G.R. No.

146775 January 30, 2002

SAN MIGUEL CORPORATION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS-FORMER THIRTEENTH DIVISION, HON.
UNDERSECRETARY JOSE M. ESPAÑOL, JR., Hon. CRESENCIANO B. TRAJANO, and
HON. REGIONAL DIRECTOR ALLAN M. MACARAYA, respondents.

FACTS:
The Department of Labor and Employment conducted a routine inspection in the
premises of San Miguel Corporation (SMC). In the course of the inspection, it was
discovered that there was underpayment by SMC of regular Muslim holiday pay to its
employees. DOLE sent a copy of the inspection result to SMC and it was received by and
explained to its personnel officer Elena dela Puerta. SMC contested the findings and DOLE
conducted summary hearings. The SMC failed to submit proof that it was paying regular
Muslim holiday pay to its employees. Hence, the Director of DOLE issued a compliance
order, directing SMC to consider Muslim holidays as regular holidays and to pay both its
Muslim and non-Muslim employees holiday pay. SMC then filed a petition before the
court.

ISSUE: WON SMC is liable to pay its employess a holiday pay for a regualr Muslim holiday
(YES).

HELD:

In any event, the Court finds no reason to reverse the decision of the Court of
Appeals. Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of
Presidential Decree No. 1083,8 otherwise known as the Code of Muslim Personal Laws,
which states:

Art. 169. Official Muslim holidays. - The following are hereby recognized as legal Muslim
holidays:

(a) ‘Amun Jadīd (New Year), which falls on the first day of the first lunar month of Muharram;

(b) Maulid-un-Nabī (Birthday of the Prophet Muhammad), which falls on the twelfth day of
the third lunar month of Rabi-ul-Awwal;

(c) Lailatul Isrā Wal Mi’rāj (Nocturnal Journey and Ascension of the Prophet Muhammad),
which falls on the twenty-seventh day of the seventh lunar month of Rajab;

(d) ‘Īd-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar month
of Shawwal, commemorating the end of the fasting season; and

(e) ‘Īd-ūl-Adhā (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month
of Dhū’l-Hijja.

Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays shall be
officially observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur,
Maguindanao, North Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in such other
Muslim provinces and cities as may hereafter be created;
(2) Upon proclamation by the President of the Philippines, Muslim holidays may also be
officially observed in other provinces and cities.

The foregoing provisions should be read in conjunction with Article 94 of the Labor Code,
which provides:

Art. 94. Right to holiday pay. - (a) Every worker shall be paid his regular daily wage during
regular holidays, except in retail and service establishments regularly employing less than
ten (10) workers;

(b) The employer may require an employee to work on any holiday but such employee shall
be paid a compensation equivalent to twice his regular rate; Petitioner asserts that Article
3(3) of Presidential Decree No. 1083 provides that "(t)he provisions of this Code shall be
applicable only to Muslims x x x." However, there should be no distinction between Muslims
and non-Muslims as regards payment of benefits for Muslim holidays. The Court of Appeals
did not err in sustaining Undersecretary Español who stated:

Assuming arguendo that the respondent’s position is correct, then by the same token,
Muslims throughout the Philippines are also not entitled to holiday pays on Christian holidays
declared by law as regular holidays. We must remind the respondent-appellant that
wages and other emoluments granted by law to the working man are determined on
the basis of the criteria laid down by laws and certainly not on the basis of the
worker’s faith or religion.

At any rate, Article 3(3) of Presidential Decree No. 1083 also declares that "x x x nothing
herein shall be construed to operate to the prejudice of a non-Muslim."

In addition, the 1999 Handbook on Workers’ Statutory Benefits, approved by then DOLE
Secretary Bienvenido E. Laguesma on 14 December 1999 categorically stated:

Considering that all private corporations, offices, agencies, and entities or establishments
operating within the designated Muslim provinces and cities are required to observe Muslim
holidays, both Muslim and Christians working within the Muslim areas may not report
for work on the days designated by law as Muslim holidays.9

On the question regarding the jurisdiction of the Regional Director Allan M. Macaraya, Article
128, Section B of the Labor Code, as amended by Republic Act No. 7730, provides:

"Article 128. Visitorial and enforcement power. - (b) Notwithstanding the provisions of
Article 129 and 217 of this Code to the contrary, and in cases where the relationship of
employer-employee still exists, the Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue compliance orders to give effect to
the labor standards provisions of this Code and other labor legislation based on the findings
of labor employment and enforcement officers or industrial safety engineers made in the
course of the inspection. The Secretary or his duly authorized representative shall issue
writs of execution to the appropriate authority for the enforcement of their orders, except in
cases where the employer contests the findings of the labor employment and enforcement
officer and raises issues supported by documentary proofs which were not considered in the
course of inspection.

In the case before us, Regional Director Macaraya acted as the duly authorized
representative of the Secretary of Labor and Employment and it was within his power to
issue the compliance order to SMC. In addition, the Court agrees with the Solicitor General
that the petitioner did not deny that it was not paying Muslim holiday pay to its non-Muslim
employees. Indeed, petitioner merely contends that its non-Muslim employees are not
entitled to Muslim holiday pay. Hence, the issue could be resolved even without
documentary proofs. In any case, there was no indication that Regional Director Macaraya
failed to consider any documentary proof presented by SMC in the course of the inspection.
 G.R. No. L-65482 December 1, 1987

JOSE RIZAL COLLEGE, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION AND NATIONAL ALLIANCE OF
TEACHERS/OFFICE WORKERS, respondents.

FACTS:
Petitioner is a non-stock, non-profit educational institution duly organized and existing
under the laws of the Philippines. It has three groups of employees categorized as follows:
(a) personnel on monthly basis, who receive their monthly salary uniformly throughout the
year, irrespective of the actual number of working days in a month without deduction for
holidays; (b) personnel on daily basis who are paid on actual days worked and they receive
unworked holiday pay and (c) collegiate faculty who are paid on the basis of student contract
hour. Before the start of the semester they sign contracts with the college undertaking to
meet their classes as per schedule.
Unable to receive their corresponding holiday pay, as claimed, from 1975 to
1977, private respondent National Alliance of Teachers and Office Workers (NATOW) filed
with the Ministry of Labor a complaint against the college for said alleged non-payment of
holiday pay, After the parties had submitted their respective position papers, the Labor
Arbiter rendered a decision. On appeal, respondent National Labor Relations Commission in
a decision promulgated on June 2, 1982, modified the decision appealed from, in the sense
that teaching personnel paid by the hour are declared to be entitled to holiday pay. Hence,
this petition.

ISSUE: WON the school faculty who according to their contracts are paid per lecture hour
are entitled to unworked holiday pay.

Labor Arbiter Julio Andres, Jr. found that faculty and personnel employed by
petitioner who are paid their salaries monthly, are uniformly paid throughout the school year
regardless of working days, hence their holiday pay are included therein while the daily paid
employees are renumerated for work performed during holidays per affidavit of petitioner's
treasurer. The problem, however, lies with its faculty members, who are paid on an hourly
basis, for while the Labor Arbiter sustains the view that said instructors and professors are
not entitled to holiday pay, his decision was modified by the National Labor Relations
Commission holding the contrary. Otherwise stated, on appeal the NLRC ruled that teaching
personnel paid by the hour are declared to be entitled to holiday pay.

