Académique Documents
Professionnel Documents
Culture Documents
24
G.R. No. 152456, 28 April 2004, 428 SCRA 239.
25
Id., at p. 249.
196
196 SUPREME COURT REPORTS ANNOTATED
The Department of Labor and Employment issued on January 16, 1976 the “Supplementary Rules and
This is a petition for certiorari to set aside the resolution of the National Labor Relations Commission
Regulations Implementing P.D. No. 851” which in paragraph 4 thereof further defines the term “basic
(NLRC), dismissing for lack of merit petitioner’s appeal from the decision of the Labor Arbiter in NLRC
salary,” thus:
Case No. 1791-MC-XI-82.
“4. Overtime pay, earnings and other remunerations which are not part of the basic salary shall not be
On December 28, 1982, respondent Associated Labor Unions (ALU), for and in behalf of all the
included in the computation of the 13 month pay.”
rank-and-file workers and employees of petitioner, filed a complaint (NLRC Case No. 1791-MC-XI-82)
Clearly, the term “basic salary” includes all remunerations or earnings paid by the employer to the
before the Ministry of Labor and Employment, Regional Arbitration Branch XI, Davao City, against
employee, but excludes cost-of-living allowances, profit-sharing payments, and all allowances and
petitioner, for “Payment of the Thirteenth-Month Pay Differentials.” Respondent ALU sought to recover
monetary benefits which have not been considered as part of the basic salary of the employee as of
from petitioner the thirteenth month pay differential for 1982 of its rank-and-file employees, equivalent to
December 16, 1975. The exclusion of cost-of-living allowances and profit sharing payments shows the
their sick, vacation and maternity leaves, premium for work done on rest days and special holidays, and
intention to strip “basic salary” of payments which are otherwise considered as “fringe” benefits. This
pay for regular holidays which petitioner, allegedly in disregard of company practice since 1975, excluded
intention is emphasized in the catch all phrase “all allowances and monetary benefits which are not
from the computation of the thirteenth month pay for 1982.
considered or integrated as part of the basic salary.” Basic salary, therefore does not merely exclude the
In its answer, petitioner claimed that it erroneously included items subject of the complaint in the
benefits expressly mentioned but all payments which may be in the form of “fringe” benefits or allowances
computation of the thirteenth month pay for the years prior to 1982, upon a doubtful and difficult question
(San Miguel Corporation v. Inciong, supra, at 143-144). In fact, the Supplementary Rules and
of law. According to petitioner, this mistake
Regulations Implementing P.D. No. 851 are very emphatic in declaring that overtime pay, earnings and
564
other remunerations shall be excluded in computing the thirteenth month pay.
564 SUPREME COURT REPORTS ANNOTATED In other words, whatever compensation an employee receives for an eight-hour work daily or the
daily wage rate in the basic salary. Any compensation or remuneration other than the daily wage rate is
Davao Fruits Corporation vs. Associated Labor Unions excluded. It follows therefore, that payments for sick, vacation and maternity leaves, premium for work
was discovered only in 1981 after the promulgation of the Supreme Court decision in the case of San done on rest days and special holidays, as well as pay for regular holidays,
Miguel Corporation v. Inciong (103 SCRA 139). 566
A decision was rendered on March 7, 1984 by Labor Arbiter Pedro C. Ramos, in favor of respondent
ALU. The dispositive portion of the decision reads as follows: 566 SUPREME COURT REPORTS ANNOTATED
On appeal is the Decision1 of the Court of Appeals in CA-G.R. SP No. 63086 dated 27 November 2001 242
sustaining the Decision2 of Accredited Voluntary Arbitrator Tomas E. Semana dated 13 November 2000,
as well as its subsequent Resolution3 dated 06 March 2002 denying petitioner’s Motion for 242 SUPREME COURT REPORTS ANNOTATED
Reconsideration.
Sevilla Trading Company vs. Semana
The facts of the case are as follows:
For two to three years prior to 1999, petitioner Sevilla Trading Company (Sevilla Trading, for short),
a domestic corporation engaged in trading business, organized and existing under Philippine laws, added 1. (i)Cash conversion of unused vacation/sick leave.
to the base figure, in its computation of the 13th-month pay of its employees, the amount of other benefits
received by the employees which are beyond the basic pay. These benefits included:
Hence, the new computation reduced the employees’ thirteenth month pay. The daily piece-rate workers
represented by private respondent Sevilla Trading Workers Union—SUPER (Union, for short), a duly
1. (a)Overtime premium for regular overtime, legal and special holidays; organized and registered union, through the Grievance Machinery in their Collective Bargaining
2. (b)Legal holiday pay, premium pay for special holidays; Agreement, contested the new computation and reduction of their thirteenth month pay. The parties
3. (c)Night premium; failed to resolve the issue.
4. (d)Bereavement leave pay; On March 24, 2000, the parties submitted the issue of “whether or not the exclusion of leaves and
5. (e)Union leave pay; other related benefits in the computation of 13th-month pay is valid” to respondent Accredited Voluntary
6. (f)Maternity leave pay; Arbitrator Tomas E. Semana (A.V.A. Semana, for short) of the National Conciliation and Mediation
7. (g)Paternity leave pay; Board, for consideration and resolution.
8. (h)Company vacation and sick leave pay; and The Union alleged that petitioner violated the rule prohibiting the elimination or diminution of
employees’ benefits as provided for in Art. 100 of the Labor Code, as amended. They claimed that paid
_______________ leaves, like sick leave, vacation leave, paternity leave, union leave, bereavement leave, holiday pay and
other leaves with pay in the CBA should be included in the base figure in the computation of their 13th-
month pay.
1 CA Rollo, pp. 124-134.
On the other hand, petitioner insisted that the computation of the 13th-month pay is based on basic Board, Insurance Commission, Philippine Atomic Energy Commission, Board of Investments,
salary, excluding benefits such as leaves with pay, as per P.D. No. 851, as amended. It maintained that, Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law. [Emphasis
in adjusting its computation of the 13th-month pay, it merely rectified the mistake its personnel committed supplied.]
in the previous years. It is elementary that the special civil action of certiorari under Rule 65 is not, and cannot be a substitute
A.V.A. Semana decided in favor of the Union. The dispositive portion of his Decision reads as for an appeal, where the latter remedy is available, as it was in this case. Petitioner Sevilla Trading failed
follows: to file an appeal within the fifteen-day reglementary period from its notice of the adverse decision of
“WHEREFORE, premises considered, this Voluntary Arbitrator hereby declared that: A.V.A. Semana. It received a copy of the decision of A.V.A. Semana on December 20, 2000, and should
have filed its appeal under Rule 43 of the 1997 Rules of Civil Procedure on or before January 4, 2001.
Instead, petitioner filed on January 19, 2001 a “Manifestation and Motion for Time to File Petition for
1. ‘1.The company is hereby ordered to include sick leave and vacation leave, paternity leave, Certiorari,” and on February 19, 2001, it filed a petition for certiorari under Rule 65 of the 1997 Rules of
union leave, bereavement leave and other leave with pay in the CBA, premium for work Civil Procedure. Clearly, petitioner Sevilla Trading had a remedy of appeal but failed to use it.
done on rest days and special holidays, and pay for regular holidays in the computation of A special civil action under Rule 65 of the Rules of Court will not be a cure for failure to timely file a
the 13th-month pay to all covered and entitled employees; petition for review on certiorari under Rule 45 (Rule 43, in the case at bar) of the Rules of Court. Rule 65
2. ‘2.The company is hereby ordered to pay corresponding backwages to all covered and is an independent action that cannot be availed of as a substitute for the lost remedy of an ordinary
entitled employees arising from the exclusion of said benefits in the computation of 13th- appeal, including that under Rule 45 (Rule 43, in the case at bar), especially if such loss or lapse was
month pay for the year 1999.’ ” occasioned by one’s own neglect or error in the choice of remedies.5
Thus, the decision of A.V.A. Semana had become final and executory when petitioner Sevilla
243 Trading filed its petition for certiorari on February 19, 2001. More particularly, the decision of A.V.A.
Semana became final and executory upon the lapse of the fifteen-day reglementary period to appeal, or
VOL. 428, APRIL 28, 2004 243 on January 5, 2001. Hence, the Court of Appeals is correct in holding that it no longer had
_______________
Sevilla Trading Company vs. Semana
Petitioner received a copy of the Decision of the Arbitrator on December 20, 2000. It filed before the 5
Court of Appeals, a “Manifestation and Motion for Time to File Petition for Certiorari” on January 19, National Irrigation Administration vs. Court of Appeals, 318 SCRA 255, 265 (1999).
2001. A month later, on February 19, 2001, it filed its Petition for Certiorari under Rule 65 of the 1997 245
Rules of Civil Procedure for the nullification of the Decision of the Arbitrator. In addition to its earlier VOL. 428, APRIL 28, 2004 245
allegations, petitioner claimed that assuming the old computation will be upheld, the reversal to the old
computation can only be made to the extent of including non-basic benefits actually included by petitioner Sevilla Trading Company vs. Semana
in the base figure in the computation of their 13th-month pay in the prior years. It must exclude those appellate jurisdiction to alter, or much less, nullify the decision of A.V.A. Semana.
non-basic benefits which, in the first place, were not included in the original computation. The appellate Even assuming that the present petition for certiorari under Rule 65 of the 1997 Rules of Civil
court denied due course to, and dismissed the petition. Procedure is a proper action, we still find no grave abuse of discretion amounting to lack or excess of
Hence, this appeal. Petitioner Sevilla Trading enumerates the grounds of its appeal, as follows: jurisdiction committed by A.V.A. Semana. “Grave abuse of discretion” has been interpreted to mean
1. THE DECISION OF THE RESPONDENT COURT TO REVERT TO THE OLD COMPUTATION OF “such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, in other
THE 13TH-MONTH PAY ON THE BASIS THAT THE OLD COMPUTATION HAD RIPENED INTO words where the power is exercised in an arbitrary or despotic manner by reason of passion or personal
PRACTICE IS WITHOUT LEGAL BASIS. hostility, and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual
2. IF SUCH BE THE CASE, COMPANIES HAVE NO MEANS TO CORRECT ERRORS IN refusal to perform the duty enjoined or to act at all in contemplation of law.”6 We find nothing of that sort
COMPUTATION WHICH WILL CAUSE GRAVE AND IRREPARABLE DAMAGE TO EMPLOYERS.4 in the case at bar.
First, we uphold the Court of Appeals in ruling that the proper remedy from the adverse decision of the On the contrary, we find the decision of A.V.A. Semana to be sound, valid, and in accord with law
arbitrator is a petition for review under Rule 43 of the 1997 Rules of Civil Procedure, not a petition for and jurisprudence. A.V.A. Semana is correct in holding that petitioner’s stance of mistake or error in the
certiorari under Rule 65. Section 1 of Rule 43 states: computation of the thirteenth month pay is unmeritorious. Petitioner’s submission of financial statements
RULE 43 every year requires the services of a certified public accountant to audit its finances. It is quite impossible
to suggest that they have discovered the alleged error in the payroll only in 1999. This implies that in
Appeals from the Court of Tax Appeals and previous years it does not know its cost of labor and operations. This is merely basic cost accounting.
Quasi-Judicial Agencies to the Court of Appeals Also, petitioner failed to adduce any other relevant evidence to support its contention. Aside from its bare
claim of mistake or error in the computation of the thirteenth month pay, petitioner merely appended to
its petition a copy of the 1997-2002 Collective Bargaining Agreement and an alleged “corrected”
SECTION 1. Scope.—This Rule shall apply to appeals from judgments or final orders of the Court of Tax computation of the thirteenth month pay. There was no explanation whatsoever why its inclusion of non-
Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial basic benefits in the base figure in the computation of their 13th-month pay in the prior years was made
agency in the exercise of its quasi-judicial functions. Among these agencies are the Civil Service by mistake, despite the clarity of statute and jurisprudence at that time.
Commission, Central Board of Assessment Appeals, Securities and Exchange Commission, Office of _______________
the President, Land Regis-
_______________
6 Concurring Opinion of Justice Angelina Sandoval-Gutierrez in the consolidated cases of Tecson
4
vs. Commission on Elections, G.R. No. 161434, Velez vs. Poe, G.R. No. 161634, and Fornier vs.
Rollo, p. 22. Commission on Elections, G.R. No. 161824, 03 March 2004, 424 SCRA 277, citing Benito vs.
244 Commission on Elections, 349 SCRA 705 (2001).
244 SUPREME COURT REPORTS ANNOTATED 246
Sevilla Trading Company vs. Semana 246 SUPREME COURT REPORTS ANNOTATED
tration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks Sevilla Trading Company vs. Semana
and Technology Transfer, National Electrification Administration, Energy Regulatory Board, National The instant case needs to be distinguished from Globe Mackay Cable and Radio Corp. vs. NLRC,7 which
Telecommunications Commission, Department of Agrarian Reform under Republic Act No. 6657, petitioner Sevilla Trading invokes. In that case, this Court decided on the proper computation of the cost-
Government Service Insurance System, Employees’ Compensation Commission, Agricultural Inventions
of-living allowance (COLA) for monthly-paid employees. Petitioner Corporation, pursuant to Wage Order Regulations which categorically, exclude from the definition of basic salary earnings and other
No. 6 (effective 30 October 1984), increased the COLA of its monthly-paid employees by multiplying the remunerations paid by employer to an employee. A cursory perusal of the two sets of Rules indicates
P3.00 daily COLA by 22 days, which is the number of working days in the company. The Union disagreed that what
with the computation, claiming that the daily COLA rate of P3.00 should be multiplied by 30 days, which _______________
has been the practice of the company for several years. We upheld the contention of the petitioner
corporation. To answer the Union’s contention of company practice, we ruled that: 8103 SCRA 139 (1981).
Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in 1982 and in 248
compliance with Wage Orders Nos. 1 (26 March 1981) to 5 (11 June 1984), should not be construed as
constitutive of voluntary employer practice, which cannot now be unilaterally withdrawn by petitioner. To 248 SUPREME COURT REPORTS ANNOTATED
be considered as such, it should have been practiced over a long period of time, and must be shown to
have been consistent and deliberate . . . The test of long practice has been enunciated thus: Sevilla Trading Company vs. Semana
. . . Respondent Company agreed to continue giving holiday pay knowing fully well that said employees has hitherto been the subject of a broad inclusion is now a subject of broad exclusion. The
are not covered by the law requiring payment of holiday pay.” (Oceanic Pharmacal Employees Union Supplementary Rules and Regulations cure the seeming tendency of the former rules to include all
[FFW] vs. Inciong, 94 SCRA 270 [1979]) remunerations and earnings within the definition of basic salary.
Moreover, before Wage Order No. 4, there was lack of administrative guidelines for the The all-embracing phrase “earnings and other remunerations” which are deemed not part of the
implementation of, the Wage Orders. It was only when the Rules Implementing Wage Order No. 4 were basic salary includes within its meaning payments for sick, vacation, or maternity leaves, premium for
issued on 21 May 1984 that a formula for the conversion of the daily allowance to its monthly equivalent works performed on rest days and special holidays, pay for regular holidays and night differentials. As
was laid down. such they are deemed not part of the basic salary and shall not be considered in the computation of the
Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous 13th-month pay. If they were not so excluded, it is hard to find any “earnings and other remunerations”
application of the law . . . expressly excluded in the computation of the 13th-month pay. Then the exclusionary provision would
In the above quoted case, the grant by the employer of benefits through an erroneous application of the prove to be idle and with no purpose.
law due to absence of clear administrative guidelines is not considered a voluntary act which cannot be In the light of the clear ruling of this Court, there is, thus no reason for any mistake in the construction or
unilaterally discontinued. Such is not the case now. In the case at bar, the Court of Appeals is correct application of the law. When petitioner Sevilla Trading still included over the years non-basic benefits of
when it pointed out its employees, such as maternity leave pay, cash equivalent of unused vacation and sick leave, among
_______________ others in the computation of the 13th-month pay, this may only be construed as a voluntary act on its
part. Putting the blame on the petitioner’s payroll personnel is inexcusable.
7 In Davao Fruits Corporation vs. Associated Labor Unions, we likewise held that:9
163 SCRA 71 (1988).
The “Supplementary Rules and Regulations Implementing P.D. No. 851” which put to rest all doubts in
247
the computation of the thirteenth month pay, was issued by the Secretary of Labor as early as January
VOL. 428, APRIL 28, 2004 247 16, 1976, barely one month after the effectivity of P.D. No. 851 and its Implementing Rules. And yet,
petitioner computed and paid the thirteenth month pay, without excluding the subject items therein until
Sevilla Trading Company vs. Semana 1981. Petitioner continued its practice in December 1981, after promulgation of the aforequoted San
that as early as 1981, this Court has held in San Miguel Corporation vs. Inciong 8 that: Miguel decision on February 24, 1981, when petitioner purportedly “discovered” its mistake.
Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as From 1975 to 1981, petitioner had freely, voluntarily and continuously included in the computation
the basis in the determination of his 13th-month pay. Any compensations or remunerations which are of its employees’ thirteenth month pay, without the payments for sick, vacation and maternity leave,
deemed not part of the basic pay is excluded as basis in the computation of the mandatory bonus. premium for work done on rest days and special holidays, and pay for regular holidays. The considerable
Under the Rules and Regulations Implementing Presidential Decree 851, the following length of time the questioned items had been included by
compensations are deemed not part of the basic salary: _______________
9
1. (a)Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of 225 SCRA 562 (1993).
Instruction No. 174; 249
2. (b)Profit sharing payments; VOL. 428, APRIL 28, 2004 249
3. (c)All allowances and monetary benefits which are not considered or integrated as part of the
regular basic salary of the employee at the time of the promulgation of the Decree on Sevilla Trading Company vs. Semana
December 16, 1975. petitioner indicates a unilateral and voluntary act on its part, sufficient in itself to negate any claim of
mistake.
Under a later set of Supplementary Rules and Regulations Implementing Presidential Decree 851 A company practice favorable to the employees had indeed been established and the payments
issued by the then Labor Secretary Blas Ople, overtime pay, earnings and other remunerations are made pursuant thereto, ripened into benefits enjoyed by them. And any benefit and supplement being
excluded as part of the basic salary and in the computation of the 13th-month pay. enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer,
The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of Instruction by virtue of Sec. 10 of the Rules and Regulations Implementing P.D. No. 851, and Art. 100 of the Labor
No. 174 and profit sharing payments indicate the intention to strip basic salary of other payments which Code of the Philippines which prohibit the diminution or elimination by the employer of the em-ployees’
are properly considered as “fringe” benefits. Likewise, the catch-all exclusionary phrase “all allowances existing benefits. [Tiangco vs. Leogardo, Jr., 122 SCRA 267 (1983)]
and monetary benefits which are not considered or integrated as part of the basic salary” shows also the With regard to the length of time the company practice should have been exercised to constitute voluntary
intention to strip basic salary of any and all additions which may be in the form of allowances or “fringe” employer practice which cannot be unilaterally withdrawn by the employer, we hold that jurisprudence
benefits. has not laid down any rule requiring a specific minimum number of years. In the above quoted case
Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree 851 is even of Davao Fruits Corporation vs. Associated Labor Unions,10 the company practice lasted for six (6) years.
more empathic in declaring that earnings and other remunerations which are not part of the basic salary In another case, Davao Integrated Port Stevedoring Services vs. Abarquez,11 the employer, for three (3)
shall not be included in the computation of the 13th-month pay. years and nine (9) months, approved the commutation to cash of the unenjoyed portion of the sick leave
While doubt may have been created by the prior Rules and Regulations Implementing Presidential with pay benefits of its intermittent workers. While in Tiangco vs. Leogardo, Jr. 12 the employer carried
Decree 851 which defines basic salary to include all remunerations or earnings paid by an employer to on the practice of giving a fixed monthly emergency allowance from November 1976 to February 1980,
an employee, this cloud is dissipated in the later and more controlling Supplementary Rules and or three (3) years and four (4) months. In all these cases, this Court held that the grant of these benefits
has ripened into company practice or policy which cannot be peremptorily withdrawn. In the case at bar,
petitioner Sevilla Trading kept the practice of including non-basic benefits such as paid leaves for unused
sick leave and vacation leave in the computation of their 13th-month pay for at least two (2) years. This,
we rule likewise constitutes voluntary employer practice which cannot be unilaterally withdrawn by the
employer without 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.
_______________
10Ibid.
11220 SCRA 197 (1993).
12
122 SCRA 267 (1983).
250
250 SUPREME COURT REPORTS ANNOTATED
——o0o——
Same; Thirteenth Month Pay; Service Incentive Leave Pay; The 13th month pay and service
JPL Marketing Promotions vs. Court of Appeals incentive leave pay are benefits man-
G.R. No. 151966. July 8, 2005.* 138
JPL MARKETING PROMOTIONS, petitioner, vs. COURT OF APPEALS, NATIONAL LABOR 138 SUPREME COURT REPORTS ANNOTATED
RELATIONS COMMISSION, NOEL GONZALES, RAMON ABESA III and FAUSTINO ANINIPOT,
respondents. JPL Marketing Promotions vs. Court of Appeals
Labor Law; Separation Pay; Separation pay is authorized only in cases of dismissals due to any dated by law and should be given to employees as a matter of right.—JPL cannot escape the
of these reasons—(a) installation of labor saving devices, (b) redundancy, (c) retrenchment, (d) cessation payment of 13th month pay and service incentive leave pay to private respondents. Said benefits are
of the employer’s business, and (e) when the employee is suffering from a disease and his continued mandated by law and should be given to employees as a matter of right. Presidential Decree No. 851,
employment is prohibited by law or is prejudicial to his health and to the health of his co-employees.— as amended, requires an employer to pay its rank and file employees a 13th month pay not later than 24
Under Arts. 283 and 284 of the Labor Code, separation pay is authorized only in cases of dismissals due December of every year. However, employers not paying their employees a 13th month pay or its
to any of these reasons: (a) installation of labor saving devices; (b) redundancy; (c) retrenchment; (d) equivalent are not covered by said law. The term “its equivalent” was defined by the law’s implementing
cessation of the employer’s business; and (e) when the employee is suffering from a disease and his guidelines as including Christmas bonus, mid-year bonus, cash bonuses and other payment amounting
continued employment is prohibited by law or is prejudicial to his health and to the health of his co- to not less than 1/12 of the basic salary but shall not include cash and stock dividends, cost-of-living-
employees. However, separation pay shall be allowed as a measure of social justice in those cases allowances and all other allowances regularly enjoyed by the employee, as well as non-monetary
where the employee is validly dismissed for causes other than serious misconduct or those reflecting on benefits.
his moral character, but only when he was illegally dismissed. In addition, Sec. 4(b), Rule I, Book VI of Same; Same; Same; Service incentive leave is a yearly leave benefit of five (5) days with pay,
the Implementing Rules to Implement the Labor Code provides for the payment of separation pay to an enjoyed by an employee who has rendered at least one year of service—it is clearly demandable after
employee entitled to reinstatement but the establishment where he is to be reinstated has closed or has one year of service.—On the other hand, service incentive leave, as provided in Art. 95 of the Labor
ceased operations or his present position no longer exists at the time of reinstatement for reasons not Code, is a yearly leave benefit of five (5) days with pay, enjoyed by an employee who has rendered at
attributable to the employer. least one year of service. Unless specifically excepted, all establishments are required to grant service
Same; Same; The common denominator of the instances where payment of separation pay is incentive leave to their employees. The term “at least one year of service” shall mean service within
warranted is that the employee was dismissed by the employer.—The common denominator of the twelve (12) months, whether continuous or broken reckoned from the date the employee started working.
instances where payment of separation pay is warranted is that the employee was dismissed by the The Court has held in several instances that “service incentive leave is clearly demandable after one
employer. In the instant case, there was no dismissal to speak of. Private respondents were simply not year of service.”
dismissed at all, whether legally or illegally. What they received from JPL was not a notice of termination Same; Same; Same; The difference between the minimum wage and the actual salary received
of employment, but a by the employees cannot be deemed as their 13th month pay and service incentive leave pay as such
difference is not equivalent to or of the same import as the said benefits contemplated by law.—
_______________ Admittedly, private respondents were not given their 13th month pay and service incentive leave pay
while they were under the employ of JPL. Instead, JPL provided salaries which were over and above the
*
minimum wage. The Court rules that the difference between the minimum wage and the actual salary
SECOND DIVISION. received by private respondents cannot be deemed as their 13th month pay and service incentive leave
137 pay as such difference is not equivalent to or of the same import as the said benefits contemplated
VOL. 463, JULY 8, 2005 137 139
VOL. 463, JULY 8, 2005 139
JPL Marketing Promotions vs. Court of Appeals
memo informing them of the termination of CMC’s contract with JPL. More importantly, they were JPL Marketing Promotions vs. Court of Appeals
advised that they were to be reassigned. At that time, there was no severance of employment to speak by law. Thus, as properly held by the Court of Appeals and by the NLRC, private respondents are
of. entitled to the 13th month pay and service incentive leave pay.
Same; Same; “Floating Status”; When the “floating status” of an employee lasts for more than six Same; Same; Same; While computation for the 13th month pay should properly begin from the
months, he may be considered to have been illegally dismissed from the service, entitling him to the first day of employment, the service incentive leave pay should start a year after commencement of
corresponding benefits for his separation.—Art. 286 of the Labor Code allows the bona fide suspension service, for it is only then that the employee is entitled to said benefit.—The Court disagrees with the
of the operation of a business or undertaking for a period not exceeding six (6) months, wherein an Court of Appeals’ ruling that the 13th month pay and service incentive leave pay should be computed
employee/employees are placed on the so-called “floating status.” When that “floating status” of an from the start of employment up to the finality of the NLRC resolution. While computation for the 13th
employee lasts for more than six months, he may be considered to have been illegally dismissed from month pay should properly begin from the first day of employment, the service incentive leave pay should
the service. Thus, he is entitled to the corresponding benefits for his separation, and this would apply to start a year after commencement of service, for it is only then that the employee is entitled to said benefit.
suspension either of the entire business or of a specific component thereof. On the other hand, the computation for both benefits should only be up to 15 August 1996, or the last
Same; Same; The principle of awarding separation pay on the ground of compassionate justice, day that private respondents worked for JPL. To extend the period to the date of finality of the NLRC
or on grounds of equity and social consideration, applies only when the employee is dismissed by the resolution would negate the absence of illegal dismissal, or to be more precise, the want of dismissal in
employer, but not where the employee sought and obtained employment elsewhere.—As clearly borne this case. Besides, it would be unfair to require JPL to pay private respondents the said benefits beyond
out by the records of this case, private respondents sought employment from other establishments even 15 August 1996 when they did not render any service to JPL beyond that date. These benefits are given
before the expiration of the six (6)-month period provided by law. As they admitted in their comment, all by law on the basis of the service actually rendered by the employee, and in the particular case of the
three of them applied for and were employed by another establishment after they received the notice service incentive leave, is granted as a motivation for the employee to stay longer with the employer.
from JPL. JPL did not terminate their employment; they themselves severed their relations with JPL. There is no cause for granting said incentive to one who has already terminated his relationship with the
Thus, they are not entitled to separation pay. The Court is not inclined in this case to award separation employer.
pay even on the ground of compassionate justice. The Court of Appeals relied on the cases wherein the Same; It should be made clear that when the law tilts the scale of justice in favor of labor, it is but
Court awarded separation pay to legally dismissed employees on the grounds of equity and social recognition of the inherent economic inequality between labor and management; There may be cases
consideration. Said cases involved employees who were actually dismissed by their employers, whether where the circumstances warrant favoring labor over the interests of management but never should the
for cause or not. Clearly, the principle applies only when the employee is dismissed by the employer, scale be so tilted if the result is an injustice to the employer.—The law in protecting the rights of the
which is not the case in this instance. In seeking and obtaining employment elsewhere, private employees authorizes neither oppression nor self-destruction of the employer. It should be made clear
respondents effectively terminated their employment with JPL. that when the law tilts the scale of justice in favor of labor, it is but recognition of the inherent economic
inequality between labor and management. The intent is to balance the scale of justice; to put the two 3
Not 26 December 1997, as stated in the Court of Appeal’s Decision.
parties on relatively equal positions. There may be cases where the circumstances warrant favoring 4 CA Rollo, p. 41.
