/premiums remitted to the SSS. Consequently, shewas deprived of the burial grant and pension benefits accruingto the heirs of Tana had he been reported for coverage.

- She prayed for the Commission to issue an order directingrespondents Conchita Ayalde and Antero Maghari as heradministrator to pay the premium contributions of the deceasedIgnacio Tana, Sr. and report his name for SSS coverage; and forthe SSS to grant petitioner Margarita Tana the funeral andpension benefits due her.- The SSS revealed that neither Hda. B-70 nor respondentsAyalde and Maghari were registered members-employers of theSSS, and consequently, Ignacio Tana, Sr. was never registered

as a member-employee. Likewise, SSS records reflected thatthere was no way of verifying whether the alleged premiumcontributions were remitted since the respondents were notregistered members-employers.- Respondent Antero Maghari raised the defense that he was amere employee who was hired as an overseer of Hda. B-70sometime during crop years 1964-65 to 1971-72, and as such,his job was limited to those defined for him by the employerwhich never involved matters relating to the SSS.- For her part, respondent Ayalde belied the allegation thatIgnacio Tana, Sr. was her employee, admitting only that he washired intermittently as an independent contractor to plow,harrow, or burrow Hda. No. Audit B-15-M. Tana used his owncarabao and other implements, and he followed his ownschedule of work hours. Ayalde further alleged that she neverexercised control over the manner by which Tana performed hiswork as an independent contractor. Moreover, Ayalde averredthat way back in 1971, the University of the Philippines hadalready terminated the lease over Hda. B-15-M and she hadsince surrendered possession thereof to the University of thePhilippines. Consequently, Ignacio Tana, Sr. was no longerhired to work thereon starting in crop year 1971-72, while hewas never contracted to work in Hda. B-70.- SSS ruled in favor of Tana. CA ruled in favor of Ayalde.

ISSUEWON an agricultural laborer who was hired on "pakyaw" basiscan be considered an employee entitled to compulsorycoverage and corresponding benefits under the Social SecurityLaw

HELD- The mandatory coverage under the SSS Law (Republic Act No.1161, as amended by PD 1202 and PD 1636) is premised on theexistence of an employer-employee relationship, and Section8(d) defines an "employee" as "any person who performsservices for an employer in which either or both mental andphysical efforts are used and who receives compensation forsuch services where there is an employer-employeerelationship." The essential elements of an employer-employeerelationship are: (a) the selection and engagement of theemployee; (b) the payment of wages; (c) the power of dismissal; and (d) the power of control with regard to the meansand methods by which the work is to be accomplished, with thepower of control being the most determinative factor.- There is no question that Tana was selected and his servicesengaged by either Ayalde herself, or by Antero Maghari, heroverseer. Corollarily, they also held the prerogative of dismissing or terminating Tana's employment. The dispute is in

the question of payment of wages. Claimant Margarita Tanaand her corroborating witnesses testified that her husband waspaid daily wages "per quincena" as well as on "pakyaw" basis.Ayalde, on the other hand, insists that Tana was paid solely on"pakyaw" basis. To support her claim, she presented payrollscovering the period January of 1974 to January of 1976 andNovember of 1978 to May of 1979.- A careful perusal of the records readily show that the exhibitsoffered are not complete, and are but a mere sampling of payrolls. While the names of the supposed laborers appeartherein, their signatures are nowhere to be found. And whilethey cover the years 1975, 1976 and portions of 1978 and1979, they do not cover the 18-year period during which Tanawas supposed to have worked in Ayalde's plantations. Also anadmitted fact is that these exhibits only cover Hda. B70, Ayalde


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Labor Law 1 A2010 - 146 - Disinihaving averred that all her records and payrolls for the otherplantation (Hda. B-15-M) were either destroyed or lost.- To our mind, these documents are not only sadly lacking, theyare also unworthy of credence. The fact that Tana's name doesnot appear in the payrolls for the years 1975, 1976 and part of 1978 and 1979, is no proof that he did not work in Hda. B70 inthe years 1961 to 1974, and the rest of 1978 and 1979. Theveracity of the alleged documents as payrolls are doubtfulconsidering that the laborers named therein never affixed their

signatures to show that they actually received the amountsindicated corresponding to their names. Moreover, no recordwas shown pertaining to Hda. B-15-M, where Tana wassupposed to have worked. Even Ayalde admitted that she hired

Tana as "arador" and sometimes as laborer during milling inHda. B-15-M.[16] In light of her incomplete documentaryevidence, Ayalde's denial that Tana was her employee in Hda.B-70 or Hda. B-15-M must fail. In contrast to Ayalde's evidence,or lack thereof, is Margarita Tana's positive testimony,corroborated by two (2) other witnesses.- The witnesses did not waver in their assertion that while Tanawas hired by Ayalde as an "arador" on "pakyaw" basis, he wasalso paid a daily wage which Ayalde's overseer disbursed everyfifteen (15) days. It is also undisputed that they were made toacknowledge receipt of their wages by signing on sheets of ruled paper, which are different from those presented by Ayaldeas documentary evidence. In fine, we find that the testimoniesof Margarita Tana and the two other witnesses prevail over theincomplete and inconsistent documentary evidence of Ayalde.- No particular form of evidence is required to prove theexistence of an employer-employee relationship. Anycompetent and relevant evidence to prove the relationship maybe admitted. For, if only documentary evidence would berequired to show that relationship, no scheming employerwould ever be brought before the bar of justice, as no employerwould wish to come out with any trace of the illegality he hasauthored considering that it should take much weightier proof to invalidate a written instrument.- The testimonial evidence of the claimant and her witnessesconstitute positive and credible evidence of the existence of anemployer-employee relationship between Tana and Ayalde. Asthe employer, the latter is duty-bound to keep faithful andcomplete records of her business affairs, not the least of whichwould be the salaries of the workers.- The assertion that Tana is an independent contractor isspecious because (1) while Tana was sometimes hired as an"arador" or plower for intermittent periods, he was hired to doother tasks in Ayalde's plantations. It is indubitable, as testifiedby the witnesses, that Tana worked continuously for Ayalde, notonly as "arador" on "pakyaw" basis, but as a regular farmhand,doing backbreaking jobs for Ayalde's business. There is noshred of evidence to show that Tana was only a seasonalworker, much less a migrant worker. All witnesses, includingAyalde herself, testified that Tana and his family resided in theplantation. If he was a mere "pakyaw" worker or independentcontractor, then there would be no reason for Ayalde to allowthem to live inside her property for free. The only logicalexplanation is that he was working for most part of the yearexclusively for Ayalde, in return for which the latter gratuitously

allowed Tana and his family to reside in her property; and, (2)Ayalde made much ado of her claim that Tana could not be heremployee because she exercised no control over his work hoursand method of performing his task as "arador." A closer scrutinyof the records, however, reveals that while Ayalde herself maynot have directly imposed on Tana the manner and methods tofollow in performing his tasks, she did exercise control throughher overseer.- Under the circumstances, the relationship between Ayalde and

Tana has more of the attributes of employer-employee thanthat of an independent contractor hired to perform a specificproject.- Lastly, as a farm laborer who has worked exclusively forAyalde for eighteen (18) years, Tana should be entitled tocompulsory coverage under the Social Security Law, whetherhis service was continuous or broken.

Disposition Decision of CA reversed. Decision of SSSreinstated.