Subject holiday pay is provided for in the Labor Code (Presidential Decree No.
442, as amended), which reads:

Art. 94. Right to holiday pay — (a) Every worker shall be paid his regular daily wage during
regular holidays, except in retail and service establishments regularly employing less than
ten (10) workers;

(b) The employer may require an employee to work on any holiday but such employee shall
be paid a compensation equivalent to twice his regular rate; ... "

and in the Implementing Rules and Regulations, Rule IV, Book III, which reads:

SEC. 8. Holiday pay of certain employees. — (a) Private school teachers, including faculty
members of colleges and universities, may not be paid for the regular holidays during
semestral vacations. They shall, however, be paid for the regular holidays during Christmas
vacations. ...
Under the foregoing provisions, apparently, the petitioner, although a non-profit institution is
under obligation to give pay even on unworked regular holidays to hourly paid faculty
members subject to the terms and conditions provided for therein.

We believe that the aforementioned implementing rule is not justified by the provisions of the
law which after all is silent with respect to faculty members paid by the hour who because of
their teaching contracts are obliged to work and consent to be paid only for work actually
done (except when an emergency or a fortuitous event or a national need calls for the
declaration of special holidays). Regular holidays specified as such by law are known to both
school and faculty members as no class days;" certainly the latter do not expect payment for
said unworked days, and this was clearly in their minds when they entered into the teaching
contracts.

On the other hand, both the law and the Implementing Rules governing holiday pay are
silent as to payment on Special Public Holidays.

It is readily apparent that the declared purpose of the holiday pay which is the prevention of
diminution of the monthly income of the employees on account of work interruptions is
defeated when a regular class day is cancelled on account of a special public holiday and
class hours are held on another working day to make up for time lost in the school calendar.
Otherwise stated, the faculty member, although forced to take a rest, does not earn what he
should earn on that day. Be it noted that when a special public holiday is declared, the
faculty member paid by the hour is deprived of expected income, and it does not matter that
the school calendar is extended in view of the days or hours lost, for their income that could
be earned from other sources is lost during the extended days. Similarly, when classes are
called off or shortened on account of typhoons, floods, rallies, and the like, these faculty
members must likewise be paid, whether or not extensions are ordered.

PREMISES CONSIDERED, the decision of respondent National Labor Relations

Commission is hereby set aside, and a new one is hereby RENDERED:

(a) exempting petitioner from paying hourly paid faculty members their pay for regular
holidays, whether the same be during the regular semesters of the school year or during
semestral, Christmas, or Holy Week vacations;

(b) but ordering petitioner to pay said faculty members their regular hourly rate on days
declared as special holidays or for some reason classes are called off or shortened for the
hours they are supposed to have taught, whether extensions of class days be ordered or
not; in case of extensions said faculty members shall likewise be paid their hourly rates
should they teach during said extensions.
 [G.R. NO. 156367 : May 16, 2005]

AUTO BUS TRANSPORT SYSTEMS, INC., Petitioner, v. ANTONIO

BAUTISTA, Respondent.

FACTS:
Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport
Systems, Inc. (Autobus), as driver-conductor. Respondent was paid on commission basis,
seven percent (7%) of the total gross income per travel, on a twice a month basis.
While respondent was driving, the bus he was driving accidentally
bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a
sharp curve without giving any warning. Respondent averred that the accident happened
because he was compelled by the management to go back to Roxas, Isabela, although he
had not slept for almost twenty-four (24) hours, as he had just arrived in Manila from Roxas,
Isabela. Respondent further alleged that he was not allowed to work until he fully paid the
30% amount of the cost of repair of the damaged buses and that despite respondent's pleas
for reconsideration, the same was ignored by management. After a month, management
sent him a letter of termination.

Thus, respondent instituted a Complaint for Illegal Dismissal with Money Claims for
nonpayment of 13th month pay and service incentive leave pay against Autobus. Petitioner,
on the other hand, maintained that respondent's employment was replete with offenses
involving reckless imprudence, gross negligence, and dishonesty. Furthermore, petitioner
avers that in the exercise of its management prerogative, respondent's employment was
terminated only after the latter was provided with an opportunity to explain his side regarding
the accident. on 03 January 2000.

The LA found that the complaint for Illegal Dismissal has no leg to stand on. It is hereby
ordered DISMISSED. However, the respondent must pay to the complainant his 13th month
pay and service incentive leave pay for all the years he had been in service. Petitioner
appealed the decision to the NLRC which rendered its decision deleting the award of
13th month pay as complainant receives payment on commission basis. Petitioner then
sought the review of said decision with the Court of Appeals which was subsequently denied
by the appellate court .

ISSUE: 1. Whether or not respondent is entitled to service incentive leave;

2. Whether or not the three (3)-year prescriptive period provided under Article
291 of the Labor Code, as amended, is applicable to respondent's claim of service incentive
leave pay.

HELD:

Whether or not respondent is entitled to service incentive leave;

Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE - (a) Every employee who has
rendered at least one year of service shall be entitled to a yearly service incentive
leave of five days with pay.

Book III, Rule V: SERVICE INCENTIVE LEAVE. SECTION 1. Coverage. 'This rule
shall apply to all employees except:

(d) Field personnel and other employees whose performance

is unsupervised by the employer including those who are
engaged on task or contract basis, purely commission basis, or
those who are paid in a fixed amount for performing work
 irrespective of the time consumed in the performance thereof; .
..

A careful perusal of said provisions of law will result in the conclusion that the grant of
service incentive leave has been delimited by the Implementing Rules and Regulations of
the Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule
V. According to the Implementing Rules, Service Incentive Leave shall not apply to
employees classified as "field personnel." The phrase "other employees whose
performance is unsupervised by the employer" must not be understood as a separate
classification of employees to which service incentive leave shall not be granted. Rather, it
serves as an amplification of the interpretation of the definition of field personnel under the
Labor Code as those "whose actual hours of work in the field cannot be determined with
reasonable certainty."

The same is true with respect to the phrase "those who are engaged on task or contract
basis, purely commission basis." Said phrase should be related with "field personnel,"
applying the rule on ejusdem generis that general and unlimited terms are restrained and
limited by the particular terms that they follow. Hence, employees engaged on task or
contract basis or paid on purely commission basis are not automatically exempted from the
grant of service incentive leave, unless, they fall under the classification of field personnel.

Therefore, petitioner's contention that respondent is not entitled to the grant of service
incentive leave just because he was paid on purely commission basis is misplaced. What
must be ascertained in order to resolve the issue of propriety of the grant of service incentive
leave to respondent is whether or not he is a field personnel.

According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural
employees who regularly perform their duties away from the principal place of business or
branch office of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty. This definition is further elaborated in the Bureau
of Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical
Commercial Employees Association10 which states that:

As a general rule, [field personnel] are those whose performance of their

job/service is not supervised by the employer or his representative, the
workplace being away from the principal office and whose hours and days of
work cannot be determined with reasonable certainty; hence, they are paid
specific amount for rendering specific service or performing specific work. If
required to be at specific places at specific times, employees including drivers
cannot be said to be field personnel despite the fact that they are performing
work away from the principal office of the employee. [Emphasis ours]

At this point, it is necessary to stress that the definition of a "field personnel" is not
merely concerned with the location where the employee regularly performs his duties but
also with the fact that the employee's performance is unsupervised by the employer. As
discussed above, field personnel are those who regularly perform their duties away from the
principal place of business of the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty. Thus, in order to conclude whether an
employee is a field employee, it is also necessary to ascertain if actual hours of work in the
field can be determined with reasonable certainty by the employer. In so doing, an inquiry
must be made as to whether or not the employee's time and performance are constantly
supervised by the employer.

In the case at bar. The driver, the complainant herein, was under constant
supervision while in the performance of this work. Therefore, as correctly concluded by the
appellate court, respondent is not a field personnel but a regular employee who performs
tasks usually necessary and desirable to the usual trade of petitioner's business.
Accordingly, respondent is entitled to the grant of service incentive leave.

