LELINA to pay the complainant the amount of SR 13,200
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ASIAN CENTER FOR CAREER AND EMPLOYMENT
SYSTEM AND SERVICES, INC. (ACCESS), petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION and
IBNO MEDIALES, respondents. 1998 Oct 12
2nd Division G.R. No. 131656
In this petition for certiorari, petitioner ASIAN CENTER FOR
CAREER & EMPLOYMENT SYSTEM & SERVICES, INC.
(ACCESS) seeks to modify the monetary awards against it in
the Decision of respondent National Labor Relations
Commission (NLRC), dated October 14, 1997, a case for
illegal dismissal.
The records disclose that petitioner hired respondent IBNO
MEDIALES to work as a mason in Jeddah, Saudi Arabia, with
a monthly salary of 1,200 Saudi Riyals (SR). The term of his
contract was two (2) years, from February 28, 1995 until
February 28, 1997.
On May 26, 1996, respondent applied with petitioner for
vacation leave with pay which he earned after working for
more then a year. His application for leave was granted. While
en route to the Philippines, his co-workers informed him that
he has been dismissed from service. The information turned
out to be true.
On June 17, 1996, respondent filed a complaint with the labor
arbiter for illegal dismissal, non-payment of overtime pay,
refund of transportation fare, illegal deductions, non-payment
of 13th month pay and salary for the unexpired portion of his
employment contract.
On March 17, 1997, the labor arbiter found petitioner guilty of
illegal dismissal.1 [Decision, Rollo, pp. 11-20.] The
dispositive portion reads:
"IN VIEW OF THE FOREGOING, judgment is hereby
rendered declaring the illegality of complainant's dismissal
and ordering the respondent ACCESS and/or ABDULLAH
representing complainant's payment for the unexpired portion
of his contract and refund of the illegality deducted amount
less P5,000.00, the legally allowed placement fee.
"Respondent are further ordered to pay attorney's fees
equivalent to ten percent (10%) of the judgment award or the
amount of SR 1,320, within ten (10) days from receipt hereof.
"All other issues are dismissed for lack of merit.
"SO ORDERD." mphasis supplied)
It is noteworthy, however, that in the body of his decision, the
labor arbiter applied Section 10 R.A. 8042,2 [Entitled:
Migrant Workers and Overseas Filipinos Act of 1995.] the law
relative to the protection of Filipino overseas-workers, and
computed private respondent's salary for the unexpired portion
of his contract as follows: SR1,200 x 3 months = SR3,600.
On appeal by petitioner, the NLRC affirmed the factual
findings of the labor arbiter but modified the appealed
decision by deleting the order of refund of excessive
placement fee for lack of jurisdiction.3 [NLRC Decision,
dated August 18, 1997; Rollo, pp. 26-32.]
Petitioner moved for reconsideration with respect to the labor
arbiter's award of SR13,200 in the dispositive portion of the
decision, representing respondent's salary for the unexpired
portion of his contract. invoking Section 10 R.A. 8042.
Petitioner urged that its liability for respondent's salary is for
only three (3) months. Petitioner claimed that it should pay
only SR 3.600 (SR 1,200 x 3 months) for the unexpired
portion of respondent's employment and SR360 (10% of
SR3,600) for attorney's fees.4 [Motion for Reconsideration,
Rollo, pp. 33-35.]
The NLRC denied petitioner's motion. It ruled that R.A. 8042
does not apply as respondent's employment which started in
February 1995 occurred prior to its effectivity on July 15,
1995.5 [Decision, dated October 14, 1997; Rollo, pp. 36-38.]
Hence, this petition for certiorari.
In the case at bar, petitioner's illegal dismissal from service is
no longer disputed. Petitioner merely impugns the monetary
awards granted by the NLRC to private respondent. It submits
that although the unexpired portion of private respondent's
employment contract is eight (8) months,6 [Respondent was
dismissed from service in June 1996 (after his vacation leave),
while his employment contract was supposed to end on
February 28, 1997.] it is liable to pay respondent only three (3)
months of his basic salary, pursuant to Section 10 of R.A.
8042, or SR1,200 (monthly salary) multiplied by 3 months, for
a total of SR3,600. Petitioner claims that the NLRC erred in
ruling that as private respondent's employment started only on
February 28, 1995, R.A. 8042, which took effect on July 15,
1995, would not apply to his case. Petitioner argues that it is
not the date of employment but the date of dismissal which
should be considered in determining the applicability of R.A.
8042. Petitioner prays that the award in the NLRC Decision
dated October 14, 1997, be changed to SR3,600 instead of
13,200 and that the award of attorney's fees be deleted.
We affirm with modifications.
As a rule, jurisdiction is determined by the law at the time of
the commencement of the action.7 [Erectors, Inc. vs. NLRC,
256 629, 637, (1996), citing Philippine-Singapore Ports. Corp.
vs. NLRC, 218 SRA 77 (1993)] In the case at bar, private
respondent's cause of action did not accrue on the date of his
date of his employment or on February 28, 1995. His cause of
action arose only from the-time he was illegally dismissed by
1
petitioner from service in June 1996, after his vacation leave
expired. It is thus clear that R.A. 8042 which took effect a year
earlier in July 1995 applies to the case at bar.
Under Section 10 of R.A. 8042, a worker dismissed from
overseas employment without just, valid or authorized cause is
entitled to his salary for the unexpired portion of his
employment contract or for three (3) months for every year of
the unexpired term, whichever is less.
In the case at bar, the unexpired portion of private
respondent's employment contract is eight (8) months. Private
respondent should therefore be paid his basic salary
corresponding to three (3) months or a total of SR3,600.8
[Computed as follows: monthly salary of SR1,200 x 3
months.]
We note that this same computation was made by the labor
arbiter in the body of his decision.9 [Supra.] Despite said
computation in the body of the decision, however, the labor
arbiter awarded higher sum (SR13,200) in the dispositive
portion.
The general rule is that where there is a conflict between the
dispositive portion or the fallo and the body of the decision,
the fallo controls. This rule rests on the theory that the fallo is
the final order while the opinion in the body is merely a
statement ordering nothing. However, where the inevitable
conclusion from the body of the decision is so clear as to show
that there was a mistake in the dispositive portion, the body of
the decision will prevail.10 [Olac, vs. Court of Appeals, 213
SCRA 321, 328 (1992), citing Aguirre vs. Aguirre, 58 SCRA
461 (1974) and Magdalena Estate, Inc. vs. Calauag, 11 SCRA
333 (1964)]
We find that the labor arbiter's award of a higher amount in
the dispositive portion was clearly an error for there is nothing
in the text of the decision which support the award of said
higher amount. We reiterate that the correct award to private
respondent for the unexpired portion of his employment
contract is SR3,600.
We come now to the award of attorney's fees in favor of
private respondent. Article 2208 of the Civil Code allows
attorney's fees to be awarded when its claimant is compelled
to litigate with third persons or to incur expenses to protect his
interest by reason of an unjustified act or omission of the party
for whom it is sought. Moreover, attorney's fees are
recoverable when there is sufficient showing of bad faith.11
[Tumbiga vs. National Labor Relations Commission, 274
SCRA 338, 349 (1997)] The Labor Code,12 [Article 111,
Chapter III, Title II, Book Three.] on the other hand, fixes the
attorney's fees that may be recovered in an amount which
should not exceed 10% of the total amount of wages awarded.
In the case at bar, petitioner's bad faith in dismissing private
respondent is manifest. Respondent was made to believe that
he would be temporarily leaving Jeddah, Kingdom of Saudi
Arabia, for a 30-day vacation leave with pay. However, while
on board the plane back to the Philippines, his co-employees
told him that he has been dismissed from his job as he was
given only a one-way plane ticket by petitioner. True enough,
private respondent was not allowed to return to his jobsite in
Jeddah after his vacation leave. Thus, private respondent was
compelled to file an action for illegal dismissal with the labor
arbiter and hence entitled to an award of attorney's fees.
IN VIEW OF THE FOREGOING, the decision of the public
respondent National Labor Relations Commission, dated
October 14, 1997, is AFFIRMED with modifications:
petitioner is ordered to pay private respondent IBNO
MEDIALES the peso equivalent of the amounts of SR3,600
for the unexpired portion of his employment contract, and
SR360 for attorney's fees. No costs. SO ORDERED.
==
DOLE PHILIPPINES, INC., petitioner, vs. THE HON.
VICENTE LEOGARDO, JR. (in his capacity as Deputy
Minister of Labor), and ASSOCIATED LABOR UNION
(ALU), respondents.
1982 October 23 En Banc G.R. No. L-60018
Petition for certiorari to annul and set aside the order of
respondent Deputy Minister of Labor, dated October 26, 1981,
which affirmed the order of the Regional Director of the
Ministry of Labor, Davao City, requiring petitioner Dole
Philippines, Inc. to pay its employees the year-end
productivity bonus agreed upon in their Collective Bargaining
Agreement in addition to the 13th month pay prescribed under
Presidential Decree No. 851.
The salient facts are as follows:
On June 6, 1975, Standard Philippines Fruit Corporation or
STANFILCO, a company merged in 1981 with petitioner Dole
Philippines, Inc., entered into a collective bargaining
agreement with the Associated Labor Union, ALU for short,
effective for a period of three (3) years, beginning June 1,
1975 to May 31, 1978. The Collective Bargaining Agreement
provided, among others, the grant of a year-end productivity
bonus to all workers within the collective bargaining unit.
Section 1, Article XVII thereof reads as follows:
"ARTICLE XVII
YEAR-END PRODUCTIVITY BONUS
SECTION 1. The COMPANY agrees to grant each worker
within the bargaining unit a year-end productivity bonus
equivalent to ten (10) days of his basic daily wage if eighty
percent (80%) or more of the average total banana production
for the two (2) preceding calendar years together with the
current year's estimate is attained. This bonus is exclusive of
any bonus which the Company may be presently giving or
may give in the future to its workers pursuant to the
COMPANY's rights under Section 4, Article I of this
Agreement." Section 4, Article I of the agreement referred to
above provides:
"SECTION 4. All terms and conditions of employment of
workers not specifically excluded in Section I of this Article
are embodied in this Agreement, and the same shall govern the
relationship between the COMPANY and such workers. On
the other hand, all such benefits and/or privileges as are not
expressly provided for in this Agreement but which are now
being accorded, may in the future be accorded, or might have
previously been accorded to the workers, no matter how long
or how often, shall be deemed purely acts of grace and
dependent upon the sole judgment and discretion of the
COMPANY to grant, modify or withdraw, and shall not be
construed as establishing an obligation on the part of the
COMPANY."