MANTRADE/FMMC DIVISION EMPLOYEES ANDWORKERS UNION V BACUNGAN

144 SCRA 510FERIA; September 30, 1986

NATUREPetition for Certiorari and Mandamus

FACTS- Petitioner employees question the validity of the pertinentsection of the Rules and Regulations Implementing the LaborCode as amended on which respondent arbitrator Froilan M.Bacungan based his decision ruling that Mantrade Devt Corp isnot under legal obligation to pay holiday pay (as provided for inArticle 94 of the Labor Code) to its monthly paid employees whoare uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than thestatutory or established minimum wage, and that this rule isapplicable not only as of March 2, 1976 but as of November 1,1974.- Respondent corporation contends, among others thatpetitioner is barred from pursuing the present action in view of (1) Article 263 of the Labor Code; (2) the pertinent provision of the CBA between petitioner and respondent corporation; and(3) Article 2044 of the Civil Code; that the special civil action of certiorari does not lie because respondent arbitrator is not an"officer exercising judicial functions" within the contemplationof Rule 65, Section 1, of the Rules of Court; that the instantpetition raises an error of judgment on the part of respondent

arbitrator and not an error of jurisdiction; that it prays for theannulment of certain rules and regulations issued by the DOLE,not for the annulment of the voluntary arbitration proceedings;and that appeal by certiorari under Section 29 of the ArbitrationLaw, Republic Act No. 876, is not applicable to the case at barbecause arbitration in labor disputes is expressly excluded bySection 3 of said law.

ISSUES1. WON decisions of arbitrators are subject to judicial review2. WON Mantrade employees are entitled to holiday pay3. WON mandamus lies in the case at bar

HELD1. YES- Oceanic Bic Division (FFW) vs. Romero (July 16, 1984): Thedecisions of voluntary arbitrators must be given the highestrespect and as a general rule must be accorded a certainmeasure of finality. It is not correct, however, that this respectprecludes the exercise of judicial review over their decisions.Article 262 of the Labor Code making voluntary arbitrationawards final, inappealable and executory, except where themoney claims exceed P100,000.00 or 40% of the paid-upcapital of the employer or where there is abuse of discretion orgross incompetence refers to appeals to the National LaborRelations Commission and not to judicial review. Judicial reviewstill lies where want of jurisdiction, grave abuse of discretion,violation of due process, denial of substantial justice, orerroneous interpretation of the Law are brought to SCsattention.2. YES


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Labor Law 1 A2010 - 147 - Disini- Under Art. 94 of the Labor Code, monthly salaried employeesare not among those excluded from receiving holiday pay. Butthey appear to be excluded under Sec. 2, Rule IV, Book III of theRules and Regulations implementing said provision.- Insular Bank of Asia and America Employees' Union (IBAAEU)vs. Inciong (October 24, 1984): Section 2, Rule IV, Book III of theimplementing rules and Policy Instruction No. 9, issued by thethen Secretary of Labor are null and void since in the guise of clarifying the Labor Code's provisions on holiday pay, they in

effect amended them by enlarging the scope of their exclusion.- Chartered Bank Employees Association vs. Ople (August 28,1985): An administrative interpretation which diminishes thebenefits of labor more than what the statute delimits orwithholds is obviously ultra vires.3. YES- While it is true that mandamus is not proper to enforce acontractual obligation, the remedy being an action for specificperformance, in view of the above cited subsequent decisions of this Court clearly defining the legal duty to grant holiday pay tomonthly salaried employees, mandamus is an appropriateequitable remedy.Disposition Questioned decision of respondent arbitrator isSET ASIDE and respondent corporation is ordered to GRANTholiday pay to its monthly salaried employees. No costs.

STATES MARINE CORP V CEBU SEAMENS ASSN[PAGE 126]

MILLARES V NLRC[PAGE 79]

TIPS

ACE NAVIGATION CO INC V CA (NLRC, ALONSAGAY)338 SCRA 380

PUNO; August 15, 2000

NATUREPetitioner for review of the resolutions that dismissed thepetition for certiorari (Ang kulit no? na-dismiss na nga yungcertiorari eh pume-petition pa!)

FACTS- In June 1994, Ace Navigation Co., Inc. recruited privaterespondent Orlando Alonsagay to work as a bartender on boardthe vessel M/V "Orient Express" owned by Conning ShippingLtd. Under their POEA approved contract of employment,Orlando shall receive a monthly basic salary of four hundredfifty U.S. dollars (U.S. $450.00), flat rate, including overtime payfor 12 hours of work daily plus tips of two U.S. dollars (U.S.$2.00) per passenger per day. He, was also entitled to 2.5 daysof vacation leave with pay each month. The contract was to lastfor one (1) year.- Petitioners alleged that on June 13, 1994, Orlando wasdeployed and boarded M/V "Orient Express" at the seaport of Hong Kong.- After the expiration of the contract, Orlando returned to thePhilippines and demanded from Ace Nav his vacation leave pay.- Ace Nav did not pay him immediately. It told him that heshould have been paid prior to his disembarkation andrepatriation to the Philippines.- Conning did not remit any amount for his vacation leave pay.Ace Nav promised to verify the matter and asked Orlando toreturn after a few days. Orlando never returned.- On November 25, 1995, Orlando filed a complaint before thelabor arbiter for vacation leave pay of four hundred fifty U.S.dollars and unpaid tips amounting to thirty six, thousand U.S.dollars

- On November 15, 1996, Labor Arbiter Felipe P. Pati orderedAce Nav and Conning to pay jointly and severally Orlando hisvacation leave pay of US$450.00. The claim for tips of Orlandowas dismissed for lack of merit.- Orlando appealed to the NLRC on February 3, 1997. In adecision penned by Commissioner Vicente S.E. Veloso andconcurred in by Commissioner Alberto R. Quimpo the NLRCordered Ace Nav and Conning to pay the unpaid tips of Orlandowhich amounted to US$36,000.00 in addition to his vacation

leave pay.- Ace Nav and Conning filed a motion for reconsideration onFebruary 2, 1998 which was denied on May 20, 1999.- On July 2, 1999, Ace Nav and Conning filed a petition forcertiorari before the Court of Appeals- On July 28, 1999, the Court of Appeals promulgated a three-page resolution and concurred in by Associate Justices EubuloG. Verzola and Elvi John S. Asuncion dismissing the petition.- Their motion for reconsideration filed was denied.Petitioners:> Petitioners argued that the Court of Appeals erred in rigidlyand technically applying Section 13, Rule 1310- Proof of

personal service shall consist of a written admission of the party served, or the official return of the server, or the affidavit of the party serving, containing a full statement of the date,

place and manner of service. If the service is by ordinary mail, proof thereof shall consist of an affidavit of the person mailingor facts showing compliance with section 7 of this Rule. If service is made by registered mail, proof shall be made by suchaffidavit and the registry receipt issued by the mailing office.The registry return card shall be filed immediately upon itsreceipt, or in lieu thereof of the unclaimed letter together withthe certified or sworn copy of the notice given by the

postmaster to the addressee.> Section 1, Rule 6511 Section 1.-- When any tribunal, board or officer exercising judicial or quasi judicial functions has acted without or in excess of its or his jurisdiction, or with graveabuse of discretion amounting to lack or excess of jurisdiction,and there is no appeal, or any plain, speedy, and adequateremedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, allegingthe facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board,officer, and granting such incidental reliefs as law and justicemay require.> They also contend that the respondent court erred in rulingthat they are the ones liable to pay tips to Orlando. They pointout that if tips will be considered as part of the salary of Orlando, it will make him the highest paid employee on M/V"Orient Express." It will create an unfavorable precedentdetrimental to the future recruitment, hiring and deployment of Filipino overseas workers specially in service orientedbusinesses. It will also be a case of double compensation thatwill unjustly enrich Orlando at the expense of petitioners.> They also stress that Orlando never complained that theyshould pay him the said tips.- Respondent filed a two-page comment to the petition adoptingthe resolution of the Court of Appeals dated July 28, 1999.

