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LELINA to pay the complainant the amount of SR 13,200

Get 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

ent Done equivalent to ten percent (10%) of the judgment award or the
amount of SR 1,320, within ten (10) days from receipt hereof.

Homeworkping. "All other issues are dismissed for lack of merit.

"SO ORDERD." mphasis supplied)

com 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
Homework Help 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
Research Paper help decision by deleting the order of refund of excessive
placement fee for lack of jurisdiction.3 [NLRC Decision,
https://www.homeworkping.com/ dated August 18, 1997; Rollo, pp. 26-32.]

Petitioner moved for reconsideration with respect to the labor

Online Tutoring arbiter's award of SR13,200 in the dispositive portion of the
https://www.homeworkping.com/ 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
click here for freelancing tutoring only SR 3.600 (SR 1,200 x 3 months) for the unexpired
sites portion of respondent's employment and SR360 (10% of
ASIAN CENTER FOR CAREER AND EMPLOYMENT SR3,600) for attorney's fees.4 [Motion for Reconsideration,
SYSTEM AND SERVICES, INC. (ACCESS), petitioner, vs. Rollo, pp. 33-35.]
IBNO MEDIALES, respondents. 1998 Oct 12 The NLRC denied petitioner's motion. It ruled that R.A. 8042
2nd Division G.R. No. 131656 does not apply as respondent's employment which started in
February 1995 occurred prior to its effectivity on July 15,
In this petition for certiorari, petitioner ASIAN CENTER FOR 1995.5 [Decision, dated October 14, 1997; Rollo, pp. 36-38.]
(ACCESS) seeks to modify the monetary awards against it in Hence, this petition for certiorari.
the Decision of respondent National Labor Relations
Commission (NLRC), dated October 14, 1997, a case for In the case at bar, petitioner's illegal dismissal from service is
illegal dismissal. no longer disputed. Petitioner merely impugns the monetary
awards granted by the NLRC to private respondent. It submits
The records disclose that petitioner hired respondent IBNO that although the unexpired portion of private respondent's
MEDIALES to work as a mason in Jeddah, Saudi Arabia, with employment contract is eight (8) months,6 [Respondent was
a monthly salary of 1,200 Saudi Riyals (SR). The term of his dismissed from service in June 1996 (after his vacation leave),
contract was two (2) years, from February 28, 1995 until while his employment contract was supposed to end on
February 28, 1997. February 28, 1997.] it is liable to pay respondent only three (3)
months of his basic salary, pursuant to Section 10 of R.A.
On May 26, 1996, respondent applied with petitioner for 8042, or SR1,200 (monthly salary) multiplied by 3 months, for
vacation leave with pay which he earned after working for a total of SR3,600. Petitioner claims that the NLRC erred in
more then a year. His application for leave was granted. While ruling that as private respondent's employment started only on
en route to the Philippines, his co-workers informed him that February 28, 1995, R.A. 8042, which took effect on July 15,
he has been dismissed from service. The information turned 1995, would not apply to his case. Petitioner argues that it is
out to be true. not the date of employment but the date of dismissal which
should be considered in determining the applicability of R.A.
On June 17, 1996, respondent filed a complaint with the labor 8042. Petitioner prays that the award in the NLRC Decision
arbiter for illegal dismissal, non-payment of overtime pay, dated October 14, 1997, be changed to SR3,600 instead of
refund of transportation fare, illegal deductions, non-payment 13,200 and that the award of attorney's fees be deleted.
of 13th month pay and salary for the unexpired portion of his
employment contract. We affirm with modifications.

On March 17, 1997, the labor arbiter found petitioner guilty of As a rule, jurisdiction is determined by the law at the time of
illegal dismissal.1 [Decision, Rollo, pp. 11-20.] The the commencement of the action.7 [Erectors, Inc. vs. NLRC,
dispositive portion reads: 256 629, 637, (1996), citing Philippine-Singapore Ports. Corp.
vs. NLRC, 218 SRA 77 (1993)] In the case at bar, private
"IN VIEW OF THE FOREGOING, judgment is hereby respondent's cause of action did not accrue on the date of his
rendered declaring the illegality of complainant's dismissal date of his employment or on February 28, 1995. His cause of
and ordering the respondent ACCESS and/or ABDULLAH action arose only from the-time he was illegally dismissed by

petitioner from service in June 1996, after his vacation leave for the unexpired portion of his employment contract, and
expired. It is thus clear that R.A. 8042 which took effect a year SR360 for attorney's fees. No costs. SO ORDERED.
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 DOLE PHILIPPINES, INC., petitioner, vs. THE HON.
entitled to his salary for the unexpired portion of his VICENTE LEOGARDO, JR. (in his capacity as Deputy
employment contract or for three (3) months for every year of Minister of Labor), and ASSOCIATED LABOR UNION
the unexpired term, whichever is less. (ALU), respondents.
1982 October 23 En Banc G.R. No. L-60018
In the case at bar, the unexpired portion of private
respondent's employment contract is eight (8) months. Private Petition for certiorari to annul and set aside the order of
respondent should therefore be paid his basic salary respondent Deputy Minister of Labor, dated October 26, 1981,
corresponding to three (3) months or a total of SR3,600.8 which affirmed the order of the Regional Director of the
[Computed as follows: monthly salary of SR1,200 x 3 Ministry of Labor, Davao City, requiring petitioner Dole
months.] Philippines, Inc. to pay its employees the year-end
productivity bonus agreed upon in their Collective Bargaining
We note that this same computation was made by the labor Agreement in addition to the 13th month pay prescribed under
arbiter in the body of his decision.9 [Supra.] Despite said Presidential Decree No. 851.
computation in the body of the decision, however, the labor
arbiter awarded higher sum (SR13,200) in the dispositive The salient facts are as follows:
On June 6, 1975, Standard Philippines Fruit Corporation or
The general rule is that where there is a conflict between the STANFILCO, a company merged in 1981 with petitioner Dole
dispositive portion or the fallo and the body of the decision, Philippines, Inc., entered into a collective bargaining
the fallo controls. This rule rests on the theory that the fallo is agreement with the Associated Labor Union, ALU for short,
the final order while the opinion in the body is merely a effective for a period of three (3) years, beginning June 1,
statement ordering nothing. However, where the inevitable 1975 to May 31, 1978. The Collective Bargaining Agreement
conclusion from the body of the decision is so clear as to show provided, among others, the grant of a year-end productivity
that there was a mistake in the dispositive portion, the body of bonus to all workers within the collective bargaining unit.
the decision will prevail.10 [Olac, vs. Court of Appeals, 213 Section 1, Article XVII thereof reads as follows:
SCRA 321, 328 (1992), citing Aguirre vs. Aguirre, 58 SCRA
461 (1974) and Magdalena Estate, Inc. vs. Calauag, 11 SCRA "ARTICLE XVII
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 SECTION 1. The COMPANY agrees to grant each worker
in the text of the decision which support the award of said within the bargaining unit a year-end productivity bonus
higher amount. We reiterate that the correct award to private equivalent to ten (10) days of his basic daily wage if eighty
respondent for the unexpired portion of his employment percent (80%) or more of the average total banana production
contract is SR3,600. for the two (2) preceding calendar years together with the
current year's estimate is attained. This bonus is exclusive of
We come now to the award of attorney's fees in favor of any bonus which the Company may be presently giving or
private respondent. Article 2208 of the Civil Code allows may give in the future to its workers pursuant to the
attorney's fees to be awarded when its claimant is compelled COMPANY's rights under Section 4, Article I of this
to litigate with third persons or to incur expenses to protect his Agreement." Section 4, Article I of the agreement referred to
interest by reason of an unjustified act or omission of the party above provides:
for whom it is sought. Moreover, attorney's fees are
recoverable when there is sufficient showing of bad faith.11 "SECTION 4. All terms and conditions of employment of
[Tumbiga vs. National Labor Relations Commission, 274 workers not specifically excluded in Section I of this Article
SCRA 338, 349 (1997)] The Labor Code,12 [Article 111, are embodied in this Agreement, and the same shall govern the
Chapter III, Title II, Book Three.] on the other hand, fixes the relationship between the COMPANY and such workers. On
attorney's fees that may be recovered in an amount which the other hand, all such benefits and/or privileges as are not
should not exceed 10% of the total amount of wages awarded. expressly provided for in this Agreement but which are now
being accorded, may in the future be accorded, or might have
In the case at bar, petitioner's bad faith in dismissing private previously been accorded to the workers, no matter how long
respondent is manifest. Respondent was made to believe that or how often, shall be deemed purely acts of grace and
he would be temporarily leaving Jeddah, Kingdom of Saudi dependent upon the sole judgment and discretion of the
Arabia, for a 30-day vacation leave with pay. However, while COMPANY to grant, modify or withdraw, and shall not be
on board the plane back to the Philippines, his co-employees construed as establishing an obligation on the part of the
told him that he has been dismissed from his job as he was COMPANY."
given only a one-way plane ticket by petitioner. True enough,
private respondent was not allowed to return to his jobsite in The 80% production level stated in Article XVII of said CBA
Jeddah after his vacation leave. Thus, private respondent was having been attained in 1975, the workers were paid the
compelled to file an action for illegal dismissal with the labor stipulated year-end productivity bonus on December 11, 1975.
arbiter and hence entitled to an award of attorney's fees.
Shortly thereafter, or on December 16, 1975, Presidential
IN VIEW OF THE FOREGOING, the decision of the public Decree 851 took effect. Section 1 thereof required all
respondent National Labor Relations Commission, dated employers to pay their employees receiving a basic salary of
October 14, 1997, is AFFIRMED with modifications: not more than P1,000.00 a month, regardless of the nature of
petitioner is ordered to pay private respondent IBNO their employment, a 13th month pay not later than December
MEDIALES the peso equivalent of the amounts of SR3,600 24 of every year. Section 2 of the law, however, exempted