The 80% production level stated in Article XVII of said CBA
having been attained in 1975, the workers were paid the
stipulated year-end productivity bonus on December 11, 1975.
Shortly thereafter, or on December 16, 1975, Presidential
Decree 851 took effect. Section 1 thereof required all
employers to pay their employees receiving a basic salary of
not more than P1,000.00 a month, regardless of the nature of
their employment, a 13th month pay not later than December
24 of every year. Section 2 of the law, however, exempted
2
from its coverage those employers already paying their
employees a 13th month pay or its equivalent.
On June 22, 1975, Secretary (now Minister) of Labor, Hon.
Blas F. Ople, issued the "Rules and Regulations Implementing
Presidential Decree 851." Section 3(c) thereof provides that
"the term 'its equivalent' . . . shall include Christmas bonus,
mid-year bonus, profit-sharing payments and other cash
bonuses amounting to not less than 1/12th of the basic salary
but shall not include cash and stock dividends, cost of living
allowance and other allowances regularly enjoyed by the
employee as well as non-monetary benefits . . . ."
The rules further added that "where an employer pays less
than 1/12th of the employee's basic salary, the employer shall
pay the difference."
To comply with the provision of P.D. 851 on the 13th month
pay, STANFILCO paid its workers on December 29, 1975 the
difference between 1/12th of their yearly basic salary and their
year-end productivity bonus. In doing so, STANFILCO relied
on Section 2 of the decree, as interpreted by the MOLE's
implementing rules. The same method of computation was
followed in the payment of the year-end productivity bonus
and the 13th month pay for the years 1976, 1977 and 1978.
Questioning this procedure, respondent ALU, joined by
STANFILCO technical employees as well as its rank-and-file
workers, filed on February 19, 1979 a complaint with the
South Cotabato District Labor Office at General Santos City,
docketed as LR-003-G.S.-79, ALU charging STANFILCO
with unfair labor practice and non-implementation of the CBA
provision on the year-end productivity bonus. The following
day, February 20, 1979, Oscar Rabino, Oscar Serenuela, Raul
Montejo and all the rank-and-file workers of STANFILCO
instituted another complaint before the same district labor
office, docketed as LR-010-G.S.-79, changing the company
with non-payment of the production incentive bonus for the
years 1975, 1976, 1977 and 1978.
The issues having been joined, the two (2) cases were
consolidated and the parties were required to file their position
papers.
On May 25, 1979, the Regional Director of MOLE, Davao
City, issued an order sustaining respondents' position that the
year-end productivity bonus, being a contractual commitment,
is separate and distinct from the 13th month pay and must,
therefore, be paid separately in full. The decretal portion of the
order reads:
"WHEREFORE, in view of all the foregoing, judgment is
hereby rendered:
"1) DISMISSING the complaint of the office and technical
employee;
"2) DISMISSING the claim of ALU for damages and
interest including its charges against respondent for unfair
labor practice;
"3) ABSOLVING respondent Thomas M. Leahy from any
personal liability;
"4) GRANTING the complaint of OSCAR RABINO and
his group as the complaint of all rank and file workers covered
by the CBA, and which will also include all rank and file
workers under the complaint filed by ALU;
"5) ORDERING respondent to pay the bonuses under the
CBA for the years 1975, 1976, 1977 and 1978."
On appeal, the respondent Deputy Minister of Labor affirming
the order.
In mandating the payment of the 13th month compensation to
employees earning less than P1,000.00, PD 851 obviously
seeks to remedy the sad plight of labor in a milieu of
worldwide inflation vis-a-vis a static wage level. However,
cognizant of the fact that the remedy sought to be enforced
had long been granted by some employers out of their own
volition and magnanimity, the law has expressly exempted
from its coverage those employers "who are already paying
their employees a 13th month pay or its equivalent." [1]
While the intention to exclude those certain employers from
the operation of the law is quite clear, the parties advance
conflicting views as to the meaning of the phrase "or its
equivalent."
Section 3(e) of the Rules and Regulations Implementing PD
No. 851, issued by the Minister of Labor on December 22,
1975 explicitly states that the term "or its equivalent . . . shall
include Christmas bonus, mid-year bonus, profit-sharing
payments and other cash bonuses amounting to not less than
one-twelfth of the basic salary. Where an employer pays less
than 1/12 of the employee's basic salary, the employer shall
pay the difference."
In "National Federation of Sugar Workers versus Ovejera, et
al.", [2] the interpretation given by the MOLE received the
imprimatur of this Court, thus:
"Having been issued by the agency charged with the
implementation of PD No. 851 as its contemporaneous
interpretation of the law, the quoted rule shall be accorded
great weight."
Furthermore, to resolve the growing number of controversies
stemming from the interpretation of Section 2, PD No. 851,
this Court in the above-cited case, speaking thru Justice Plana,
established definitely the legal equivalent of the 13th month
pay in this wise:
"The evident intention of the law, as revealed by the law itself,
was to grant an additional income in the form of a 13th month
pay to employees not already receiving the same. Otherwise
put, the intention was to grant some relief - not to all workers -
but only to the unfortunate ones not actually paid a 13th month
salary or what amounts to it, by whatever name called; but it
was not envisioned that a double burden would be imposed on
the employer already paying his employees a 13th month pay
or its equivalent - whether out of pure generosity or on the
basis of a binding agreement, and in the latter case, regardless
of the conditional character of the grant (such as making the
payment dependent on profit), so long as there is actual
payment. Otherwise, what was conceived to be a 13th month
salary would in effect become a 14th or possibly 13th month
pay."
Continuing, this Court said:
"Pragmatic considerations also weigh heavily in favor of
crediting both voluntary and contractual bonuses for the
purpose of determining liability for the 13th month pay . . . ."
Tested against this norm, it becomes clear that the year-end
productivity bonus granted by petitioner to private respondents
pursuant to their CBA is, in legal contemplation, an integral
part of their 13th month pay, notwithstanding its conditional
nature. When, therefore, petitioner, in order to comply with
the mandate of PD No. 851, credited the year-end productivity
bonus as part of the 13th month pay and adopted the procedure
of paying only the difference between said bonus and 1/12th
of the worker's yearly basic salary, it acted well within the
letter and spirit of the law and its implementing rules. For in
the event that "an employer pays less than one-twelfth of the
employees' basic salary, all that said employer is required to
do under the law is to pay the difference." [3]
3
To hold otherwise would be to impose an unreasonable and
undue burden upon those employers who had demonstrated
their sensitivity and concern for the welfare of their
employees. A contrary stance would indeed create an absurd
situation whereby an employer who started giving his
employees the 13th month pay only because of the
unmistakable force of the law would be in a far better position
than another who, by his own magnanimity or by mutual
agreement, had long been extending to his employees the
benefits contemplated under PD No. 851, by whatever
nomenclature these benefits have come to be known. Indeed,
PD No. 851, a legislation benevolent in its purpose, never
intended to bring about such oppressive situation.
WHEREFORE, this petition is hereby granted and,
accordingly, the order of respondent Deputy Minister of
Labor, dated October 26, 1981, is set aside. No costs.
SO ORDERED.
==
G.R. No. 119930. March 12, 1998]
INSULAR LIFE ASSURANCE CO., LTD., petitioner,
vs. NATIONAL LABOR RELATIONS
COMMISSION (Fourth Division, Cebu City),
LABOR ARBITER NICASIO P. ANINON and
PANTALEON DE LOS REYES, respondents.
On 17 June 1994 respondent Labor Arbiter
dismissed for lack of jurisdiction NLRC RAB-VII Case
No. 03-0309-94 filed by private respondent Pantaleon de
los Reyes against petitioner Insular Life Assurance Co.,
Ltd. (INSULAR LIFE), for illegal dismissal and
nonpayment of salaries and back wages after findings
no employer-employee relationship between De los
Reyes and petitioner INSULAR LIFE. [1] On appeal by
private respondent, the order of dismissal was reversed
by the National Labor Relations Commission (NLRC)
which ruled that respondent De los Reyes was an
employee of petitioner.[2] Petitioner’s motion for
reconsideration having been denied, the NLRC
remanded the case to the Labor Arbiter for hearing on
the merits.
Seeking relief through this special civil action
for certiorari with prayer for a restraining order and/or
preliminary injunction, petitioner now comes to us
praying for annulment of the decision of respondent
NLRC dated 3 March 1995 and its Order dated 6 April
1995 denying the motion for reconsideration of the
decision. It faults NLRC for acting without jurisdiction
and/or with grave abuse of discretion when, contrary to
established facts and pertinent law and jurisprudence, it
reversed the decision of the Labor Arbiter and held
instead that the complaint was properly filed as an
employer-employee relationship existed between
petitioner and private respondent.
Petitioner reprises the stand it assumed below that
it never had any employer-employee relationship with
private respondent, this being an express agreement
between them in the agency contracts, particularly
reinforced by the stipulation therein de los Reyes was
allowed discretion to devise ways and means to fulfill his
obligations as agent and would be paid commission fees
based on his actual output. It further insists that the
nature of this work status as described in the contracts
had already been squarely resolved by the Court in the
earlier case of Insular Life Assurance Co., Ltd. v. NLRC
and Basiao [3]where the complainant therein, Melecio
Basiao, was similarly situated as respondent De los
Reyes in that he was appointed first as an agent and
then promoted as agency manager, and the contracts
under which he was appointed contained terms and
conditions Identical to those of De los Reyes. Petitioner
concludes that since Basiao was declared by the Court
to be an independent contractor and not an employee of
petitioner, there should be no reason why the status of
De los Reyes herein vis-à-vis petitioner should not be
similarly determined.
We reject the submissions of petitioner and hold
that respondent NLRC acted appropriately within the
bounds of the law. The records of the case are replete
with telltale indicators of an existing employer-employee
relationship between the two parties despite written
contractual disavowals.