ISSUES1. WON the CA erred in rigidly applying Sec 13102. WON the CA erred in ruling that they are the ones liable topay tips to petitioner (Orlando)

HELD1. YESRatio Rules of procedure are used to help secure and notoverride substantial justice. [Heirs of Francisco Guballa Sr. vs.Court of Appeals] Even the Rules of Court mandates a liberalconstruction in order to promote their objective of securing a

just, speedy and inexpensive disposition of every action andproceeding. Since rules of procedure are mere tools designed tofacilitate the attainment of justice, their strict and rigidapplication which would result in technicalities that tend tofrustrate rather than promote substantial justice must always


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Labor Law 1 A2010 - 148 - Disinibe avoided. Thus, the dismissal of an appeal on purely technicalground is frowned upon especially if it will result to unfairness.Reasoning- We apply these sound rules in the case at bar. Petitioners'petition for certiorari before the Court of Appeals contained thecertified true copy of the NLRC's decision dated November 26,1997. Its order dated May 2, 199917 and the sworn certificationof non-forum shopping. Petitioners also explained that theircounsel executed an affidavit of proof of service and

explanation in the afternoon of July 1, 1999. However, he forgotto attach it when he filed their petition the following daybecause of the volume and pressure of work and lack of officepersonnel. However, the Registry which is the proof of mailingto Orlando's counsel, issued by the Central Post Office wasattached on the original petition they filed with the respondentcourt. It was also stamped by the NLRC which is proof of receiptof the petition by the latter. The affidavit of service, which wasoriginally omitted, was attached on their motion forreconsideration. Significantly, it was dated July 1, 1999.- the subsequent filing of the affidavit of service may beconsidered as substantial compliance with the rules.2. NOReasoning- The word tip has several meanings. It is more frequentlyused to indicate additional compensation, and in this sense "tip"is defined as meaning a gratuity; a gift; a present; a fee; moneygiven, as to a servant to secure better or more prompt service.- Tipping is done to get the attention and secure the immediateservices of a waiter, porter or others for their services. Since atip is considered a pure gift out of benevolence or friendship, itcan not be demanded from the customer. Whether or not tipswill be given is dependent on the will and generosity of thegiver. Although a customer may give a tip as a consideration forservices rendered, its value still depends on the giver. They aregiven in addition to the compensation by the employer. Agratuity given by an employer in order to inspire the employeeto exert more effort in his work is more appropriately called abonus.- The contract of employment between petitioners and Orlandois categorical that the monthly salary of Orlando is US$450.00flat rate. This already included his overtime pay which isintegrated in his 12 hours of work. The words "plus tips of US$2.00 per passenger per day" were written at the line forovertime. Since payment for overtime was included in themonthly salary of Orlando, the supposed tips mentioned in thecontract should be deemed included thereat.- The actuations of Orlando during his employment also showthat he was aware his monthly salary is only US$450.00, nomore no less. He did not raise any complaint about the non-payment of his tips during the entire duration of hisemployment. After the expiration of his contract, he demandedpayment only of his vacation leave pay. He did not immediatelyseek the payment of tips. He only asked for the payment of tipswhen he filed this case before the labor arbiter. This shows thatthe alleged non-payment of tips was a mere afterthought tobloat up his claim. The records of the case do not show thatOrlando was deprived of any monthly salary. It will now beunjust to impose a burden on the employer who performed the

contract in good faith.- Furthermore, it is presumed that the parties were aware of theplain, ordinary and common meaning of the word "tip." As abartender, Orlando can not feign ignorance on the practice of tipping and that tips are normally paid by customers and not bythe employer.- However, Orlando should be paid his vacation leave pay.Petitioners denied this liability by raising the defense that theusual practice is that vacation leave pay is given beforerepatriation. But as the labor arbiter correctly observed,petitioners did not present any evidence to prove that theyalready paid the amount. The burden of proving payment wasnot discharged by the petitioners.Disposition Reversed and set aside

CASH WAGE/COMMISSIONS

SONGCO V NLRC (AGUAS, F.E. ZUELLIG INC)183 SCRA 610

MEDIALDEA; March 23, 1990

FACTS- Private respondent F.E. Zuellig (M), Inc., filed with theDepartment of Labor an application seeking clearance toterminate the services of petitioners Jose Songco, RomeoCipres, and Amancio Manuel allegedly on the ground of retrenchment due to financial losses.- This application was seasonably opposed by petitionersalleging that the company is not suffering from any losses. Theyalleged further that they are being dismissed because of theirmembership in the union.

- At the last hearing of the case, however, petitionersmanifested that they are no longer contesting their dismissal.

The parties then agreed that the sole issue to be resolved is thebasis of the separation pay due to petitioners.- Petitioners, who were in the sales force of Zuellig receivedmonthly salaries of at least P40,000. In addition, they receivedcommissions for every sale they made.- The CBA entered into between Zuellig and F.E. ZuelligEmployees Association, of which petitioners are members,contains the following provision:

ARTICLE XIV Retirement GratuitySection l(a)-Any employee, who is separated fromemployment due to old age, sickness, death or permanentlay-off not due to the fault of said employee shall receivefrom the company a retirement gratuity in an amountequivalent to one (1) month's salary per year of service.One month of salary as used in this paragraph shall bedeemed equivalent to the salary at date of retirement;years of service shall be deemed equivalent to total servicecredits, a fraction of at least six months being consideredone year, including probationary employment.

- On the other hand, Article 284 of the Labor Code thenprevailing provides:

Art. 284. Reduction of personnel . The termination of employment of any employee due to the installation of labor saving-devices, redundancy, retrenchment to preventlosses, and other similar causes, shall entitle the employeeaffected thereby to separation pay . In case of terminationdue to the installation of labor-saving devices orredundancy, the separation pay shall be equivalent to one(1) month pay or to at least one (1) month pay for everyyear 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) monthpay 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.

- In addition, Sections 9(b) and 10, Rule 1, Book VI of the RulesImplementing the Labor Code provide:

Sec. 9(b). Where the termination of employment is due toretrechment initiated by the employer to prevent losses orother similar causes, or where the employee suffers from adisease and his continued employment is prohibited by lawor is prejudicial to his health or to the health of his co-employees, the employee shall be entitled to terminationpay equivalent at least to his one month salary, or to one-half month pay for every year of service, whichever ishigher, a fraction of at least six (6) months beingconsidered as one whole year.Sec. 10. Basis of termination pay . The computation of the termination pay of an employee as provided hereinshall be based on his latest salary rate, unless the samewas reduced by the employer to defeat the intention of theCode, in which case the basis of computation shall be therate before its deduction. (Emphasis supplied)


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Labor Law 1 A2010 - 149 - Disini- The Labor Arbiter rendered a decision ordering the respondentto pay the complainants separation pay equivalent to their one-month salary (exclusive of commissions, allowances, etc.) forevery year of service that they have worked with the company.- The appeal by petitioners to the National Labor RelationsCommission was dismissed for lack of merit.- Petitioners' Arguments > In arriving at the correct and legal amount of separation paydue them, whether under the Labor Code or the CBA, their basic

salary, earned sales commissions and allowances should beadded together. They cited Article 97(f) of the Labor Code whichincludes commission as part on one's salary, to wit;

(f) 'Wage' paid to any employee shall mean theremuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed orascertained on a time, task, piece, or commission basis, orother method of calculating the same, which is payable byan employer to an employee under a written or unwrittencontract of employment for work done or to be done, or forservices rendered or to be rendered, and includes the fairand reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarilyfurnished by the employer to the employee. 'Fairreasonable value' shall not include any profit to theemployer or to any person affiliated with the employer.