from its coverage those employers already paying their seeks to remedy the sad plight of labor in a milieu of
employees a 13th month pay or its equivalent. worldwide inflation vis-a-vis a static wage level. However,
cognizant of the fact that the remedy sought to be enforced
On June 22, 1975, Secretary (now Minister) of Labor, Hon. had long been granted by some employers out of their own
Blas F. Ople, issued the "Rules and Regulations Implementing volition and magnanimity, the law has expressly exempted
Presidential Decree 851." Section 3(c) thereof provides that from its coverage those employers "who are already paying
"the term 'its equivalent' . . . shall include Christmas bonus, their employees a 13th month pay or its equivalent." [1]
mid-year bonus, profit-sharing payments and other cash
bonuses amounting to not less than 1/12th of the basic salary While the intention to exclude those certain employers from
but shall not include cash and stock dividends, cost of living the operation of the law is quite clear, the parties advance
allowance and other allowances regularly enjoyed by the conflicting views as to the meaning of the phrase "or its
employee as well as non-monetary benefits . . . ." equivalent."

The rules further added that "where an employer pays less Section 3(e) of the Rules and Regulations Implementing PD
than 1/12th of the employee's basic salary, the employer shall No. 851, issued by the Minister of Labor on December 22,
pay the difference." 1975 explicitly states that the term "or its equivalent . . . shall
include Christmas bonus, mid-year bonus, profit-sharing
To comply with the provision of P.D. 851 on the 13th month payments and other cash bonuses amounting to not less than
pay, STANFILCO paid its workers on December 29, 1975 the one-twelfth of the basic salary. Where an employer pays less
difference between 1/12th of their yearly basic salary and their than 1/12 of the employee's basic salary, the employer shall
year-end productivity bonus. In doing so, STANFILCO relied pay the difference."
on Section 2 of the decree, as interpreted by the MOLE's
implementing rules. The same method of computation was In "National Federation of Sugar Workers versus Ovejera, et
followed in the payment of the year-end productivity bonus al.", [2] the interpretation given by the MOLE received the
and the 13th month pay for the years 1976, 1977 and 1978. imprimatur of this Court, thus:

Questioning this procedure, respondent ALU, joined by "Having been issued by the agency charged with the
STANFILCO technical employees as well as its rank-and-file implementation of PD No. 851 as its contemporaneous
workers, filed on February 19, 1979 a complaint with the interpretation of the law, the quoted rule shall be accorded
South Cotabato District Labor Office at General Santos City, great weight."
docketed as LR-003-G.S.-79, ALU charging STANFILCO
with unfair labor practice and non-implementation of the CBA Furthermore, to resolve the growing number of controversies
provision on the year-end productivity bonus. The following stemming from the interpretation of Section 2, PD No. 851,
day, February 20, 1979, Oscar Rabino, Oscar Serenuela, Raul this Court in the above-cited case, speaking thru Justice Plana,
Montejo and all the rank-and-file workers of STANFILCO established definitely the legal equivalent of the 13th month
instituted another complaint before the same district labor pay in this wise:
office, docketed as LR-010-G.S.-79, changing the company
with non-payment of the production incentive bonus for the "The evident intention of the law, as revealed by the law itself,
years 1975, 1976, 1977 and 1978. was to grant an additional income in the form of a 13th month
pay to employees not already receiving the same. Otherwise
The issues having been joined, the two (2) cases were put, the intention was to grant some relief - not to all workers -
consolidated and the parties were required to file their position but only to the unfortunate ones not actually paid a 13th month
papers. salary or what amounts to it, by whatever name called; but it
was not envisioned that a double burden would be imposed on
On May 25, 1979, the Regional Director of MOLE, Davao the employer already paying his employees a 13th month pay
City, issued an order sustaining respondents' position that the or its equivalent - whether out of pure generosity or on the
year-end productivity bonus, being a contractual commitment, basis of a binding agreement, and in the latter case, regardless
is separate and distinct from the 13th month pay and must, of the conditional character of the grant (such as making the
therefore, be paid separately in full. The decretal portion of the payment dependent on profit), so long as there is actual
order reads: payment. Otherwise, what was conceived to be a 13th month
salary would in effect become a 14th or possibly 13th month
"WHEREFORE, in view of all the foregoing, judgment is pay."
hereby rendered:
Continuing, this Court said:
"1) DISMISSING the complaint of the office and technical
employee; "Pragmatic considerations also weigh heavily in favor of
"2) DISMISSING the claim of ALU for damages and crediting both voluntary and contractual bonuses for the
interest including its charges against respondent for unfair purpose of determining liability for the 13th month pay . . . ."
labor practice;
"3) ABSOLVING respondent Thomas M. Leahy from any Tested against this norm, it becomes clear that the year-end
personal liability; productivity bonus granted by petitioner to private respondents
"4) GRANTING the complaint of OSCAR RABINO and pursuant to their CBA is, in legal contemplation, an integral
his group as the complaint of all rank and file workers covered part of their 13th month pay, notwithstanding its conditional
by the CBA, and which will also include all rank and file nature. When, therefore, petitioner, in order to comply with
workers under the complaint filed by ALU; the mandate of PD No. 851, credited the year-end productivity
"5) ORDERING respondent to pay the bonuses under the bonus as part of the 13th month pay and adopted the procedure
CBA for the years 1975, 1976, 1977 and 1978." of paying only the difference between said bonus and 1/12th
of the worker's yearly basic salary, it acted well within the
On appeal, the respondent Deputy Minister of Labor affirming letter and spirit of the law and its implementing rules. For in
the order. the event that "an employer pays less than one-twelfth of the
employees' basic salary, all that said employer is required to
In mandating the payment of the 13th month compensation to do under the law is to pay the difference." [3]
employees earning less than P1,000.00, PD 851 obviously