140 5 Id., at pp. 63-64.
6 Joint Decision dated 19 May 1999, Id., at pp. 48-51.
140 SUPREME COURT REPORTS ANNOTATED 7 Id., at p. 50.
8
JPL Marketing Promotions vs. Court of Appeals Ibid.
9 Ibid.
labor over the interests of management but never should the scale be so tilted if the result is an
142
injustice to the employer. Justitia nemini neganda est (Justice is to be denied to none).
142 SUPREME COURT REPORTS ANNOTATED
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
JPL Marketing Promotions vs. Court of Appeals
Private respondents appealed to the NLRC. In its Resolution,10 the Second Division of the NLRC agreed
The facts are stated in the opinion of the Court. with the Labor Arbiter’s finding that when private respondents filed their complaints, the six-month period
Engelberto Farol for petitioner. had not yet expired, and that CMC’s decision to stop its operations in the areas was beyond the control
Eustaquio Beltran for private respondents. of JPL, thus, they were not illegally dismissed. However, it found that despite JPL’s effort to look for
clients to which private respondents may be reassigned it was unable to do so, and hence they are
TINGA, J.: entitled to separation pay.11 Setting aside the Labor Arbiter’s decision, the NLRC ordered the payment
of:
1. Separation pay, based on their last salary rate and counted from the first day of their employment with
This is a petition for review of the Decision1 of the Court of Appeals in CA-G.R. SP No. 62631 dated 03 the respondent JPL up to the finality of this judgment;
October 2001 and its Resolution2 dated 25 January 2002 denying petitioner’s Motion for 2. Service Incentive Leave pay, and 13th month pay, computed as in No. 1 hereof.12
Reconsideration, affirming the Resolution of the National Labor Relations Commission (NLRC), Second Aggrieved, JPL filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of Appeals,
Division, dated 27 July 2000, awarding separation pay, service incentive leave pay, and 13th month pay imputing grave abuse of discretion on the part of the NLRC. It claimed that private respondents are not
to private respondents. by law entitled to separation pay, service incentive leave pay and 13th month pay.
JPL Marketing and Promotions (hereinafter referred to as “JPL”) is a domestic corporation engaged The Court of Appeals dismissed the petition and affirmed in toto the NLRC resolution. While
in the business of recruitment and placement of workers. On the other hand, private respondents Noel
conceding that there was no illegal dismissal, it justified the award of separation pay on the grounds of
Gonzales, Ramon Abesa III and Faustino Aninipot were employed by JPL as merchandisers on separate equity and social justice.13 The Court of Appeals rejected JPL’s argument that the difference in the
dates and assigned at different establishments in Naga City and Daet, Camarines Norte as attendants amounts of private respondents’ salaries and the minimum wage in the region should be considered as
to the display of California Marketing Corporation (CMC), one of petitioner’s clients. payment for their service incentive leave and 13th month pay. 14 Notwithstanding the absence of a
On 13 August 1996, JPL notified private respondents that CMC would stop its direct merchandising contractual agreement on the grant of
activity in the Bicol
_______________
_______________
10
1 Rollo, pp. 13-18.
Seventh Division, penned by Associate Justice Eliezer R. De Los Santos, JJ. Godardo A. Jacinto 11 Id., at p. 16.
and Bernardo P. Abesamis, concurring; Rollo, pp. 27-36. 12 Id., at p. 17.
2
Rollo, pp. 38-40. 13 CA Decision, Rollo, pp. 32-33.
141 14 Id., at p. 35.
JPL Marketing Promotions vs. Court of Appeals VOL. 463, JULY 8, 2005 143
Region, Isabela, and Cagayan Valley effective 15 August 1996.3 They were advised to wait for further JPL Marketing Promotions vs. Court of Appeals
notice as they would be transferred to other clients. However, on 17 October 1996,4 private respondents
13th month pay, compliance with the same is mandatory under the law. Moreover, JPL failed to show
Abesa and Gonzales filed before the National Labor Relations Commission Regional Arbitration Branch that it was exempt from paying service incentive leave pay. JPL filed a motion for reconsideration of the
(NLRC) Sub V complaints for illegal dismissal, praying for separation pay, 13th month pay, service said resolution, but the same was denied on 25 January 2002.15
incentive leave pay and payment for moral damages.5 Aninipot filed a similar case thereafter. In the instant petition for review, JPL claims that the Court of Appeals committed reversible error in
After the submission of pertinent pleadings by all of the parties and after some clarificatory hearings, rendering the assailed Decision and Resolution.16 The instant case does not fall under any of the
the complaints were consolidated and submitted for resolution. Executive Labor Arbiter Gelacio L. instances where separation pay is due, to wit: installation of labor-saving devices, redundancy,
Rivera, Jr. dismissed the complaints for lack of merit.6 The Labor Arbiter found that Gonzales and Abesa retrenchment or closing or cessation of business operation,17 or disease of an employee whose
applied with and were employed by the store where they were originally assigned by JPL even before
continued employment is prejudicial to him or co-employees,18 or illegal dismissal of an employee but
the lapse of the six (6)-month period given by law to JPL to provide private respondents a new reinstatement is no longer feasible.19 Meanwhile, an employee who voluntarily resigns is not entitled to
assignment. Thus, they may be considered to have unilaterally severed their relation with JPL, and separation unless stipulated in the employment contract, or the collective bargaining agreement, or is
cannot charge JPL with illegal dismissal.7 The Labor Arbiter held that it was incumbent upon private sanctioned by established practice or policy of the employer.20 It argues that private respondents’ good
respondents to wait until they were reassigned by JPL, and if after six months they were not reassigned, record and length of service, as well as the social justice precept, are not enough to warrant the award
they can file an action for separation pay but not for illegal dismissal.8 The claims for 13th month pay and of separation pay. Gonzales and Aninipot were employed by JPL for more than four (4) years, while
service incentive leave pay was also denied since private respondents were paid way above the Abesa rendered his services for more than two (2) years, hence, JPL claims that such short period could
applicable minimum wage during their employment.9
not have shown their worth to JPL so as to reward them with payment of separation pay. 21
_______________
_______________
15
CA Resolution, Id., at pp. 38-40. his moral character, but only when he was illegally dismissed.32 In addition, Sec. 4(b), Rule I, Book VI of
16
Rollo, p. 16. the Implementing Rules to Implement the Labor Code provides for the payment of separation pay to an
17 Art. 283, Labor Code. employee entitled to reinstatement but the establishment where he is to be reinstated has closed or has
18 Art. 284, Id. ceased operations or his present posi-
19 Sec. 4 (b), Rule I, Book VI of the Implementing Rules and Regulations of the Labor Code.
20
Citing Phimco Industries, Inc. v. National Labor Relations Commission, 339 Phil. 477; 273 SCRA _______________
286 (1997); Hinatuan Mining Corporation v. National Labor Relations Commission, 268 SCRA
622 (1997).
21 Rollo, p. 18. 29 Id., at pp. 62-63.
30
144 Id., at p. 64.
31
Ibid.
144 SUPREME COURT REPORTS ANNOTATED 32 Capili v. National Labor Relations Commission, 337 Phil. 210, 215; 270 SCRA 488 (1997).
146
JPL Marketing Promotions vs. Court of Appeals
In addition, even assuming arguendo that private respondents are entitled to the benefits awarded, the 146 SUPREME COURT REPORTS ANNOTATED
computation thereof should only be from their first day of employment with JPL up to 15 August 1996,
the date of termination of CMC’s contract, and not up to the finality of the 27 July 2000 resolution of the JPL Marketing Promotions vs. Court of Appeals
NLRC.22 To compute separation pay, 13th month pay, and service incentive leave pay up to 27 July 2000 tion no longer exists at the time of reinstatement for reasons not attributable to the employer.
would negate the findings of both the Court of Appeals and the NLRC that private respondents were not The common denominator of the instances where payment of separation pay is warranted is that
unlawfully terminated.23 Additionally, it would be erroneous to compute service incentive leave pay from the employee was dismissed by the employer.33 In the instant case, there was no dismissal to speak of.
the first day of their employment up to the finality of the NLRC resolution since an employee has to render Private respondents were simply not dismissed at all, whether legally or illegally. What they received
at least one (1) year of service before he is entitled to the same. Thus, service incentive leave pay should from JPL was not a notice of termination of employment, but a memo informing them of the termination
be counted from the second year of service.24 of CMC’s contract with JPL. More importantly, they were advised that they were to be reassigned. At that
On the other hand, private respondents maintain that they are entitled to the benefits being claimed time, there was no severance of employment to speak of.
as per the ruling of this Court in Serrano v. NLRC, et al.25 They claim that their dismissal, while not illegal, Furthermore, Art. 286 of the Labor Code allows the bona fide suspension of the operation of a
was tainted with bad faith.26 They allege that they were deprived of due process because the notice of business or undertaking for a period not exceeding six (6) months, wherein an employee/employees are
termination was sent to them only two (2) days before the actual termination.27 Likewise, the most that placed on the so-called “floating status.” When that “floating status” of an employee lasts for more than
JPL offered to them by way of settlement was the payment of separation pay of seven (7) days for every six months, he may be considered to have been illegally dismissed from the service. Thus, he is entitled
year of service.28 to the corresponding benefits for his separation, and this would apply to suspension either of the entire
Replying to private respondents’ allegations, JPL disagrees that the notice it sent to them was a business or of a specific component thereof.34
notice of actual termination. The said memo merely notified them of the end of merchandising for CMC, As clearly borne out by the records of this case, private respondents sought employment from other
and that they will be transferred to establishments even before the expiration of the six (6)-month period provided by law. As they admitted
in their comment, all three of them applied for and were employed by another establishment after they
received the notice from JPL.35 JPL did not terminate their employment; they themselves severed their
_______________
22
_______________
Id., at pp. 19-20.
23 Id., at p. 22.
33
24 Id., at pp. 23-24. Ibid.
25 380 Phil. 416; 331 SCRA 331 (2000). 34
Reynaldo Valdez v. National Labor Relations Commission, 349 Phil. 760, 766; 286 SCRA 87, 93
26
Rollo, p. 48. (1998), citing Agro Commercial Security Services Agency, Inc. v. National Labor Relations
27
Id., at p. 47. Commission, 175 SCRA 790 (1989).
28 35 Rollo, p. 48.
Id., at p. 48.
145 147
VOL. 463, JULY 8, 2005 145 VOL. 463, JULY 8, 2005 147
JPL Marketing Promotions vs. Court of Appeals JPL Marketing Promotions vs. Court of Appeals
other clients.29 Moreover, JPL is not bound to observe the thirty (30)-day notice rule as there was no relations with JPL. Thus, they are not entitled to separation pay.
dismissal to speak of. JPL counters that it was private respondents who acted in bad faith when they The Court is not inclined in this case to award separation pay even on the ground of compassionate
sought employment with another establishment, without even the courtesy of informing JPL that they justice. The Court of Appeals relied on the cases36 wherein the Court awarded separation pay to legally
were leaving for good, much less tender their resignation.30 In addition, the offer of seven (7) days per dismissed employees on the grounds of equity and social consideration. Said cases involved employees
year of service as separation pay was merely an act of magnanimity on its part, even if private who were actually dismissed by their employers, whether for cause or not. Clearly, the principle applies
respondents are not entitled to a single centavo of separation pay.31 only when the employee is dismissed by the employer, which is not the case in this instance. In seeking
The case thus presents two major issues, to wit: whether or not private respondents are entitled to and obtaining employment elsewhere, private respondents effectively terminated their employment with
separation pay, 13th month pay and service incentive leave pay, and granting that they are so entitled, JPL.
what should be the reckoning point for computing said awards. In addition, the doctrine enunciated in the case of Serrano37 cited by private respondents has
Under Arts. 283 and 284 of the Labor Code, separation pay is authorized only in cases of dismissals already been abandoned by our ruling in Agabon v. National Labor Relations Commission.38 There we
due to any of these reasons: (a) installation of labor saving devices; (b) redundancy; (c) retrenchment; ruled that an employer is liable to pay indemnity in the form of nominal damages to a dismissed employee
(d) cessation of the employer’s business; and (e) when the employee is suffering from a disease and his if, in effecting such dismissal, the employer failed to comply with the requirements of due process.
continued employment is prohibited by law or is prejudicial to his health and to the health of his co- However, private respondents are not entitled to the payment of damages considering that there was no
employees. However, separation pay shall be allowed as a measure of social justice in those cases violation of due process in this case. JPL’s memo dated 13 August 1996 to private respondents is not a
where the employee is validly dismissed for causes other than serious misconduct or those reflecting on notice of termination, but a mere note informing private respondents of the termination of CMC’s contract
and their re-assignment to other clients. The thirty (30)-day notice rule does not apply.