- Respondents Comments > If it were really the intention of the Labor Code as well as itsimplementing rules to include commission in the computation of separation pay, it could have explicitly said so in clear andunequivocal terms. Furthermore, in the definition of the term"wage", "commission" is used only as one of the features ordesignations attached to the word remuneration or earnings.

ISSUEWON earned sales commissions and allowances should beincluded in the monthly salary of petitioners for the purpose of computation of their separation pa

HELD YES- Article 97(f) by itself is explicit that commission is included inthe definition of the term "wage". It has been repeatedlydeclared by the courts that where the law speaks in clear andcategorical language, there is no room for interpretation orconstruction; there is only room for application.- 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 theImplementing Rules, which mention the terms "pay" and"salary", is more apparent than real.- Broadly, the word "salary" means a recompense orconsideration made to a person for his pains or industry inanother man's business. Whether it be derived from "salarium,"or more fancifully from "sal," the pay of the Roman soldier, itcarries with it the fundamental idea of compensation forservices rendered. -- Indeed, there is eminent authority for holding that the words"wages" and "salary" are in essence synonymous. "Salary," the

etymology of which is the Latin word "salarium," is often usedinterchangeably with "wage", the etymology of which is theMiddle English word "wagen". Both words generally refer to oneand the same meaning, that is, a reward or recompense forservices performed.- Likewise, "pay" is the synonym of "wages" and "salary".Inasmuch as the words "wages", "pay" and "salary" have thesame meaning, and commission is included in the definition of "wage", the logical conclusion, therefore, is, in the computationof the separation pay of petitioners, their salary base shouldinclude also their earned sales commissions.- Granting, in gratia argumenti , that the commissions were inthe form of incentives or encouragement, so that the petitionerswould be inspired to put a little more industry on the jobsparticularly assigned to them, still these commissions are direct

remuneration services rendered which contributed to theincrease of income of Zuellig.- Commission is the recompense, compensation or reward of anagent, salesman, executor, trustees, receiver, factor, broker orbailee, when the same is calculated as a percentage on theamount of his transactions or on the profit to the principal. Thenature of the work of a salesman and the reason for such typeof remuneration for services rendered demonstrate clearly thatcommission are part of petitioners' wage or salary.

- The Court took judicial notice of the fact that some salesmendo not receive any basic salary but depend on commissions andallowances or commissions alone, are part of petitioners' wageor salary. Also, that some salesman do not received any basicsalary but depend on commissions and allowances orcommissions alone, although an employer-employeerelationship exists.- Bearing in mind the preceding discussions, if the opposite viewis adopted that commissions, do not form part of wage orsalary, then, in effect, this kind of salesmen do not receive anysalary and therefore, not entitled to separation pay in the eventof discharge from employment. This narrow interpretation is notin accord with the liberal spirit of our labor laws and consideringthe purpose of separation pay which is, to alleviate thedifficulties which confront a dismissed employee thrown the thestreets to face the harsh necessities of life.- Additionally, in Soriano v. NLRC, et al., supra , in resolving theissue of the salary base that should be used in computing theseparation pay, the Court held that:

The commissions also claimed by petitioner ('overridecommission' plus 'net deposit incentive') are not properlyincludible in such base figure since such commissions mustbe earned by actual market transactions attributable topetitioner.

- Applying this by analogy, since the commissions in the presentcase were earned by actual market transactions attributable topetitioners, these should be included in their separation pay. Inthe computation thereof, what should be taken into account isthe average commissions earned during their last year of employment.- In carrying out and interpreting the Labor Code's provisionsand its implementing regulations, the workingman's welfareshould be the primordial and paramount consideration. Thiskind of interpretation gives meaning and substance to theliberal and compassionate spirit of the law as provided for inArticle 4 of the Labor Code which states that "all doubts in theimplementation and interpretation of the provisions of the LaborCode including its implementing rules and regulations shall beresolved in favor of labor", and Article 1702 of the Civil Codewhich provides that "in case of doubt, all labor legislation andall labor contracts shall be construed in favor of the safety anddecent living for the laborer.Disposition The petition was granted.

IRAN V NLRC (RETRALBA)106 SCRA 444

ROMERO; April 22, 1998

FACTS- Antonio Iran is engaged in softdrinks merchandising anddistribution in Mandaue City, Cebu, employing truck drivers whodouble as salesmen, truck helpers, and non-field personnel inpursuit thereof. He hired private respondents asdrivers/salesmen and truck helpers. Drivers/salesmen drovepetitioners delivery trucks and promoted, sold and deliveredsoftdrinks to various outlets in Mandaue City. The truck helpersassisted in the delivery of softdrinks to the different outletscovered by the driver/salesmen.- As part of their compensation, the driver/salesmen and truckhelpers of petitioner received commissions per case of softdrinks sold.- Sometime in June 1991, Iran discovered cash shortages andirregularities allegedly committed by private respondents.Pending the investigation of irregularities and settlement of the


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Labor Law 1 A2010 - 150 - Disinicash shortages, Iran required private respondents to report forwork everyday. They were not allowed, however, to go on theirrespective routes. A few days thereafter, despite aforesaidorder, private respondents stopped reporting for work,prompting Iran to conclude that the former had abandonedtheir employment. Consequently, Iran terminated their services.He also filed a complaint for estafa against them.- Private respondents filed complaints against Iran for illegaldismissal, illegal deduction, underpayment of wages, premium

pay for holiday and rest day, holiday pay, service incentiveleave pay, 13 th month pay, allowances, separation pay,recovery of cash bond, damages and attorneys fees.- Said complaints were consolidated, and assigned to LaborArbiter Ernesto F. Carreon. He found that Iran had validlyterminated private respondents, there being just cause for thelatters dismissal. Nevertheless, he also ruled that Iran had notcomplied with minimum wage requirements in compensatingprivate respondents, and had failed to pay private respondentstheir 13 th month pay.- On appeal, NLRC affirmed the validity of private respondentsdismissal, but found that said dismissal did not comply with theprocedural requirements for dismissing employees. MR denied.