To hold otherwise would be to impose an unreasonable and conditions Identical to those of De los Reyes. Petitioner
undue burden upon those employers who had demonstrated concludes that since Basiao was declared by the Court
their sensitivity and concern for the welfare of their to be an independent contractor and not an employee of
employees. A contrary stance would indeed create an absurd petitioner, there should be no reason why the status of
situation whereby an employer who started giving his De los Reyes herein vis-à-vis petitioner should not be
employees the 13th month pay only because of the similarly determined.
unmistakable force of the law would be in a far better position
than another who, by his own magnanimity or by mutual We reject the submissions of petitioner and hold
agreement, had long been extending to his employees the that respondent NLRC acted appropriately within the
benefits contemplated under PD No. 851, by whatever bounds of the law. The records of the case are replete
nomenclature these benefits have come to be known. Indeed, with telltale indicators of an existing employer-employee
PD No. 851, a legislation benevolent in its purpose, never relationship between the two parties despite written
intended to bring about such oppressive situation. contractual disavowals.
These facts are undisputed: on 21 August 1992
WHEREFORE, this petition is hereby granted and, petitioner entered into an agency contract with
accordingly, the order of respondent Deputy Minister of respondent Pantaleon de los Reyes [4] authorizing the
Labor, dated October 26, 1981, is set aside. No costs. latter to solicit within the Philippines applications for life
SO ORDERED. 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
G.R. No. 119930. March 12, 1998] 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
COMMISSION (Fourth Division, Cebu City),
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
On 17 June 1994 respondent Labor Arbiter contract. Aside from soliciting insurance for the
dismissed for lack of jurisdiction NLRC RAB-VII Case petitioner, private respondent was required to submit to
No. 03-0309-94 filed by private respondent Pantaleon de the former all completed applications for insurance within
los Reyes against petitioner Insular Life Assurance Co., ninety (90) consecutive days, deliver policies, receive
Ltd. (INSULAR LIFE), for illegal dismissal and and collect initial premiums and balances of first year
nonpayment of salaries and back wages after findings premiums, renewal premiums, deposits on applications
no employer-employee relationship between De los and payments on policy loans. Private respondent was
Reyes and petitioner INSULAR LIFE. [1] On appeal by also bound to turn over to the company immediately any
private respondent, the order of dismissal was reversed and all sums of money collected by him. In a written
by the National Labor Relations Commission (NLRC) communication by petitioner to respondent De los
which ruled that respondent De los Reyes was an Reyes, the latter was urged to register with the Social
employee of petitioner.[2] Petitioner’s motion for Security System as a self-employed individual as
reconsideration having been denied, the NLRC provided under PD No. 1636.[5]
remanded the case to the Labor Arbiter for hearing on
On 1 March 1993 petitioner and private respondent
the merits.
entered into another contract[6]where the latter was
Seeking relief through this special civil action appointed as Acting Unit Manager under its office – the
for certiorari with prayer for a restraining order and/or Cebu DSO V (157). As such, the duties and
preliminary injunction, petitioner now comes to us responsibilities of De los Reyes included the recruitment,
praying for annulment of the decision of respondent training, organization and development within his
NLRC dated 3 March 1995 and its Order dated 6 April designated territory of a sufficient number of qualified,
1995 denying the motion for reconsideration of the competent and trustworthy underwriters, and to
decision. It faults NLRC for acting without jurisdiction supervise and coordinate the sales efforts of the
and/or with grave abuse of discretion when, contrary to underwriters in the active solicitation of new business
established facts and pertinent law and jurisprudence, it and in the furtherance of the agency’s assigned goals. It
reversed the decision of the Labor Arbiter and held was similarly provIded in the management contract that
instead that the complaint was properly filed as an the relation of the acting unit manager and/or the agents
employer-employee relationship existed between of his unit to the company shall be that of independent
petitioner and private respondent. contractor. If the appointment was terminated for any
reason other than for cause, the acting unit manager
Petitioner reprises the stand it assumed below that would be reverted to agent status and assigned to any
it never had any employer-employee relationship with unit. As in the previous agency contract, De los Reyes
private respondent, this being an express agreement together with his unit force was granted freedom to
between them in the agency contracts, particularly exercise judgment as to time, place and means of
reinforced by the stipulation therein de los Reyes was soliciting insurance. Aside from being granted override
allowed discretion to devise ways and means to fulfill his commissions, the acting unit manager was given
obligations as agent and would be paid commission fees production bonus, development allowance and a unit
based on his actual output. It further insists that the development financing scheme euphemistically termed
nature of this work status as described in the contracts “financial assistance” consisting of payment to him of a
had already been squarely resolved by the Court in the free portion of P300.00 per month and a valIdate portion
earlier case of Insular Life Assurance Co., Ltd. v. NLRC of P1,200.00. While the latter amount was deemed as an
and Basiao [3]where the complainant therein, Melecio advance against expected commissions, the former was
Basiao, was similarly situated as respondent De los not and would be freely given to the unit manager by the
Reyes in that he was appointed first as an agent and company only upon fulfillment by him of certain
then promoted as agency manager, and the contracts manpower and premium quota requirements. The
under which he was appointed contained terms and agents and underwriters recruited and trained by the
acting unit manager would be attached to the unit but be promoted to Unit Manager with the right of petitioner
petitioner reserved the right to determine if such to revert him to agent status when warranted.
assignment would be made or, for any reason, to
reassign them elsewhere. Parenthetically, both petitioner and respondent
NLRC treated the agency contract and the management
Aside from soliciting insurance, De los Reyes was contract entered into between petitioner and De los
also expressly obliged to participate in the company’s Reyes as contracts of agency. We however hold
conservation program, i.e., preservation and otherwise. Unquestionably there exist major distinctions
maintenance of existing insurance policies, and to between the two agreements. While the first has the
accept moneys duly receipted on agent’s receipts earmarks of an agency contract, the second is far
provided the same were turned over to the company. As removed from the concept of agency in that provided
long as he was unit manager in an acting capacity, De therein are conditionalities that indicate an employer-
los Reyes was prohibited from working for other life employee relationship. the NLRC therefore was correct
insurance companies or with the government. He could in finding that private respondent was an employee of
not also accept a managerial or supervisory position in petitioner, but this holds true only insofar as the
any firm doing business in the Philippines without the management contract is concerned. In view thereof, he
written consent of petitioner. Labor Arbiter has jurisdiction over the case.
Private respondent worked concurrently as agent It is axiomatic that the existence of an employer-
and Acting Unit Manager until he was notified by employee relationship cannot be negated by expressly
petitioner on 18 November 1993 that his services were repudiating it in the management contract and providing
terminated effective 18 December 1993. On 7 March therein that the “employee” is an independent contractor
1994 he filed a complaint before the Labor Arbiter on the when the terms of agreement clearly show otherwise.
ground that he was illegally dismissed and that he was For, the employment status of a person is defined and
not paid his salaries and separation pay. prescribed by law and not by what the parties say it
should be.[7] In determining the status of the
Petitioner filed a motion to dismiss the complaint of management contract, the “four-fold test” on
De los Reyes for lack of jurisdiction, citing the absence employment earlier mentioned has to be applied.
of employer-employee relationship. it reasoned out that
based on the criteria for determining the existence of Petitioner contends that De los Reyes was never
such relationship or the so-called “four-fold test,” i.e., (a) required to go through the pre-employment procedures
selection and engagement of employee, (b) payment of and that the probationary employment status was
wages, (c) power of dismissal, and, (d) power of control, reserved only to employees of petitioner. On this score,
De los Reyes was not an employee but an independent it insists that the first requirement of selection and
contractor. engagement of the employee was not met.
On 17 June 1994 the motion of petitioner was A look at the provisions of the contract shows that
granted by the Labor Arbiter and the case was private respondent was appointed as Acting Unit
dismissed on the ground that the element of control was Manager only upon recommendation of the District
not sufficiently established since the rules and Manager.[8] This indicates that private respondent was
guidelines set by petitioner in its agency agreement with hired by petitioner because of the favorable
respondent De los Reyes were formulated only to endorsement of its duly authorized officer. But, this
achieve the desired result without dictating the means or approbation could only have been based on the
methods of attaining it. performance of De los Reyes with petitioner was nothing
more than a trial or probationary period for his eventual
Respondent NLRC however appreciated the appointment as Acting Unit Manager of petitioner. Then,
evidence from a different perspective. It determined that again, the very designation of the appointment of private
respondent De los Reyes was under the effective control respondent as “acting” unit manager obviously implies a
of petitioner in the critical and most important aspects of temporary employment status which may be made
his work as Unit Manager. This conclusion was derived permanent only upon compliance with company
from the provisions in the contract which appointed standards such as those enumerated under Sec. 6 of the
private respondent as Acting Unit Manager, to wit: (a) De management contract.[9]
los Reyes was to serve exclusively the company,
therefore, he was not an independent contractor; (b) he On the matter of payment of wages, petitioner
was required to meet certain manpower and points out that respondent was compensated strictly on
production quota; and, (c) petitioner controlled the commission basis, the amount of which was totally
assignment to and removal of soliciting agents from his dependent on his total output. But, the manager’s
unit. contract speaks differently. Thus –
The NLRC also took into account other 4. Performance Requirements.- To maintain
circumstances showing that petitioner exercised your appointment as Acting Unit Manager you must
employer’s prerogatives over De los Reyes, e.g., (a) meet the following manpower and production
limiting the work of respondent De los Reyes to selling a requirements:
life insurance policy known as “Salary Deduction
Insurance” only to members of the Philippine National Quarter Active Calendar Year
Police, public and private school teachers and other Production Agents Cumulative FYP
employees of private companies; (b) assigning private Production
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) 1ST 2 P125,000
months of his appointment as Acting Unit Manager the 2ND 3 250,000
amount of P1,500.00 as Unit Development Financing of 3RD 4 375,000
which 20% formed his salary and the rest, i.e., 80%, as 4TH 5 500,000
advance of his expected commissions; and (d) promising
that upon completion of certain requirements, he would