_______________ The law in protecting the rights of the employees authorizes neither oppression nor self-destruction
of the employer. It should be made clear that when the law tilts the scale of justice in favor of labor, it is
36 Philippine National Construction Corporation v. National Labor Relations Commission, 366 Phil. but recognition of the inherent economic inequality between labor and management. The intent is to
678; 317 SCRA 186 (1999); United South Dockhandlers, Inc. v. National Labor Relations Commission, balance the scale of justice; to put the two parties on
et al., 267 SCRA 401 (1997); Firestone Tire and Rubber Co. of the Philippines v. Lariosa, et al., 148 150
SCRA 186 (1987); Rollo, pp. 32-33. 150 SUPREME COURT REPORTS ANNOTATED
37
Supra note 25.
38
G.R. No. 158693, 17 November 2004, 442 SCRA 573. JPL Marketing Promotions vs. Court of Appeals
148 relatively equal positions. There may be cases where the circumstances warrant favoring labor over the
interests of management but never should the scale be so tilted if the result is an injustice to the
148 SUPREME COURT REPORTS ANNOTATED
employer. Justitia nemini neganda est (Justice is to be denied to none).43
JPL Marketing Promotions vs. Court of Appeals WHEREFORE, the petition is GRANTED IN PART. The Decision and Resolution of the Court of
Nonetheless, JPL cannot escape the payment of 13th month pay and service incentive leave pay to Appeals in CA-G.R. SP No. 62631 are hereby MODIFIED. The award of separation pay is deleted.
private respondents. Said benefits are mandated by law and should be given to employees as a matter Petitioner is ordered to pay private respondents their 13th month pay commencing from the date of
of right. employment up to 15 August 1996, as well as service incentive leave pay from the second year of
Presidential Decree No. 851, as amended, requires an employer to pay its rank and file employees employment up to 15 August 1996. No pronouncement as to costs.
a 13th month pay not later than 24 December of every year. However, employers not paying their SO ORDERED.
employees a 13th month pay or its equivalent are not covered by said law. 39 The term “its equivalent” Puno (Chairman), Austria-Martinez, Callejo, Sr. and Chico-Nazario, JJ., concur.
was defined by the law’s implementing guidelines as including Christmas bonus, mid-year bonus, cash Petition granted in part, judgment and resolution modified.
bonuses and other payment amounting to not less than 1/12 of the basic salary but shall not include Notes.—Separation pay shall be allowed as a measure of social justice only in those instances
cash and stock dividends, cost-of-living-allowances and all other allowances regularly enjoyed by the where the employee is validly dismissed for causes other than serious misconduct or those reflecting on
employee, as well as non-monetary benefits.40 his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an
On the other hand, service incentive leave, as provided in Art. 95 of the Labor Code, is a yearly offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer
leave benefit of five (5) days with pay, enjoyed by an employee who has rendered at least one year of may not be required to give the dismissed employee separation pay, or financial assistance, or whatever
service. Unless specifically excepted, all establishments are required to grant service incentive leave to other name it is called, on the ground of social justice. A contrary rule would have the effect of rewarding
their employees. The term “at least one year of service” shall mean service within twelve (12) months, rather than punishing the erring employee for his offense. (Philippine Long Distance Telephone Company
whether continuous or broken reckoned from the date the employee started working. 41 The Court has vs. National Labor Relations Commission, 164 SCRA 671 [1988])
held in several instances that “service incentive leave is clearly demandable after one year of service.”42
Admittedly, private respondents were not given their 13th month pay and service incentive leave _______________
pay while they were under the employ of JPL. Instead, JPL provided salaries
43
Philippine Geothermal, Inc. v. National Labor Relations Commission, 236 SCRA 371, 379 (1994).
_______________ 151
39
VOL. 463, JULY 8, 2005 151
Sec. 2, P.D. No. 851.
40
Section 3(e), Rules and Regulations Implementing P.D. No. 851. Brucal vs. Desierto
41 Sec. 3, Rule V, Book III, Rules to Implement the Labor Code.
Separation pay, equivalent to one month’s salary for every year of service, is awarded as an alternative
42 Imbuido v. National Labor Relations Commission, 385 Phil. 999, 1013; 329 SCRA 357, 368
to reinstatement when the latter is no longer an option, and is computed from the commencement of
(2000), citing Fernandez v. National Labor Relations Commission, 285 SCRA 149 (1998). employment up to the time of termination, including the imputed service for which the employee is entitled
149 to back wages, with the salary rate prevailing at the end of the period of putative service being the basis
for computation. (Reformist Union of R.B. Liner, Inc. vs. National Labor Relations Commission, 266
VOL. 463, JULY 8, 2005 149
SCRA 713 [1997])
JPL Marketing Promotions vs. Court of Appeals
which were over and above the minimum wage. The Court rules that the difference between the minimum ——o0o——
wage and the actual salary received by private respondents cannot be deemed as their 13th month pay
and service incentive leave pay as such difference is not equivalent to or of the same import as the said
benefits contemplated by law. Thus, as properly held by the Court of Appeals and by the NLRC, private
respondents are entitled to the 13th month pay and service incentive leave pay.
However, the Court disagrees with the Court of Appeals’ ruling that the 13th month pay and service
incentive leave pay should be computed from the start of employment up to the finality of the NLRC
resolution. While computation for the 13th month pay should properly begin from the first day of
employment, the service incentive leave pay should start a year after commencement of service, for it is
only then that the employee is entitled to said benefit. On the other hand, the computation for both
benefits should only be up to 15 August 1996, or the last day that private respondents worked for JPL.
To extend the period to the date of finality of the NLRC resolution would negate the absence of illegal
dismissal, or to be more precise, the want of dismissal in this case. Besides, it would be unfair to require
JPL to pay private respondents the said benefits beyond 15 August 1996 when they did not render any
service to JPL beyond that date. These benefits are given by law on the basis of the service actually
rendered by the employee, and in the particular case of the service incentive leave, is granted as a
motivation for the employee to stay longer with the employer. There is no cause for granting said
incentive to one who has already terminated his relationship with the employer.
Minimum Wage Rates Sycip, Salazar, Hernandez & Gatmaitan for petitioner;
Gilbert P. Lorenzo for private respondent.
Employers Confederation of the Phils. vs. National Wages and Productivity
SARMIENTO, J.;
Commission
G.R. No. 96169. September 24, 1991.* The petition is given due course and the various pleadings submitted being sufficient to aid the Court in
EMPLOYERS CONFEDERATION OF THE PHILIPPINES, petitioner, vs. NATIONAL WAGES AND the proper resolution of the basic issues raised in this case, we decide it without further ado.
PRODUCTIVITY COMMISSION AND REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY The Employers Confederation of the Philippines (ECOP) is
BOARD-NCR, TRADE UNION CONGRESS OF THE PHILIPPINES, respondents. 761
Labor Law; Wages; The National Wages and Productivity Commission noted that the VOL. 201, SEPTEMBER 24, 1991 761
determination of wages has generally involved true methods, the “floor-wage” method and the “salary-
ceiling” method.—In the National Wages and Productivity Commission’s Order of November 6,1990, the Employers Confederation of the Phils. vs. National Wages and Productivity
Commission noted that the determination of wages has generally involved two methods, the “floor-wage”
method and the “salary-ceiling” method. Commission
Same; Same; Same; Republic Act No. 6727 was intended to rationalize wages. first, by providing questioning the validity of Wage Order No. NCR-01-A dated October 23, 1990 of the Regional Tripartite
for full-time boards to police wages round-the-clock and second by giving the boards enough powers to Wages and Productivity Board, National Capital Region, promulgated pursuant to the authority of
achieve this objective.—As the Commission noted, the increasing trend is toward the second mode, the Republic Act No. 6727, “AN ACT TO RATIONALIZE WAGE POLICY DETERMINATION BY
salary-cap method, which has reduced disputes arising from wage distortions (brought about, apparently, ESTABLISHING THE MECHANISM AND PROPER STANDARDS THEREFOR, AMENDING FOR THE
by the floor-wage method), Of course, disputes are appropriate subjects of collective bargaining and PURPOSE ARTICLE 99 OF, AND INCORPORATING ARTICLES 120, 121, 122, 123, 124,126, AND
grievance procedures, but as the Commission observed and as we are ourselves agreed, bargaining 127 INTO, PRESIDENTIAL DECREE NO. 442 AS AMENDED, OTHERWISE KNOWN AS THE LABOR
has helped very little in correcting wage distortions. Precisely, Republic Act No. 6727 was intended to CODE OF THE PHILIPPINES, FIXING NEW WAGE RATES, PROVIDING WAGE INCENTIVES FOR
rationalize wages, first, by providing for fulltime boards to police wages round-the-clock, and second. by INDUSTRIAL DISPERSAL TO THE COUNTRYSIDE, AND FOR OTHER PURPOSES," was approved
giving the boards enough powers to achieve this objective. by the President on June 9,1989, Aside from providing new wage rates,1 the “Wage Rationalization Act”
Same; Same; Same; Court not convinced that the Regional Board of the National Capital Region also provides, among other things, for various Regional Tripartite Wages and Productivity Boards in
in decreeing an across-the-board hike performed an unlawful act of legislation.—The Court is not charge of prescribing minimum wage rates for all workers in the various regions, 2 and for a National
convinced that the Regional Board of the National Capital Region, in decreeing an across-the-board hike, Wages and Productivity Commission to review, among other functions, wage levels determined by the
performed an unlawful act of legislation. It is true that wage-fixing, like rate-fixing, constitutes an act boards.3
Congress; it is also true, however, that Congress may delegate the power to fix rates provided that, as On October 15, 1990, the Regional Board of the National Capital Region issued Wage Order No.
in all delegations cases, Congress leaves sufficient standards. As this Court has indicated, it is impressed NCR-01, increasing the minimum wage by P17.00 daily in the National Capital Region.4 The Trade Union
that the Congress of the Philippines (TUCP) moved for reconsideration; so did the Personnel Management
________________ Association of the Philippines (PMAP).5 ECOP opposed.
On October 23, 1990, the Board issued Wage Order No. NCR01-A, amending Wage Order No.
* NCR-01, as follows:
SECOND DIVISION.
________________
760
780 SUPREME COURT REPORTS ANNOTATED 1
Rep. Act No. 6727, sec. 4(a).
2
Supra, art. 3
Employers Confederation of the Phils. vs. National Wages and Productivity 3
Supra.
4 Wage Order No. NCR-01 (RTWPB) (DOLE), October 15, 1990; the Order exempts, of course,
Commission
above-quoted standards are sufficient, and in the light of the floorwage method’s failure, the Court domestics and other household servants.
5 Wage Order No. NCR-01-A (RTWPB) (DOLE), October 23, 1990.
believes that the Commission cor-rectly upheld the Regional Board of the National Capital Region.
Same; Same; Same; The Act as meant to nationalize wages that is, by having permanent boards 762
to decide wages rather than leaving wage determination to Congress year after year and law after law.— 762 SUPREME COURT REPORTS ANNOTATED
lt is the Court’s thinking, reached after the Court’s own study of the Act, that the Act is meant to rationalize
wages, that is, by having permanent boards to decide wages rather than leaving wage"determination to Employers Confederation of the Phils. vs. National Wages and Productivity
Congress year after year-and law-.after law. The Court is not of course saying that the Act is an effort of
Congress to pass the buck, or worse, to abdicate its duty, but simply, to leave the question of wages to Commission
the expertise of experts. Section 1. Upon the effectivity of this Wage Order, all workers and employees in the private sector in the
Same; Same; Definition of.—The Labor Code defines “wage” as follows: “Wage” paid to any National Capital Region already receiving wages above the statutory minimum wage rates up to one
employee shall mean the remuneration or earnings, however designated, capable of being expressed in hundred and twenty-five pesos (P1 25.00) per day shall also receive an increase of seventeen pesos
terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other (P17.00) per day.
method of calculating the same; which is payable by an employer to an employee under a written or ECOP appealed to the National Wages ‘and Productivity Commission. On November 6, 1990, the
unwritten contract of employment for work done or to be done, or for services rendered or to be rendered Commission promulgated an Order, dismissing. the appeal for lack of merit. On November 14, 1990, the
and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, Commission denied.reconsideration. The Orders of the Commission (as we’ll as Wage Order No. NCR-
or other facilities customarily furnished by the employer to the employee “Fair and reasonable value” 01-A) are the subject of this petition, in which ECOP assails the board’s grant of an “across-the-board”
shall not include any profit to the employer or to any person affiliated with the employer,, wage increase to workers already being paid more than existing minimum wage rates (up to P125.00 a
day) as an alleged excess of authority, and” alleges that under the Republic Act No. 6727, the boards
may only prescribe “minimum wages,” not determine “salary ceilings/' ECOP likewise claims that
PETITION for review from the decision of the National Wages and Productivity Commission,
Republic Act No. 6727 is meant to promote collective bargaining as the primary mode of settling wages,
and in its opinion, the boards can not preempt collective bargaining agreements by establishing ceilings.