ISSUES1. WON commissions are included in determining compliancewith the minimum wage requirement2. WON Iran is guilty of procedural lapses in terminating privaterespondents

If yes, WON P1,000.00 indemnity fee to each of the privaterespondents is proper3. WON the advance amount received by private respondentsshould be credited as part of their 13 th month pay

HELD1. YES- The nature of the work of a salesman and the reason for suchtype of remuneration for services rendered demonstrate clearlythat commissions are part of a salesmans wage or salary.- Article 97(f), LC explicitly includes commissions as part of wages. While commissions are, indeed, incentives or forms of encouragement to inspire employees to put a little moreindustry on the jobs particularly assigned to them, still thesecommissions are direct remunerations for services rendered.- Commissions have been defined as the recompense,compensation or reward of an agent, salesman, executor,trustee, receiver, factor, broker or bailee, when the same iscalculated as a percentage on the amount of his transactions oron the profit to the principal.- SC has taken judicial notice of the fact that some salesmen donot receive any basic salary but depend entirely oncommissions and allowances or commissions alone, although anemployer-employee relationship exists. Undoubtedly, this salarystructure is intended for the benefit of the corporationestablishing such, on the apparent assumption that thereby itssalesmen would be moved to greater enterprise and diligenceand close more sales in the expectation of increasing their salescommissions. This, however, does not detract from thecharacter of such commissions as part of the salary or wage

paid to each of its salesmen for rendering services to thecorporation.- There is no law mandating that commissions be paid only afterthe minimum wage has been paid to the employee. Verily, theestablishment of a minimum wage only sets a floor below whichan employees remuneration cannot fall, not that commissionsare excluded from wages in determining compliance with theminimum wage law.- Philippine Agricultural Commercial and Industrial WorkersUnion vs. NLRC: drivers and conductors who are compensatedpurely on a commission basis are automatically entitled to thebasic minimum pay mandated by law should said commissionsbe less than their basic minimum for eight hours work. Weresaid commissions equal to or even exceed the minimum wage,the employer need not pay, in addition, the basic minimum payprescribed by law.

2. YES- In terminating employees, the employer must furnish theworker with two written notices before the latter can be legallyterminated: (a) a notice which apprises the employee of theparticular acts or omissions for which his dismissal is sought and (b) the subsequent notice which informs the employee of the employers decision to dismiss him.- First notice informing the employee that his dismissal is beingsought is absent in the present case. This makes the

termination of private respondents defective, for which Iranmust be sanctioned for his non-compliance with therequirements of or for failure to observe due process.- Section 2 of Book V, Rule XIV of the Omnibus RulesImplementing the Labor Code requires that in cases of abandonment of work, notice should be sent to the workerslast known address. If indeed private respondents hadabandoned their jobs, it was incumbent upon Iran to complywith this requirement. This, Iran failed to do, entitlingrespondents to nominal damages in the amount of P5,000.00each, in accord with recent jurisprudence, to vindicate orrecognize their right to procedural due process which wasviolated by Iran.3. YES- Iran is entitled to credit only the amounts paid for theparticular year covered by said vouchers.- While it is true that the vouchers evidencing payments of 13 thmonth pay were submitted only on appeal, it would have beenmore in keeping with the directive of Article 221 of the LaborCode for the NLRC to have taken the same into account.- In labor cases, technical rules of evidence are not binding.Labor officials should use every and all reasonable means toascertain the facts in each case speedily and objectively,without regard to technicalities of law or procedure.- The intent of P.D. No. 851 is the granting of additional incomein the form of 13 th month pay to employees not as yet receivingthe same and not that a double burden should be imposed onthe employer who is already paying his employees a 13 th monthpay or its equivalent. An employer who pays less than 1/12 th ofthe employees basic salary as their 13 th month pay is onlyrequired to pay the difference.Disposition NLRC decision modified. Case remanded to theLabor Arbiter for a recomputation of the alleged deficiencies. Nocosts.

WAGES AND SALARY

GAA V CA (EUROPHIL INDUSTRIES CORP.)140 SCRA 304 (85)

PATAJO; December 31, 1985

NATUREA petition for review on certiorari of the decision of the Court of Appeals affirming the decision of the Court of First Instance of Manila.

FACTS

- Respondent Europhil Industries Corporation was formerly oneof the tenants in Trinity Building at T.M. Kalaw Street, Manila,while petitioner Rosario A. Gaa was then the buildingadministrator.- December 12, 1973: Europhil Industries commenced an actionin CFI for damages against petitioner "for having perpetratedcertain acts that Europhil Industries considered a trespass uponits rights, namely, cutting of its electricity, and removing itsname from the building directory and gate passes of its officialsand employees." Court ruled in favor of Europhil.- A writ of garnishment was issued pursuant to which DeputySheriff Cesar A. Roxas served a Notice of Garnishment upon ElGrande Hotel, where petitioner was then employed, garnishingher "salary, commission and/or remuneration." Gaa filed withthe CFI a motion to lift said garnishment on the ground that her


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Labor Law 1 A2010 - 151 - Disini"salaries, commission and or remuneration" are exempted fromexecution under Article 1708 of the New Civil Code.- CA dismissed the petition, saying that Gaa is not a merelaborer as contemplated under Article 1708. The term laborerdoes not apply to one who holds a managerial or supervisoryposition like that of petitioner, but only to those "laborersoccupying the lower strata."

ISSUE

WON Gaa is a laborer falling under the exception of Art. 1708 of the Civil Code

HELDNO, Gaa is not a laborer as contemplated by the Civil Code.Ratio The term "wages" as distinguished from "salary", appliesto the compensation for manual labor, skilled or unskilled, paidat stated times, and measured by the day, week, month, orseason, while "salary" denotes a higher degree of employment,or a superior grade of services, and implies a position of office.Reasoning- The legislature intended the exemption in Article 1708 of theNew Civil Code to operate in favor of laboring men or women inthe sense that their work is manual. Persons belonging to thisclass usually look to the reward of a day's labor for immediateor present support, and such persons are more in need of theexemption than any others.LABORER: everyone who performs any kind of mental orphysical labor, but as commonly and customarily used andunderstood, it only applies to one engaged in some form of manual or physical labor.WAGE: the pay given "as hire or reward to artisans, mechanics,domestics or menial servants, and laborers employed inmanufactories, agriculture, mines, and other manual occupationand usually employed to distinguish the sums paid to personshired to perform manual labor, skilled or unskilled, paid atstated times, and measured by the day, week, month, orseason."- Petitioner is not an ordinary or rank and file laborer but "aresponsibly-placed employee," of El Grande Hotel, "responsiblefor planning, directing, controlling, and coordinating theactivities of all housekeeping personnel" to ensure thecleanliness, maintenance and orderliness of all guest rooms,function rooms, public areas, and the surroundings of the hotel.Petitioner is occupying a position equivalent to that of amanagerial or supervisory position.Disposition Decision of the CA affirmed, with costs against thepetitioner.

EQUITABLE BANKING CORP V SADAC490 SCRA 380

CHICO-NAZARIO; June 8, 2006

NATUREPetition for Review on Certiorari, with Motion to Refer thePetition to the Court En Banc , seeking to reverse the Decisionand Resolution of the CA which reversed and set aside theResolutions of the NLRC.

FACTS- Respondent Sadac was appointed Vice President of the LegalDepartment of petitioner Bank and subsequently GeneralCounsel thereof. Nine lawyers of petitioner Banks LegalDepartment accused Sadac of abusive conduct and petitionedfor a change in leadership of the department. On the ground of lack of confidence in Sadac, under the rules of client and lawyerrelationship, petitioner Bank instructed him to deliver allmaterials in his custody in all cases in which the latter wasappearing as its counsel of record.- Sadac requested for a full hearing and formal investigation butthe same remained unheeded. He filed a complaint for illegaldismissal with damages against petitioner Bank and individualmembers of the Board of Directors thereof. After learning of thefiling of the complaint, petitioner Bank terminated his services.

Finally, Sadac was removed from his office and ordereddisentitled to any compensation and other benefits. LaborArbiter Jovencio Ll. Mayor, Jr., dismissed the complaint for lackof merit. On appeal, the NLRC reversed the Labor Arbiter anddeclared Sadacs dismissal as illegal.