5.4 Unit Development Financing (UDF). – As doing business in the Philippines without the
an Acting Unit Manager you shall be given during written consent of the Company; x x x
the first 12 months of your appointment a financial
assistance which is composed of two parts: 2. Complainant was required to meet
certain manpower and production quotas.
5.4.1 Free Portion amounting
to P300 per month, subject to your meeting 3. Respondent (herein petitioner) controlled
prescribed minimum performance the assignment and removal of soliciting agents to
requirement on manpower and premium and from complainant’s unit, thus: x x x 7..2.
production. The free portion is not payable by Assignment of Agents: Agents recruited and
you. trained by you shall be attached to your unit
unless for reasons of Company policy, no such
5.4.2 Validate Portion assignment should be made. The Company
amounting to P1,200 per month, also subject retains the exclusive right to assign new soliciting
to meeting the same prescribed minimum agents appointed and assigned to the saId unit x x
performance requirements on manpower and xx
premium production. The valIdated portion is
an advance against expected compensation It would not be amiss to state the respondent’s duty
during the UDF period and thereafter as may to collect the company’s premiums using company
be necessary. receipts under Sec. 7.4 of the management contract is
further evIdence of petitioner’s control over respondent,
The above provisions unquestionably demonstrate thus:
that the performance requirement imposed on De los
Reyes was applicable quarterly while his entitlement to xxxx
the free portion (P300) and the validated portion
(P1,200) was monthly starting on the first month of the 7.4 Acceptance and Remittance of Premiums. – x x x x
twelve (12) months of the appointment. Thus, it has to the Company hereby authorizes you to accept and
be admitted that even before the end of the first quarter receive sums of money in payment of premiums, loans,
and prior to the so-called quarterly performance deposits on applications, with or without interest, due
evaluation, private respondent was already entitled to be from policy holders and applicants for insurance, and the
paid both the free and validated portions of the UDF like, specially from policyholders of business solicited
every month because his production performance could and sold by the agents attached to your unit provIded
not be determined until after the lapse of the quarter however, that all such payments shall be duly receipted
involved. This indicates quite clearly that the unit by you on the corresponding Company’s “Agents’
manager’s quarterly performance had no bearing at all Receipt” to be provIded you for this purpose and to be
on his entitlement at least to the free portion of the UDF covered by such rules and accounting regulations the
which for all intents and purposes comprised the salary Company may issue from time to time on the matter.
regularly paid to him by petitioner. Thus it cannot be Payments received by you shall be turned over to the
validly claimed that the financial assistance consisting of Company’s designated District or Service Office clerk or
the free portion of the UDF was purely dependent on the directly to the Home Office not later than the next
premium production of the agent. Be that as it may, it is working day from receipt thereof x x x x
worth considering that the payment of compensation by
way of commission does not militate against the Petitioner would have us apply our ruling in Insular
conclusion that private respondent was an employee of Life Assurance Co., Ltd. v. NLRC and Basiao [12] to the
petitioner. Under Art. 97 of the Labor Code, “wage” shall instant case under the doctrine of stare decisis,
mean “however designated, capable of being expressed postulating that both cases involve parties similarly
in terms of money, whether fixed or ascertained on a situated and facts which are almost Identical.
time, task, price or commission basis x x x x” [10]
But we are not convinced that the cited case is on
As to the matter involving the power of dismissal all fours with the case at bar. In Basiao, the agent was
and control by the employer, the latter of which is the appointed Agency Manager under an Agency Manager
most important of the test, petitioner asserts that its Contract. To implement his end of the agreement,
termination of De los Reyes was but an exercise of its Melecio Basiao organized an agency office to which he
inherent right as principal under the contracts and that gave the name M. Basiao and Associates. The Agency
the rules and guIdelines it set forth in the contract Manager Contract practically contained the same terms
cannot, by any stretch of imagination, be deemed as an and conditions as the Agency Contract earlier entered
exercise of control over the private respondent as these into, and the Court observed that “drawn from the terms
were merely directives that fixed the desired result of the contract they had entered into, (which) either
without dictating the means or method to be employed in expressly or by necessary implication, Basiao (was)
attaining it. The following factual findings of the made the master of his own time and selling methods,
NLRC[11] however contradict such claims: left to his own judgment the time, place and means of
soliciting insurance, set no accomplishment quotas and
A perusal of the appointment of complainant as Acting compensated him on the bases of results obtained. He
Unit Manager reveals that: was not bound to observe any schedule of working
hours or report to any regular station; he could seek and
1. Complainant was to “exclusively” serve work on his prospects anywhere and anytime he chose
respondent company. Thus it is provIded: x x x to and was free to adopt the selling methods he deemed
7..7 Other causes of Termination: This most effective.” Upon these premises, Basiao was
Appointment may likewise be terminated for any of considered as agent – an independent contractor – of
the following causes: x x x 7..7..2. Your entering petitioner INSULAR LIFE.
the service of the government or another life Unlike Basiao, herein respondent De los Reyes was
insurance company; 7..7..3. Your accepting a appointed Acting Unit Manager, not agency manager.
managerial or supervisory position in any firm
There is not evidence that to implement his obligations HONORATO JUDICO and NATIONAL LABOR
under the management contract, De los Reyes had RELATIONS COMMISSION, respondents.
organized an office. Petitioner in fact has admitted that it
provIded De los Reyes a place and a table at its office Before us is a Petition for certiorari to review the
where he reported for and worked whenever he was not decision of the National Labor Relations Commission
out in the field. Placed under petitioner’s Cebu District (NLRC, for brevity) dated September 9, 1985 reversing
Service Office, the unit was given a name by petitioner – the decision of Labor Arbiter Vito J. Minoria, dated June
De los Reyes and Associates – and assigned Code No. 9, 1983, by 1) ordering petitioner insurance company,
11753 and Recruitment No. 109398. Under the Great Pacific Life Assurance Corporation (Grepalife, for
managership contract, De los Reyes was obliged to work brevity) to recognize private respondent Honorato
exclusively for petitioner in life insurance solicitation and Judico, as its regular employee as defined under Art.
was imposed premium production quotas. Of course, the 281 of the Labor Code and 2) remanding the case to its
acting unit manager could not underwrite other lines of origin for the determination of private respondent
insurance because his Permanent Certificate of Judico's money claims.
Authority was for life insurance only and for no other. He
was proscribed from accepting a managerial or The records of the case show that Honorato Judico filed
supervisory position in any other office including the a complaint for illegal dismissal against Grepalife, a duly
government without the written consent of petitioner. De organized insurance firm, before the NLRC Regional
los Reyes could only be promoted to permanent unit Arbitration Branch No. VII, Cebu City on August 27,
manager if he met certain requirements and his 1982. Said complaint prayed for award of money claims
promotion was recommended by the petitioner’s District consisting of separation pay, unpaid salary and 13th
Manager and Regional Manager and approved by its month pay, refund of cash bond, moral and exemplary
Division Manager. As Acting Unit Manager, De los damages and attorney's fees.
Reyes performed functions beyond mere solicitation of
insurance business for petitioner. As found by the NLRC,
he exercised administrative functions which were Both parties appealed to the NLRC when a decision was
necessary and beneficial to the business of INSULAR rendered by the Labor Arbiter dismissing the complaint
LIFE. on the ground that the employer-employee relations did
not exist between the parties but ordered Grepalife to
In Great Pacific Life Insurance Company v. pay complainant the sum of Pl,000.00 by reason of
NLRC[13] which is closer in application that Basiao to this Christian Charity.
present controversy, we found that “the relationships of
the Ruiz brothers and Grepalife were those of employer- On appeal, said decision was reversed by the NLRC
employee. First, their work at the time of their dismissal ruling that complainant is a regular employee as defined
as zone supervisor and district manager was necessary under Art. 281 of the Labor Code and declaring the
and desirable to the usual business of the insurance appeal of Grepalife questioning the legality of the
company. They were entrusted with supervisory, sales payment of Pl,000.00 to complainant moot and
and other functions to guard Grepalife’s business academic. Nevertheless, for the purpose of revoking the
interests and to bring in more clients to the company, supersedeas bond of said company it ruled that the
and even with administrative functions to ensure that all Labor Arbiter erred in awarding Pl,000.00 to complainant
collections, reports and data are faithfully brought to the in the absence of any legal or factual basis to support its
company x x x x A cursory reading of their respective payment.
functions as enumerated in their contracts reveals that
the company practically dictates the manner by which
Petitioner company moved to reconsider, which was
their jobs are to be carried out x x x x” We need
denied, hence this petition for review raising four legal
elaborate no further.
issues to wit:
Exclusivity of service, control of assignments and
removal of agents under private respondent’s unit, I. Whether the relationship between
collection of premiums, furnishing of company facilities insurance agents and their principal, the
and materials as well as capital described as Unit insurance company, is that of agent and
Development Fund are but hallmarks of the principal to be governed by the
management system in which herein private respondent Insurance Code and the Civil Code
worked. This obtaining, there is no escaping the provisions on agency, or one of
conclusion that private respondent Pantaleon de los employer-employee, to be governed by
Reyes was an employee of herein petitioner. the Labor Code.
WHEREFORE, the petition of Insular Life
Assurance Company, Ltd., is DENIED and the Decision II. Whether insurance agents are
of the National Labor Relations Commission dated 3 entitled to the employee benefits
March 1995 and its Order of 6 April 1996 sustaining it prescribed by the Labor Code.
are AFFIRMED. Let this case be REMANDED to the
Labor Arbiter a quo who is directed to hear and dispose III. Whether the public respondent
of this case with deliberate dispatch in light of the views NLRC has jurisdiction to take
expressed herein. cognizance of a controversy between
insurance agent and the insurance
SO ORDERED. company, arising from their agency
== relations.

G.R. No. 73887 December 21, 1989 IV. Whether the public respondent acted
correctly in setting aside the decision of
GREAT PACIFIC LIFE ASSURANCE Labor Arbiter Vito J. Minoria and in
CORPORATION, petitioner, ordering the case remanded to said

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
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
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.