The facts are stated in the opinion of the Court. ECOP prays for the nullification of Wage Order No. NCR01-A and for the “reinstatement” of Wage Order
No. NCR-01 The Court directed the Solicitor General to comment on behalf of the Government, and in latest consumer price index, or better. would have Congress done it as the need arises, as the legislature,
the Solicitor General’s opinion, the Board, in prescribing an across-the-board hike did not, in reality, prior to the Act, has done so for years. The fact of the matter is that the Act sought a “thinking” group of
“grant additional or other benefits to workers and employees, such as the extension of wage increases men and women bound by statutory standards. We quote:
to employees and workers already receiving more than minimum wages . . ."6 but rather, fixed minimum ART. 124. Standards/Criteria for Minimum Wage Fixing.—The regional minimum wages to be
wages according to the “salary-ceiling method,” established by the Regional Board shall be as nearly adequate as is economically feasible to maintain
ECOP insists, in its reply, that wage-fixing is a legislative function, and Republic Act No. 6727 the minimum standards of living necessary for the health, efficiency and general well-being of the
delegated to the regional boards no more “than the power to grant minimum wage adjustments"7 and “in employees within the framework of the national economic and social development program. In the
the absence of clear statutory authority,"8 determination of such regional minimum wages, the Regional Board shall, among other relevant factors,
________________ consider the following:
correcting wage distortions. Precisely, Republic Act No. 6727 was intended to rationalize wages, first, by 15 CONST., art II, sec. 18.
providing for full-time boards to police wages round-the-clock, and second, by giving the boards enough 16 Supra, art, XII, sec. 6.
powers to achieve this objective. The Court is of the opinion that Congress meant the boards to be 17 Supra, art, XIII, sec. 1.
creative in resolving ;the annual question of wages without labor and management knocking on the 18 Supra, sec. 3.
legislature’s door at every turn. The Court’s opinion is that if Republic No. 6727 intended the boards 19
Pres. Decree No. 442, art 3.
alone to set floor wages, the Act would have no need for a board but an accountant to keep track of the 766
25
Rep. Act No. 6727, supra, sec. 1.
766 SUPREME COURT REPORTS ANNOTATED 26CONST., art. II, sec. 18, supra,
Employers Confederation of the Phils, vs. National Wages and Productivity 768
1. a.THE PRESIDENT AND CEO EXECUTED THE POSITION PAPER UNDER OATH WHERE 8CA Rollo, Annexes “2”-“4”, pp. 159-161.
THE PAYROLL EVIDENCING PAYMENT OF THE DECEMBER 1994 COLA, WHICH HE 190
ALSO SIGNED, WAS ANNEXED AND ATTACHED, HENCE THERE WAS NO NEED FOR
HIM TO MAKE A SEPARATE AFFIDAVIT; 190 SUPREME COURT REPORTS ANNOTATED
2. b.THE PAYMASTER CERTIFIED IN EACH PAGE OF THE PAYROLL THAT SHE
HAD ACTUALLY PAID THE AMOUNTS TO THE PERSONS LISTED IN THE DECEMBER Kar Asia, Inc. vs. Corona
1994 PAYROLL THAT INCLUDED HEREIN RESPONDENTS. HENCE, THE PAYROLL IS erwise they shall be barred forever. In the present case, the respondents filed the complaint for
NOT MERELY AN APPROVAL FOR PAYMENT BUT IS AN EVIDENCE underpayment of wage on September 24, 1997. Thus, the action for the payment of the December 1993
THAT ACTUAL PAYMENT WAS MADE. COLA has already prescribed.
3. c.THE LABOR ARBITER CONDUCTED A CLARIFICATORY HEARING WHEREIN THE With respect to the December 1994 COLA, we find that the respondents alleged its non-payment
CASHIERS OF PETITIONER, ONE OF WHOM WAS THE PAYMASTER REFERRED TO only in the complaint. Subsequent pleadings reveal that they opted to pursue their demand only for
ABOVE, CONFIRMED THAT THEY HAVE ACTUALLY PAID THE RESPONDENTS THEIR December 1993 COLA and forego that of the December 1994. Even assuming that the neglect by the
ALLEGED UNPAID COLA. respondents in asserting their claim for the December 1994 COLA does not amount to an abandonment
on the ground that they should not be deprived of their rightful monetary claims if they were so entitled,
still the paucity of evidence to substantiate their bare assertions negates such an award.
1. 2.THE HONORABLE COURT OF APPEALS EXCEEDED THE LIMITS OF ITS POWER TO The payrolls9 for December 1 to 15, 1994 and December 16 to 31, 1994 indicate an allowance of
REVIEW THE ACTS OF THE LABOR ARBITER AND THE NLRC BY NOT CONFINING P327.00 for each period, or a total of P654.00 for the entire month. However, a casual observation of the
ITSELF IN DETERMINING WHETHER THE SAID QUASI-JUDICIAL BODIES LACKED OR payroll for the December 1993 COLA will also show that the respondents signed for the amount of
ACTED IN EXCESS OF JURISDICTION OR COMMITTED GRAVE ABUSE OF P654.00. Also, the allowances appearing in the two separate payslips10 for December 1 to 15, 1994 and
DISCRETION BUT PROCEEDED TO INQUIRE ON THE CORRECTNESS OF THE December 16 to 31, 1994 sum up to a total of P654.00. Although the numeric figures in the December
EVALUATION OF EVIDENCE BY THE SAID AGENCIES WHICH IS BEYOND THE 1994 payroll and the payslips for the same period were denominated merely as allowances while those
OFFICE OF AN EXTRAORDINARY WRIT OF CERTIORARI.7 in the December 1993 payroll were specifically identified as COLA, the fact that they add up to the same
figure, i.e., P654.00, is not a coincidence. Whether designated merely as an allowance or COLA, it is
unmistakable that they all represent the cost of living allowance for the given periods under RTWPB XI
In support of the first assigned error, petitioners argue that the factual findings of the Court of Appeals
Wage Order No. 3.
are in conflict with the evidence on record and those of the Labor Arbiter and the NLRC. They contend
Moreover, the affidavits of Ermina Daray and Cristita Arana, whose verity we find no reason to
that the proceedings and pleadings before the Labor
suspect, confirmed the truthfulness of the entries in the payrolls and affirmed the receipt by the
_______________
respondents of their full compensation. Entries in the payroll, being entries in the course of business,
enjoy the presumption of regularity under Rule 130, Section 43 of the Rules of Court. It is therefore
7Id., pp. 29-30. incumbent upon the respondents to adduce clear and convincing evidence in support of their claim.
189 Unfortunately, re-
_______________
VOL. 437, AUGUST 24, 2004 189
Kar Asia, Inc. vs. Corona 9CA Rollo, Annexes “5”-“14”, pp. 162-171.
Arbiter and the NLRC showed that the respondents have abandoned their claim for non-payment of the 10Rollo, Annexes “P” to “P-17”, pp. 290-306.
December 1994 COLA. They insist that in their position paper and Memorandum on Appeal, the 191
respondents only demanded the payment of the December 1993 COLA but not the December 1994
VOL. 437, AUGUST 24, 2004 191
11
Supra, note 9.
12
Supra, note 10.
13
Columbus Philippine Bus Corporation v. National Labor Relations Commission, G.R. Nos.
114858-59, 7 September 2001, 364 SCRA 606; Conti v. National Labor Relations Commission, G.R. No.
119253, 10 April 1997, 271 SCRA 114.
192
192 SUPREME COURT REPORTS ANNOTATED
Re: Habitual Tardiness of Julie M. Maycacayan, RTC, Br. 165, Pasig City
WHEREFORE, based on the foregoing, the petition is GRANTED. The February 28, 2002 decision of
the Court of Appeals in CA-G.R. SP No. 57972 is REVERSED and SET ASIDE. The Decision of the
NLRC dated August 23, 1999 dismissing respondents’ claims of unpaid COLA for December 1993 and
December 1994, and deleting the awards for moral damages, attorney’s fees and litigation expenses for
lack of sufficient basis, is AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
Davide, Jr., C.J., Quisumbing, Carpio and Azcuna, JJ., concur.
Carpio, J., On Official Leave.
Petition granted, judgment reversed and set aside.
Note.—The long inaction of the employees to file their claim for unpaid wages cast doubts as to the
veracity of their claim. (Aklan Electric Cooperative Incorporated vs. National Labor Relations
Commission, 323 SCRA 258 [2000])
——o0o——
AUSTRIA-MARTINEZ, J.:
G & M (Phils.), Inc. vs. Cruz
G.R. No. 140495. April 15, 2005.* The well-entrenched rule, especially in labor cases, is that findings of fact of quasi-judicial bodies, like
G & M (PHILS.), INC., petitioner, vs. EPIFANIO CRUZ, respondent. the National Labor Relations Commission (NLRC), are accorded with respect, even finality, if supported
Labor Law; Factual findings of labor officials, who are deemed to have acquired expertise in by substantial evidence. Particularly when passed upon and upheld by the Court of Appeals, they are
matters within their respective jurisdiction, are generally accorded not only respect but even finality, and binding and conclusive upon the Supreme Court and will not normally be disturbed.1
bind the Supreme Court when supported by substantial evidence.—This petition mainly involves factual The Court finds no reason in this case to depart from such doctrine.
issues, i.e., whether or not there is evidence on record to support the findings of the Labor Arbiter, the Petitioner G & M (Phils.), Inc. recruited respondent Cruz as trailer driver for its foreign principal,
NLRC and the Court of Appeals that respondent is entitled to the payment of salary differential and Salim Al Yami Est., for a period of two years, and with a stipulated monthly salary of US$625, starting
unpaid wages. This calls for a re-examination of the evidence, which the Court cannot entertain. As June 6, 1990. Respondent alleged that when he arrived in the Kingdom of Saudi Arabia, he was made
stated earlier, factual findings of labor officials, who are deemed to have acquired expertise in matters to sign an employment contract in blank and his salary was reduced to SR604.00. Seven months into
within their respective jurisdiction, are generally accorded not only respect but even finality, and bind the employment, his employer deported him on December 28, 1990. According to respondent, the cause for
Court when supported by substantial evidence. It is not the Court’s function to assess and evaluate the his dismissal was his complaint for sub-human working conditions, non-payment of wages and overtime
evidence all over again, particularly where the findings of both the Arbiter and the Court of Appeals pay, salary deduction and change of employer. Hence, he filed with the Labor Arbiter an
concur. Affidavit/Complaint against petitioner for illegal dismissal, underpayment and non-payment of wages,
Same; The burden of proving payment of monetary claims rests on the employer.—The rule is and refund of transportation expenses. Respondent claims that he was only paid in an
that the burden of proving payment of monetary claims rests on the employer, in this case, herein peti- _______________
_______________
1 San Juan De Dios Educational Foundation Employees Union-Alliance of Filipino Workers vs. San
* Juan De Dios Educational Foundation, G.R. No. 143341, May 28, 2004, 430 SCRA 193, 205-206.
SECOND DIVISION.
216 218
216 SUPREME COURT REPORTS ANNOTATED 218 SUPREME COURT REPORTS ANNOTATED
G & M (Phils.), Inc. vs. Cruz G & M (Phils.), Inc. vs. Cruz
tioner, it being the employment agency or recruitment entity, and agent of the foreign principal, amount equivalent to five months salary and he did not receive his salary for the last two months.
Salim Al Yami Est., which recruited respondent. In Jimenez vs. NLRC, which involves a claim for unpaid Respondent submitted a copy of his pay slip showing the amount of SR604.00 as his basic salary. 2
wages/commissions, separation pay and damages against an employer, the Court ruled that where a Petitioner contends that respondent abandoned his job when he joined an illegal strike and refused
person is sued for a debt admits that the debt was originally owed, and pleads payment in whole or in to report for work, constituting a breach of his employment contract and a valid cause for termination of
part, it is incumbent upon him to prove such payment. This is based on the principle of evidence that employment. Petitioner also claims that the pay slip submitted by respondent is inadmissible because
each party must prove his affirmative allegations. Since petitioner asserts that respondent has already the original copy was not presented and that its existence, due execution, genuineness and authenticity
been fully paid of his stipulated salary, the burden is upon petitioner to prove such fact of full payment. were not established.3
Same; As a general rule, the Supreme Court is not duty-bound to delve into the accuracy of the The Labor Arbiter found merit in petitioner’s claim that respondent abandoned his job, but
NLRC’s factual findings in the absence of a clear showing that these were arbitrary and bereft of any nevertheless granted respondent’s claim for underpayment of wages and two months unpaid salary. The
rational basis.—With regard to the admissibility of the pay slips, both the Labor Arbiter and the NLRC dispositive portion of the Labor Arbiter’s decision reads:
found that it was admissible as evidence. As a general rule, the Court is not duty-bound to delve into the “WHEREFORE, premises considered, the charge of illegal dismissal is hereby denied for lack of merit.
accuracy of the NLRC’s factual findings in the absence of a clear showing that these were arbitrary and However, respondent G & M (Phils.), Inc., is hereby ordered to pay within ten (10) days from receipt
bereft of any rational basis. In the present case, petitioner failed to demonstrate any arbitrariness or lack hereof, herein complainant Epifanio Cruz, the sums of P77,455.00 to be adjusted as earlier stated, and
of rational basis on the part of the NLRC. US$1,250.00 or its peso equivalent at the time of payment.