ISSUE1. WON Sadac is entitled to full backwages including salaryincreases

2. WON Sadac is entitled to receive certain benefits3. WON the CA erred in awarding attorneys fees to Sadac4. WON Sadac is entitled to legal interest5. WON the petition should be heard by the court en banc

HELD1. NORatio The outstanding feature of backwages is the degree of assuredness to an employee that he would have had them asearnings had he not been illegally terminated from hisemployment. Salary increases, however, are a mereexpectancy. There is no vested right to salary increases.Reasoning- That respondent Sadac may have received salary increases inthe past only proves fact of receipt but does not establish adegree of assuredness that is inherent in backwages. The merefact that petitioner had been previously granted salaryincreases by reason of his excellent performance does notnecessarily guarantee that he would have performed in thesame manner and, therefore, qualify for the said increase later.When there is an award of backwages this actually refers tobackwages without qualifications and deductions. Anunqualified award of backwages means that the employee ispaid at the wage rate at the time of his dismissal. The basefigure to be used in the computation of backwages due to theemployee should include not just the basic salary, but also theregular allowances that he had been receiving.Obiter Broadly, the word "salary" means a recompense orconsideration made to a person for his pains or industry inanother mans business. It carries with it the fundamental ideaof compensation for services rendered. In labor law, thedistinction between salary and wage appears to be merelysemantics. That wage and salary are synonymous has beensettled. Both words generally refer to one and the samemeaning, that is, a reward or recompense for servicesperformed. Likewise, "pay" is the synonym of "wages" and"salary".2. NORatio Sadac did not present any evidence to prove entitlementto these claims.Reasoning- Petitioner Banks computation contains no acknowledgment of herein claimed benefits, namely, check-up benefit, clothingallowance, and cash conversion of vacation leaves. We cannotsustain the rationalization that the acknowledgment bypetitioner Bank in its computation of certain benefits granted toSadac means that the latter is also entitled to the other benefitsas claimed by him but not acknowledged by the Bank.

3. NORatio The decision of the CA AFFIRMED with MODIFICATION theNLRC decision, which modification did not touch upon the awardof attorneys fees as granted, hence, the award stands.Reasoning- When a final judgment becomes executory, it therebybecomes immutable and unalterable. The CAs decision becamefinal and executory. This renders moot whatever argumentpetitioner Bank raised against the grant of attorneys fees toSadac.4. YESRatio The legal interest of 12% per annum shall be imposedfrom the time judgment becomes final and executory, until fullsatisfaction thereof.Reasoning


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Labor Law 1 A2010 - 152 - Disini- The CA was not in error in imposing the same notwithstandingthat the parties were at variance in the computation of Sadacsbackwages. What is significant is that the decision whichawarded backwages to Sadac became final and executory.

Therefore, petitioner Bank is liable to pay interest from the dateof finality of the decision.5. NORatio The instant case is not one that should be heard by theCourt en banc .

Reasoning- We are not herein modifying or reversing a doctrine orprinciple laid down by the Court en banc or in a division.Disposition The petition is PARTIALLY GRANTED andPARTIALLY DENIED. The decision of the CA is hereby MODIFIED.

GRATUITY AND WAGES

PLASTIC TOWN CENTER CORPORATION V NLRC(NAGKAKAISANG LAKAS NG MANGGAGAWA (NLM)-

KATIPUNAN)172 SCRA 380

GUTIERREZ; April 19,1989

NATUREPetition for review of the decision of the NLRC

FACTS- There are 2 provisions of the CBA in question in this case.1) P1 increase in salary is granted every July 1. Also, section 3provides: It is agreed and understood by the parties herein thatthe aforementioned increase in pay shall be credited againstfuture allowances or wage orders hereinafter implemented orenforced by virtue of Letters of Instructions, Decrees and otherlabor legislation.- Wage order number 4, effective on May 1 1984, provided forthe integration of the emergency cost of living allowances(ECOLA). It also provided that the minimum daily wage rate beP32. Petitioner Plastic Town incurred a deficiency of P1 afterintegrating the ECOLA. They then advanced the implementationof the wage increase as provided for by the CBA. The petitionerargues that it did not credit the Pl.00 per day across the boardincrease under the CBA as compliance with Wage Order No. 5implemented on June 16,1984 since it gave an additional P3.00per day to the basic salary pursuant to said order. It, however,credited the Pl.00 a day increase to the requirement underWage Order No. 4 to which the private respondents allegedlydid not object.2) gratuity pay to resigning employees- Gratuity pay is based on the monthly salary. Petitioner arguesthat the computation of the monthly salary should be theequivalent of 26 days of salary, not 30 days as the respondentsaver.

ISSUES1. WON the petitioners can credit the P1 increase in the CBA ascompliance with wage order number 42. WON the monthly salary is equivalent to 26 days

HELD1. NO.- In the case at bar, the petitioner alleges that on May 1, 1984,it granted a Pl.00 increase pursuant to Wage Order No. 4 whichin consonance with Section 3 of the CBA was to be credited tothe July 1, 1984 increase under the CBA. It was, therefore, a Julyincrease. Section 3 of the CBA, however, clearly states that CBAgranted increases shall be credited against future allowances orwage orders. Thus, the CBA increase to be effected on July 1,1984 can not be retroactively applied to mean compliance withWage Order No. 4 which took effect on May 1, 1984.2. NO. It should be 30 days- To say that awarding the daily wage earner salary for morethan 26 days is paying him for days he does not work misses

the point entirely. The issue here is not payment for daysworked but payment of gratuity pay equivalent to one month or30 days salary- From the foregoing, gratuity pay is therefore, not intended topay a worker for actual services rendered. It is a money benefitgiven to the workers whose purpose is "to reward employees orlaborers, who have rendered satisfactory and efficient serviceto the company." (Sec. 2, CBA) While it may be enforced once itforms part of a contractual undertaking, the grant of such

benefit is not mandatory so as to be considered a part of laborstandard law unlike the salary, cost of living allowances, holidaypay, leave benefits, etc., which are covered by the Labor Code.Nowhere has it ever been stated that gratuity pay should bebased on the actual number of days worked over the period of years forming its basis. We see no point in counting the numberof days worked over a ten-year period to determine themeaning of "two and one- half months' gratuity." Moreover anydoubts or ambiguity in the contract between management andthe union members should be resolved in the light of Article1702 of the Civil Code that:- In case of doubt, all labor legislation and all labor contractsshall be construed in favor of the safety and decent living forthe laborerDisposition Decision affirmed

13TH

MONTH PAY AGABON V NLRC

[PAGE 35]

B. PAYMENT OF WAGES

9.03 FORM

FULL PAYMENT

LOPEZ SUGAR CORPORATION V FRANCO458 SCRA 515

CALLEJO; May 16, 2005NATUREPetition for review on certiorari of the Decision of the Court of Appeals (CA)

FACTS- Franco, Pabalan, Perrin and Candelario were supervisoryemployees of the Lopez Sugar Corporation (the Corporation, forbrevity). Franco was barely 20 years old when he was employedin 1974 as Fuel-in-Charge. His co-employee, Pabalan, wasabout 28 years old when he was hired by the Corporation asShift Supervisor in the Sugar Storage Department in 1975.Perrin and Candelario were employed in 1975 and 1976,respectively, as Planter Service Representatives (PSRs), whorose from the ranks and, by 1994, occupied supervisory

positions in the Corporations Cane Marketing Section.- The supervisory employees of the Corporation, spearheadedby Franco, Pabalan, Perrin and Candelario, decided to form alabor union called Lopez Sugar Corporation SupervisorsAssociation. Franco was elected president and Pabalan astreasurer. Perrin and Candelario, on the other hand, wereamong its active members.The officers of the union and themanagement held a meeting, which led to the submission of the unions proposals for a CBA on July 24, 1995.- The Corporations president issued a Memorandum to the vice-president and department heads for the adoption of a specialretirement program for supervisory and middle level managers.He emphasized that the management shall have the final sayon who would be covered, and that the program would beirrevocable once approved.