These facts are undisputed: on 21 August 1992
petitioner entered into an agency contract with
respondent Pantaleon de los Reyes [4] authorizing the
latter to solicit within the Philippines applications for life
insurance and annuities for which he would be paid
compensation in the form of commissions. The contract
was prepared by petitioner in its entirety and De los
Reyes merely signed his conformity thereto. It contained
the stipulation that no employer-employee relationship
shall be created between the parties and that the agent
shall be free to exercise his own judgment as to time,
place and means of soliciting insurance. De los Reyes
however was prohibited by petitioner from working for
any other life insurance company, and violation of this
stipulation was sufficient ground for termination of the
contract. Aside from soliciting insurance for the
petitioner, private respondent was required to submit to
the former all completed applications for insurance within
ninety (90) consecutive days, deliver policies, receive
and collect initial premiums and balances of first year
premiums, renewal premiums, deposits on applications
and payments on policy loans. Private respondent was
also bound to turn over to the company immediately any
and all sums of money collected by him. In a written
communication by petitioner to respondent De los
Reyes, the latter was urged to register with the Social
Security System as a self-employed individual as
provided under PD No. 1636.[5]
On 1 March 1993 petitioner and private respondent
entered into another contract[6]where the latter was
appointed as Acting Unit Manager under its office – the
Cebu DSO V (157). As such, the duties and
responsibilities of De los Reyes included the recruitment,
training, organization and development within his
designated territory of a sufficient number of qualified,
competent and trustworthy underwriters, and to
supervise and coordinate the sales efforts of the
underwriters in the active solicitation of new business
and in the furtherance of the agency’s assigned goals. It
was similarly provIded in the management contract that
the relation of the acting unit manager and/or the agents
of his unit to the company shall be that of independent
contractor. If the appointment was terminated for any
reason other than for cause, the acting unit manager
would be reverted to agent status and assigned to any
unit. As in the previous agency contract, De los Reyes
together with his unit force was granted freedom to
exercise judgment as to time, place and means of
soliciting insurance. Aside from being granted override
commissions, the acting unit manager was given
production bonus, development allowance and a unit
development financing scheme euphemistically termed
“financial assistance” consisting of payment to him of a
free portion of P300.00 per month and a valIdate portion
of P1,200.00. While the latter amount was deemed as an
advance against expected commissions, the former was
not and would be freely given to the unit manager by the
company only upon fulfillment by him of certain
manpower and premium quota requirements. The
agents and underwriters recruited and trained by the
4
acting unit manager would be attached to the unit but
petitioner reserved the right to determine if such
assignment would be made or, for any reason, to
reassign them elsewhere.
Aside from soliciting insurance, De los Reyes was
also expressly obliged to participate in the company’s
conservation program, i.e., preservation and
maintenance of existing insurance policies, and to
accept moneys duly receipted on agent’s receipts
provided the same were turned over to the company. As
long as he was unit manager in an acting capacity, De
los Reyes was prohibited from working for other life
insurance companies or with the government. He could
not also accept a managerial or supervisory position in
any firm doing business in the Philippines without the
written consent of petitioner.
Private respondent worked concurrently as agent
and Acting Unit Manager until he was notified by
petitioner on 18 November 1993 that his services were
terminated effective 18 December 1993. On 7 March
1994 he filed a complaint before the Labor Arbiter on the
ground that he was illegally dismissed and that he was
not paid his salaries and separation pay.
Petitioner filed a motion to dismiss the complaint of
De los Reyes for lack of jurisdiction, citing the absence
of employer-employee relationship. it reasoned out that
based on the criteria for determining the existence of
such relationship or the so-called “four-fold test,” i.e., (a)
selection and engagement of employee, (b) payment of
wages, (c) power of dismissal, and, (d) power of control,
De los Reyes was not an employee but an independent
contractor.
On 17 June 1994 the motion of petitioner was
granted by the Labor Arbiter and the case was
dismissed on the ground that the element of control was
not sufficiently established since the rules and
guidelines set by petitioner in its agency agreement with
respondent De los Reyes were formulated only to
achieve the desired result without dictating the means or
methods of attaining it.
Respondent NLRC however appreciated the
evidence from a different perspective. It determined that
respondent De los Reyes was under the effective control
of petitioner in the critical and most important aspects of
his work as Unit Manager. This conclusion was derived
from the provisions in the contract which appointed
private respondent as Acting Unit Manager, to wit: (a) De
los Reyes was to serve exclusively the company,
therefore, he was not an independent contractor; (b) he
was required to meet certain manpower and
production quota; and, (c) petitioner controlled the
assignment to and removal of soliciting agents from his
unit.
The NLRC also took into account other
circumstances showing that petitioner exercised
employer’s prerogatives over De los Reyes, e.g., (a)
limiting the work of respondent De los Reyes to selling a
life insurance policy known as “Salary Deduction
Insurance” only to members of the Philippine National
Police, public and private school teachers and other
employees of private companies; (b) assigning private
respondent to a particular place and table where he
worked whenever he has not in the field; (c) paying
private respondent during the period of twelve (12)
months of his appointment as Acting Unit Manager the
amount of P1,500.00 as Unit Development Financing of
which 20% formed his salary and the rest, i.e., 80%, as
advance of his expected commissions; and (d) promising
that upon completion of certain requirements, he would
be promoted to Unit Manager with the right of petitioner
to revert him to agent status when warranted.
Parenthetically, both petitioner and respondent
NLRC treated the agency contract and the management
contract entered into between petitioner and De los
Reyes as contracts of agency. We however hold
otherwise. Unquestionably there exist major distinctions
between the two agreements. While the first has the
earmarks of an agency contract, the second is far
removed from the concept of agency in that provided
therein are conditionalities that indicate an employer-
employee relationship. the NLRC therefore was correct
in finding that private respondent was an employee of
petitioner, but this holds true only insofar as the
management contract is concerned. In view thereof, he
Labor Arbiter has jurisdiction over the case.
It is axiomatic that the existence of an employer-
employee relationship cannot be negated by expressly
repudiating it in the management contract and providing
therein that the “employee” is an independent contractor
when the terms of agreement clearly show otherwise.
For, the employment status of a person is defined and
prescribed by law and not by what the parties say it
should be.[7] In determining the status of the
management contract, the “four-fold test” on
employment earlier mentioned has to be applied.
Petitioner contends that De los Reyes was never
required to go through the pre-employment procedures
and that the probationary employment status was
reserved only to employees of petitioner. On this score,
it insists that the first requirement of selection and
engagement of the employee was not met.
A look at the provisions of the contract shows that
private respondent was appointed as Acting Unit
Manager only upon recommendation of the District
Manager.[8] This indicates that private respondent was
hired by petitioner because of the favorable
endorsement of its duly authorized officer. But, this
approbation could only have been based on the
performance of De los Reyes with petitioner was nothing
more than a trial or probationary period for his eventual
appointment as Acting Unit Manager of petitioner. Then,
again, the very designation of the appointment of private
respondent as “acting” unit manager obviously implies a
temporary employment status which may be made
permanent only upon compliance with company
standards such as those enumerated under Sec. 6 of the
management contract.[9]
On the matter of payment of wages, petitioner
points out that respondent was compensated strictly on
commission basis, the amount of which was totally
dependent on his total output. But, the manager’s
contract speaks differently. Thus –
4. Performance Requirements.- To maintain
your appointment as Acting Unit Manager you must
meet the following manpower and production
requirements:
Quarter Active Calendar Year
Production Agents Cumulative FYP
Production
1ST 2 P125,000
2ND 3 250,000
3RD 4 375,000
4TH 5 500,000
5
 5.4 Unit Development Financing (UDF). – As
an Acting Unit Manager you shall be given during
the first 12 months of your appointment a financial
assistance which is composed of two parts:
5.4.1 Free Portion amounting
to P300 per month, subject to your meeting
prescribed minimum performance
requirement on manpower and premium
production. The free portion is not payable by
you.
5.4.2 Validate Portion
amounting to P1,200 per month, also subject
to meeting the same prescribed minimum
performance requirements on manpower and
premium production. The valIdated portion is
an advance against expected compensation
during the UDF period and thereafter as may
be necessary.
The above provisions unquestionably demonstrate
that the performance requirement imposed on De los
Reyes was applicable quarterly while his entitlement to
the free portion (P300) and the validated portion
(P1,200) was monthly starting on the first month of the
twelve (12) months of the appointment. Thus, it has to
be admitted that even before the end of the first quarter
and prior to the so-called quarterly performance
evaluation, private respondent was already entitled to be
paid both the free and validated portions of the UDF
every month because his production performance could
not be determined until after the lapse of the quarter
involved. This indicates quite clearly that the unit
manager’s quarterly performance had no bearing at all
on his entitlement at least to the free portion of the UDF
which for all intents and purposes comprised the salary
regularly paid to him by petitioner. Thus it cannot be
validly claimed that the financial assistance consisting of
the free portion of the UDF was purely dependent on the
premium production of the agent. Be that as it may, it is
worth considering that the payment of compensation by
way of commission does not militate against the
conclusion that private respondent was an employee of
petitioner. Under Art. 97 of the Labor Code, “wage” shall
mean “however designated, capable of being expressed
in terms of money, whether fixed or ascertained on a
time, task, price or commission basis x x x x” [10]
As to the matter involving the power of dismissal
and control by the employer, the latter of which is the
most important of the test, petitioner asserts that its
termination of De los Reyes was but an exercise of its
inherent right as principal under the contracts and that
the rules and guIdelines it set forth in the contract
cannot, by any stretch of imagination, be deemed as an
exercise of control over the private respondent as these
were merely directives that fixed the desired result
without dictating the means or method to be employed in
attaining it. The following factual findings of the
NLRC[11] however contradict such claims:
A perusal of the appointment of complainant as Acting
Unit Manager reveals that:
1. Complainant was to “exclusively” serve
respondent company. Thus it is provIded: x x x
7..7 Other causes of Termination: This
Appointment may likewise be terminated for any of
the following causes: x x x 7..7..2. Your entering
the service of the government or another life
insurance company; 7..7..3. Your accepting a
managerial or supervisory position in any firm
doing business in the Philippines without the
written consent of the Company; x x x
2. Complainant was required to meet
certain manpower and production quotas.
3. Respondent (herein petitioner) controlled
the assignment and removal of soliciting agents to
and from complainant’s unit, thus: x x x 7..2.