The question now that must be addressed is up to what amount of service incentive leave
pay respondent is entitled to. The response to this query inevitably leads us to the correlative
issue of whether or not the three (3)-year prescriptive period under Article 291 of the Labor
Code is applicable to respondent's claim of service incentive leave pay.

Article 291 of the Labor Code states that all money claims arising from employer-employee
relationship shall be filed within three (3) years from the time the cause of action accrued;
otherwise, they shall be forever barred.

In the application of this section of the Labor Code, the pivotal question to be answered is
when does the cause of action for money claims accrue in order to determine the reckoning
date of the three-year prescriptive period.

Consequently, in cases of nonpayment of allowances and other monetary benefits, if

it is established that the benefits being claimed have been withheld from the employee for a
period longer than three (3) years, the amount pertaining to the period beyond the three-year
prescriptive period is therefore barred by prescription. The amount that can only be
demanded by the aggrieved employee shall be limited to the amount of the benefits withheld
within three (3) years before the filing of the complaint.

It is essential at this point, however, to recognize that the service incentive leave is a curious
animal in relation to other benefits granted by the law to every employee. In the case of
service incentive leave, the employee may choose to either use his leave credits or
commute it to its monetary equivalent if not exhausted at the end of the year. Furthermore, if
the employee entitled to service incentive leave does not use or commute the same, he is
entitled upon his resignation or separation from work to the commutation of his accrued
service incentive leave. As enunciated by the Court in Fernandez v. NLRC:

The clear policy of the Labor Code is to grant service incentive leave pay to
workers in all establishments, subject to a few exceptions. Section 2, Rule V,
Book III of the Implementing Rules and Regulations provides that "[e]very
employee who has rendered at least one year of service shall be entitled to a
yearly service incentive leave of five days with pay." Service incentive leave is
a right which accrues to every employee who has served "within 12 months,
whether continuous or broken reckoned from the date the employee started
working, including authorized absences and paid regular holidays unless the
working days in the establishment as a matter of practice or policy, or that
provided in the employment contracts, is less than 12 months, in which case
said period shall be considered as one year." It is also "commutable to its
money equivalent if not used or exhausted at the end of the year." In other
words, an employee who has served for one year is entitled to it. He may use
it as leave days or he may collect its monetary value. To limit the award to
three years, as the solicitor general recommends, is to unduly restrict such
right.17 [Italics supplied]

] Applying Article 291 of the Labor Code in light of this peculiarity of the service
incentive leave, we can conclude that the three (3)-year prescriptive period commences, not
at the end of the year when the employee becomes entitled to the commutation of his
service incentive leave, but from the time when the employer refuses to pay its monetary
equivalent after demand of commutation or upon termination of the employee's services, as
the case may be.
The above construal of Art. 291, vis - Ã -vis the rules on service incentive leave, is in
keeping In the case at bar, respondent had not made use of his service incentive leave nor
demanded for its commutation until his employment was terminated by petitioner. Neither did
petitioner compensate his accumulated service incentive leave pay at the time of his
dismissal. It was only upon his filing of a complaint for illegal dismissal, one month from the
time of his dismissal, that respondent demanded from his former employer commutation of
his accumulated leave credits. His cause of action to claim the payment of his accumulated
service incentive leave thus accrued from the time when his employer dismissed him and
failed to pay his accumulated leave credits.

Therefore, the prescriptive period with respect to his claim for service incentive leave pay
only commenced from the time the employer failed to compensate his accumulated service
incentive leave pay at the time of his dismissal. Since respondent had filed his money claim
after only one month from the time of his dismissal, necessarily, his money claim was filed
within the prescriptive period provided for by Article 291 of the Labor Code.
 G.R. No. 211141, June 29, 2016

HILARIO DASCO, REYMIR PARAFINA, RICHARD PARAFINA, EDILBERTO ANIA, MICHAEL

ADANO, JAIME BOLO, RUBEN E. GULA, ANTONIO CUADERNO AND JOVITO
CATANGUI, Petitioners, v. PHILTRANCO SERVICE ENTERPRISES INC/CENTURION
SOLANO, MANAGER, Respondents.

FACTS:
This case stemmed from a complaint for regularization, underpayment of wages, non-
payment of service incentive leave (SIL) pay, and attorney's fees, filed by the petitioners against
Philtranco Service Enterprises Inc., (PSEI), a domestic corporation engaged in providing public
utility transportation, and its Manager, herein respondent.
The petitioners were employed by the respondents as bus drivers and/or conductors. The
petitioners filed a case against the respondents alleging that: (1) they were already qualified for
regular employment status since they have been working with the respondents for several years;
(2) they were paid only P404.00 per round trip, which lasts from two to five days, without
overtime pay and below the minimum wage rate; (3) they cannot be considered as field
personnel because their working hours are controlled by the respondents from dispatching to
end point and their travel time is monitored and measured by the distance because they are in
the business of servicing passengers where time is of the essence; and (4) they had not been
given their yearly five-day SIL since the time they were hired by the respondents.
In response, the respondents asserted that: (1) the petitioners were paid on a fixed salary
rate (2) the petitioners are seasonal employees since their contracts are for a fixed period and
their employment was dependent on the exigency of the extraordinary public demand for more
buses during peak months of the year; and (3) the petitioners are not entitled to overtime pay and
SIL pay because they are field personnel whose time outside the company premises cannot be
determined with reasonable certainty since they ply provincial routes and are left alone in the
field unsupervised.
In overturning the NLRC's decision, the CA considered the petitioners as field workers
and, on that basis, denied their claim for benefits, such as overtime pay and SIL pay. According
to the CA, there was no way for the respondents to supervise the petitioners on their job. The
petitioners are practically on their own in plying the routes in the field, as in fact, they can deviate
from the fixed routes, take short cuts, make detours, and take breaks, among others. The
petitioners work time and performance are not constantly supervised by the respondents, thus
making them field personnel. Hence, the present petition for review on certiorari.

ISSUE: WON the petitioners as bus drivers and/or conductors are field personnel, and thus
entitled to overtime pay and SIL pay. (YES)

HELD:

As a general rule, [field personnel] are those whose performance of their job/service is
not supervised by the employer or his representative, the workplace being away from the
principal office and whose hours and days of work cannot be determined with reasonable
certainty; hence, they are paid specific amount for rendering specific service or performing
specific work. If required to be at specific places at specific times, employees including drivers
cannot be said to be field personnel despite the fact that they are performing work away from the
principal office of the employee.
At this point, it is necessary to stress that the definition of a "field personnel" is not
merely concerned with the location where the employee regularly performs his duties but also
with the fact that the employee's performance is unsupervised by the employer. As discussed
above, field personnel are those who regularly perform their duties away from the principal place
of business of the employer and whose actual hours of work in the field cannot be determined
with reasonable certainty. Thus, in order to conclude whether an employee is a field employee, it
is also necessary to ascertain if actual hours of work in the field can be determined with
reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not
the employee's time and performance are constantly supervised by the employer.

Guided by the foregoing norms, the NLRC properly concluded that the petitioners are not
field personnel but regular employees who perform tasks usually necessary and desirable to the
respondents' business. Evidently, the petitioners are not field personnel as defined above and
the NLRC's finding in this regard is supported by the established facts of this case: (1) the
petitioners, as bus drivers and/or conductors, are directed to transport their passengers at a
specified time and place; (2) they are not given the discretion to select and contract with
prospective passengers; (3) their actual work hours could be determined with reasonable
certainty, as well as their average trips per month; and (4) the respondents supervised their time
and performance of duties.

Obviously, these drivers and/or conductors cannot be considered as field personnel

because they are under the control and constant supervision of the bus companies while in the
performance of their work. Thus, they are consequently entitled to the benefits accorded to
regular employees of the respondents, including overtime pay and SIL pay.
 [ G.R. No. 219569, August 17, 2016 ]
HSY MARKETING LTD., CO.,* PETITIONER, VS. VIRGILIO O. VILLASTIQUE, RESPONDENT.