Premises considered, the appealed decision is hereby Petitioner appealed to the NLRC which, on August
AFFIRMED in toto. 30, 1993, dismissed the appeal for lack of merit. The
NLRC dismissed petitioner’s claim that it cannot be held
SO ORDERED. 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]
G.R. No. 112574. October 8, 1998] The NLRC likewise denied petitioner’s motion for
reconsideration of its decision in its order dated October
25, 1993.
its President DOMINGO B.
NAVAL, petitioner, vs. NATIONAL LABOR Hence, this petition. Petitioner contends:
AGAO, JR., respondents. I

This is a petition for certiorari to set aside the THE RESPONDENT COMMISSION PALPABLY
decision, dated August 30, 1993, of the National Labor ERRED IN RULING AND SUSTAINING THE VIEW
Relations Commission dismissing the appeal of THAT FISHING CREW MEMBERS, LIKE FERMIN
petitioner Mercidar Fishing Corporation from the decision AGAO, JR., CANNOT BE CLASSIFIED AS FIELD
of the Labor Arbiter in NLRC NCR Case No. 09-05084- PERSONNEL UNDER ARTICLE 82 OF THE LABOR
90, as well as the resolution dated October 25, 1993, of CODE.
the NLRC denying reconsideration.
This case originated from a complaint filed on II
September 20, 1990 by private respondent Fermin
Agao, Jr. against petitioner for illegal dismissal, violation THE RESPONDENT COMMISSION ACTED WITH
of P.D. No. 851, and non-payment of five days service GRAVE ABUSE OF DISCRETION AMOUNTING TO
incentive leave for 1990. Private respondent had been LACK OF JURISDICTION WHEN IT UPHELD THE
employed as a “bodegero” or ship’s quartermaster on FINDINGS OF THE LABOR ARBITER THAT HEREIN
February 12, 1988. He complained that he had been PETITIONER HAD CONSTRUCTIVELY DISMISSED
constructively dismissed by petitioner when the latter FERMIN AGAO, JR., FROM EMPLOYMENT.
refused him assignments aboard its boats after he had
reported to work on May 28, 1990.[1] The petition has no merit.
Private respondent alleged that he had been sick Art. 82 of the Labor Code provides:
and thus allowed to go on leave without pay for one
month from April 28, 1990 but that when he reported to ART. 82. Coverage. - The provisions of this
work at the end of such period with a health clearance, Title [Working Conditions and Rest Periods]
he was told to come back another time as he could not shall apply to employees in all establishments
be reinstated immediately. Thereafter, petitioner refused and undertakings whether for profit or not, but
to give him work. For this reason, private respondent not to government employees, field personnel,
asked for a certificate of employment from petitioner on members of the family of the employer who
September 6, 1990. However, when he came back for are dependent on him for support, domestic
the certificate on September 10, petitioner refused to helpers, persons in the personal service of
issue the certificate unless he submitted his another, and workers who are paid by results
resignation. Since private respondent refused to submit as determined by the Secretary of Labor in
such letter unless he was given separation pay, appropriate regulations.
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 “Field personnel” shall refer to non-agricultural
claimed that the latter failed to report for work after his employees who regularly perform their duties
leave had expired and was, in fact, absent without leave away from the principal place of business or
for three months until August 28, 1998. Petitioner further branch office of the employer and whose
claims that, nonetheless, it assigned private respondent actual hours of work in the field cannot be
to another vessel, but the latter was left behind on determined with reasonable certainty.
September 1, 1990. Thereafter, private respondent Petitioner argues essentially that since the work of
asked for a certificate of employment on September 6 on private respondent is performed away from its principal
the pretext that he was applying to another fishing place of business, it has no way of verifying his actual
company. On September 10, 1990, he refused to get hours of work on the vessel. It contends that private
the certificate and resign unless he was given separation respondent and other fishermen in its employ should be
pay.[3] classified as “field personnel” who have no statutory right
On February 18, 1992, Labor Arbiter Arthur L. to service incentive leave pay.
Amansec rendered a decision disposing of the case as In the case of Union of Filipro Employees (UFE) v.
follows: Vicar,[5] this Court explained the meaning of the phrase
ACCORDINGLY, respondents are ordered to “whose actual hours of work in the field cannot be
reinstate complainant with backwages, pay determined with reasonable certainty” in Art. 82 of the
him his 13th month pay and incentive leave Labor Code, as follows:
pay for 1990. Moreover, the requirement that “actual hours
of work in the field cannot be determined with
All other claims are dismissed. reasonable certainty” must be read in
conjunction with Rule IV, Book III of the
SO ORDERED. Implementing Rules which provides:
Rule IV Holidays with Pay
Section 1. Coverage - This rule shall dismissed by petitioner. Such factual finding of both the
apply to all employees except: 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
(e) Field personnel and other respondent presented when he reported to work on May
employees whose 28, 1990.[9] As the NLRC held:
time and performance is Anent grounds (a) and (b) of the appeal, the
unsupervised by the employer xxx respondent, in a nutshell, would like us to
(Italics supplied) believe that the Arbiter abused his discretion
While contending that such rule added (or seriously erred in his findings of facts) in
another element not found in the law (Rollo, p. giving credence to the factual version of the
13), the petitioner nevertheless attempted to complainant. But it is settled that “(W)hen
show that its affected members are not confronted with conflicting versions of factual
covered by the abovementioned rule. The matters,” the Labor Arbiter has the “discretion
petitioner asserts that the company’s sales to determine which party deserves credence
personnel are strictly supervised as shown by on the basis of evidence received.” [Gelmart
the SOD (Supervisor of the Day) schedule and Industries (Phils.), Inc. vs. Leogardo, 155
the company circular dated March 15, 1984 SCRA 403, 409, L-70544, November 5,
(Annexes 2 and 3, Rollo, pp. 53-55). 1987]. And besides, it is settled in this
jurisdiction that “to constitute abandonment of
Contrary to the contention of the petitioner, the position, there must be concurrence of the
Court finds that the aforementioned rule did intention to abandon and some overt acts from
not add another element to the Labor Code which it may be inferred that the employee
definition of field personnel. The clause concerned has no more interest in working”
“whose time and performance is unsupervised (Dagupan Bus Co., Inc. vs. NLRC, 191 SCRA
by the employer” did not amplify but merely 328), and that the filing of the complaint which
interpreted and expounded the clause “whose asked for reinstatement plus backwages
actual hours of work in the field cannot be (Record, p. 20) is inconsistent with
determined with reasonable certainty.” The respondents’ defense of abandonment (Hua
former clause is still within the scope and Bee Shirt Factory vs. NLRC, 188 SCRA 586).
purview of Article 82 which defines field [10]

personnel. Hence, in deciding whether or not

an employee’s actual working hours in the It is trite to say that the factual findings of quasi-
field can be determined with reasonable judicial bodies are generally binding as long as they are
certainty, query must be made as to whether supported substantially by evidence in the record of the
or not such employee’s time and performance case.[11] This is especially so where, as here, the agency
is constantly supervised by the employer.[6] and its subordinate who heard the case in the first
instance are in full agreement as to the facts.[12]
Accordingly, it was held in the aforementioned case
that salesmen of Nestle Philippines, Inc. were field As regards the labor arbiter’s award which was
personnel: affirmed by respondent NLRC, there is no reason to
apply the rule that reinstatement may not be ordered if,
It is undisputed that these sales personnel as a result of the case between the parties, their relation
start their field work at 8:00 a.m. after having is strained.[13] Even at this late stage of this dispute,
reported to the office and come back to the petitioner continues to reiterate its offer to reinstate
office at 4:00 p.m. or 4:30 p.m. if they are private respondent.[14]
WHEREFORE, the petition is DISMISSED.
The petitioner maintains that the period
between 8:00 a.m. to 4:00 or 4:30 p.m. SO ORDERED.
comprises the sales personnel’s working ==
hours which can be determined with Mercidar Fishing Corporation vs. NLRC, G.R. No. 112574.
reasonable certainty. October 8, 1998; 297 SCRA 440
The Court does not agree. The law requires Posted by Pius Morados on November 10, 2011
that the actual hours of work in the field be (Labor Standards – Fishermen are not field personnels,
reasonably ascertained. The company has no Article 82)
way of determining whether or not these sales Facts : Private respondent employed as a “bodegero” or
personnel, even if they report to the office ship’s quartermaster complained of being constructively
before 8:00 a.m. prior to field work and come dismissed by petitioner corporation when the latter
back at 4:30 p.m., really spend the hours in refused him assignments aboard its boats after he had
between in actual field work.[7] reported to work. The Larbor Arbiter rendered a decision
ordering petitioner corporation to reinstate complainant
In contrast, in the case at bar, during the entire with back wages, pay him his 13th month pay and
course of their fishing voyage, fishermen employed by incentive leave. Petitioner claims that it cannot be held
petitioner have no choice but to remain on board its liable for service incentive leave pay by fishermen in its
employ as the latter supposedly are “field personnel” and
vessel. Although they perform non-agricultural work thus not entitled to such pay under the Labor Code.
away from petitioner’s business offices, the fact remains Article 82 of the Labor Code provides among others that
that throughout the duration of their work they are under “field personnel” shall refer to non-agricultural
the effective control and supervision of petitioner through employees who regularly perform their duties away from
the vessel’s patron or master as the NLRC correctly the principal place of business or branch of office of the
held.[8] employer and whose actual hours of work in the field
cannot be determined with reasonable certainty.
Neither did petitioner gravely abuse its discretion in
ruling that private respondent had constructively been Issue : WON fishermen are considered field personnel.