Assignment of Agents: Agents recruited and
trained by you shall be attached to your unit
unless for reasons of Company policy, no such
assignment should be made. The Company
retains the exclusive right to assign new soliciting
agents appointed and assigned to the saId unit x x
xx
It would not be amiss to state the respondent’s duty
to collect the company’s premiums using company
receipts under Sec. 7.4 of the management contract is
further evIdence of petitioner’s control over respondent,
thus:
xxxx
7.4 Acceptance and Remittance of Premiums. – x x x x
the Company hereby authorizes you to accept and
receive sums of money in payment of premiums, loans,
deposits on applications, with or without interest, due
from policy holders and applicants for insurance, and the
like, specially from policyholders of business solicited
and sold by the agents attached to your unit provIded
however, that all such payments shall be duly receipted
by you on the corresponding Company’s “Agents’
Receipt” to be provIded you for this purpose and to be
covered by such rules and accounting regulations the
Company may issue from time to time on the matter.
Payments received by you shall be turned over to the
Company’s designated District or Service Office clerk or
directly to the Home Office not later than the next
working day from receipt thereof x x x x
Petitioner would have us apply our ruling in Insular
Life Assurance Co., Ltd. v. NLRC and Basiao [12] to the
instant case under the doctrine of stare decisis,
postulating that both cases involve parties similarly
situated and facts which are almost Identical.
But we are not convinced that the cited case is on
all fours with the case at bar. In Basiao, the agent was
appointed Agency Manager under an Agency Manager
Contract. To implement his end of the agreement,
Melecio Basiao organized an agency office to which he
gave the name M. Basiao and Associates. The Agency
Manager Contract practically contained the same terms
and conditions as the Agency Contract earlier entered
into, and the Court observed that “drawn from the terms
of the contract they had entered into, (which) either
expressly or by necessary implication, Basiao (was)
made the master of his own time and selling methods,
left to his own judgment the time, place and means of
soliciting insurance, set no accomplishment quotas and
compensated him on the bases of results obtained. He
was not bound to observe any schedule of working
hours or report to any regular station; he could seek and
work on his prospects anywhere and anytime he chose
to and was free to adopt the selling methods he deemed
most effective.” Upon these premises, Basiao was
considered as agent – an independent contractor – of
petitioner INSULAR LIFE.
Unlike Basiao, herein respondent De los Reyes was
appointed Acting Unit Manager, not agency manager.
6
There is not evidence that to implement his obligations
under the management contract, De los Reyes had
organized an office. Petitioner in fact has admitted that it
provIded De los Reyes a place and a table at its office
where he reported for and worked whenever he was not
out in the field. Placed under petitioner’s Cebu District
Service Office, the unit was given a name by petitioner –
De los Reyes and Associates – and assigned Code No.
11753 and Recruitment No. 109398. Under the
managership contract, De los Reyes was obliged to work
exclusively for petitioner in life insurance solicitation and
was imposed premium production quotas. Of course, the
acting unit manager could not underwrite other lines of
insurance because his Permanent Certificate of
Authority was for life insurance only and for no other. He
was proscribed from accepting a managerial or
supervisory position in any other office including the
government without the written consent of petitioner. De
los Reyes could only be promoted to permanent unit
manager if he met certain requirements and his
promotion was recommended by the petitioner’s District
Manager and Regional Manager and approved by its
Division Manager. As Acting Unit Manager, De los
Reyes performed functions beyond mere solicitation of
insurance business for petitioner. As found by the NLRC,
he exercised administrative functions which were
necessary and beneficial to the business of INSULAR
LIFE.
In Great Pacific Life Insurance Company v.
NLRC[13] which is closer in application that Basiao to this
present controversy, we found that “the relationships of
the Ruiz brothers and Grepalife were those of employer-
employee. First, their work at the time of their dismissal
as zone supervisor and district manager was necessary
and desirable to the usual business of the insurance
company. They were entrusted with supervisory, sales
and other functions to guard Grepalife’s business
interests and to bring in more clients to the company,
and even with administrative functions to ensure that all
collections, reports and data are faithfully brought to the
company x x x x A cursory reading of their respective
functions as enumerated in their contracts reveals that
the company practically dictates the manner by which
their jobs are to be carried out x x x x” We need
elaborate no further.
Exclusivity of service, control of assignments and
removal of agents under private respondent’s unit,
collection of premiums, furnishing of company facilities
and materials as well as capital described as Unit
Development Fund are but hallmarks of the
management system in which herein private respondent
worked. This obtaining, there is no escaping the
conclusion that private respondent Pantaleon de los
Reyes was an employee of herein petitioner.
WHEREFORE, the petition of Insular Life
Assurance Company, Ltd., is DENIED and the Decision
of the National Labor Relations Commission dated 3
March 1995 and its Order of 6 April 1996 sustaining it
are AFFIRMED. Let this case be REMANDED to the
Labor Arbiter a quo who is directed to hear and dispose
of this case with deliberate dispatch in light of the views
expressed herein.
SO ORDERED.
==
G.R. No. 73887 December 21, 1989
GREAT PACIFIC LIFE ASSURANCE
CORPORATION, petitioner,
vs.
HONORATO JUDICO and NATIONAL LABOR
RELATIONS COMMISSION, respondents.
Before us is a Petition for certiorari to review the
decision of the National Labor Relations Commission
(NLRC, for brevity) dated September 9, 1985 reversing
the decision of Labor Arbiter Vito J. Minoria, dated June
9, 1983, by 1) ordering petitioner insurance company,
Great Pacific Life Assurance Corporation (Grepalife, for
brevity) to recognize private respondent Honorato
Judico, as its regular employee as defined under Art.
281 of the Labor Code and 2) remanding the case to its
origin for the determination of private respondent
Judico's money claims.
The records of the case show that Honorato Judico filed
a complaint for illegal dismissal against Grepalife, a duly
organized insurance firm, before the NLRC Regional
Arbitration Branch No. VII, Cebu City on August 27,
1982. Said complaint prayed for award of money claims
consisting of separation pay, unpaid salary and 13th
month pay, refund of cash bond, moral and exemplary
damages and attorney's fees.
Both parties appealed to the NLRC when a decision was
rendered by the Labor Arbiter dismissing the complaint
on the ground that the employer-employee relations did
not exist between the parties but ordered Grepalife to
pay complainant the sum of Pl,000.00 by reason of
Christian Charity.
On appeal, said decision was reversed by the NLRC
ruling that complainant is a regular employee as defined
under Art. 281 of the Labor Code and declaring the
appeal of Grepalife questioning the legality of the
payment of Pl,000.00 to complainant moot and
academic. Nevertheless, for the purpose of revoking the
supersedeas bond of said company it ruled that the
Labor Arbiter erred in awarding Pl,000.00 to complainant
in the absence of any legal or factual basis to support its
payment.
Petitioner company moved to reconsider, which was
denied, hence this petition for review raising four legal
issues to wit:
I. Whether the relationship between
insurance agents and their principal, the
insurance company, is that of agent and
principal to be governed by the
Insurance Code and the Civil Code
provisions on agency, or one of
employer-employee, to be governed by
the Labor Code.
II. Whether insurance agents are
entitled to the employee benefits
prescribed by the Labor Code.
III. Whether the public respondent
NLRC has jurisdiction to take
cognizance of a controversy between
insurance agent and the insurance
company, arising from their agency
relations.
IV. Whether the public respondent acted
correctly in setting aside the decision of
Labor Arbiter Vito J. Minoria and in
ordering the case remanded to said
7
 Labor Arbiter for further proceedings.(p. That private respondent Judico was an agent of the
159, Rollo) petitioner is unquestionable. But, as We have held in
Investment Planning Corp. vs. SSS, 21 SCRA 294, an
The crux of these issues boil down to the question of insurance company may have two classes of agents
whether or not employer-employee relationship existed who sell its insurance policies: (1) salaried employees
between petitioner and private respondent. who keep definite hours and work under the control and
supervision of the company; and (2) registered
representatives who work on commission basis. The
Petitioner admits that on June 9, 1976, private
agents who belong to the second category are not
respondent Judico entered into an agreement of agency
required to report for work at anytime, they do not have
with petitioner Grepalife to become a debit agent
to devote their time exclusively to or work solely for the
attached to the industrial life agency in Cebu City.
company since the time and the effort they spend in their
Petitioner defines a debit agent as "an insurance agent
work depend entirely upon their own will and initiative;
selling/servicing industrial life plans and policy holders.
they are not required to account for their time nor submit
Industrial life plans are those whose premiums are
a report of their activities; they shoulder their own selling
payable either daily, weekly or monthly and which are
expenses as well as transportation; and they are paid
collectible by the debit agents at the home or any place
their commission based on a certain percentage of their
designated by the policy holder" (p. 156, Rollo). Such
sales. One salient point in the determination of
admission is in line with the findings of public respondent
employer-employee relationship which cannot be easily
that as such debit agent, private respondent Judico had
ignored is the fact that the compensation that these
definite work assignments including but not limited to
agents on commission received is not paid by the
collection of premiums from policy holders and selling
insurance company but by the investor (or the person
insurance to prospective clients. Public respondent
insured). After determining the commission earned by an
NLRC also found out that complainant was initially paid
agent on his sales the agent directly deducts it from the
P 200. 00 as allowance for thirteen (13) weeks
amount he received from the investor or the person
regardless of production and later a certain percentage
insured and turns over to the insurance company the
denominated as sales reserve of his total collections but
amount invested after such deduction is made. The test
not lesser than P 200.00. Sometime in September 1981,
therefore is whether the "employer" controls or has
complainant was promoted to the position of Zone
reserved the right to control the "employee" not only as
Supervisor and was given additional (supervisor's)
to the result of the work to be done but also as to the
allowance fixed at P110.00 per week. During the third
means and methods by which the same is to be
week of November 1981, he was reverted to his former
accomplished.
position as debit agent but, for unknown reasons, not
paid so-called weekly sales reserve of at least P 200.00.
Finally on June 28, 1982, complainant was dismissed by Applying the aforementioned test to the case at bar, We
way of termination of his agency contract. can readily see that the element of control by the
petitioner on Judico was very much present. The record
shows that petitioner Judico received a definite minimum
Petitioner assails the findings of the NLRC that private
amount per week as his wage known as "sales reserve"
respondent is an employee of the former. Petitioner
wherein the failure to maintain the same would bring him
argues that Judico's compensation was not based on
back to a beginner's employment with a fixed weekly
any fixed number of hours he was required to devote to
wage of P 200.00 for thirteen weeks regardless of
the service of petitioner company but rather it was the
production. He was assigned a definite place in the
production or result of his efforts or his work that was
office to work on when he is not in the field; and in
being compensated and that the so-called allowance for
addition to his canvassing work he was burdened with
the first thirteen weeks that Judico worked as debit
the job of collection. In both cases he was required to
agent, cannot be construed as salary but as a subsidy or
make regular report to the company regarding these
a way of assistance for transportation and meal
duties, and for which an anemic performance would
expenses of a new debit agent during the initial period of
mean a dismissal. Conversely faithful and productive
his training which was fixed for thirteen (13) weeks.
service earned him a promotion to Zone Supervisor with
Stated otherwise, petitioner contends that Judico's
additional supervisor's allowance, a definite amount of
compensation, in the form of commissions and bonuses,
P110.00 aside from the regular P 200.00 weekly
was based on actual production, (insurance plans sold
"allowance". Furthermore, his contract of services with
and premium collections).
petitioner is not for a piece of work nor for a definite
period.