Same; Proceedings before the NLRC are not covered by the technical rules of evidence and SO ORDERED.”4
procedure.—Article 221 of the Labor Code provides that proceedings before the NLRC are not covered On partial appeal to the NLRC, the same was dismissed per Resolution dated June 10, 1998, with the
by the technical rules of evidence and procedure. The probative value of the copy of the pay slips is aptly following dispositive portion:
justified by the NLRC, as follows: . . . the payslips are original duplicates of computerized “WHEREFORE, the appeal is Dismissed for lack of merit. Respondent G & M (Phils.), Inc., and Salim Al
payslips issued by the employer, Salim Al Yami Est., to its workers which contain entries such as pay Yami Est., are hereby ordered jointly and severally liable to pay complainant Epifanio Cruz
date, employee’s I.D. number, employee name, category, basic rate, overtime hours and other relevant _______________
information, including an itemization of earnings (basic pay, overtime pay, meal allowance for the period
covered) and deductions. The fact that the payslips are not authenticated will not militate against 2 CA Rollo, p. 34.
complainant’s claim, considering that in presenting the payslips, complainant has established the fact of 3 Id., pp. 35-36, Labor Arbiter’s Decision dated October 29, 1997.
underpayment, and the burden has shifted to the respondent to prove that complainant was totally 4 Id., pp. 38-39.
compensated for actual services rendered. 219
217
VOL. 456, APRIL 15, 2005 219
VOL. 456, APRIL 15, 2005 217
G & M (Phils.), Inc. vs. Cruz
G & M (Phils.), Inc. vs. Cruz
the Philippine Peso equivalent at the time of actual payment of the following sums:
G & M (Phils.), Inc. vs. Cruz G & M (Phils.), Inc. vs. Cruz
spondent to prove underpayment, and the pay slip submitted by respondent, which is of “questionable absence of a clear showing that these were arbitrary and bereft of any rational basis. 17 In the present
authenticity,” is not enough to prove the same.11 case, petitioner failed to demonstrate any arbitrariness or lack of rational basis on the part of the NLRC.18
The rule is that the burden of proving payment of monetary claims rests on the employer, 12 in this
case, herein petitioner, it being the employment agency or recruitment entity, and agent of the foreign
Article 221 of the Labor Code provides that proceedings before the NLRC are not covered by the
technical rules of evidence and procedure. The probative value of the copy of the pay slips is aptly
justified by the NLRC, as follows:
. . . the payslips are original duplicates of computerized payslips issued by the employer, Salim Al
Yami Est., to its workers which contain entries such as pay date, employee’s I.D. number, employee
name, category, basic rate, overtime hours and other relevant information, including an itemization of
earnings (basic pay, overtime pay, meal allowance for the period covered) and deductions. The fact that
the payslips are not authenticated will not militate against complainant’s claim, considering that in
presenting the payslips, complainant has established the fact of underpayment, and the burden has
shifted to the respondent to prove that complainant was totally compensated for actual services
rendered.19 (Emphasis supplied)
WHEREFORE, the petition is DENIED for lack merit.
SO ORDERED.
Puno (Chairman), Callejo, Sr., Tinga and Chico-Nazario, JJ., concur.
Petition denied.
Notes.—The right of an employee to demand for separation pay and backwages is always premised
on the fact that
_______________
17
Hacienda Fatima vs. National Federation of Sugarcane Workers-Food and General Trade, G.R.
No. 149440, January 28, 2003, 396 SCRA 518, 527-528.
18 Tan vs. National Labor Relations Commission, G.R. No. 128290, November 24, 1998, 299 SCRA
169, 179.
19 CA Rollo, pp. 21-22.
224
224 SUPREME COURT REPORTS ANNOTATED
——o0o——
employee is an independent contractor when, as in this case, the facts clearly show otherwise. Indeed,
the employment status of a person is defined and prescribed by law and not by what the parties say it
G.R. No. 146530. January 17, 2005.* should be.
PEDRO CHAVEZ, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, SUPREME Same; Same; Same; Abandonment; As a rule, the employer bears the burden to prove that the
PACKAGING, INC. and ALVIN LEE, Plant Manager, respondents. dismissal was for a valid and just cause; Factors to constitute abandonment; A charge of abandonment
Labor Law; Elements of an employer-employee relationship.—The elements to determine the is totally inconsistent with the immediate filing of a complaint for illegal dismissal more so when it includes
existence of an employment relationship are: (1) the selection and engagement of the employee; (2) the a prayer for reinstatement.—As a rule, the employer bears the burden to prove that the dismissal was
payment of wages; (3) the power of dismissal; and (4) the employer’s power to control the employee’s for a valid and just cause. In this case, the respondents failed to prove any such cause for the petitioner’s
conduct. The most important element is the employer’s control of the employee’s conduct, not only as to dismissal. They insinuated that the petitioner abandoned his job. To constitute abandonment, these two
the result of the work to be done, but also as to the means and methods to accomplish it. All the four factors must concur: (1) the failure to report for work or absence without valid or justifiable reason; and
elements are present in this case. (2) a clear intention to sever employer-employee relationship. Obviously, the petitioner did not intend to
Same; Same; Benefits; Wages; Definition of Wages.—Wages are defined as “remuneration or sever his relationship with the respondent company for at the time that he allegedly abandoned his job,
earnings, however designated, capable of being expressed in terms of money, whether fixed or the petitioner just filed a complaint for regularization, which was forthwith amended to one for illegal
ascertained on a time, task, piece or commission basis, or other method of calcu- dismissal. A charge of abandonment is totally inconsistent with the immediate filing of a complaint for
illegal dismissal, more so when it includes a prayer for reinstatement.
Same; Same; Same; The negligence, to warrant removal from service, should not merely be
_______________ gross but also habitual.—Neither can the respondents’ claim that the petitioner was guilty of gross
negligence in the proper maintenance of the truck constitute a valid and
* SECOND DIVISION. 481
479
VOL. 448, JANUARY 17, 2005 481
VOL. 448, JANUARY 17, 2005 479
Chavez vs. National Labor Relations Commission
Chavez vs. National Labor Relations Commission just cause for his dismissal. Gross negligence implies a want or absence of or failure to exercise
lating the same, which is payable by an employer to an employee under a written or unwritten slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences
contract of employment for work done or to be done, or for service rendered or to be rendered.” That the without exerting any effort to avoid them. The negligence, to warrant removal from service, should not
petitioner was paid on a per trip basis is not significant. This is merely a method of computing merely be gross but also habitual. The single and isolated act of the petitioner’s negligence in the proper
compensation and not a basis for determining the existence or absence of employer-employee maintenance of the truck alleged by the respondents does not amount to “gross and habitual neglect”
relationship. One may be paid on the basis of results or time expended on the work, and may or may not warranting his dismissal.
acquire an employment status, depending on whether the elements of an employer-employee Same; Same; Same; The lack of a valid and just cause in terminating the services of the petitioner
relationship are present or not. In this case, it cannot be gainsaid that the petitioner received renders his dismissal illegal.—The lack of a valid and just cause in terminating the services of the
compensation from the respondent company for the services that he rendered to the latter. petitioner renders his dismissal illegal. Under Article 279 of the Labor Code, an employee who is unjustly
Same; Same; Same; Same; Under the Rules Implementing the Labor Code, every employer is dismissed is entitled to reinstatement, without loss of seniority rights and other privileges, and to the
required to pay his employees by means of payroll.—Under the Rules Implementing the Labor Code, payment of full backwages, inclusive of allowances, and other benefits or their monetary equivalent,
every employer is required to pay his employees by means of payroll. The payroll should show, among computed from the time his compensation was withheld from him up to the time of his actual
other things, the employee’s rate of pay, deductions made, and the amount actually paid to the employee. reinstatement.
Interestingly, the respondents did not present the payroll to support their claim that the petitioner was not PETITION for review on certiorari of a decision of the Court of Appeals.
their employee, raising speculations whether this omission proves that its presentation would be adverse The facts are stated in the opinion of the Court.
to their case. Danilo S. Capuli for petitioner.
Same; Same; Dismissals; Respondent’s power to dismiss the petitioner was inherent in the fact Tan, Acut & Lopez for private respondents.
that they engaged the services of the petitioner as truck driver.—The respondents’ power to dismiss the
petitioner was inherent in the fact that they engaged the services of the petitioner as truck driver. They CALLEJO, SR., J.:
exercised this power by terminating the petitioner’s services albeit in the guise of “severance of
contractual relation” due allegedly to the latter’s breach of his contractual obligation.
Same; Same; Same; While an independent contractor enjoys independence and freedom from Before the Court is the petition for review on certiorari of the Resolution1 dated December 15, 2000
the control and supervision of his principal, an employee is subject to the employer’s power to control of the Court of Appeals (CA) reversing its Decision dated April 28, 2000 in CA-G.R. SP No. 52485. The
the means and methods by which the employee’s work is to be performed and accomplished.—Of the assailed resolution reinstated the Decision dated July 10, 1998 of the National Labor Relations
four elements of the employer-employee relationship, the “control test” is the most important. Compared Commission (NLRC), dismissing the complaint for illegal
to an employee, an independent contractor is one who carries on a distinct and independent business
and undertakes to perform the job, work, or service on its own account and under its _______________
480
480 SUPREME COURT REPORTS ANNOTATED 1 Penned by Associate Justice Oswaldo D. Agcaoili (retired), with Associate Justices Renato C.
Dacudao and Andres B. Reyes, Jr., concurring.
Chavez vs. National Labor Relations Commission 482
own responsibility according to its own manner and method, free from the control and direction
482 SUPREME COURT REPORTS ANNOTATED
of the principal in all matters connected with the performance of the work except as to the results thereof.
Hence, while an independent contractor enjoys independence and freedom from the control and Chavez vs. National Labor Relations Commission
supervision of his principal, an employee is subject to the employer’s power to control the means and dismissal filed by herein petitioner Pedro Chavez. The said NLRC decision similarly reversed its earlier
methods by which the employee’s work is to be performed and accomplished. Decision dated January 27, 1998 which, affirming that of the Labor Arbiter, ruled that the petitioner had
Same; Same; Same; The employment status of a person is defined and prescribed by law and been illegally dismissed by respondents Supreme Packaging, Inc. and Mr. Alvin Lee.
not by what the parties say it should be.—It bears stressing that the existence of an employer-employee The case stemmed from the following facts:
relationship cannot be negated by expressly repudiating it in a contract and providing therein that the
The respondent company, Supreme Packaging, Inc., is in the business of manufacturing cartons 6. This contract shall take effect immediately upon the signing by the parties, subject to
and other packaging materials for export and distribution. It engaged the services of the petitioner, Pedro renewal on a year-to-year basis.”2
Chavez, as truck driver on October 25, 1984. As such, the petitioner was tasked to deliver the respondent This contract of service was dated December 12, 1984. It was subsequently renewed twice, on July
company’s products from its factory in Mariveles, Bataan, to its various customers, mostly in Metro 10, 1989 and September 28, 1992. Except for the rates to be paid to the petitioner, the terms of the
Manila. The respondent company furnished the petitioner with a truck. Most of the petitioner’s delivery contracts were substantially the same. The relationship of the respondent company and the petitioner
trips were made at nighttime, commencing at 6:00 p.m. from Mariveles, and returning thereto in the was allegedly governed by this contract of service.
afternoon two or three days after. The deliveries were made in accordance with the routing slips issued The respondents insisted that the petitioner had the sole control over the means and methods by
by respondent company indicating the order, time and urgency of delivery. Initially, the petitioner was which his work was accomplished. He paid the wages of his helpers and exercised control over them.
paid the sum of P350.00 per trip. This was later adjusted to P480.00 per trip and, at the time of his As such, the petitioner was not entitled to regularization because he was not an employee of the
alleged dismissal, the petitioner was receiving P900.00 per trip. respondent company. The respondents, likewise, maintained that they did not dismiss the petitioner.
Sometime in 1992, the petitioner expressed to respondent Alvin Lee, respondent company’s plant Rather, the severance of his contractual relation with the respondent company was due to his violation
manager, his (the petitioner’s) desire to avail himself of the benefits that the regular employees were of the terms and conditions of their con-
receiving such as overtime pay, nightshift differential pay, and 13th month pay, among others. Although
he promised to extend these benefits to the petitioner, respondent Lee failed to actually do so. _______________
On February 20, 1995, the petitioner filed a complaint for regularization with the Regional Arbitration
Branch No. III of the NLRC in San Fernando, Pampanga. Before the case could be heard, respondent
company terminated the services of the petitioner. Consequently, on May 25, 1995, the petitioner filed 2 Rollo, pp. 113-114.
an amended complaint against the respondents for illegal 485
483
VOL. 448, JANUARY 17, 2005 485
VOL. 448, JANUARY 17, 2005 483
Chavez vs. National Labor Relations Commission
Chavez vs. National Labor Relations Commission tract. The petitioner allegedly failed to observe the minimum degree of diligence in the proper
dismissal, unfair labor practice and non-payment of overtime pay, nightshift differential pay, 13th month maintenance of the truck he was using, thereby exposing respondent company to unnecessary
pay, among others. The case was docketed as NLRC Case No. RAB-III-02-6181-95. significant expenses of overhauling the said truck.