FACTS:
Petitioner hired respondent as a field driver for Fabulous Jeans tasked to deliver ready-
to-wear items and/or general merchandise for a daily compensation of P370.00. On January 10,
2011, respondent figured in an accident when the service vehicle bumped a pedestrian.
Fabulous Jeans shouldered the hospitalization and medical expenses which respondent was
asked to reimburse, but to no avail.
Respondent was allegedly required to sign a resignation letter, which he refused to do. A
couple of days later, he tried to collect his salary for that week but was told that it was withheld
because of his refusal to resign. Respondent then filed a complaint for illegal dismissal with
money claims against petitioner, Fabulous Jeans, and its owner before the NLRC.
In their defense,[15] petitioner, et al. contended that respondent had committed several
violations in the course of his employment and that it was respondent who refused to report for
work, he should be considered as having voluntarily severed his own employment.Thus, his
money claims cannot prosper as he was not terminated.
The CA affirmed in toto the NLRC Resolutions, observing that the failure of petitioner, to
present the alleged resignation letter of respondent belied their claim that he voluntarily resigned;
and that the fact of filing by respondent of the labor complaint was inconsistent with the charge of
abandonment. Thus, the CA found no grave abuse of discretion on the part of the NLRC in
sustaining the award of separation pay, which respondent had expressly prayed for from the very
start of the proceedings, thereby foreclosing, by implication, reinstatement as a relief. In addition,
the CA held that reinstatement was no longer feasible considering the resentment and enmity
between the parties. Petitioner, moved for reconsideration, but was denied In a Resolution.
Hence, this petition solely filed by herein petitioner.

ISSUES: The issues for the Court's resolution are whether or not the CA correctly: (b) affirmed
the findings of the NLRC that respondent did not voluntarily resign from work and petitioner did
not dismiss him from employment, and consequently, awarded respondent separation pay; and
(c) declared respondent to be a regular employee and thus, awarded him service incentive leave
pay.

HELD:

I. WON the CA committed a grave error when it affirmed the findings of the NLRC that
respondent did not voluntarily resign from work and petitioner did not dismiss him from
employment, and consequently, awarded respondent separation pay;
The Court likewise upholds the unanimous conclusion of the lower tribunals that
respondent had not been dismissed at all. Other than the latter's unsubstantiated allegation of
having been verbally terminated from his work, no substantial evidence was presented to show
that he was indeed dismissed or was prevented from returning to his work. In the absence of any
showing of an overt or positive act proving that petitioner had dismissed respondent, the latter's
claim of illegal dismissal cannot be sustained, as such supposition would be self-serving,
conjectural, and of no probative value.
Similarly, petitioner's claims of respondent's voluntary resignation and/or abandonment
deserve scant consideration, considering petitioner's failure to discharge the burden of proving
the deliberate and unjustified refusal of respondent to resume his employment without any
intention of returning. It was incumbent upon petitioner to ascertain respondent's interest or non-
interest in the continuance of his employment,[63] but to no avail.
Hence, since there is no dismissal or abandonment to speak of, the appropriate
course of action is to reinstate the employee (in this case, herein respondent) without,
however, the payment of backwages.

For this reason, the Court agrees with petitioner that the LA, the NLRC, and the CA erred
in awarding separation pay in spite of the finding that respondent had not been dismissed.
Properly speaking, liability for the payment of separation pay is but a legal consequence of
illegal dismissal where reinstatement is no longer viable or feasible. As a relief granted in
lieu of reinstatement, it goes without saying that an award of separation pay is inconsistent with a
finding that there was no illegal dismissal. [66] This is because an employee who had not been
dismissed, much less illegally dismissed, cannot be reinstated.
In fine, petitioner is ordered to reinstate respondent to his former position without the
payment of backwages. If respondent voluntarily chooses not to return to work, he must then be
considered as having resigned from employment. This is without prejudice, however, to the
willingness of both parties to continue with their former contract of employment or enter into a
new one whenever they so desire.

II. WON respondent is a regular employee and thus, entitled for payment of service
incentive leave pay. (YES)

While petitioner should not be adjudged liable for separation pay, the Court nonetheless
sustains the award of service incentive leave pay in favor of respondent, in accordance with the
finding of the CA that respondent was a regular employee of petitioner and is, therefore, entitled
to such benefit.
As the CA aptly pointed out: [R]espondent is not a field personnel as defined above
because of the nature of his job as a company driver. Expectedly, respondent is directed to
deliver the goods at a specified time and place and he is not given the discretion to solicit,
select[,] and contact prospective clients. Respondent in his Position Paper claimed that he was
required to report for work from 8:00 a.m. to 8:00 p.m. at the company's store located at Velez-
Gomez Street, Cagayan de Oro City. Certainly then, respondent was under the control and
supervision of petitioners. Respondent, therefore, is a regular employee whose task is
usually necessary and desirable to the usual trade and business of the company. Thus, he
is entitled to the benefits accorded to regular employees, including service incentive leave
pay.
The Court has already held that company drivers who are under the control and
supervision of management officers — like respondent herein — are regular employees
entitled to benefits including service incentive leave pay. "Service incentive leave is a right
which accrues to every employee who has served 'within 12 months, whether continuous or
broken, reckoned from the date the employee started working, including authorized absences
and paid regular holidays unless the working days in the establishment as a matter of practice or
policy, or that provided in the employment contracts, is less than 12 months, in which case said
period shall be considered as one [(1)] year.' It is also commutable to its money equivalent if
not used or exhausted at the end of the year. In other words, an employee who has served
for one (1) year is entitled to it. He may use it as leave days or he may collect its monetary
value."[74]

Petitioner, as the employer of respondent, and having complete control over the records of the
company, could have easily rebutted the said monetary claim against it by presenting the
vouchers or payrolls showing payment of the same. However, since petitioner opted not to lift a
finger in providing the required documentary evidence, the ineluctable conclusion that may be
derived therefrom is that it never paid said benefit and must, perforce, be ordered to settle its
obligation to respondent.
 [ G.R. No. 222980, March 20, 2017 ]
LOURDES C. RODRIGUEZ, PETITIONER, VS. PARK N RIDE INC./VICEST (PHILS)
INC./GRAND LEISURE CORP./SPS. VICENTE & ESTELITA B. JAVIER, RESPONDENTS.

FACTS:
Petitioner filed a Complaint for constructive illegal dismissal, non-payment of service
incentive leave pay and 13th month pay, including claims for moral and exemplary damages and
attorney's fees against respondents Park N Ride, Vicest Phils., Grand Leisure, and the Javier
Spouses.
In her Position Paper, petitioner alleged that she was employed as Restaurant
Supervisor. Four (4) years later, the restaurant business closed. Rodriguez was transferred to
office work and became an Administrative and Finance Assistant to Estelita. One of her duties
was to open the office in Makati City at 8:00 a.m. daily. She was also required to handle the
personnel and administrative matters of the spouses other companies without additional
compensation. She likewise took care of the household concerns of the Javier Spouses, such as
preparing payrolls of drivers and helpers, shopping for household needs, and looking after the
spouses' house whenever they travelled abroad.[12]

Sometime in 2000, the Javier Spouses established Park N Ride, a business that provided
terminal parking and leasing. Petitioner handled the administrative, finance, and warehousing
departments of Park N Ride. She allegedly worked from 8:00 a.m. to 7:00 p.m., Mondays to
Saturdays; was on call on Sundays; and worked during Christmas and other holidays. She was
deducted an equivalent of two (2) days' wage for every day of absence and was not paid any
service incentive leave pay. On one occasion, Rodriguez asked the Javier Spouses if she could
go home by 10:00 a.m. to attend a family reunion, but her request was denied.
The Javier Spouses' treatment of Rodriguez became unbearable; thus, she filed her
resignation letter. The Javier Spouses allegedly did not accept her resignation and convinced her
to reconsider and stay on. However, her experience became worse. Rodriguez claimed that
toward the end of her employment, Estelita was always unreasonable and hot-headed, and
would belittle and embarrass her in the presence of co-workers.
Petitioner wrote the Javier Spouses a letter expressing her gripes at them. She intimated that
they were always finding fault with her to push her to resign. The Javier Spouses replied to her
letter, allegedly accepting her resignation. Petitioner prayed for separation pay in lieu of
reinstatement; full back wages; service incentive leave pay; proportional 13 th month pay; moral
damages of P100,000.00; exemplary damages of P100,000.00; and attorney's fees.
Rodriguez filed a Rule 65 Petition[61] before the Court of Appeals imputing grave abuse of
discretion on the National Labor Relations Commission.