Said contentions of petitioner are strongly rejected by
private respondent. He maintains that he received a
On the other hand, an ordinary commission insurance
definite amount as his Wage known as "sales reserve"
agent works at his own volition or at his own leisure
the failure to maintain the same would bring him back to
without fear of dismissal from the company and short of
a beginner's employment with a fixed weekly wage of P
committing acts detrimental to the business interest of
200.00 regardless of production. He was assigned a
the company or against the latter, whether he produces
definite place in the office to work on when he is not in
or not is of no moment as his salary is based on his
the field; and in addition to canvassing and making
production, his anemic performance or even dead result
regular reports, he was burdened with the job of
does not become a ground for dismissal. Whereas, in
collection and to make regular weekly report thereto for
private respondent's case, the undisputed facts show
which an anemic performance would mean dismissal.
that he was controlled by petitioner insurance company
He earned out of his faithful and productive service, a
not only as to the kind of work; the amount of results, the
promotion to Zone Supervisor with additional
kind of performance but also the power of dismissal.
supervisor's allowance, (a definite or fixed amount of
Undoubtedly, private respondent, by nature of his
P110.00) that he was dismissed primarily because of
position and work, had been a regular employee of
anemic performance and not because of the termination
petitioner and is therefore entitled to the protection of the
of the contract of agency substantiate the fact that he
law and could not just be terminated without valid and
was indeed an employee of the petitioner and not an
justifiable cause.
insurance agent in the ordinary meaning of the term.

8
Premises considered, the appealed decision is hereby
AFFIRMED in toto.
SO ORDERED.
==
G.R. No. 112574. October 8, 1998]
MERCIDAR FISHING CORPORATION represented by
its President DOMINGO B.
NAVAL, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and FERMIN
AGAO, JR., respondents.
This is a petition for certiorari to set aside the
decision, dated August 30, 1993, of the National Labor
Relations Commission dismissing the appeal of
petitioner Mercidar Fishing Corporation from the decision
of the Labor Arbiter in NLRC NCR Case No. 09-05084-
90, as well as the resolution dated October 25, 1993, of
the NLRC denying reconsideration.
This case originated from a complaint filed on
September 20, 1990 by private respondent Fermin
Agao, Jr. against petitioner for illegal dismissal, violation
of P.D. No. 851, and non-payment of five days service
incentive leave for 1990. Private respondent had been
employed as a “bodegero” or ship’s quartermaster on
February 12, 1988. He complained that he had been
constructively dismissed by petitioner when the latter
refused him assignments aboard its boats after he had
reported to work on May 28, 1990.[1]
Private respondent alleged that he had been sick
and thus allowed to go on leave without pay for one
month from April 28, 1990 but that when he reported to
work at the end of such period with a health clearance,
he was told to come back another time as he could not
be reinstated immediately. Thereafter, petitioner refused
to give him work. For this reason, private respondent
asked for a certificate of employment from petitioner on
September 6, 1990. However, when he came back for
the certificate on September 10, petitioner refused to
issue the certificate unless he submitted his
resignation. Since private respondent refused to submit
such letter unless he was given separation pay,
petitioner prevented him from entering the premises. [2]
Petitioner, on the other hand, alleged that it was
private respondent who actually abandoned his work. It
claimed that the latter failed to report for work after his
leave had expired and was, in fact, absent without leave
for three months until August 28, 1998. Petitioner further
claims that, nonetheless, it assigned private respondent
to another vessel, but the latter was left behind on
September 1, 1990. Thereafter, private respondent
asked for a certificate of employment on September 6 on
the pretext that he was applying to another fishing
company. On September 10, 1990, he refused to get
the certificate and resign unless he was given separation
pay.[3]
On February 18, 1992, Labor Arbiter Arthur L.
Amansec rendered a decision disposing of the case as
follows:
ACCORDINGLY, respondents are ordered to
reinstate complainant with backwages, pay
him his 13th month pay and incentive leave
pay for 1990.
All other claims are dismissed.
SO ORDERED.
Petitioner appealed to the NLRC which, on August
30, 1993, dismissed the appeal for lack of merit. The
NLRC dismissed petitioner’s claim that it cannot be held
liable for service incentive leave pay by fishermen in its
employ as the latter supposedly are “field personnel” and
thus not entitled to such pay under the Labor Code. [4]
The NLRC likewise denied petitioner’s motion for
reconsideration of its decision in its order dated October
25, 1993.
Hence, this petition. Petitioner contends:
I
THE RESPONDENT COMMISSION PALPABLY
ERRED IN RULING AND SUSTAINING THE VIEW
THAT FISHING CREW MEMBERS, LIKE FERMIN
AGAO, JR., CANNOT BE CLASSIFIED AS FIELD
PERSONNEL UNDER ARTICLE 82 OF THE LABOR
CODE.
II
THE RESPONDENT COMMISSION ACTED WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OF JURISDICTION WHEN IT UPHELD THE
FINDINGS OF THE LABOR ARBITER THAT HEREIN
PETITIONER HAD CONSTRUCTIVELY DISMISSED
FERMIN AGAO, JR., FROM EMPLOYMENT.
The petition has no merit.
Art. 82 of the Labor Code provides:
ART. 82. Coverage. - The provisions of this
Title [Working Conditions and Rest Periods]
shall apply to employees in all establishments
and undertakings whether for profit or not, but
not to government employees, field personnel,
members of the family of the employer who
are dependent on him for support, domestic
helpers, persons in the personal service of
another, and workers who are paid by results
as determined by the Secretary of Labor in
appropriate regulations.
.... ... ...
“Field personnel” shall refer to non-agricultural
employees who regularly perform their duties
away from the principal place of business or
branch office of the employer and whose
actual hours of work in the field cannot be
determined with reasonable certainty.
Petitioner argues essentially that since the work of
private respondent is performed away from its principal
place of business, it has no way of verifying his actual
hours of work on the vessel. It contends that private
respondent and other fishermen in its employ should be
classified as “field personnel” who have no statutory right
to service incentive leave pay.
In the case of Union of Filipro Employees (UFE) v.
Vicar,[5] this Court explained the meaning of the phrase
“whose actual hours of work in the field cannot be
determined with reasonable certainty” in Art. 82 of the
Labor Code, as follows:
Moreover, the requirement that “actual hours
of work in the field cannot be determined with
reasonable certainty” must be read in
conjunction with Rule IV, Book III of the
Implementing Rules which provides:
Rule IV Holidays with Pay
9
 Section 1. Coverage - This rule shall
apply to all employees except:
.... ... ...
(e) Field personnel and other
employees whose
time and performance is
unsupervised by the employer xxx
(Italics supplied)
While contending that such rule added
another element not found in the law (Rollo, p.
13), the petitioner nevertheless attempted to
show that its affected members are not
covered by the abovementioned rule. The
petitioner asserts that the company’s sales
personnel are strictly supervised as shown by
the SOD (Supervisor of the Day) schedule and
the company circular dated March 15, 1984
(Annexes 2 and 3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the
Court finds that the aforementioned rule did
not add another element to the Labor Code
definition of field personnel. The clause
“whose time and performance is unsupervised
by the employer” did not amplify but merely
interpreted and expounded the clause “whose
actual hours of work in the field cannot be
determined with reasonable certainty.” The
former clause is still within the scope and
purview of Article 82 which defines field
personnel. Hence, in deciding whether or not
an employee’s actual working hours in the
field can be determined with reasonable
certainty, query must be made as to whether
or not such employee’s time and performance
is constantly supervised by the employer.[6]
Accordingly, it was held in the aforementioned case
that salesmen of Nestle Philippines, Inc. were field
personnel:
It is undisputed that these sales personnel
start their field work at 8:00 a.m. after having
reported to the office and come back to the
office at 4:00 p.m. or 4:30 p.m. if they are
Makati-based.
The petitioner maintains that the period
between 8:00 a.m. to 4:00 or 4:30 p.m.
comprises the sales personnel’s working
hours which can be determined with
reasonable certainty.
The Court does not agree. The law requires
that the actual hours of work in the field be
reasonably ascertained. The company has no
way of determining whether or not these sales
personnel, even if they report to the office
before 8:00 a.m. prior to field work and come
back at 4:30 p.m., really spend the hours in
between in actual field work.[7]
In contrast, in the case at bar, during the entire
course of their fishing voyage, fishermen employed by
petitioner have no choice but to remain on board its
vessel. Although they perform non-agricultural work
away from petitioner’s business offices, the fact remains
that throughout the duration of their work they are under
the effective control and supervision of petitioner through
the vessel’s patron or master as the NLRC correctly
held.[8]
Neither did petitioner gravely abuse its discretion in
ruling that private respondent had constructively been
dismissed by petitioner. Such factual finding of both the
NLRC and the Labor Arbiter is based not only on the
pleadings of the parties but also on a medical certificate
of fitness which, contrary to petitioner’s claim, private
respondent presented when he reported to work on May
28, 1990.[9] As the NLRC held:
Anent grounds (a) and (b) of the appeal, the
respondent, in a nutshell, would like us to
believe that the Arbiter abused his discretion
(or seriously erred in his findings of facts) in
giving credence to the factual version of the
complainant. But it is settled that “(W)hen
confronted with conflicting versions of factual
matters,” the Labor Arbiter has the “discretion
to determine which party deserves credence
on the basis of evidence received.” [Gelmart
Industries (Phils.), Inc. vs. Leogardo, 155
SCRA 403, 409, L-70544, November 5,
1987]. And besides, it is settled in this
jurisdiction that “to constitute abandonment of
position, there must be concurrence of the
intention to abandon and some overt acts from
which it may be inferred that the employee
concerned has no more interest in working”
(Dagupan Bus Co., Inc. vs. NLRC, 191 SCRA
328), and that the filing of the complaint which
asked for reinstatement plus backwages
(Record, p. 20) is inconsistent with
respondents’ defense of abandonment (Hua
Bee Shirt Factory vs. NLRC, 188 SCRA 586).