The respondents, for their part, denied the existence of an employer-employee relationship between After the parties had filed their respective pleadings, the Labor Arbiter rendered the Decision dated
the respondent company and the petitioner. They averred that the petitioner was an independent February 3, 1997, finding the respondents guilty of illegal dismissal. The Labor Arbiter declared that the
contractor as evidenced by the contract of service which he and the respondent company entered into. petitioner was a regular employee of the respondent company as he was performing a service that was
The said contract provided as follows: necessary and desirable to the latter’s business. Moreover, it was noted that the petitioner had
“That the Principal [referring to Supreme Packaging, Inc.], by these presents, agrees to hire and the discharged his duties as truck driver for the respondent company for a continuous and uninterrupted
Contractor [referring to Pedro Chavez], by nature of their specialized line or service jobs, accepts the period of more than ten years.
services to be rendered to the Principal, under the following terms and covenants heretofore mentioned: The contract of service invoked by the respondents was declared null and void as it constituted a
1. That the inland transport delivery/hauling activities to be performed by the contractor circumvention of the constitutional provision affording full protection to labor and security of tenure. The
to the principal, shall only cover travel route from Mariveles to Metro Manila. Otherwise, any Labor Arbiter found that the petitioner’s dismissal was anchored on his insistent demand to be
change to this travel route shall be subject to further agreement by the parties concerned. regularized. Hence, for lack of a valid and just cause therefor and for their failure to observe the due
2. That the payment to be made by the Principal for any hauling or delivery transport process requirements, the respondents were found guilty of illegal dismissal. The dispositive portion of
services fully rendered by the Contractor shall be on a per trip basis depending on the size or the Labor Arbiter’s decision states:
classification of the truck being used in the transport service, to wit: “WHEREFORE, in the light of the foregoing, judgment is hereby rendered declaring respondent
a) If the hauling or delivery service shall require a truck of six wheeler, the SUPREME PACKAGING, INC. and/or MR. ALVIN LEE, Plant Manager, with business address at BEPZ,
payment on a per trip basis from Mariveles to Metro Manila shall be THREE Mariveles, Bataan guilty of illegal dismissal, ordering said respondent to pay complainant his separation
HUNDRED PESOS (P300.00) and EFFECTIVE December 15, 1984. pay equivalent to one (1) month pay per year of service based on the average monthly pay of P10,800.00
b) If the hauling or delivery service require a truck of ten wheeler, the payment in lieu of reinstatement as his reinstatement back to work will not do any good between the parties as
on a per trip basis, following the same route mentioned, shall be THREE HUNDRED the employment relationship has already become strained and full backwages from the time his
FIFTY (P350.00) Pesos and Effective December 15, 1984. compensation was withheld on February 23, 1995 up to January 31, 1997 (cut-off date) until compliance,
3. That for the amount involved, the Contractor will be to [sic] provide for [sic] at least two otherwise, his backwages shall continue to run. Also to pay complainant his 13th month pay, night shift
(2) helpers;484 differential pay and service incentive leave pay hereunder computed as follows:
a) Backwages ………………….. P248,400.00486
484 SUPREME COURT REPORTS ANNOTATED
486 SUPREME COURT REPORTS ANNOTATED
Chavez vs. National Labor Relations Commission
4. The Contractor shall exercise direct control and shall be responsible to the Principal Chavez vs. National Labor Relations Commission
for the cost of any damage to, loss of any goods, cargoes, finished products or the like, while b) Separation Pay ………….…... P140,400.00
the same are in transit, or due to reckless [sic] of its men utilized for the purpose above c) 13th month pay ………….….. P 10,800.00
mentioned; d) Service Incentive Leave Pay .. 2,040.00
5. That the Contractor shall have absolute control and disciplinary power over its men TOTAL P401,640.00
working for him subject to this agreement, and that the Contractor shall hold the Principal free Respondent is also ordered to pay ten (10%) of the amount due the complainant as attorney’s fees.
and harmless from any liability or claim that may arise by virtue of the Contractor’s non- SO ORDERED.”3
compliance to the existing provisions of the Minimum Wage Law, the Employees Compensation The respondents seasonably interposed an appeal with the NLRC. However, the appeal was
Act, the Social Security System Act, or any other such law or decree that may hereafter be dismissed by the NLRC in its Decision4 dated January 27, 1998, as it affirmed in toto the decision of the
enacted, it being clearly understood that any truck drivers, helpers or men working with and for Labor Arbiter. In the said decision, the NLRC characterized the contract of service between the
the Contractor, are not employees who will be indemnified by the Principal for any such claim, respondent company and the petitioner as a “scheme” that was resorted to by the respondents who,
including damages incurred in connection therewith; taking advantage of the petitioner’s unfamiliarity with the English language and/or legal niceties, wanted
to evade the effects and implications of his becoming a regularized employee.5
The respondents sought reconsideration of the January 27, 1998 Decision of the NLRC. Acting entered into to preclude acquisition of tenurial security by the employee, they should be struck down and
thereon, the NLRC rendered another Decision6 dated July 10, 1998, reversing its earlier decision and, disregarded as contrary to public policy and morals. In this case, the ‘contract of service’ is just another
this time, holding that no employer-employee relationship existed between the respondent company and attempt to exploit the unwitting employee and deprive him of the protection of the Labor Code by making
the petitioner. In reconsidering its earlier decision, the NLRC stated that the respondents did not exercise it appear that the stipulations of the parties were governed by the Civil Code as in ordinary transactions.”9
control over the means and methods by which the petitioner accomplished his delivery services. It upheld However, on motion for reconsideration by the respondents, the CA made a complete turn around
the validity of the contract of service as it pointed out that said contract was as it rendered the assailed Resolution dated December 15, 2000 upholding the contract of service
between the petitioner and the respondent company. In reconsidering its decision, the CA explained that
_______________ the extent of control exercised by the respondents over the petitioner was only with respect to the result
but not to the means and methods used by him. The CA cited the following circumstances: (1) the
respondents had no say on how the
3 Id., at p. 151.
4 Penned by Commissioner Rogelio I. Rayala, with Presiding Commissioner Raul T. Aquino and
Commissioner Victoriano R. Calaycay, concurring; Id., at pp. 177-184. _______________
5 Rollo, pp. 183-184.
6 Penned by Commissioner Angelita A. Gacutan, with Presiding Commissioner Raul T. Aquino and 9 Rollo, pp. 42-43.
Commissioner Victoriano R. Calaycay, concurring; Id., at pp. 60-73. 489
487
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Chavez vs. National Labor Relations Commission
Chavez vs. National Labor Relations Commission goods were to be delivered to the customers; (2) the petitioner had the right to employ workers who
silent as to the time by which the petitioner was to make the deliveries and that the petitioner could hire would be under his direct control; and (3) the petitioner had no working time.
his own helpers whose wages would be paid from his own account. These factors indicated that the The fact that the petitioner had been with the respondent company for more than ten years was,
petitioner was an independent contractor, not an employee of the respondent company. according to the CA, of no moment because his status was determined not by the length of service but
The NLRC ruled that the contract of service was not intended to circumvent Article 280 of the Labor by the contract of service. This contract, not being contrary to morals, good customs, public order or
Code on the regularization of employees. Said contract, including the fixed period of employment public policy, should be given the force and effect of law as between the respondent company and the
contained therein, having been knowingly and voluntarily entered into by the parties thereto was declared petitioner. Consequently, the CA reinstated the July 10, 1998 Decision of the NLRC dismissing the
valid citing Brent School, Inc. v. Zamora.7 The NLRC, thus, dismissed the petitioner’s complaint for illegal petitioner’s complaint for illegal dismissal.
dismissal. Hence, the recourse to this Court by the petitioner. He assails the December 15, 2000 Resolution
The petitioner sought reconsideration of the July 10, 1998 Decision but it was denied by the NLRC of the appellate court alleging that:
in its Resolution dated September 7, 1998. He then filed with this Court a petition for certiorari, which (A)
was referred to the CA following the ruling in St. Martin Funeral Home v. NLRC.8 THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO
The appellate court rendered the Decision dated April 28, 2000, reversing the July 10, 1998 Decision EXCESS OF JURISDICTION IN GIVING MORE CONSIDERATION TO THE “CONTRACT OF
of the NLRC and reinstating the decision of the Labor Arbiter. In the said decision, the CA ruled that the SERVICE” ENTERED INTO BY PETITIONER AND PRIVATE RESPONDENT THAN ARTICLE 280 OF
petitioner was a regular employee of the respondent company because as its truck driver, he performed THE LABOR CODE OF THE PHILIPPINES WHICH CATEGORICALLY DEFINES A REGULAR
a service that was indispensable to the latter’s business. Further, he had been the respondent company’s EMPLOYMENT NOTWITHSTANDING ANY WRITTEN AGREEMENT TO THE CONTRARY AND
truck driver for ten continuous years. The CA also reasoned that the petitioner could not be considered REGARDLESS OF THE ORAL AGREEMENT OF THE PARTIES;
an independent contractor since he had no substantial capital in the form of tools and machinery. In fact, (B)
the truck that he drove belonged to the respondent company. The CA also observed that the routing slips THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO
that the respondent company issued to the petitioner showed that it exercised control over the latter. The EXCESS OF JURISDICTION IN REVERSING ITS OWN FINDINGS THAT PETITIONER IS A
routing slips indicated the chronological order and priority of REGULAR EMPLOYEE AND IN HOLDING THAT THERE EXISTED NO EMPLOYER-EMPLOYEE
RELATIONSHIP BETWEEN PRIVATE RESPONDENT AND PETITIONER IN AS MUCH AS THE
_______________ “CONTROL TEST” WHICH IS CONSIDERED THE MOST
490
_______________
26 Philippine Aeolus Automotive United Corporation v. National Labor Relations Commission, 331
SCRA 237 (2000).
27 Id., at p. 247.
28 Rollo, pp. 149-150.
29 Cebu Marine Beach Resort v. National Labor Relations Commission, 414 SCRA 173 (2003).
496
496 SUPREME COURT REPORTS ANNOTATED
Ann. 368.
12
1. 1.Complainant Fredelito Juanatas is hereby declared respondents’ employee and shares in Biala vs. Court of Appeals, et al., G.R. No. 43503, October 31, 1990, 191 SCRA 50; Servicewide
(the) commission and separation pay awarded to complainant Pedro Juanatas, his father. Specialists, Inc. vs. Intermediate Appellate Court, et al., G.R. No. 74553, June 8, 1989, 174 SCRA 80.
2. 2.Respondent JJ’s Trucking and Dr. Bernardo Jimenez are jointly and severally liable to pay 90
complainants their unpaid commissions in the total amount of Eighty Four Thousand Three
90 SUPREME COURT REPORTS ANNOTATED
Hundred Eighty Seven Pesos and 05/100 (P84,387.05).
3. 3.The award of attorney’s fees is reduced accordingly to eight thousand four hundred thirty Jimenez vs. National Labor Relations Commission
eight pesos and 70/100 (P8,438.70). of going forward with the evidence—as distinct from the general burden of proof—shifts to the creditor,
4. 4.The other findings stand affirmed.”4 who is then under a duty of producing some evidence to show non-payment.13
In the instant case, the right of respondent Pedro Juanatas to be paid a commission equivalent to
Petitioners’ motion for reconsideration having been denied thereafter in public respondent’s resolution 17%, later increased to 20%, of the gross income is not disputed by petitioners. Although private
dated August 8, 1994,5 petitioners have come to us in this recourse, raising for resolution the issues as respondents admit receipt of partial payment, petitioners still have to present proof of full payment. Where
to whether or not respondent NLRC committed grave abuse of discretion in ruling (a) that private the defendant sued for a debt admits that the debt was originally owed, and pleads payment in whole or
respondents were not paid their commissions in full, and (b) that respondent Fredelito Juanatas was an in part, it is incumbent upon him to prove such payment. That a plaintiff admits that some payments have
employee of JJ’s Trucking. been made does not change the burden of proof. The defendant still has the burden of establishing
The review of labor cases elevated to us on certiorari is confined to questions of jurisdiction or grave payments beyond those admitted by plaintiff.14
abuse of discretion.6 As a rule, this Court does not review supposed errors in the decision of the NLRC The testimony of petitioners which merely denied the claim of private respondents, unsupported by
which raise factual issues, because factual findings of agencies exercising quasi-judicial functions are documentary evidence, is not sufficient to establish payment. Although petitioners submitted a notebook
accorded not only respect but even finality,7 aside from the consideration that the Court is essentially not showing the alleged vales of private respondents for the year 1990,15 the same is inadmissible and
a trier of facts. However, in the case at bar, a review of the records thereof with an assessment of the cannot be given probative value considering that it is not properly accomplished, is undated and
facts is necessary since the factual findings of the NLRC and the labor arbiter unsigned, and is thus uncertain as to its origin and authenticity.16
_______________ The positive testimony of a creditor may be sufficient of itself to show non-payment, even when met
by indefinite testimony of the debtor. Similarly, the testimony of the debtor may also be sufficient to show
4
payment, but, where his testimony is contradicted by the other party or by a disinterested witness, the
Ibid., 112-113. issue may be determined against the debtor since he has the burden of proof. The testimony of the
5Ibid., 122-123.
6 Loadstar Shipping Co., Inc. vs. Gallo, et al., G.R. No. 102845, February 4, 1994, 229 SCRA
debtor creating merely an inference of payment will not be
_______________
654; Philippine Overseas Drilling and Oil Development Corporation vs. Ministry of Labor, et al., G.R. No.
55703, November 27, 1986, 146 SCRA 79.
13
7
Sta. Fe Construction Co., et al. vs. NLRC, et al., G.R. No. 101280, March 2, 1994, 230 SCRA 60 Am. Jur. 2d, Payment, Sec. 174, 998.
14 Ibid., id., Sec. 171, 996-997.
593; San Miguel Corporation vs. Javate, Jr., et al., G.R. No. 54244, January 27, 1992, 205 SCRA 469.
15 Original Record, 375-377.
89
16
See Callanta vs. NLRC, et al., G.R. No. 105083, August 20, 1993, 225 SCRA 526.