In the Decision, the Court of Appeals held that there was no constructive dismissal, but
rather Rodriguez voluntarily resigned from her employment. Rodriguez sought reconsideration.
The Court of Appeals denied the motion in its Resolution. Hence, this Petition.

ISSUES: (1) WON petitioner was constructively dismissed; (2) WON petitioner was entitled to full
service incentive leave pay and damages.

HELD:

(1) WON petitioner was constructively dismissed. NO.

Petitioner maintains that she has been constructively dismissed. There is constructive
dismissal when an employer's act of clear discrimination, insensibility or disdain becomes so
unbearable on the part of the employee so as to foreclose any choice on his part except to resign
from such employment.[71] It exists where there is involuntary resignation because of the
harsh, hostile and unfavorable conditions set by the employer.
The unreasonably harsh conditions that compel resignation on the part of an employee
must be way beyond the occasional discomforts brought about by the misunderstandings
between the employer and employee. However, when these strong words from the employer
happen without palpable reason or are expressed only for the purpose of degrading the dignity of
the employee, then a hostile work environment will be created. In a sense, the doctrine of
constructive dismissal has been a consistent vehicle by this Court to assert the dignity of labor.
However, this is not the situation in this case.
The National Labor Relations Commission did not commit a grave abuse of discretion in
finding that petitioner was not constructively dismissed but that she voluntarily resigned from
employment. The affidavits of petitioner's former co-workers were mere narrations of petitioner's
various duties. Far from showing the alleged harsh treatment that petitioner suffered, the
affidavits rather reveal the full trust and confidence reposed by respondents on petitioner.
Petitioner was neither terminated on September 22, 2009 nor was she constructively
dismissed. There was no showing of bad faith or malicious design by the respondents that would
make her work conditions unbearable. [80] On the other hand, it is a fact that petitioner enjoyed the
privilege of working closely with the Javier Spouses and having their full trust and confidence.
Spontaneous expressions of an employer do not automatically render a hostile work atmosphere.
The circumstances in this case negate its presence. From the representation of petitioner, what
triggered her resignation was the incident on September 22, 2009 when Estelita told her "Kung
ayaw mo na ng ginagawa mo, we can manage!" These words, however, are not sufficient to
make the continued employment of petitioner impossible, unreasonable, or unlikely.

(2) WON petitioner was entitled to full service incentive leave pay (YES) and damages
(NO).
On the monetary claims, petitioner is not entitled to moral and exemplary damages
considering that she was not illegally dismissed.

On the other hand, with respect to service incentive leave pay, the Court of Appeals
limited the award thereof to three (3) years (2006 to 2009) only due to the prescriptive period
under Article 291 of the Labor Code. It held:
Article 95 of the Labor Code provides that every employee who has rendered at least one
year of service shall be entitled to a yearly service incentive leave pay of five days with pay,
subject to exceptions (i.e.: when the employee is already enjoying vacation leave with pay of at
least five days; and when the employee is employed in an establishment regularly employing
less than ten employees).

It was not shown here that petitioner Rodriguez was enjoying vacation leave with pay of
at least five days while being employed by private respondents Spouses Javier; it was not shown
that private respondents Spouses Javier were merely employing less than 10 employees (on the
contrary, private respondent spouses Javier stated that they were employing less than 15
employees). Hence, the award of service incentive leave pay to petitioner Rodriguez was proper.
Private respondents Spouses Javier employed petitioner Rodriguez for 25 years.
Applying the prescriptive period for money claims under Article 291 of the Labor Code however,
petitioner Rodriguez should only be entitled to the three years' worth of service incentive pay for
the years 2006 to 2009.

In the case of service incentive leave, the employee may choose to either use his leave
credits or commute it to its monetary equivalent if not exhausted at the end of the year.
Furthermore, if the employee entitled to service incentive leave does not use or commute the
same, he is entitled upon his resignation or separation from work to the commutation of his
accrued service incentive leave. It is also "commutable to its money equivalent if not used or
exhausted at the end of the year." In other words, an employee who has served for one year is
entitled to it. He may use it as leave days or he may collect its monetary value. To limit the award
to three years, as the solicitor general recommends, is to unduly restrict such right.

Correspondingly, it can be conscientiously deduced that the cause of action of an entitled

employee to claim his service incentive leave pay accrues from the moment the employer
refuses to remunerate its monetary equivalent if the employee did not make use of said leave
credits but instead chose to avail of its commutation. Accordingly, if the employee wishes to
accumulate his leave credits and opts for its commutation upon his resignation or separation
from employment, his cause of action to claim the whole amount of his accumulated service
incentive leave shall arise when the employer fails to pay such amount at the time of his
resignation or separation from employment.

Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive
leave, we can conclude that the three (3)-year prescriptive period commences, not at the end
of the year when the employee becomes entitled to the commutation of his service incentive
leave, but from the time when the employer refuses to pay its monetary equivalent after
demand of commutation or upon termination of the employee's services, as the case may
be.

Thus, the prescriptive period with respect to petitioner's claim for her entire service
incentive leave pay commenced only from the time of her resignation or separation from
employment. Since petitioner had filed her complaint on October 7, 2009, or a few days after her
resignation in September 2009, her claim for service incentive leave pay has not prescribed.
Accordingly, petitioner must be awarded service incentive leave pay for her entire 25 years of
service—from 1984 to 2009—and not only three (3) years' worth (2006 to 2009) as determined
by the Court of Appeals.
 G.R. No. 177524 July 23, 2014

NATIONAL UNION OF WORKERS IN HOTEL RESTAURANT AND ALLIED INDUSTRIES

(NUWHRAIN-APL-IUF), PHILIPPINE PLAZA CHAPTER, Petitioner,
vs.
PHILIPPINE PLAZA HOLDINGS, INC., Respondent.

FACTS:
The Union is the collective bargaining agent of the rank-and-file employees of respondent
Philippine Plaza Holdings, Inc. (PPHI). The PPHI and the Union executed the "Third Rank-and-
File Collective Bargaining Agreement as Amended" (CBA). The CBA provided, among others, for
the collection, by the PPHI, of a ten percent (10%) service charge on the sale of food, beverage,
transportation, laundry and rooms. The pertinent CBA provisions provides that The HOTEL shall
continue to collect ten percent (10%) service charge on the sale of food, beverage,
transportation, laundry and rooms except on negotiated contracts and special rates.
The distributable amount will be shared equally by all HOTEL employees,
including managerial employees but excluding expatriates, with three shares to be given to PPHI
Staff and three shares to the UNION (one for the national and two for the local funds) that may
be utilized by them for purposes for which the UNION may decide.
The Union’s Service Charge Committee informed the Union President, through
an audit report of uncollected service charges for the last quarter of 1998. The Union presented
this audit report to the PPHI’s management during the February 26, 1999 Labor Management
Cooperation Meeting (LMCM).The PPHI’s management responded that the Hotel Financial
Controller would need to verify the audit report.