[10]
It is trite to say that the factual findings of quasi-
judicial bodies are generally binding as long as they are
supported substantially by evidence in the record of the
case.[11] This is especially so where, as here, the agency
and its subordinate who heard the case in the first
instance are in full agreement as to the facts.[12]
As regards the labor arbiter’s award which was
affirmed by respondent NLRC, there is no reason to
apply the rule that reinstatement may not be ordered if,
as a result of the case between the parties, their relation
is strained.[13] Even at this late stage of this dispute,
petitioner continues to reiterate its offer to reinstate
private respondent.[14]
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
==
Mercidar Fishing Corporation vs. NLRC, G.R. No. 112574.
October 8, 1998; 297 SCRA 440
Posted by Pius Morados on November 10, 2011
(Labor Standards – Fishermen are not field personnels,
Article 82)
Facts : Private respondent employed as a “bodegero” or
ship’s quartermaster complained of being constructively
dismissed by petitioner corporation when the latter
refused him assignments aboard its boats after he had
reported to work. The Larbor Arbiter rendered a decision
ordering petitioner corporation to reinstate complainant
with back wages, pay him his 13th month pay and
incentive leave. Petitioner claims that it cannot be held
liable for service incentive leave pay by fishermen in its
employ as the latter supposedly are “field personnel” and
thus not entitled to such pay under the Labor Code.
Article 82 of the Labor Code provides among others that
“field personnel” shall refer to non-agricultural
employees who regularly perform their duties away from
the principal place of business or branch of office of the
employer and whose actual hours of work in the field
cannot be determined with reasonable certainty.
Issue : WON fishermen are considered field personnel.
10
Held : No. Although fishermen perform non-agricultural
work away from their employer’s business offices, the
fact remains that throughout the duration of their work
they are under the effective control and supervision of
the employer through the vessel’s patron or master.
==
G.R. No. 85073 August 24, 1993
DAVAO FRUITS CORPORATION, petitioner,
vs.
ASSOCIATED LABOR UNIONS (ALU) for in behalf of
all the rank-and-file workers/employees of DAVAO
FRUITS CORPORATION and NATIONAL LABOR
RELATIONS COMMISSION, respondents.
This is a petition for certiorari to set aside the resolution
of the National Labor Relations Commission (NLRC),
dismissing for lack of merit petitioner's appeal from the
decision of the Labor Arbiter in NLRC Case No. 1791-
MC-X1-82.
On December 28, 1982 respondent Associated Labor
Unions (ALU), for and in behalf of all the rank-and-file
workers and employees of petitioner, filed a complaint
(NLRC Case No. 1791-MC-XI-82) before the Ministry of
Labor and Employment, Regional Arbitration Branch XI,
Davao City, against petitioner, for "Payment of the
Thirteenth-Month Pay Differentials." Respondent ALU
sought to recover from petitioner the thirteenth month
pay differential for 1982 of its rank-and-file employees,
equivalent to their sick, vacation and maternity leaves,
premium for work done on rest days and special
holidays, and pay for regular holidays which petitioner,
allegedly in disregard of company practice since 1975,
excluded from the computation of the thirteenth month
pay for 1982.
In its answer, petitioner claimed that it erroneously
included items subject of the complaint in the
computation of the thirteenth month pay for the years
prior to 1982, upon a doubtful and difficult question of
law. According to petitioner, this mistake was discovered
only in 1981 after the promulgation of the Supreme
Court decision in the case of San Miguel Corporation v.
Inciong (103 SCRA 139).
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:
WHEREFORE, in view of all the
foregoing considerations, judgment is
hereby rendered ordering respondent to
pay the 1982 — 13th month pay
differential to all its rank-and-file
workers/employees herein represented
by complainant Union (Rollo, p. 32).
Petitioner appealed the decision of the Labor Arbiter to
the NLRC, which affirmed the said decision accordingly
dismissed the appeal for lack of merit.
Petitioner elevated the matter to this Court in a petition
for review under Rule 45 of the Revised Rules of Court.
This error notwithstanding and in the interest of justice,
this Court resolved to treat the instant petition as a
special civil action for certiorari under Rule 65 of the
Revised Rules of Court (P.D. No. 1391, Sec. 5; Rules
Implementing P.D. No. 1391, Rule II, Sec. 7; Cando v.
National Labor Relations Commission, 189 SCRA 666
[1990]: Pearl S. Buck Foundation, Inc. v. National Labor
Relations Commission, 182 SCRA 446 [1990]).
The crux of the present controversy is whether in the
computation of the thirteenth month pay given by
employers to their employees under P.D.
No. 851, payments for sick, vacation and maternity
leaves, premiums for work done on rest days and
special holidays, and pay for regular holidays may be
excluded in the computation and payment thereof,
regardless of long-standing company practice.
Presidential Decree No. 851, promulgated on December
16, 1975, mandates all employers to pay their
employees a thirteenth month pay. How this pay shall be
computed is set forth in Section 2 of the "Rules and
Regulations Implementing Presidential Decree No. 851,"
thus:
SECTION 2. . . .
(a) "Thirteenth month pay" shall mean
one twelfth (1/12) of the basic salary of
an employee within a calendar year.
(b) "Basic Salary" shall include all
renumerations or earnings paid by an
employer to an employee for services
rendered but may not include cost of
living allowances granted 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 integrated as part of the
regular or basic salary of the employee
at the time of the promulgation of the
Decree on December 16, 1975.
The Department of Labor and Employment issued on
January 16, 1976 the "Supplementary Rules and
Regulations Implementing P.D. No. 851" which in
paragraph 4 thereof further defines the term "basic
salary," thus:
4. Overtime pay, earnings and other
renumerations which are not part of the
basic salary shall not be included in the
computation of the 13th month pay.
Clearly, the term "basic salary" includes renumerations
or earnings paid by the employer to employee, but
excludes cost-of-living allowances, profit-sharing
payments, and all allowances and monetary benefits
which have not been considered as part of the basic
salary of the employee as of December 16, 1975. The
exclusion of cost-of-living allowances and profit sharing
payments shows the intention to strip "basic salary" of
payments which are otherwise considered as "fringe"
benefits. This intention is emphasized in the catch all
phrase "all allowances and monetary benefits which are
not considered or integrated as part of the basic salary."
Basic salary, therefore does not merely exclude the
benefits expressly mentioned but all payments which
may be in the form of "fringe" benefits or allowances
(San Miguel Corporation v. Inciong, supra, at 143-144).
In fact, the Supplementary Rules and Regulations
Implementing P.D. No. 851 are very emphatic in
declaring that overtime pay, earnings and other
renumerations shall be excluded in computing the
thirteenth month pay.
11
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 excluded.
It follows therefore, that payments for sick, vacation and
maternity leaves, premium for work done on rest days
special holidays, as well as pay for regular holidays, are
likewise excluded in computing the basic salary for the
purpose of determining the thirteen month pay.
Petitioner claims that the mistake in the interpretation of
"basic salary" was caused by the opinions, orders and
rulings rendered by then Acting Labor Secretary Amado
C. Inciong, expressly including the subject items in
computing the thirteenth month pay. The inclusion of
these items is clearly not sanctioned under P.D. No. 851,
the governing law and its implementing rules, which
speak only of "basis salary" as the basis for determining
the thirteenth month pay.
Moreover, whatever doubt arose in the interpretation of
P.D. No. 851 was erased by the Supplementary Rules
and Regulations which clarified the definition of "basic
salary."
As pointed out in San Miguel Corporation v. Inciong,
(supra):
While doubt may have been created by
the prior Rules and Regulations and
Implementing Presidential Decree 851
which defines basic salary to include all
remunerations or earnings paid by an
employer to an employee, this cloud is
dissipated in the later and more
controlling Supplementary Rules and
Regulations which categorically, exclude
from the definition of basic salary
earnings and other remunerations paid
by employer to an employee. A cursory
perusal of the two sets of Rules
indicates that what has hitherto been the
subject of broad inclusion is now a
subject of broad exclusion. The
Supplementary Rules and Regulations
cure the seeming tendency of the former
rules to include all remunerations and
earnings within the definition of basic
salary.
The all-embracing phrase "earnings and
other remunerations which are deemed
not part of the basic salary includes
within its meaning payments for sick,
vacation, or maternity leaves, premium
for work performed on rest days and
special holidays, pay for regular
holidays and night differentials. As such
they are deemed not part of the basic
salary and shall not be considered in the
computation of the 13th-month pay. If
they were not so excluded, it is hard to
find any "earnings and other
remunerations" expressly excluded in
computation of the 13th month-pay.
Then the exclusionary provision would
prove to be idle and with purpose.
The "Supplementary Rules and Regulations
Implementing P.D. No. 851," which put to rest all doubts
in the computation of the thirteenth month pay, was
issued by the Secretary of Labor as early as January 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 1981. Petitioner
continued its practice in December 1981, after
promulgation of the afore-quoted San Miguel decision on
February 24, 1981, when petitioner purportedly
"discovered" its mistake.
From 1975 to 1981, petitioner had freely, voluntarily and
continuously included in the computation of its
employees' thirteenth month pay, the payments for sick,
vacation and maternity leaves, premiums for work done
on rest days and special holidays, and pay for regular
holidays. The considerable length of time the questioned
items had been included by petitioner indicates a
unilateral and voluntary act on its part, sufficient in itself
to negate any claim of mistake.
A company practice favorable to the employees had
indeed been established and the payments made
pursuant thereto, ripened into benefits enjoyed by them.
And any benefit and supplement being enjoyed by the
employees cannot be reduced, diminished, discontinued
or eliminated by the employer, by virtue of Section 10 of
the Rules and Regulations Implementing P.D. No. 851,
and Article 100 of the labor of the Philippines, which
prohibit the diminution or elimination by the employer of
the employees' existing benefits (Tiangco v. Leogardo,
Jr., 122 SCRA 267, [1983]).
Petitioner cannot invoke the principle of solutio
indebiti which as a civil law concept that is not applicable
in Labor Law. Besides, in solutio indebiti, the obligee is
required to return to the obligor whatever he received
from the latter (Civil Code of the Philippines, Arts. 2154
and 2155). Petitioner in the instant case, does not
demand the return of what it paid respondent ALU from
1975 until 1981; it merely wants to "rectify" the error it
made over these years by excluding unilaterally from the
thirteenth month pay in 1982 the items subject of
litigation. Solutio indebiti, therefore, is not applicable to
the instant case.