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Labor Law 1 A2010 - 153 - DisiniPerrin and Candelario were on leave when they were invited by

Juan Masa, Jr., head of the Cane Marketing Section, to theNortheast Beach Resort in Escalante, Negros Occidental. Thelatter informed them that they were all included in the specialretirement program and would receive their respective noticesof dismissal shortly.- Masa, Pabalan, Franco, Perrin and Candelario received copiesof the Memorandum dated August 25, 1995 from theCorporations Vice-President for Administration and Finance,

informing them that they were included in the specialretirement program for supervisors and middle levelmanagers; hence, their employment with the Corporation wasto be terminated effective September 29, 1995, and they wouldbe paid their salaries until September 27, 1995. The privaterespondents received their respective separation pays andexecuted their respective Release Waiver and Quitclaim afterreceiving their clearances from the Corporation.- The private respondents filed separate complaints against thecorporation with the NLRC for illegal dismissal, unfair laborpractice, reinstatement and damages.- The Corporation maintained that the termination of theemployment of the complainants was in response to thechallenges brought about by the General Agreement on Tariff and Trade (GATT), the AFTA and other international tradeagreements, which greatly affected the local sugar industry anda study done by Sycip, Gorres, Velayo and Company (SGV)regarding the Corporation and its operations to identify changesthat could be implemented to achieve cost effectiveness andglobal competitiveness- Labor Arbiter rendered judgment in favor of the Corporationand ordered the dismissal of the complainants. Thecomplainants appealed to the NLRC that granted their appealand reversed the decision of the Labor Arbiter. The CA rendered

judgment dismissing the petition, on the ground that the NLRCdid not commit grave abuse of discretion in rendering judgmentagainst the Corporation.

ISSUES1. WON there was proof of redundancy in the fulfillment of the

jobs of the employees and whether there is a criteria, guideline,or standard for selection. If not whether it was meant tointimidate the union2. WON the waiver and quitclaim was valid

HELD1. NO- The SC agreed with the ruling of the CA that the petitionerillegally dismissed the private respondents from theiremployment by including them in its special retirementprogram, thus, debilitating the union, rendering it pliant bydecapacitating its leadership. As such, the so-calleddownsizing of the Cane Marketing Department and SMSDbased on the SGV Study Report was a farce capricious andarbitrary.- Complainants are not in a position to anticipate howrespondent will present its case for redundancy particular[ly]because no standard, criteria or guidelines for the selection of dismissed employees was made known to them, and all that

they were told was that you were selected as among thosewho will be separated from the service; nonetheless, this early,it is possible to point out certain facts which throw light on theplausibility or want of it, of the ground relied upon.1. No contingency has occurred, of the kind mentioned by theSupreme Court in the Wiltshire case, (over-hiring of workers,decreased volume of business or dropping of a particularservice line) which would explain the dismissal on the ground of redundancy; over-hiring of workers cannot conceivably occur inthe level of the supervisors; on the other hand, it would haverequired an event of cataclysmic proportion to justify thedismissal for redundancy of a full one-third of the supervisors inan establishment, and if such an event were to occur it wouldhave resulted in tremendous losses which is not true herebecause the dismissal is not on account of or to prevent losses;

2. In no other category of employees did positions suddenlybecome redundant except among the supervisors who have justorganized themselves into a labor union and were working fortheir first-ever CBA in the establishment;3. The dismissal came at the precise time when the LopezSugar Central Supervisors Association (LSCA) had presented itsCBA proposals and was expecting the companys reply asmandated by law; in fact, the reply was overdue, being requiredto be submitted by management within ten (10) days from

receipt of the union proposal; there is no better proof that thedismissals have served their hidden purpose than that the CBAnegotiation has ended to all intents and purpose, beforemanagement could even present its counterproposal.Certainly, it would be farfetched to say that the remaining unionofficers and members have abandoned its objective of having aCBA for reasons other than the fear of suffering the fate of those who had been dismissed.- The absence of criteria, guidelines, or standard for selection of dismissed employees renders the dismissals whimsical,capricious and vindictive; in the case of the complainantsFranco and Pabalan, who are the Union President and

Treasurer, respectively, the reason for their inclusion is obvious.Additionally, it must be mentioned that in the case of Pabalan,there were three shift supervisors, one for each 8-hour shiftbefore the program was implemented, namely, Pabalan,Bitera and Lopez; Pabalan and Bitera (a union director) wereterminated, leaving Lopez alone, who worked on 12-hour shiftduty with Henry Villa, department head who was forced toperform the work of shift supervisor; Pabalan was offered to berehired as an employee of BUGLAS, a labor-only contractor buthe refused; an employee, Eugenio Bolanos was assigned fromanother department to do the work of shift supervisor and threeof them (Lopez, Villa and Bolanos) now divide shift dutiesamong themselves. There is no explanation why among theshift supervisors it was Pabalan and Bitera who were included inthe program.- In the case of complainants [P]errin and Candelario, bothPlanter Service Representatives, the manipulation is even moreapparent; one year before the program was instituted, twonew PSRs were hired (Labrador and Cambate) bringing to sixthe total number of PSRs; after the termination of [P]errin andCandelario, who have served for nearly 20 years, two new PSRswere hired (Oropel and Jeres) on contractual basis and whosecompensation is based on pakiao; additionally, Candelario washired after his dismissal under the same arrangement as Oropeland Jeres, which lasted only up to January 1996 whenmanagement learned of the filing of the first of these cases;[P]errin, on his part, was offered the same arrangement but herefused.- The rehiring of dismissed employees through a labor-onlycontractor exposes the program as a circumvention of thelaw. This is true in the case of the following supervisors whowere terminated with complainant but were subsequentlyemployed to do exactly the same work, but as employees of BUGLAS, a labor-only contractor which supplies laborers torespondent LSC. The above re-hiring in addition to othercircumstances earlier mentioned, such as the hiring of 2 menPSRs after Candelario and [P]errin were terminated; the short-

lived rehiring of the former and the offer to hire the latter whichhe refused, all indicate that there was no redundancy.- None of the work has been phased out or rendered obsoleteby any event that took place. As to duplication of functions, itmust be mentioned that the positions of complainants haveexisted for a long time judging from their years of service withrespondent; the observation of the Supreme Court in theWiltshire case to the effect that in a well-organizedestablishment, duplication of functions is hardly to be expectedis pertinent.- Foremost, the petitioner failed to formulate fair andreasonable criteria in ascertaining what positions were declaredredundant and accordingly obsolete, such as preferred status,efficiency or seniority. It, likewise, failed to formulate fair andreasonable parameters to determine who among thesupervisors and middle-level managers should be retired for


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Labor Law 1 A2010 - 154 - Disiniredundancy. Using the SGV report as anchor, the petitionercame out with a special retirement program for its 108supervisors and middle-level managers, making it clear that itsdecision to eliminate them was final and irrevocable. Moreover,the private respondents were not properly apprised of theexistence of the special retirement program, as well as thecriteria for the selection of the supervisors to be retired, andthose to be retained or transferred or demoted.- Contrary to its submissions, the petitioner downsized the Cane

Marketing Department by eliminating private respondentsPerrin and Candelario; and Franco and Candelario from theSugar and Molasses Storage Department. The downsizing of personnel was not among the foregoing recommendations, andyet this was what the petitioner did, through its specialretirement program, by including private respondents Francoand Pabalan, thereby terminating their employment. It is toomuch of a coincidence that the two private respondents wereactive members of the union.Recommendations were made relating to the Cane MarketingDepartment, the report recommended the beefing up of thepetitioners planter service representative force, whileeliminating those who were ineffective. There is no showing inthe record that respondents Perrin and Candelario wereeliminated solely because they were inefficient. Neither is thereany substantial evidence on record that the privaterespondents performance had been deteriorating; on thecontrary, they had been so far so efficient that they had beengiven promotions from time to time during their employment.