Through a letter the PPHI admitted liability that the Union claimed as uncollected service
charges. The PPHI denied the rest of the Union’s claims because: (1) they were exempted from
the service charge being revenues from "special promotions" (revenue from the Westin Gold
Card sales) or "negotiated contracts" (alleged revenue from the Maxi-Media contract); (2) the
revenues did not belong to the PPHI but to third-party suppliers; and (3) no revenue was realized
from these transactions as they were actually expenses incurred for the benefit of executives or
by way of good-will to clients and government officials.

When the parties failed to reach an agreement, the Union, filed before the LA (Regional
Arbitration Branch of the NLRC) a complaint for non-payment of specified service charges. The
Union additionally charged the PPHI with unfair labor practice (ULP) for violation of their
collective bargaining agreement.

ISSUE:WON the Union may collect from the PPHI, under the terms of the CBA, its share of the
service charges.

In granting the Union’s claim, the NLRC simply declared that the PPHI "has not shown
any proof that it paid or remitted what is due to the Union and its members" and concluded that
the specified entries/transactions were "service chargeable." This NLRC conclusion plainly failed
to appreciate that it involved only the alleged uncollected service charges from the specified
entries/transactions. The NLRC likewise, in the course of its ruling, did not point to any evidence
supporting its conclusion.
Accordingly, we affirm the CA’s decision to be legally correct as it correctly reversed the
NLRC decision for grave abuse of discretion.

Nature of a CBA; rules in the interpretation of CBA provisions

A collective bargaining agreement, as used in Article 252 (now Article 262) 27 of the Labor
Code, is a contract executed at the request of either the employer or the employees’ exclusive
bargaining representative with respect to wages, hours of work and all other terms and
conditions of employment, including proposals for adjusting any grievances or questions under
such agreement.28 Jurisprudence settles that a CBA is the law between the contracting parties
who are obliged under the law to comply with its provisions.29

As a contract and the governing law between the parties, the general rules of statutory
construction apply in the interpretation of its provisions. Thus, if the terms of the CBA are plain,
clear and leave no doubt on the intention of the contracting parties, the literal meaning of its
stipulations, as they appear on the face of the contract, shall prevail. 30 Only when the words used
are ambiguous and doubtful or leading to several interpretations of the parties’ agreement that a
resort to interpretation and construction is called for.31

No service charges were due from the specified entries/transactions; they either
fall within the CBA-excepted "Negotiated Contracts" and "Special Rates" or did not
involve "a sale of food, beverage, etc." The Union anchors its claim for services charges on
Sections 68 and 69 of the CBA, in relation with Article96 of the Labor Code. Section 68 states
that the sale of food, beverage, transportation, laundry and rooms are subject to service charge
at the rate often percent (10%). Excepted from the coverage of the 10% service charge are the
so-called "negotiated contracts" and "special rates."

Following the wordings of Section 68 of the CBA, three requisites must be present for the
provisions on service charges to operate: (1) the transaction from which service charge is sought
to be collected is a sale; (2) the sale transaction covers food, beverage, transportation, laundry
and rooms; and (3) the sale does not result from negotiated contracts and/or at special rates.

In plain terms, all transactions involving a "sale of food, beverage, transportation, laundry
and rooms" are generally covered. Excepted from the coverage are, first, non-sale transactions
or transactions that do not involve any sale even though they involve "food, beverage, etc."
Second, transactions that involve a sale but do not involve "food, beverage, etc." And third,
transactions involving "negotiated contracts" and "special rates" i.e., a "sale of food, beverage,
etc." resulting from "negotiated contracts" or at "special rates;" non-sale transactions involving
"food, beverage, etc." resulting from "negotiated contracts" and/or "special rates;" and sale
transactions, but not involving "food, beverage, etc.," resulting from "negotiated contracts" and
"special rates." Notably, the CBA does not specifically define the terms "negotiated contracts"
and "special rates." Nonetheless, the CBA likewise does not explicitly limit the use of these terms
to specified transactions. With particular reference to "negotiated contracts," the CBA does not
confine its application to "airline contracts" as argued by the Union. Thus, as correctly declared
by the CA, the term "negotiated contracts" should be read as applying to all types of negotiated
contracts and not to "airlines contracts" only.

In reversing the NLRC’s ruling and denying the Union’s claim, the CA found the specified
entries/transactions as either falling under the excepted negotiated contracts and/or special rates
or not involving a sale of food, beverage, etc. Specifically, it considered the entries "Westin
GoldCards Revenue" and "Maxi Media Barter" to be negotiated contracts or contracts under
special rates, and the entries "Business Promotions" and "Gift Certificates" as contracts that did
not involve a sale of food, beverage, etc. The CA also found no factual and evidentiary basis to
support the Union’s claim for service charges on the entries "Guaranteed No show" and "F & B
Revenue."

The PPHI did not violate Article 96 of the Labor Code when they refused the Union’s claim for
service charges on the specified entries/transactions

Article 96 of the Labor Code provides for the minimum percentage distribution between the
employer and the employees of the collected service charges, and its integration inthe covered
employees’ wages in the event the employer terminates its policy of providing for its collection. It
pertinently reads:
Art. 96. Service Charges. In case the service charge is abolished, the share of the covered
employees shall be considered integrated in their wages.

This last paragraph of Article 96 of the Labor Code presumes the practice of collecting service
charges and the employer’s termination of this practice. When this happens, Article 96 requires
the employer to incorporate the amount that the employees had been receiving as share of the
collected service charges into their wages. Incases where no service charges had previously
been collected (as where the employer never had any policy providing for collection of service
charges or had never imposed the collection of service charges on certain specified
transactions), Article 96 will not operate.

In this case, the CA found that the PPHI had not in fact been collecting services charges on the
specified entries/transactions that we pointed out as either falling under "negotiated contracts"
and/or "special rates" or did not involve a "sale of food, beverage, etc." Accordingly, Article 96 of
the Labor Code finds no application in this case; the PPHI did not abolish or terminate the
implementation of any company policy providing for the collection of service charges on specified
entries/transactions that could have otherwise rendered it liable to pay an amount representing
the covered employees’ share in the alleged abolished service charges.
 G.R. No. L-50999 March 23, 1990

JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, petitioners,

vs
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR ARBITER
FLAVIO AGUAS, and F.E. ZUELLIG (M), INC., respondents.

FACTS:
Private respondent filed with the Department of Labor an application seeking clearance
to terminate the services of petitioners. This application was seasonably opposed by petitioners
alleging that the company is not suffering from any losses. They alleged further that they are
being dismissed because of their membership in the union. At the last hearing of the case,
however, petitioners manifested that they are no longer contesting their dismissal. The parties
then agreed that the sole issue to be resolved is the basis of the separation pay due to
petitioners. Petitioners, who were in the sales force of Zuellig received monthly salaries of at
least P40,000. In addition, they received commissions for every sale they made.
The Labor Arbiter rendered a decision ordering respondent to pay the complainants
separation pay equivalent to their one month salary (exclusive of commissions, allowances, etc.)
for every year of service that they have worked with the company. The appeal by petitioners to
the National Labor Relations Commission was dismissed for lack of merit. Hence, the present
petition.

ISSUE: WON earned sales commissions and allowances should be included in the monthly
salary of petitioners for the purpose of computation of their separation pay. (YES).

HELD: The petition is impressed with merit.