Held : No. Although fishermen perform non-agricultural [1990]: Pearl S. Buck Foundation, Inc. v. National Labor
work away from their employer’s business offices, the Relations Commission, 182 SCRA 446 [1990]).
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. 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
G.R. No. 85073 August 24, 1993 leaves, premiums for work done on rest days and
special holidays, and pay for regular holidays may be
DAVAO FRUITS CORPORATION, petitioner, excluded in the computation and payment thereof,
vs. regardless of long-standing company practice.
all the rank-and-file workers/employees of DAVAO Presidential Decree No. 851, promulgated on December
FRUITS CORPORATION and NATIONAL LABOR 16, 1975, mandates all employers to pay their
RELATIONS COMMISSION, respondents. employees a thirteenth month pay. How this pay shall be
computed is set forth in Section 2 of the "Rules and
This is a petition for certiorari to set aside the resolution Regulations Implementing Presidential Decree No. 851,"
of the National Labor Relations Commission (NLRC), thus:
dismissing for lack of merit petitioner's appeal from the
decision of the Labor Arbiter in NLRC Case No. 1791- SECTION 2. . . .
(a) "Thirteenth month pay" shall mean
On December 28, 1982 respondent Associated Labor one twelfth (1/12) of the basic salary of
Unions (ALU), for and in behalf of all the rank-and-file an employee within a calendar year.
workers and employees of petitioner, filed a complaint
(NLRC Case No. 1791-MC-XI-82) before the Ministry of (b) "Basic Salary" shall include all
Labor and Employment, Regional Arbitration Branch XI, renumerations or earnings paid by an
Davao City, against petitioner, for "Payment of the employer to an employee for services
Thirteenth-Month Pay Differentials." Respondent ALU rendered but may not include cost of
sought to recover from petitioner the thirteenth month living allowances granted pursuant to
pay differential for 1982 of its rank-and-file employees, Presidential Decree No. 525 or Letter of
equivalent to their sick, vacation and maternity leaves, Instructions No. 174, profit-sharing
premium for work done on rest days and special payments, and all allowances and
holidays, and pay for regular holidays which petitioner, monetary benefits which are not
allegedly in disregard of company practice since 1975, considered or integrated as part of the
excluded from the computation of the thirteenth month regular or basic salary of the employee
pay for 1982. at the time of the promulgation of the
Decree on December 16, 1975.
In its answer, petitioner claimed that it erroneously
included items subject of the complaint in the The Department of Labor and Employment issued on
computation of the thirteenth month pay for the years January 16, 1976 the "Supplementary Rules and
prior to 1982, upon a doubtful and difficult question of Regulations Implementing P.D. No. 851" which in
law. According to petitioner, this mistake was discovered paragraph 4 thereof further defines the term "basic
only in 1981 after the promulgation of the Supreme salary," thus:
Court decision in the case of San Miguel Corporation v.
Inciong (103 SCRA 139). 4. Overtime pay, earnings and other
renumerations which are not part of the
A decision was rendered on March 7, 1984 by Labor basic salary shall not be included in the
Arbiter Pedro C. Ramos, in favor of respondent ALU. computation of the 13th month pay.
The dispositive portion of the decision reads as follows:
Clearly, the term "basic salary" includes renumerations
WHEREFORE, in view of all the or earnings paid by the employer to employee, but
foregoing considerations, judgment is excludes cost-of-living allowances, profit-sharing
hereby rendered ordering respondent to payments, and all allowances and monetary benefits
pay the 1982 — 13th month pay which have not been considered as part of the basic
differential to all its rank-and-file salary of the employee as of December 16, 1975. The
workers/employees herein represented exclusion of cost-of-living allowances and profit sharing
by complainant Union (Rollo, p. 32). payments shows the intention to strip "basic salary" of
payments which are otherwise considered as "fringe"
Petitioner appealed the decision of the Labor Arbiter to benefits. This intention is emphasized in the catch all
the NLRC, which affirmed the said decision accordingly phrase "all allowances and monetary benefits which are
dismissed the appeal for lack of merit. not considered or integrated as part of the basic salary."
Basic salary, therefore does not merely exclude the
Petitioner elevated the matter to this Court in a petition benefits expressly mentioned but all payments which
for review under Rule 45 of the Revised Rules of Court. may be in the form of "fringe" benefits or allowances
This error notwithstanding and in the interest of justice, (San Miguel Corporation v. Inciong, supra, at 143-144).
this Court resolved to treat the instant petition as a In fact, the Supplementary Rules and Regulations
special civil action for certiorari under Rule 65 of the Implementing P.D. No. 851 are very emphatic in
Revised Rules of Court (P.D. No. 1391, Sec. 5; Rules declaring that overtime pay, earnings and other
Implementing P.D. No. 1391, Rule II, Sec. 7; Cando v. renumerations shall be excluded in computing the
National Labor Relations Commission, 189 SCRA 666 thirteenth month pay.

In other words, whatever compensation an employee 1976, barely one month after the effectivity of P.D. No.
receives for an eight-hour work daily or the daily wage 851 and its Implementing Rules. And yet, petitioner
rate in the basic salary. Any compensation or computed and paid the thirteenth month pay, without
remuneration other than the daily wage rate is excluded. excluding the subject items therein until 1981. Petitioner
It follows therefore, that payments for sick, vacation and continued its practice in December 1981, after
maternity leaves, premium for work done on rest days promulgation of the afore-quoted San Miguel decision on
special holidays, as well as pay for regular holidays, are February 24, 1981, when petitioner purportedly
likewise excluded in computing the basic salary for the "discovered" its mistake.
purpose of determining the thirteen month pay.
From 1975 to 1981, petitioner had freely, voluntarily and
Petitioner claims that the mistake in the interpretation of continuously included in the computation of its
"basic salary" was caused by the opinions, orders and employees' thirteenth month pay, the payments for sick,
rulings rendered by then Acting Labor Secretary Amado vacation and maternity leaves, premiums for work done
C. Inciong, expressly including the subject items in on rest days and special holidays, and pay for regular
computing the thirteenth month pay. The inclusion of holidays. The considerable length of time the questioned
these items is clearly not sanctioned under P.D. No. 851, items had been included by petitioner indicates a
the governing law and its implementing rules, which unilateral and voluntary act on its part, sufficient in itself
speak only of "basis salary" as the basis for determining to negate any claim of mistake.
the thirteenth month pay.
A company practice favorable to the employees had
Moreover, whatever doubt arose in the interpretation of indeed been established and the payments made
P.D. No. 851 was erased by the Supplementary Rules pursuant thereto, ripened into benefits enjoyed by them.
and Regulations which clarified the definition of "basic And any benefit and supplement being enjoyed by the
salary." employees cannot be reduced, diminished, discontinued
or eliminated by the employer, by virtue of Section 10 of
As pointed out in San Miguel Corporation v. Inciong, the Rules and Regulations Implementing P.D. No. 851,
(supra): 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,
While doubt may have been created by
Jr., 122 SCRA 267, [1983]).
the prior Rules and Regulations and
Implementing Presidential Decree 851
which defines basic salary to include all Petitioner cannot invoke the principle of solutio
remunerations or earnings paid by an indebiti which as a civil law concept that is not applicable
employer to an employee, this cloud is in Labor Law. Besides, in solutio indebiti, the obligee is
dissipated in the later and more required to return to the obligor whatever he received
controlling Supplementary Rules and from the latter (Civil Code of the Philippines, Arts. 2154
Regulations which categorically, exclude and 2155). Petitioner in the instant case, does not
from the definition of basic salary demand the return of what it paid respondent ALU from
earnings and other remunerations paid 1975 until 1981; it merely wants to "rectify" the error it
by employer to an employee. A cursory made over these years by excluding unilaterally from the
perusal of the two sets of Rules thirteenth month pay in 1982 the items subject of
indicates that what has hitherto been the litigation. Solutio indebiti, therefore, is not applicable to
subject of broad inclusion is now a the instant case.
subject of broad exclusion. The
Supplementary Rules and Regulations WHEREFORE, finding no grave abuse of discretion on
cure the seeming tendency of the former the part of the NLRC, the petition is hereby DISMISSED,
rules to include all remunerations and and the questioned decision of respondent NLRC is
earnings within the definition of basic AFFIRMED accordingly.
The all-embracing phrase "earnings and G.R. No. L-12950 December 9, 1959
other remunerations which are deemed
not part of the basic salary includes BENJAMIN CELESTIAL, ET AL. Petitioners,
within its meaning payments for sick, vs. THE SOUTHERN MINDANAO
vacation, or maternity leaves, premium
for work performed on rest days and
AL., Respondents.
special holidays, pay for regular
holidays and night differentials. As such
they are deemed not part of the basic This is a petition by Benjamin Celestial and 175
salary and shall not be considered in the others for review of the decision of the Auditor
computation of the 13th-month pay. If General, dated September 9, 1957, denying their
they were not so excluded, it is hard to claim for differential pay under the Minimum
find any "earnings and other Wage Law.
remunerations" expressly excluded in
computation of the 13th month-pay. The record discloses that petitioner are
Then the exclusionary provision would employees and/or workers of the Southern
prove to be idle and with purpose. Mindanao Experimental Station, later referred to
as Experimental Station, Bureau of Plant Industry
The "Supplementary Rules and Regulations in Davao City, and that since 1952 they had been
Implementing P.D. No. 851," which put to rest all doubts paid each a daily wage of P2.50; that some time
in the computation of the thirteenth month pay, was in March 1957, petitioners filed with the Auditor
issued by the Secretary of Labor as early as January 16,
General's Office their claims for differential pay,
alleging among other things that they were and disseminate useful information pertaining to
entitled to the minimum wage of P4.00 a day, agriculture in the Philippines, to encourage the
instead of P2.50, which was actually paid them use of improved agriculture methods; and, in
by the Experimental Station; and that as already general, to promote the development of the
stated, on September 9, 1957, the Auditor agriculture resources of the Philippines, as
General rendered a decision, holding that follows:
petitioner were not entitled to the minimum daily
wage of P4.00, but only to P2.50. (a) By the introduction of new domesticated
animals, and the improvement of the breeds of
The resolution of this case depends upon the domesticated animal now found in the
interpretation and application of Section 3 (a), Philippines;
(b) and (c) of the Minimum Wage Law, which we
reproduce below for purposes of ready reference: (b) By the control and eradication of diseases of
live stock;
SEC. 3. Minimum wage. - (a) Every employer
shall pay to each of his employees who is (c) By the investigation of soil and climate
employed by an enterprise other than in conditions, and the methods of producing and
agriculture wage at the rate of not less than - handling agriculture products;