Yet, the petitioner eliminated private respondents Perrin andCandelario and retained three PSRs, namely, Danilo Villanueva,Roberto Combate and Danilo Labrador, who were employedwith the petitioner from one to three years and transferredRaymundo de la Rosa, who had been working there for only sixyears. Again, it is too much of a coincidence that Franco andPabalan, the President and Treasurer, respectively, of the union,were included in the special retirement program.- As may be expected, the dismissals generated a generalperception that management was sending a strong messagethat all employees hold their position at its pleasure, and that itwas within its power to dismiss anyone anytime. With thedismissal of the union officers and with the membership noweffectively threatened, the union virtually collapsed as anorganization. Out of fear, no one would even assume theposition of union President. An indication of this sad state of affairs into which the union has fallen is that nothing came outof its CBA proposal. It has been a year and three months as of this writing since the respondent informed the union that itsproposal had been referred to the companys external counsel,but no counter-proposal has been submitted and no singleconference has been held since then.- Redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet thedemands on the enterprise. A redundant position is onerendered superfluous by any number of factors, such as over-hiring of workers, decreased volume of business, dropping of aparticular product line previously manufactured by thecompany or phasing out of a service activity priorly undertakenby the business. Under these conditions, the employer has no

legal obligation to keep in its payroll more employees than arenecessary for the operation of its business.- As seen in the case it was seen that contrary to thepetitioners claim, the employer must comply with the followingrequisites to ensure the validity of the implementation of aredundancy program: (1) a written notice served on both theemployees and the Department of Labor and Employment atleast one month prior to the intended date of retrenchment; (2)payment of separation pay equivalent to at least one monthpay or at least one month pay for every year of service,whichever is higher; (3) good faith in abolishing the redundantpositions; and (4) fair and reasonable criteria in ascertainingwhat positions are to be declared redundant and accordinglyabolished.- And as emphasized in the case of Panlilio v. National LaborRelations Commission that it is imperative for the employer to

have fair and reasonable criteria in implementing itsredundancy program, such as but not limited to (a) preferredstatus; (b) efficiency; and (c) seniority.- The general rule is that the characterization by an employer of an employees services as no longer necessary or sustainable isan exercise of business judgment on the part of the employer.

The wisdom or soundness of such characterization or decision isnot, as a general rule, subject to discretionary review on thepart of the Labor Arbiter, the NLRC and the CA. Such

characterization may, however, be rejected if the same is foundto be in violation of the law or is arbitrary or malicious.2. NO- While it may be true that the private respondents signedseparate Deeds of Release Waiver and Quitclaim and receivedseparation pay, nonetheless, we find and so hold that the NLRCdid not err in nullifying the decision of the Labor Arbiter.- The Release Waiver and Quitclaim were not verified by thecomplainants. Under prevailing jurisprudence, the fact that anemployee has signed a satisfaction receipt of his claims doesnot necessarily result in the waiver thereof. The law does notconsider as valid any agreement whereby a worker agrees toreceive less compensation than what he is entitled to recover.A deed of release or quitclaim cannot bar an employee fromdemanding benefits to which he is legally entitled. We haveherefore (sic) explained that the reason why quitclaims arecommonly frowned upon as contrary to public policy and whythey are held to be ineffective to bar claims for the fullmeasures of the workers legal rights is the fact the employerand the employee obviously do not stand on the same footing.

The employer drove the employees to the wall. The latter musthave to get hold of the money. Because out of job, they had toface the harsh necessities of life. x x x (Marcos vs. NLRC, G.R.No. 111744, September 8, 1995). The private respondents hadno other recourse but to execute the said Release Waiver andQuitclaim because the petitioner made it clear in itsMemorandum dated August 8, 1995 that it had the final say onwho would be included in its special retirement program. Theirdismissal from the petitioner corporation was a fait accompli,solely because they organized a union that would bargain forreasonable terms and conditions of employment sought to beincluded in a CBA. In fine, the private respondents were left tofend for themselves, with no source of income from then on;prospects for new jobs were dim. Their backs against the wall,the private respondents were forced to sign the said documentsand receive their separation pay.Disposition petition is DENIED for lack of merit.

G&M INC V BATOMALAGUE[PAGE 116]

PAYROLL PAYMENT

CHAVEZ V NLRC[PAGE 59]

PHIL GLOBAL COMMUNICATIONS INC V DE VERA[PAGE 52]

CASH WAGE

CONGSON V NLRC243 SCRA 260

PADILLA; April 5, 1995

NATUREAppeal from a decision of NLRC

FACTS- Petitioner Dominico C. Congson is the registered owner of Southern Fishing Industry. Private respondents Bargo, Himeno,


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Labor Law 1 A2010 - 155 - DisiniBadagos, et al were hired on various dates by Congson asregular piece-rate workers. They were uniformly paid at a rateof P1 per tuna weighing 30-80 kilos per movement, that is from the fishing boats down to petitioner's storage plant at aload/unload cycle of work until the tuna catch reached its finalshipment/destination. They did the work of unloading tuna fromfishing boats to truck haulers; unloading them again atpetitioner's cold storage plant for filing, storing, cleaning, andmaintenance; and finally loading the processed tuna for

shipment. They worked 7 days/week.- In June 1990, Congson notified his workers of his proposal toreduce the rate-per-tuna movement due to the scarcity of tuna.Private respondents resisted Congson's proposed ratereduction. When they reported for work the next day, they wereinformed that they had been replaced by a new set of workers.When they requested for a dialogue with the management, theywere instructed to wait for further notice. They waited for thenotice of dialogue for a full week but in vain.- So private complainant workers filed complaint againstCongson for underpayment of wages, non-payment of overtimepay, 13th month pay, holiday pay, rest day pay, and 5-dayservice incentive leave pay; and for constructive dismissal.Labor Arbiter and NLRC ruled in favor of private respondentworkers. NLRC found Congson guilty of illegal dismissal. It heldthat private respondents did not abandon their work, but thatCongson replaced private respondents with a new set of workers without just cause and the required notice and hearing.It also affirmed Labor Arbiters findings and monetary awards.Hence, this appeal.

ISSUES1. WON there was grave abuse of discretion on the part of respondent NLRC in upholding Labor Arbiters award of salarydifferentials2. WON NLRC was correct in affirming LAs award of separationpay

HELD1. NO- Petitioner Congson argues that despite the fact that privaterespondents' actual cash wage fell below the minimum wagefixed by law, respondent NLRC should have considered asforming a substantial part of private respondents' total wagesthe cash value of the tuna liver and intestines privaterespondents were entitled to retrieve. Petitioner thereforeargues that the combined value of private respondents' cashwage and the monetary value of the tuna liver and intestinesclearly exceeded the minimum wage fixed by law.- Rule: Congsons practice of paying the private respondents theminimum wage by means of legal tender combined with tunaliver and intestines runs counter to the above cited provision o

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