Petitioners' position was that in arriving at the correct and legal amount of separation pay
due them, whether under the Labor Code or the CBA, their basic salary, earned sales
commissions and allowances should be added together. They cited Article 97(f) of the Labor
Code which includes commission as part on one's salary, to wit;

(f) 'Wage' paid to any employee shall mean the remuneration or earnings, however designated,
capable of being expressed in terms of money, whether fixed or ascertained on a time, task,
piece, or commission basis, or other method of calculating the same, which is payable by an
employer to an employee under a written or unwritten contract of employment for work done or to
be done, or for services rendered or to be rendered, and includes the fair and reasonable value,
as determined by the Secretary of Labor, of board, lodging, or other facilities customarily
furnished by the employer to the employee. 'Fair reasonable value' shall not include any profit to
the employer or to any person affiliated with the employer.

Article 97(f) by itself is explicit that commission is included in the definition of the term "wage". It
has been repeatedly declared by the courts that where the law speaks in clear and categorical
language, there is no room for interpretation or construction; there is only room for application. A
plain and unambiguous statute speaks for itself, and any attempt to make it clearer is vain labor
and tends only to obscurity.
The definition of 'wage' provided in Article 96 (sic) of the Code can be correctly be stated
as a general definition. It is 'wage ' in its generic sense. A careful perusal of the same does not
show any indication that commission is part of salary. We can say that commission by itself may
be considered a wage. This is not something novel for it cannot be gainsaid that certain types of
employees like agents, field personnel and salesmen do not earn any regular daily, weekly or
monthly salaries, but rely mainly on commission earned.

Upon the other hand, the provisions of Section 10, Rule 1, Book VI of the implementing rules in
conjunction with Articles 273 and 274 (sic) of the Code specifically states that the basis of the
termination pay due to one who is sought to be legally separated from the service is 'his latest
salary rates.

We agree with the Solicitor General that granting, in gratia argumenti, that the
commissions were in the form of incentives or encouragement, so that the petitioners would be
inspired to put a little more industry on the jobs particularly assigned to them, still these
commissions are direct remuneration services rendered which contributed to the increase of
income of Zuellig . Commission is the recompense, compensation or reward of an agent,
salesman, executor, trustees, receiver, factor, broker or bailee, when the same is calculated as a
percentage on the amount of his transactions or on the profit to the principal (Black's Law
Dictionary, 5th Ed., citing Weiner v. Swales, 217 Md. 123, 141 A.2d 749, 750). The nature of the
work of a salesman and the reason for such type of remuneration for services rendered
demonstrate clearly that commission are part of petitioners' wage or salary. We take judicial
notice of the fact that some salesmen do not receive any basic salary but depend on
commissions and allowances or commissions alone, are part of petitioners' wage or salary. We
take judicial notice of the fact that some salesman do not received any basic salary but depend
on commissions and allowances or commissions alone, although an employer-employee
relationship exists.

Applying this by analogy, since the commissions in the present case were earned by
actual market transactions attributable to petitioners, these should be included in their separation
pay. In the computation thereof, what should be taken into account is the average commissions
earned during their last year of employment. The final consideration is, in carrying out and
interpreting the Labor Code's provisions and its implementing regulations, the workingman's
welfare should be the primordial and paramount consideration. This kind of interpretation gives
meaning and substance to the liberal and compassionate spirit of the law as provided for in
Article 4 of the Labor Code which states that "all doubts in the implementation and interpretation
of the provisions of the Labor Code including its implementing rules and regulations shall be
resolved in favor of labor" and Article 1702 of the Civil Code which provides that "in case of
doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and
decent living for the laborer.
 G.R. No. 179654 September 22, 2014

HACIENDA LEDDY/RICARDO GAMBOA, JR., Petitioner,

vs.
PAQUITA VILLEGAS, Respondent.

FACTS:
Villegas is an employee at the Hacienda Leddy as early as 1960, when it was still named
Hacienda Teresa which was later on named Hacienda Leddy when same was succeeded by his
Ricardo Gamboa, Jr. During his employment up to the time of his dismissal, Villegas performed
sugar farming job 8 hours a day, 6 days a week work, continuously for not less than 302 days a
year, and for which services he was paid ₱45.00 per day. He likewise worked in petitioner's
coconut lumber business.
On June 9, 1993, Gamboa went to Villegas' house and told him that his services were no
longer needed without prior notice or valid reason. Hence, Villegas filed the instant complaint for
illegal dismissal.

Gamboa, on the other hand, denied having dismissed Villegas but admitted in his earlier
position paper that Villegas indeed worked with the said farm owned by his father, doing casual
and odd jobs until the latter's death in 1993. He was even given the benefit of occupying a small
portion of the land where his house was erected. He, however, maintained that Villegas ceased
working at the farm as early as 1992, contrary to his allegation that he was dismissed.

However, later, Gamboa apparently retracted and instead insisted that the farm records reveal
that the only time Villegas rendered service for the hacienda was only in the year 1993 when he
was contracted by the farm to cut coconut lumber which were given to regular workers for the
repairs of their houses.6 Gamboa added that they informed Villegas that they need the property,
hence, they requested that he vacate it, but he refused. He further argued that during his
employment, Villegas was paid in accordance with the rate mandated by law and that his claim
for illegal dismissal was merely a fabrication as he was the one who opted not to work.

The CA reversed the decision of the NLRC and affirmed the decision of the LA declaring
that respondent is a regular worker and DIRECTING A STRAIGHT COMPUTATION FOR WAGE
DIFFERENTIALS, BACKWAGES AND SEPARATION PAY, THE FINDINGS NOT BEING
INACCORD WITH LAW.

ISSUE: WON Villegas is a regular employee.

HELD:
The issue of Villegas' alleged illegal dismissal is anchored on the existence of an
employer-employee relationship between him and Gamboa; thus, essentially a question of fact. A
perusal of the records would show that respondent, having been employed in the subject
Hacienda while the same was still being managed by petitioner's father until the latter's death in
1993, is undisputed as the same was even admitted by Gamboa in his earlier pleadings. While
refuting that Villegas was a regular employee, petitioner however failed to categorically deny that
Villegas was indeed employed in their hacienda albeit he insisted that Villegas was merely a
casual employee doing odd jobs.
The rule is long and well settled that, in illegal dismissal cases like the one at bench, the
burden of proof is upon the employer to show that the employee’s termination from service is for
a just and valid cause.

In the instant case, Villegas had worked with the Gamboas, it should be more than 20
years of service. Even Gamboa admitted that by act of generosity and compassion, Villegas was
given a privilege of erecting his house inside the hacienda during his employment. While it may
indeed be an act of good will on the part of the Gamboas, still, such act is usually done by the
employer either out of gratitude for the employee’s service or for the employer's convenience as
the nature of the work calls for it. Indeed, petitioner's length of service is an indication of the
regularity of his employment. Even assuming that he was doing odd jobs around the farm, such
long period of doing said odd jobs is indicative that the same was either necessary or desirable
to petitioner's trade or business. Owing to the length service alone, he became a regular
employee, by operation of law, one year after he was employed.

Article 280 of the Labor Code, describes a regular employee as one who is either (1) engaged to
perform activities which are necessary or desirable in the usual business or trade of the
employer; and (2) those casual employees who have rendered at least one year of service,
whether continuous or broken, with respect to the activity in which he is employed.

While length of time may not be the controlling test to determine if Villegas is indeed a regular
employee, it is vital in establishing if he was hired to perform tasks which are necessary and
indispensable to the usual business or trade of the employer. Clearly, even assuming that
Villegas' employment was only for a specific duration, the fact that he was repeatedly re-hired
over a long period of time shows that his job is necessary and indispensable to the usual
business or trade of the employer.