VOL. 256, APRIL 2, 1996 89 91
Jimenez vs. National Labor Relations Commission VOL. 256, APRIL 2, 1996 91
are at odds with each other.8
On the first issue, we find no reason to disturb the findings of respondent NLRC that the entire Jimenez vs. National Labor Relations Commission
amount of commissions was not paid, this by reason of the evident failure of herein petitioners to present regarded as conclusive on that issue.17
evidence that full payment thereof has been made. It is a basic rule in evidence that each party must Hence, for failure to present evidence to prove payment, petitioners defaulted in their defense and
prove his affirmative allegation. Since the burden of evidence lies with the party who asserts an in effect admitted the allegations of private respondents.
affirmative allegation, the plaintiff or complainant has to prove his affirmative allegations in the complaint With respect to the second issue, however, we agree with petitioners that the NLRC erred in holding
and the defendant or respondent has to prove the affirmative allegations in his affirmative defenses and that the son, Fredelito, was an employee of petitioners.
counterclaim. Considering that petitioners herein assert that the disputed commissions have been paid, We have consistently ruled that in determining the existence of an employer-employee relationship,
they have the bounden duty to prove that fact. the elements that are generally considered are the following: (1) the selection and engagement of the
As a general rule, one who pleads payment has the burden of proving it.9 Even where the plaintiff employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
must allege non-payment, the general rule is that the burden rests on the defendant to prove payment, employee’s conduct,18 with the control test assuming primacy in the overall consideration.
rather than on the plaintiff to prove non-payment.10 The debtor has the burden of showing with legal In the case at bar, the aforementioned elements are not present. The agreement was between
certainty that the obligation has been discharged by petitioner JJ’s Trucking and respondent Pedro Juanatas. The hiring of a helper was discretionary on the
payment.11 When the existence of a debt is fully established by the evidence contained in the record, part of Pedro. Under their contract, should he employ a helper, he would be responsible for the latter’s
the burden of proving that it has been extinguished by payment devolves upon the debtor who offers compensation. With or without a helper, respondent Pedro Juanatas was entitled to the same percentage
such a defense to the claim of the creditor.12 Where the debtor introduces some evidence of payment, of commission. Respondent Fredelito Juanatas was hired by his father, Pedro, and the compensation
the burden he received was paid by his father out of the latter’s commission. Further, Fredelito was not subject to
_______________ the control and supervision of and dismissal by petitioners but of and by his father.
Even the Solicitor General, in his comment, agreed with the finding of the labor arbiter that Fredelito
8 See Prieto, et al. vs. NLRC, et al., G.R. No. 93699, September 10, 1993, 226 SCRA 232; Rapiz,
was not an employee of petitioners, to wit:
_______________
et al. vs. NLRC, et al., G.R. No. 91122, March 16, 1992, 207 SCRA 243; Llobrera vs. NLRC, et al., G.R.
No. 76271, June 28, 1988, 162 SCRA 788.
17
70 C.J.S., Payment, Sec. 121, 334.
18
Canlubang Security Agency vs. NLRC, et al., G.R. No. 97492, December 8, 1992, 216 SCRA
280; Ruga, et al. vs. NLRC, et al., G.R. Nos. 72654-61, January 22, 1990, 181 SCRA 266; Makati
Haberdashery, Inc., et al. vs. NLRC, et al., G.R. Nos. 83380-81, November 15, 1989, 179 SCRA 448.
92
92 SUPREME COURT REPORTS ANNOTATED
19Rollo, 166-167.
93
VOL. 256, APRIL 10, 1996 93
*
SECOND DIVISION. 1 Mario G. Frondoza, et al. v. Hi-Tech Manufacturing Corp., et al., NLRC NCR CA No. 011793-93,
687 NLRC NCR 00-08-05864-94, and Allan S. Villar, et al. v. Hi-Tech Manufacturing Corp., et al., NLRC NCR
CA No. 00-08-06381-94; Decision penned by Commissioner Victoriano R. Calaycay, concurred in by
VOL. 331, MAY 11, 2000 687 Presiding Commissioner Raul T. Aquino and Commissioner Rogelio I. Rayala.
Villar vs. National Labor Relations Commission 689
tute abandonment, there must be clear proof of deliberate and unjustified intent to sever the VOL. 331, MAY 11, 2000 689
employer-employee relationship. Mere absence of the employee is not sufficient. The burden of proof to
show a deliberate and unjustified refusal of an employee to resume his employment without any intention Villar vs. National Labor Relations Commission
of returning rests on the employer. tion for organizing a labor union in the work premises as well as in filing the petition for certification
Same; Same; Same; Petitioners having been illegally dismissed are entitled to reinstatement with election before the Department of Labor. They further averred that they were paid daily wages ranging
full back wages, undiminished by earnings elsewhere, to be computed from their illegal dismissal to their from P81.00 to P145.00 which were below the minimum fixed by law and that they were required to work
actual reinstatement.—We conclude that petitioners did not abandon their jobs but were illegally six (6) days a week from 8 o’clock in the morning to 7 o’clock in the evening without being paid for the
dismissed therefrom by private respondent. As a consequence, they are entitled to reinstatement with overtime. Neither were they paid their service incentive leave pay and 13th month pay.
full back wages, undiminished by earnings elsewhere, to be computed from their illegal dismissal to their Petitioners originally numbered twenty-three (23) but fifteen (15) of them desisted in the course of
actual reinstatement. the proceedings thus leaving only the eight (8) petitioners who pursued their cause to the end.2
Same; Same; Quitclaims; A deed of release or quitclaim cannot bar employees from demanding On the other hand, HI-TECH denied having dismissed petitioners. It contended that petitioners were
benefits to which they are legally entitled, or stop them from contesting the legality of their dismissal.— probably stung by their defeat in the certification election such that they refused to work thereafter; that
We note that the handwritten letters and affidavits executed by Arturo Manimtim and Exequiel Manimtim the HI-TECH management called their attention concerning their unauthorized absences without leave
partake of the nature of quitclaims. Nevertheless, a deed of release or quitclaim cannot bar employees but petitioners continued with their leave en masse with the sole intention of crippling the company
from demanding benefits to which they are legally entitled, or stop them from contesting the legality of operations; and, that petitioners could return to their jobs at HI-TECH any time at their discretion. In
their dismissal. The acceptance of these benefits does not amount to an estoppel. However, it is but just support of these allegations, private respondent presented in evidence the affidavits3 of employees who
that the amounts received by Arturo and Exequiel Manimtim as consideration for the quitclaims be initially joined petitioners in filing their complaints but later desisted from pursuing their claims. The
deducted from their respective monetary awards. pertinent portions of the affidavits uniformly read—
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari. 1. 2.That I hereby state that I was not dismissed by the company or its officials, the truth of the
matter being that I did not report for work anymore after the certification election on July 31,
The facts are stated in the opinion of the Court. 1994, when our Union lost in the said election; that I wanted to resign from the company, as
Jose C. Evangelista for petitioners. I am hereby resigning voluntarily from my job with HI-TECH MANUFACTURING
Raul E. Espinosa for private respondent. CORPORATION;
NAME B/WAGES U/PAYMENT 13TH MP SILP VOL. 331, MAY 11, 2000 693
A. VILLAR P100,062.05 P24,026.00 P2,002.10 P1,855.00 Villar vs. National Labor Relations Commission
We find sufficient cause to deviate from the findings of the NLRC. It is clear from the records that
D. INDITA 100,062.05 12,913.00 1,076.05 675.00 sometime in August 1994, immediately after petitioners supposedly “refused to work” having lost earlier
in the certification election, several complaints for illegal dismissal against HI-TECH were filed by
G. DATALIO 100,062.05 10,734.00 895.00 675.00
petitioners. These are sufficient proofs that they were never guilty of leaving their jobs. The concept of
G. VILLARALBO 100,062.00 16,163.00 1,347.35 1,855.00 abandonment of work is inconsistent with the immediate filing of complaints for illegal dismissal. An
employee who took steps to protest his layoff could not by any logic be said to have abandoned his
A. PIPINO 100,062.05 520.00 430.00 2,145.00 work.6
Abandonment is a matter of intention and cannot lightly be presumed from certain equivocal acts.
A. MANIMTIM 100,062.05 5,930.90 495.90 1,855.00
To constitute abandonment, there must be clear proof of deliberate and unjustified intent to sever the
N. ANGAY 115,456.25 944.00 78.65 1,855.00 employer-employee relationship.7 Mere absence of the employee is not sufficient. The burden of proof
to show a deliberate and unjustified refusal of an employee to resume his employment without any
E. MANIMTIM 122,091.65 5,938.00 494.90 1,855.00 intention of returning rests on the employer.8
On appeal by HI-TECH, the NLRC in its Decision of 30 May 1997 vacated and set aside the Labor HI-TECH failed to discharge its burden. We find its evidence—consisting mainly of the affidavit of
Arbiter’s Decision and ordered petitioners to report back to work, or if no longer feasible, directed HI- employees and the handwritten notes of Arturo Manimtim and Exequiel Manimtim—not enough to
TECH to pay petitioners their separation benefits. The NLRC ruled— establish that petitioners indeed deliberately and unjustifiably abandoned their jobs. The statements of
the employees in these documents, readily acknowledging their guilt and absolutely exonerating their control of the employer. Thus, in choosing not to present evidence to prove that it had paid all the
employer from any liability, were rigidly and uniformly stated, and appeared too good to be true. We are monetary claims of petitioners, HI-TECH failed once again to discharge the onus
not unaware ______________
_______________
9 Tomas Lao Construction v. National Labor Relations Commission, G.R. No. 116781, 5 September
Relations Commission, G.R. No. 120030, 17 June 1997, 273 SCRA 549. 1997, 278 SCRA 716.
6 See Jones v. National Labor Relations Commission, et al., G.R. No. 107729, 6 December
10
Rollo, p. 88; Annex “A.”
11
1995, 250 SCRA 668. See National Semiconductor (HK) Distribution, Ltd. v. National Labor Relations Commission, G.R.
7
Shin I Industrial Philippines v. National Labor Relations Commission, G.R. No. 74489, 3 August No. 123520, 26 June 1998, 291 SCRA 348.
1988, 164 SCRA 8; Asphalt and Cement Pavers, Inc. v. Leogardo, Jr., G.R. No. 74563, 20 June 12 G.R. No. 116960, 2 April 1996, 256 SCRA 84.
RULES AND REGULATIONS IMPLEMENTING PRESIDENTIAL DECREE NO. 851 In any establishment where a union has been recognized or certified as the collective bargaining
By virtue of the powers vested in me by law, the following rules and regulations implementing agent of the employees therein, the periodicity or frequency of payment of the 13th month pay
Presidential Decree No. 851 are hereby issued for the guidance of all concerned. may be the subject of agreement.
Section 1. Payment of 13-month Pay All employers covered by Presidential Decree No. 851,
hereinafter referred to as the "Decree", shall pay to all their employees receiving a basic salary of Nothing herein shall prevent employers from giving the benefits provided in the Decree to their
not more than P1,000 a month a thirteenth-month pay not later than December 24 of every year. employees who are receiving more than One Thousand (P1,000) Pesos a month or benefits higher
than those provided by the Decree.
Section 2. Definition of certain terms As used in this issuance.
(a) "Thirteenth-moth pay" shall mean one twelfth (1/12) of the basic salary of an Section 6. Special feature of benefit The benefits granted under this issuance shall not be credited
employee within a calendar year; as part of the regular wage of the employees for purposes of determining overtime and premium
(b) "Basic salary" shall include all remunerations or earnings paid by an employer to an pay, fringe benefits, as well as premium contributions to the State Insurance Fund, social security,
employee for services rendered but may not include cost-of-living allowances granted medicare and private welfare and retirement plans.
pursuant to Presidential Decree No. 525 or Letter of Instructions No. 174, profit-sharing
payments, and all allowances and monetary benefits which are not considered or Section 7. Exemption of Distressed employers Distressed employers shall qualify for exemption
integrated as part of the regular or basic salary of the employee at the time of the from the requirement of the Decree upon prior authorization by the Secretary of Labor. Petitions
promulgation of the Decree on December 16, 1975. for exemptions may be filed within the nearest regional office having jurisdiction over the employer
not later than January 15, 1976. The regional offices shall transmit the petitions to the Secretary
Section 3. Employers covered The Decree shall apply to all employers except to: of Labor within 24 hours from receipt thereof.
(a) Distressed employers, such as (1) those which are currently incurring substantial
losses or (2) in the case of non-profit institutions and organizations, where their income, Section 8. Report of compliance Every covered employer shall make a report of his compliance
whether from donations, contributions, grants and other earnings from any source, has with the Decree to the nearest regional labor office not later than January 15 of each year.
consistently declined by more than forty (40%) percent of their normal income for the The report shall conform substantially with the following form:
last two (2) years, subject to the provision of Section 7 of this issuance; REPORT ON COMPLIANCE WITH PD NO. 851
(b) The Government and any of its political subdivisions, including government-owned 1. Name of establishment
and controlled corporations, except those corporations operating essentially as private 2. Address
subsidiaries of the Government; 3. Principal product or business
(c) Employers already paying their employees 13-month pay or more in a calendar year 4. Total employment
of its equivalent at the time of this issuance; 5. Total number of workers benefited
(d) Employers of household helpers and persons in the personal service of another in 6. Amount granted per employee
relation to such workers; and 7. Total amount of benefits granted
(e) Employers of those who are paid on purely commission, boundary, or task basis, 8. Name, position and tel. no. of person giving information
and those who are paid a fixed amount for performing a specific work, irrespective of
the time consumed in the performance thereof, except where the workers are paid on Section 9. Adjudication of claims Non-payment of the thirteenth-month pay provided by the
piece-rate basis in which case the employer shall be covered by this issuance insofar Decree and these rules shall be treated as money claims cases and shall be processed in
as such workers are concerned. accordance with the Rules Implementing the Labor Code of the Philippines and the Rules of the
National Labor Relations Commission.
Section 10. Prohibition against reduction or elimination of benefits Nothing herein shall be
construed to authorize any employer to eliminate, or diminish in any way, supplements, or other
employee benefits or favorable practice being enjoyed by the employee at the time of promulgation
of this issuance.
Section 11. Transitory Provision These rules and regulations shall take effect immediately and for
purposes of the 13-month pay for 1975, the same shall apply only to those who are employees as
of December 16, 1975.
Manila, Philippines, 22 December 1975.