(1) . . . . (d) By the introduction, production, and

distribution of improved seeds and plants;
(2) Three pesos a day on the effective date of
this Act and for one year after the effective date, (e) By the control and eradication of diseases,
and thereafter P4.00 a day, for employees of insects, and other pests injurious to cultivated
establishment located outside of Manila or its plants;
environs: . . . .
(f) By the operation of a system of demonstration
(b) Every employer who operates a farm and agriculture extension work;
enterprise comprising more than 12 hectares
shall pay each of his employees who is engaged (g) By the collection of agricultural statistics; and
in agriculture, wage at the rate of not less than -
(h) By the publication and distribution of
(1) . . ., (2) . . .; bulletins, circulars, and other printed matter.

(3) One year thereafter, P2.50 a day and no SEC. 1754. Experiment station, farms, and
allowance for board and lodging shall reduce this stations for agricultural instruction. - In such
wage below P2.25 in cash. place in the Philippines as may be considered
suitable for the purpose, the Director of Plant
(c) Effective on the first of July, nineteen hundred Industry, with the approval of the Head of the
and fifty-two, the minimum wage rates for Department, shall be funds shall be available
employees in the Government service shall be therefore, establish, equip, maintain, and operate
those provided in subsection (a) and (b) of this experiment stations, farms, stock farms, and
section . . . station for practical agriculture instruction.

From the legal provisions above-reproduce, it will (In the Bureau of Agriculture is also vested the
readily be seen that in order that an employee or supervision and control of American agriculture
laborer may be paid the minimum wage of P2.50 colonies).
a day, he must be employed by an enterprise (in
this case, the Southern Mindanao Experimental On the basis of the legal provision above-
Station) engaged in agriculture; that said reproduced, we are of the opinion that both the
employer operates s farm comprising more than Bureau of Plant Industry and Experimental
12 hectares; and that the employee or laborer is Station, particularly the latter, are engaged in
engaged in agriculture. The second condition is agriculture or are dedicated to agricultural
satisfied because the Experimental Station is functions, specially when we take into
operating a farm comprising 960 hectares. The consideration the definition of agriculture in
next question to be decided is whether or not Section 2 of the Minimum Wage Law itself,
said Experimental Station is engaged in Republic Act No. 602, which is as follow:
agriculture. To determine this, we have to go
back to the function of the Bureau of Plant
Agriculture includes faring in all its branches and
Industry (Section 1753, Revised Administrative
among other things include the cultivation and
Code) of which the Experimental Station is an
things of the soil, dairying, the production,
agency or adjunction, said Experimental Station
cultivation, growing, and harvesting of any
being provided for in Section 1754 of the same
agricultural or horticular commodities, the raising
Revised Administrative Code. Said two sections
of livestock or poultry, and any practice
are reproduced below for ready reference:
performer by a farmer or on a farm as an
incident to or in conjunction with such farming
SEC. 1753. Function of Bureau of Plant Industry. operations, but does not include the
- It shall be the function of said Bureau to collect manufacturing or processing of sugar, coconut,
abaca, tobacco, pineapples or other farm agricultural workers; consequently, they may
products. receive a only the minimum wage of P2.50 a day,
prescribed for workers engaged in agriculture.
And is a matter of public knowledge that
experimental stations maintained by the Bureau But petitioners contend that the Bureau of Plant
of Plant Industry, specially when done on a big Industry and Experimental Station could not be
scale like the Southern Mindanao Experimental engaged in agriculture for the reason that their
Station that operates a farm comprising 960 farm enterprise is not for profit. In answer to this
hectares, though its employees and laborers, contention, it is enough to say that Minimum
actually till the soil, introduce and plant seeds of Wage Law in defining agriculture, does not
the best crop varieties found by it after study and prescribe the condition that the person or entity
experiment, raise said crops in the best approved is engaged in it for purposes of profit. We can
methods of cultivation, including the spacing of well imagine a person interested in research and
each plant or seedling and the amount of water scientific agriculture who proceeds to cultivate a
needed though irrigation, weeding, et., and the little farm of, say, one or two hectares, to put
proper harvesting of the crop, including the into practice the results of his research,
timing and method, all for the instruction and introducing in the cultivation the most modern
benefit of Philippine farmers, and to foster methods, the most suitable fertilizers, etc., so
agriculture in the country. Included in this that a hectare so cultivated can produce, say,
cultivation is the discovery of plant pests and from 250 to 300 cavans of palay and incidentally
their eradication by means of treatment with the to compete a prize or a medal offered by the
proper insecticides. Thereafter, from the harvest Government or any of its agencies. The fact that
are extracted the seeds which are called certified he does not cultivate the farm for purposes of
seeds, for sale and distribution to farmers. There profit, but rather in the interest of science and to
can be no question that all these acts and prove his scientific and agricultural theories, and
function fall within the definition of agriculture incidentally enter the contest for a prize, does not
provided in the Minimum Wage Law, and, make him less agriculturist and his activities as
consequently, are agricultural as distinguished agriculture.
from no-agricultural functions. It follows that the
laborers and farm workers who actually carry out Incidentally, it may be stated that the Secretary
and perform these functions are also engaged in of Justice in an opinion rendered in connection
agriculture. It is possible that not all the laborers with the different activities of the Davao Regional
and employees in the Experimental Station are Fiber Station, holds that the laborers and
actually engaged in preparing the land for employees of said fiber experimental station are
planting, such as plowing, tilling, and planting the not entitled to the minimum wage of P4.00.
seeds or seedlings, in weeding the farm, in
treating plant diseases and harvesting crops. In view of the foregoing, the decision appealed
some employees may be engaged in office work, from is hereby reversed affirmed. No costs.
such as, clerks, supervisors, maintenance
workers, etc. But inasmuch as they are all ==
employed by the Experimental Station, which is a
G.R. No. 122827. March 29, 1999]
farm enterprise, and their work is incidental to
agriculture, they may also be considered as LIDUVINO M. MILLARES, et. al, petitioners,
agricultural workers and employees. vs. NATIONAL LABOR RELATIONS
Interpretative Bulletin No. 14, issued by the COMMISSION, (FIFTH DIVISION), and
United States Wage Administration Service, PAPER INDUSTRIES CORPORATION OF
implementing the provisions of the Fair Labor THE PHILIPPINES (PICOP), respondents.
Standards Act of the United States of 1938, from
which our Minimum Wage Law was copied Petitioners numbering one hundred sixteen (116)
(Morave: Minimum Wage Law, p. 279), under the occupied the positions of Technical Staff, Unit
title "Office Workers, Etc.," says: Manager, Section Manager, Department Manager,
Division Manager and Vice President in the mill site of
Office Workers, Etc. respondent Paper Industries Corporation of the
Philippines (PICOP) in Bislig, Surigao del Sur. In 1992
12. We have received inquiries concerning office PICOP suffered a major financial setback allegedly
help - secretaries, clerks, bookkeepers, etc., brought about by the joint impact of restrictive
night watchmen, maintenance workers, government regulations on logging and the economic
engineers, etc., who are employed by a farmer or crisis. To avert further losses, it undertook a
a farm in connection with the activities described retrenchment program and terminated the services of
in the definition of "agriculture" contained in petitioners. Accordingly, petitioners received separation
section 3 (f). In our opinion such employees are pay computed at the rate of one (1) month basic pay for
exempt. (Teller" Labor Disputes and Collective every year of service. Believing however that the
Bargaining, Vol. II, p. 1209) allowances they allegedly regularly received on a
monthly basis during their employment should have
The above-reproduced portion of the bulletin, been included in the computation thereof they lodged a
applied in this jurisdiction, means that the complaint for separation pay differentials.
employees mentioned therein are not governed
by our Minimum Wage Law, as regards the The allowances in question pertained to the
minimum wage of P4.00 a day for non- following -
1. Staff/Manager's Allowance - considered in point was Estate of the late Eugene J.
Kneebone v. NLRC[6] where the Court held that
Respondent PICOP provides free housing facilities to representation and transportation allowances were
supervisory and managerial employees assigned in deemed not part of salary and should therefore be
Bislig. The privilege includes free water and electric excluded in the computation of separation
consumption. Owing however to shortage of such benefits. Relating the present case with Art. 97, par. (f),
facilities, it was constrained to grant Staff allowance of the Labor Code, the NLRC likewise found that
instead to those who live in rented houses outside but petitioners' allowances were contingency-based and thus
near the vicinity of the mill site. But the allowance not included in their salaries. On 26 September 1995
ceases whenever a vacancy occurs in the company's reconsideration was denied.[7]
housing facilities. The former grantee is then directed to
In this petition for certiorari, petitioners submit that
fill the vacancy. For Unit, Section and Department
their allowances are included in the definition of
Managers, respondent PICOP gives an additional
"facilities" in Art. 97, par. (f), of the Labor Code, being
amount to meet the same kind of expenses called
necessary and indispensable for their existence and
Manager's allowance.
subsistence. Furthermore they claim that their availment
of the monetary equivalent of those "facilities" on a
2. Transportation Allowance - monthly basis was characterized by permanency,
regularity and customariness. And to fortify their
To relieve respondent PICOP's motor pool in Bislig from arguments they insist on the applicability of Santos,
a barrage of requests for company vehicles and to [8]
Soriano,[9] The Insular Life Assurance Company,
stabilize company vehicle requirements it grants [10]
Planters Products, Inc.[11] and Songco[12] which are all
transportation allowance to key officers and Managers against the NLRC holding that the salary base in
assigned in the mill site who use their own vehicles in computing separation pay includes not just the basic
the performance of their duties. It is a conditional grant salary but also the regular allowances.
such that when the conditions no longer obtain, the
privilege is discontinued. The recipients of this kind of There is no showing of grave abuse of discretion on
allowance are required to liquidate it by submitting a the part of the NLRC. In case of retrenchment to
report with a detailed enumeration of expenses incurred. prevent losses, Art. 283 of the the Labor Code imposes
on the employer an obligation to grant to the affected
3. Bislig Allowance - employees separation pay equivalent to one (1)
month pay or at least one-half (1/2) month pay for every
The Bislig Allowance is given to Division Managers and year of service, whichever is higher. Since the law
corporate officers assigned in Bislig on account of the speaks of "pay," the question arises, "What exactly does
hostile environment prevailing therein. But once the the term connote?" We correlate Art. 283 with Art. 97 of
recipient is transferred elsewhere outside Bislig, the the same Code on definition of terms. "Pay" is not
allowance ceases. 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
Applying Art.,97, par. (f), of the Labor Code which
recompense for services performed. Specifically,
defines if wage," the Executive Labor Arbiter opined
"wage" is defined in letter (f) as the remuneration
that the subject allowances, being customarily furnished
or earnings, however designated, capable of being
by respondent PICOP and regularly received by
expressed in terms ofmoney, whether fixed or
petitioners, formed part of the latter's wages. Resolving
ascertained on a time, task, piece, or commission basis,
the controversy from another angle, on the strength of
or other method of calculating the same, which is
the ruling in Santos v. NLRC[2] and Soriano v.
payable by an employer to an employee under a written
NLRC[3] that in the computation of separation pay
or unwritten contract of employment for work done or to
account should be taken not just of the basic salary but
be done, or for services rendered or to be rendered and
also of the regular allowances that the employee had
includes the fair and reasonable value, as determined by
been receiving, he concluded that the allowances should
the Secretary of Labor, of board, lodging, or other
be included in petitioners' base pay. Thus respondent
facilities customarily furnished by the employer to the
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 We invite attention to the above-underlined
plus ten per cent (10%) thereof as attorney's fees. [4] clause. Stated differently, when an employer
customarily furnishes his employee board, lodging or
The National Labor Relations Commission (NLRC) other facilities, the fair and reasonable value thereof, as
did not share the view of the Executive Labor determined by the Secretary of Labor and Employment,
Arbiter. On 7 October 1994 it set aside the assailed is included in "wage." In order to ascertain whether the
decision by decreeing that the allowances did not form subject allowances form part of petitioner's "wages," we
part of the salary base used in computing separation pay. divide the discussion on the following - "customarily
furnished;" "board, lodging or other facilities;" and, "fair
and reasonable value as determined by the Secretary of
Its ruling was based on the finding that the cases Labor."
relied upon by the Executive Labor Arbiter were
inapplicable since they involved illegal dismissal where "Customary" is founded on long-established and
separation pay was granted in lieu of reinstatement constant practice[13] connoting regularity. [14] The receipt
which was no longer feasible. Instead, what it of an allowance on a monthly basis does not ipso