WHEREFORE, finding no grave abuse of discretion on
the part of the NLRC, the petition is hereby DISMISSED,
and the questioned decision of respondent NLRC is
AFFIRMED accordingly.
==
G.R. No. L-12950 December 9, 1959
BENJAMIN CELESTIAL, ET AL. Petitioners,
vs. THE SOUTHERN MINDANAO
EXPERIMENTAL STATION, ET
AL., Respondents.
This is a petition by Benjamin Celestial and 175
others for review of the decision of the Auditor
General, dated September 9, 1957, denying their
claim for differential pay under the Minimum
Wage Law.
The record discloses that petitioner are
employees and/or workers of the Southern
Mindanao Experimental Station, later referred to
as Experimental Station, Bureau of Plant Industry
in Davao City, and that since 1952 they had been
paid each a daily wage of P2.50; that some time
in March 1957, petitioners filed with the Auditor
General's Office their claims for differential pay,
12
alleging among other things that they were
entitled to the minimum wage of P4.00 a day,
instead of P2.50, which was actually paid them
by the Experimental Station; and that as already
stated, on September 9, 1957, the Auditor
General rendered a decision, holding that
petitioner were not entitled to the minimum daily
wage of P4.00, but only to P2.50.
The resolution of this case depends upon the
interpretation and application of Section 3 (a),
(b) and (c) of the Minimum Wage Law, which we
reproduce below for purposes of ready reference:
SEC. 3. Minimum wage. - (a) Every employer
shall pay to each of his employees who is
employed by an enterprise other than in
agriculture wage at the rate of not less than -
(1) . . . .
(2) Three pesos a day on the effective date of
this Act and for one year after the effective date,
and thereafter P4.00 a day, for employees of
establishment located outside of Manila or its
environs: . . . .
(b) Every employer who operates a farm
enterprise comprising more than 12 hectares
shall pay each of his employees who is engaged
in agriculture, wage at the rate of not less than -
(1) . . ., (2) . . .;
(3) One year thereafter, P2.50 a day and no
allowance for board and lodging shall reduce this
wage below P2.25 in cash.
(c) Effective on the first of July, nineteen hundred
and fifty-two, the minimum wage rates for
employees in the Government service shall be
those provided in subsection (a) and (b) of this
section . . .
From the legal provisions above-reproduce, it will
readily be seen that in order that an employee or
laborer may be paid the minimum wage of P2.50
a day, he must be employed by an enterprise (in
this case, the Southern Mindanao Experimental
Station) engaged in agriculture; that said
employer operates s farm comprising more than
12 hectares; and that the employee or laborer is
engaged in agriculture. The second condition is
satisfied because the Experimental Station is
operating a farm comprising 960 hectares. The
next question to be decided is whether or not
said Experimental Station is engaged in
agriculture. To determine this, we have to go
back to the function of the Bureau of Plant
Industry (Section 1753, Revised Administrative
Code) of which the Experimental Station is an
agency or adjunction, said Experimental Station
being provided for in Section 1754 of the same
Revised Administrative Code. Said two sections
are reproduced below for ready reference:
SEC. 1753. Function of Bureau of Plant Industry.
- It shall be the function of said Bureau to collect
and disseminate useful information pertaining to
agriculture in the Philippines, to encourage the
use of improved agriculture methods; and, in
general, to promote the development of the
agriculture resources of the Philippines, as
follows:
(a) By the introduction of new domesticated
animals, and the improvement of the breeds of
domesticated animal now found in the
Philippines;
(b) By the control and eradication of diseases of
live stock;
(c) By the investigation of soil and climate
conditions, and the methods of producing and
handling agriculture products;
(d) By the introduction, production, and
distribution of improved seeds and plants;
(e) By the control and eradication of diseases,
insects, and other pests injurious to cultivated
plants;
(f) By the operation of a system of demonstration
and agriculture extension work;
(g) By the collection of agricultural statistics; and
(h) By the publication and distribution of
bulletins, circulars, and other printed matter.
SEC. 1754. Experiment station, farms, and
stations for agricultural instruction. - In such
place in the Philippines as may be considered
suitable for the purpose, the Director of Plant
Industry, with the approval of the Head of the
Department, shall be funds shall be available
therefore, establish, equip, maintain, and operate
experiment stations, farms, stock farms, and
station for practical agriculture instruction.
(In the Bureau of Agriculture is also vested the
supervision and control of American agriculture
colonies).
On the basis of the legal provision above-
reproduced, we are of the opinion that both the
Bureau of Plant Industry and Experimental
Station, particularly the latter, are engaged in
agriculture or are dedicated to agricultural
functions, specially when we take into
consideration the definition of agriculture in
Section 2 of the Minimum Wage Law itself,
Republic Act No. 602, which is as follow:
Agriculture includes faring in all its branches and
among other things include the cultivation and
things of the soil, dairying, the production,
cultivation, growing, and harvesting of any
agricultural or horticular commodities, the raising
of livestock or poultry, and any practice
performer by a farmer or on a farm as an
incident to or in conjunction with such farming
operations, but does not include the
manufacturing or processing of sugar, coconut,
13
abaca, tobacco, pineapples or other farm
products.
And is a matter of public knowledge that
experimental stations maintained by the Bureau
of Plant Industry, specially when done on a big
scale like the Southern Mindanao Experimental
Station that operates a farm comprising 960
hectares, though its employees and laborers,
actually till the soil, introduce and plant seeds of
the best crop varieties found by it after study and
experiment, raise said crops in the best approved
methods of cultivation, including the spacing of
each plant or seedling and the amount of water
needed though irrigation, weeding, et., and the
proper harvesting of the crop, including the
timing and method, all for the instruction and
benefit of Philippine farmers, and to foster
agriculture in the country. Included in this
cultivation is the discovery of plant pests and
their eradication by means of treatment with the
proper insecticides. Thereafter, from the harvest
are extracted the seeds which are called certified
seeds, for sale and distribution to farmers. There
can be no question that all these acts and
function fall within the definition of agriculture
provided in the Minimum Wage Law, and,
consequently, are agricultural as distinguished
from no-agricultural functions. It follows that the
laborers and farm workers who actually carry out
and perform these functions are also engaged in
agriculture. It is possible that not all the laborers
and employees in the Experimental Station are
actually engaged in preparing the land for
planting, such as plowing, tilling, and planting the
seeds or seedlings, in weeding the farm, in
treating plant diseases and harvesting crops.
some employees may be engaged in office work,
such as, clerks, supervisors, maintenance
workers, etc. But inasmuch as they are all
employed by the Experimental Station, which is a
farm enterprise, and their work is incidental to
agriculture, they may also be considered as
agricultural workers and employees.
Interpretative Bulletin No. 14, issued by the
United States Wage Administration Service,
implementing the provisions of the Fair Labor
Standards Act of the United States of 1938, from
which our Minimum Wage Law was copied
(Morave: Minimum Wage Law, p. 279), under the
title "Office Workers, Etc.," says:
Office Workers, Etc.
12. We have received inquiries concerning office
help - secretaries, clerks, bookkeepers, etc.,
night watchmen, maintenance workers,
engineers, etc., who are employed by a farmer or
a farm in connection with the activities described
in the definition of "agriculture" contained in
section 3 (f). In our opinion such employees are
exempt. (Teller" Labor Disputes and Collective
Bargaining, Vol. II, p. 1209)
The above-reproduced portion of the bulletin,
applied in this jurisdiction, means that the
employees mentioned therein are not governed
by our Minimum Wage Law, as regards the
minimum wage of P4.00 a day for non-
agricultural workers; consequently, they may
receive a only the minimum wage of P2.50 a day,
prescribed for workers engaged in agriculture.
But petitioners contend that the Bureau of Plant
Industry and Experimental Station could not be
engaged in agriculture for the reason that their
farm enterprise is not for profit. In answer to this
contention, it is enough to say that Minimum
Wage Law in defining agriculture, does not
prescribe the condition that the person or entity
is engaged in it for purposes of profit. We can
well imagine a person interested in research and
scientific agriculture who proceeds to cultivate a
little farm of, say, one or two hectares, to put
into practice the results of his research,
introducing in the cultivation the most modern
methods, the most suitable fertilizers, etc., so
that a hectare so cultivated can produce, say,
from 250 to 300 cavans of palay and incidentally
to compete a prize or a medal offered by the
Government or any of its agencies. The fact that
he does not cultivate the farm for purposes of
profit, but rather in the interest of science and to
prove his scientific and agricultural theories, and
incidentally enter the contest for a prize, does not
make him less agriculturist and his activities as
agriculture.
Incidentally, it may be stated that the Secretary
of Justice in an opinion rendered in connection
with the different activities of the Davao Regional
Fiber Station, holds that the laborers and
employees of said fiber experimental station are
not entitled to the minimum wage of P4.00.
In view of the foregoing, the decision appealed
from is hereby reversed affirmed. No costs.
==
G.R. No. 122827. March 29, 1999]
LIDUVINO M. MILLARES, et. al, petitioners,
vs. NATIONAL LABOR RELATIONS
COMMISSION, (FIFTH DIVISION), and
PAPER INDUSTRIES CORPORATION OF
THE PHILIPPINES (PICOP), respondents.
Petitioners numbering one hundred sixteen (116)
[1]
occupied the positions of Technical Staff, Unit
Manager, Section Manager, Department Manager,
Division Manager and Vice President in the mill site of
respondent Paper Industries Corporation of the
Philippines (PICOP) in Bislig, Surigao del Sur. In 1992
PICOP suffered a major financial setback allegedly
brought about by the joint impact of restrictive
government regulations on logging and the economic
crisis. To avert further losses, it undertook a
retrenchment program and terminated the services of
petitioners. Accordingly, petitioners received separation
pay computed at the rate of one (1) month basic pay for
every year of service. Believing however that the
allowances they allegedly regularly received on a
monthly basis during their employment should have
been included in the computation thereof they lodged a
complaint for separation pay differentials.