facto characterize it as regular and forming part of (b) The employee is required to, and does, make an
salary[15]because the nature of the grant is a factor worth accounting/liquidation for such expense in accordance
considering. We agree with the observation of the with the specific requirements of substantiation for such
Office of the Solicitor General- that the subject category or expense.
allowances were temporarily, not regularly, received by
petitioners because - Board and lodging allowances furnished to an employee
not in excess of the latter's needs and given free of
In the case of the housing allowance, once a vacancy charge, constitute income to the latter except if such
occurs in the company-provided housing allowances or benefits are furnished to the employee for
accommodations, the employee concerned transfers to the convenience of the employer and as necessary
the company premises and his housing allowance is incident to proper performance of his duties in which
discontinued x x x x case such benefits or allowances do not constitute
taxable income.[18]
On the other hand, the transportation allowance is in the
form of advances for actual transportation expenses The Secretary of Labor and Employment under Sec.
subject to liquidation x x x given only to employees who 6, Rule VII, Book III, of the Rules Implementing the
have personal cars. Labor Code may from time to time fix in appropriate
issuances the "fair and reasonable value of board,
The Bislig allowance is given to Division Managers and lodging and other facilities customarily furnished by an
corporate officers assigned in Bislig, Surigao del employer to his employees." Petitioners' allowances do
Norte. Once the officer is transferred outside Bislig, the not represent such fair and reasonable value as
allowance stops.[16] determined by the proper authority simply because the
Staff/Manager's allowance and transportation allowance
We add that in the availment of the transportation were amounts given by respondent company in lieu of
allowance, respondent PICOP set another requirement actual provisions for housing and transportation needs
that the personal cars be used by the employees in the whereas the Bislig allowance was given in consideration
performance of their duties. When the conditions for of being assigned to the hostile environment then
availment ceased to exist, the allowance reached the prevailing in Bislig.
cutoff point. The finding of the NLRC along the same The inevitable conclusion is that, as reached by the
line likewise merits concurrence, i.e., petitioners' NLRC, subject allowances did not form part of
continuous enjoyment of the disputed allowances was petitioners' wages.
based on contingencies the occurrence of which
wrote finis to such enjoyment. In Santos[19] the Court decreed that in the
computation of separation pay awarded in lieu of
Although it is quite easy to comprehend "board" reinstatement, account must be taken not only of the
and "lodging," it is not so with "facilities." Thus Sec. 5, basic salary but also of transportation and emergency
Rule VII, Book III, of the Rules Implementing the Labor living allowances. Later, the Court
Code gives meaning to the term as including articles or in Soriano, citing Santos, was general in its holding that
services for the benefit of the employee or his family but the salary base properly used in computing separation
excluding tools of the trade or articles or service pay where reinstatement was no longer feasible should
primarily for the benefit of the employer or necessary to include not just the basic salary but also the regular
the conduct of the employer's business. The Staff allowances that the employee had been
/Manager's allowance may fall under "lodging" but the receiving. Insular merely reiterated the aforementioned
transportation and Bislig allowances are not embraced in rulings. The rationale is not difficult to discern. It is the
"facilities" on the main consideration that they are obligation of the employer to pay an illegally dismissed
granted as well as the Staff/Manager's allowance for employee the whole amount of his salaries plus all other
respondent PICOP's benefit and convenience, i.e., to benefits, bonuses and general increases to which he
insure that petitioners render quality performance. In would have been normally entitled had he not been
determining whether a privilege is a facility, the criterion dismissed and had not stopped working. [20] The same
is not so much its kind but its purpose. [17] That the holds true in case of retrenched employees. And thus we
assailed allowances were for the benefit and applied Insular and Soriano in Planters in the
convenience of respondent company was supported by computation of separation pay of retrenched
the circumstance that they were not subjected to employees. Songco likewise involved retrenchment and
withholding tax. Revenue Audit Memo Order No. 1-87 was relied upon inPlanters, Soriano and Santos in
pertinently provides - determining the proper amount of separation pay. As
culled from the foregoing jurisprudence, separation pay
3.2 x x x x transportation, representation or when awarded to an illegally dismissed employee in lieu
entertainment expenses shall not constitute taxable of reinstatement or to a retrenched employee should be
compensation if: computed based not only on the basic salary but also on
the regular allowances that the employee had been
(a) It is for necessary travelling and representation or receiving. But in view of the previous discussion that
entertainment expenses paid or incurred by the employee the disputed allowances were not regularly received by
in the pursuit of the trade or business of the employer, petitioners herein, there was no reason at all for
and petitioners to resort to the above cases.
Neither is Kneebone applicable, contrary to the
finding of the NLRC, because of the difference in factual
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.