The allowances in question pertained to the
following -
14
1. Staff/Manager's Allowance -
Respondent PICOP provides free housing facilities to
supervisory and managerial employees assigned in
Bislig. The privilege includes free water and electric
consumption. Owing however to shortage of such
facilities, it was constrained to grant Staff allowance
instead to those who live in rented houses outside but
near the vicinity of the mill site. But the allowance
ceases whenever a vacancy occurs in the company's
housing facilities. The former grantee is then directed to
fill the vacancy. For Unit, Section and Department
Managers, respondent PICOP gives an additional
amount to meet the same kind of expenses called
Manager's allowance.
2. Transportation Allowance -
To relieve respondent PICOP's motor pool in Bislig from
a barrage of requests for company vehicles and to
stabilize company vehicle requirements it grants
transportation allowance to key officers and Managers
assigned in the mill site who use their own vehicles in
the performance of their duties. It is a conditional grant
such that when the conditions no longer obtain, the
privilege is discontinued. The recipients of this kind of
allowance are required to liquidate it by submitting a
report with a detailed enumeration of expenses incurred.
3. Bislig Allowance -
The Bislig Allowance is given to Division Managers and
corporate officers assigned in Bislig on account of the
hostile environment prevailing therein. But once the
recipient is transferred elsewhere outside Bislig, the
allowance ceases.
Applying Art.,97, par. (f), of the Labor Code which
defines if wage," the Executive Labor Arbiter opined
that the subject allowances, being customarily furnished
by respondent PICOP and regularly received by
petitioners, formed part of the latter's wages. Resolving
the controversy from another angle, on the strength of
the ruling in Santos v. NLRC[2] and Soriano v.
NLRC[3] that in the computation of separation pay
account should be taken not just of the basic salary but
also of the regular allowances that the employee had
been receiving, he concluded that the allowances should
be included in petitioners' base pay. Thus respondent
PICOP was ordered on 28 April 1994 to pay petitioners
Four Million Four Hundred Eighty-One Thousand Pesos
(P4,481,000.00) representing separation pay differentials
plus ten per cent (10%) thereof as attorney's fees. [4]
The National Labor Relations Commission (NLRC)
did not share the view of the Executive Labor
Arbiter. On 7 October 1994 it set aside the assailed
decision by decreeing that the allowances did not form
part of the salary base used in computing separation pay.
[5]
Its ruling was based on the finding that the cases
relied upon by the Executive Labor Arbiter were
inapplicable since they involved illegal dismissal where
separation pay was granted in lieu of reinstatement
which was no longer feasible. Instead, what it
considered in point was Estate of the late Eugene J.
Kneebone v. NLRC[6] where the Court held that
representation and transportation allowances were
deemed not part of salary and should therefore be
excluded in the computation of separation
benefits. Relating the present case with Art. 97, par. (f),
of the Labor Code, the NLRC likewise found that
petitioners' allowances were contingency-based and thus
not included in their salaries. On 26 September 1995
reconsideration was denied.[7]
In this petition for certiorari, petitioners submit that
their allowances are included in the definition of
"facilities" in Art. 97, par. (f), of the Labor Code, being
necessary and indispensable for their existence and
subsistence. Furthermore they claim that their availment
of the monetary equivalent of those "facilities" on a
monthly basis was characterized by permanency,
regularity and customariness. And to fortify their
arguments they insist on the applicability of Santos,
[8]
Soriano,[9] The Insular Life Assurance Company,
[10]
Planters Products, Inc.[11] and Songco[12] which are all
against the NLRC holding that the salary base in
computing separation pay includes not just the basic
salary but also the regular allowances.
There is no showing of grave abuse of discretion on
the part of the NLRC. In case of retrenchment to
prevent losses, Art. 283 of the the Labor Code imposes
on the employer an obligation to grant to the affected
employees separation pay equivalent to one (1)
month pay or at least one-half (1/2) month pay for every
year of service, whichever is higher. Since the law
speaks of "pay," the question arises, "What exactly does
the term connote?" We correlate Art. 283 with Art. 97 of
the same Code on definition of terms. "Pay" is not
defined therein but "wage." In Songco the Court
explained that both words (as well as salary) generally
refer to one and the same meaning, i.e., a reward or
recompense for services performed. Specifically,
"wage" is defined in letter (f) as the remuneration
or earnings, however designated, capable of being
expressed in terms ofmoney, whether fixed or
ascertained on a time, task, piece, or commission basis,
or other method of calculating the same, which is
payable by an employer to an employee under a written
or unwritten contract of employment for work done or to
be done, or for services rendered or to be rendered and
includes the fair and reasonable value, as determined by
the Secretary of Labor, of board, lodging, or other
facilities customarily furnished by the employer to the
employee.
We invite attention to the above-underlined
clause. Stated differently, when an employer
customarily furnishes his employee board, lodging or
other facilities, the fair and reasonable value thereof, as
determined by the Secretary of Labor and Employment,
is included in "wage." In order to ascertain whether the
subject allowances form part of petitioner's "wages," we
divide the discussion on the following - "customarily
furnished;" "board, lodging or other facilities;" and, "fair
and reasonable value as determined by the Secretary of
Labor."
"Customary" is founded on long-established and
constant practice[13] connoting regularity. [14] The receipt
of an allowance on a monthly basis does not ipso
15
facto characterize it as regular and forming part of
salary[15]because the nature of the grant is a factor worth
considering. We agree with the observation of the
Office of the Solicitor General- that the subject
allowances were temporarily, not regularly, received by
petitioners because -
In the case of the housing allowance, once a vacancy
occurs in the company-provided housing
accommodations, the employee concerned transfers to
the company premises and his housing allowance is
discontinued x x x x
On the other hand, the transportation allowance is in the
form of advances for actual transportation expenses
subject to liquidation x x x given only to employees who
have personal cars.
The Bislig allowance is given to Division Managers and
corporate officers assigned in Bislig, Surigao del
Norte. Once the officer is transferred outside Bislig, the
allowance stops.[16]
We add that in the availment of the transportation
allowance, respondent PICOP set another requirement
that the personal cars be used by the employees in the
performance of their duties. When the conditions for
availment ceased to exist, the allowance reached the
cutoff point. The finding of the NLRC along the same
line likewise merits concurrence, i.e., petitioners'
continuous enjoyment of the disputed allowances was
based on contingencies the occurrence of which
wrote finis to such enjoyment.
Although it is quite easy to comprehend "board"
and "lodging," it is not so with "facilities." Thus Sec. 5,
Rule VII, Book III, of the Rules Implementing the Labor
Code gives meaning to the term as including articles or
services for the benefit of the employee or his family but
excluding tools of the trade or articles or service
primarily for the benefit of the employer or necessary to
the conduct of the employer's business. The Staff
/Manager's allowance may fall under "lodging" but the
transportation and Bislig allowances are not embraced in
"facilities" on the main consideration that they are
granted as well as the Staff/Manager's allowance for
respondent PICOP's benefit and convenience, i.e., to
insure that petitioners render quality performance. In
determining whether a privilege is a facility, the criterion
is not so much its kind but its purpose. [17] That the
assailed allowances were for the benefit and
convenience of respondent company was supported by
the circumstance that they were not subjected to
withholding tax. Revenue Audit Memo Order No. 1-87
pertinently provides -
3.2 x x x x transportation, representation or
entertainment expenses shall not constitute taxable
compensation if:
(a) It is for necessary travelling and representation or
entertainment expenses paid or incurred by the employee
in the pursuit of the trade or business of the employer,
and
(b) The employee is required to, and does, make an
accounting/liquidation for such expense in accordance
with the specific requirements of substantiation for such
category or expense.
Board and lodging allowances furnished to an employee
not in excess of the latter's needs and given free of
charge, constitute income to the latter except if such
allowances or benefits are furnished to the employee for
the convenience of the employer and as necessary
incident to proper performance of his duties in which
case such benefits or allowances do not constitute
taxable income.[18]
The Secretary of Labor and Employment under Sec.
6, Rule VII, Book III, of the Rules Implementing the
Labor Code may from time to time fix in appropriate
issuances the "fair and reasonable value of board,
lodging and other facilities customarily furnished by an
employer to his employees." Petitioners' allowances do
not represent such fair and reasonable value as
determined by the proper authority simply because the
Staff/Manager's allowance and transportation allowance
were amounts given by respondent company in lieu of
actual provisions for housing and transportation needs
whereas the Bislig allowance was given in consideration
of being assigned to the hostile environment then
prevailing in Bislig.
The inevitable conclusion is that, as reached by the
NLRC, subject allowances did not form part of
petitioners' wages.
In Santos[19] the Court decreed that in the
computation of separation pay awarded in lieu of
reinstatement, account must be taken not only of the
basic salary but also of transportation and emergency
living allowances. Later, the Court
in Soriano, citing Santos, was general in its holding that
the salary base properly used in computing separation
pay where reinstatement was no longer feasible should
include not just the basic salary but also the regular
allowances that the employee had been
receiving. Insular merely reiterated the aforementioned
rulings. The rationale is not difficult to discern. It is the
obligation of the employer to pay an illegally dismissed
employee the whole amount of his salaries plus all other
benefits, bonuses and general increases to which he
would have been normally entitled had he not been
dismissed and had not stopped working. [20] The same
holds true in case of retrenched employees. And thus we
applied Insular and Soriano in Planters in the
computation of separation pay of retrenched
employees. Songco likewise involved retrenchment and
was relied upon inPlanters, Soriano and Santos in
determining the proper amount of separation pay. As
culled from the foregoing jurisprudence, separation pay
when awarded to an illegally dismissed employee in lieu
of reinstatement or to a retrenched employee should be
computed based not only on the basic salary but also on
the regular allowances that the employee had been
receiving. But in view of the previous discussion that
the disputed allowances were not regularly received by
petitioners herein, there was no reason at all for
petitioners to resort to the above cases.
Neither is Kneebone applicable, contrary to the
finding of the NLRC, because of the difference in factual
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circumstances. In Kneebone, the Court was tasked to
resolve the issue whether the representation and
transportation allowances formed part of salary as to be
considered in the computation
of retirement benefits. The ruling was in the negative on
the main ground that the retirement plan of the company
expressly excluded such allowances from salary.
WHEREFORE, the petition is DISMISSED. The
resolution of public respondent National Labor Relations
Commission dated 7 October 1994 holding that the Staff
/Manager's, transportation and Bislig allowances did not
form part of the salary base used in computing the
separation pay of petitioners, as well as its resolution
dated 26 September 1995 denying reconsideration, is
AFFIRMED. No costs.
SO ORDERED.
==

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