Gamboa likewise argued that Villegas was paid on a piece-rate basis. However, payment on a
piece-ratebasis does not negate regular employment. "The term ‘wage’ is broadly defined in
Article 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of
money whether fixed or ascertained on a time, task, piece or commission basis. Payment by the
piece is just a method of compensation and does not define the essence of the relations." 19

We are likewise unconvinced that it was Villegas who suddenly stopped working. Considering
that hewas employed with the Gamboas for more than 20 years and was even given a place to
call his home, it does not make sense why Villegas would suddenly stop working therein for no
apparent reason. To justify a finding of abandonment of work, there must be proof of a deliberate
and unjustified refusal on the part of an employee to resume his employment. The burden of
proof is on the employer to show an unequivocal intent on the part of the employee to
discontinue employment. Mere absence is not sufficient. It must be accompanied by manifest
acts unerringly pointing to the fact that the employee simply does not want to work anymore. 20

Petitioner failed to discharge this burden. Other than the self-serving declarations in the
affidavit of his employee, petitioner did not adduce proof of overt acts of Villegas showing his
intention to abandon his work. Abandonment is a matter of intention;it cannot be inferred or
presumed from equivocal acts. On the contrary, the filing of the instant illegal dismissal complaint
negates any intention on his part to sever their employment relationship.
The Labor Code draws a fine line between regular and casual employees to protect the
interests of labor. Thus, notwithstanding any agreements to the contrary, what determines
whether a certain employment is regular or casual is not the will and word of the employer, to
which the desperate worker often accedes, much less the procedure of hiring the employee or
the manner of paying his salary. It is the nature of the activities performed in relation to the
particular business or trades considering all circumstances, and in some cases the length of time
of its performance and its continued existence.
All these having discussed, as a regular worker, Villegas is entitled to security of tenure
under Article 279 of the Labor Code and can only be removed for cause. We found no valid
cause attending to his dismissal and found also that his dismissal was without due process.
Article 277(b) of the Labor Code provides that: x x x Subject to the constitutional right of
workers to security of tenure and their right to be protected against dismissal except for a just
and authorized cause and without prejudice to the requirement of notice under Article 283 of this
Code, the employer shall furnish the worker whose employment is sought to be terminated a
written notice containing a statement of the causes for termination and shall afford the latter
ample opportunity to be heard and to defend himself with the assistance of his representative if
he so desires in accordance with company rules and regulations promulgated pursuant to
guidelines set by the Department of Labor and Employment.
 G.R. No. 204651, August 06, 2014

OUR HAUS REALTY DEVELOPMENT CORPORATION, Petitioner, v. ALEXANDER PARIAN,

JAY C. ERINCO, ALEXANDER CANLAS, BERNARD TENEDERO AND JERRY
SABULAO, Respondents.

FACTS:
Respondents were all laborers working for petitioner Our Haus Realty Development
Corporation (Our Haus), a company engaged in the construction business. The respondents
respective employment records and daily wage rates from 2007 to 2010 are summarized in the
table7 below:lawlibra Sometime in May 2010, Our Haus
experienced financial distress. To alleviate its condition, Our Haus suspended some of its
construction projects and asked the affected workers, including the respondents, to take vacation
leaves. Eventually, the respondents were asked to report back to
work but instead of doing so, they filed with the LA a complaint for underpayment of their daily
wages. They claimed that except for respondent Bernardo N. Tenedero, their wages were below
the minimum rates prescribed in the following wage orders from 2007 to
2010:chanRoblesvirtualLawlibrary

1. Wage Order No. NCR-13, which provides for a daily minimum wage rate
of P362.00 for the non-agriculture sector (effective from August 28, 2007
until June 13, 2008); andChanRoblesVirtualawlibrary
2. Wage Order No. NCR-14, which provides for a daily minimum wage rate
of P382.00 for the non-agriculture sector (effective from June 14, 2008
until June 30, 2010).

ISSUE: WON the petitioner is liable to pay them their holiday, service incentive leave (SIL),
13th month and overtime pays.9cralawred

HELD:
The respondents prayed for the denial of the petition. 32 They maintained that the CA did
not err in ruling that the values of the board and lodging cannot be deducted from their wages for
failure to comply with the requirements set by law. 33 And though the claim for SIL pay was not
included in their pro forma complaint, they raised their claims in their position paper and Our
Haus had the opportunity to contradict it in its pleadings.

The benefit or privilege given to the employee which constitutes an extra remuneration
above and over his basic or ordinary earning or wage is supplement; and when said benefit or
privilege is part of the laborers' basic wages, it is a facility. The distinction lies not so much in the
kind of benefit or item (food, lodging, bonus or sick leave) given, but in the purpose for which it is
given. In the case at bench, the items provided were given freely by SLL for the purpose of
maintaining the efficiency and health of its workers while they were working at their respective
projects.50

Ultimately, the real difference lies not on the kind of the benefit but on the purpose why it was
given by the employer. If it is primarily for the employee ½s gain, then the benefit is a facility; if
its provision is mainly for the employer ½s advantage, then it is a supplement ¿½. Again, this is
to ensure that employees are protected in circumstances where the employer designates a
benefit as deductible from the wages even though it clearly works to the employer�s greater
convenience or advantage.

Under the purpose test, substantial consideration must be given to the nature of the
employer ½s business in relation to the character or type of work performed by the employees
involved.

Our Haus is engaged in the construction business, a labor-intensive enterprise. The success of
its projects is largely a function of the physical strength, vitality and efficiency of its laborers. Its
business will be jeopardized if its workers are weak, sickly, and lack the required energy to
perform strenuous physical activities. Thus, by ensuring that the workers are adequately and well
fed, the employer is actually investing on its business.

Based on these considerations, we conclude that even under the purpose test, the subsidized
meals and free lodging provided by Our Haus are actually supplements. Although they also work
to benefit the respondents, an analysis of the nature of these benefits in relation to Our Haus�
business shows that they were given primarily for Our Haus� greater convenience and
advantage. If weighed on a scale, the balance tilts more towards Our Haus� side. Accordingly,
their values cannot be considered in computing the total amount of the respondents� wages.

Under the circumstances, the daily wages paid to the respondents are clearly below the
prescribed minimum wage rates in the years 2007-2010.

The provision of deductible facilities must be voluntarily accepted in writing by the

employeeï. In Mayon Hotel, we reiterated that a facility may only be deducted from the wage if
the employer was authorized in writing by the concerned employee.51 As it diminishes the take-
home pay of an employee, the deduction must be with his express consent.

The facility must be charged at a fair and reasonable value. Our Haus admitted that it deducted
the amount of P290.00 per week from each of the respondents for their meals. But it now
submits that it did not actually withhold the entire amount as it did not figure in the computation
the money it expended for the salary of the cook, the water, and the LPG used for cooking, which
amounts to P249.40 per week per person. From these, it appears that the total meal expense per
week for each person is P529.40, making Our Haus� P290.00 deduction within the 70%
ceiling prescribed by the rules.

The valuation of a facility must be supported by relevant documents such as receipts

and company records for it to be considered as fair and reasonable. In Mabeza, we
noted:chanRoblesvirtualLawlibrary

Curiously, in the case at bench, the only valuations relied upon by the labor
arbiter in his decision were figures furnished by the private respondent's
own accountant, without corroborative evidence.� On the pretext that
records prior to the July 16, 1990 earthquake were lost or destroyed, respondent
failed to produce payroll records, receipts and other relevant documents,
where he could have, as has been pointed out in the Solicitor General's
manifestation, �secured certified copies thereof from the nearest regional
office of the Department of Labor, the SSS or the BIR�.52 [emphasis ours]

In the present case, Our Haus never explained how it came up with the values it
assigned for the benefits it provided; it merely listed its supposed expenses without any
supporting document. Since Our Haus is using these additional expenses (cook�s salary,
water and LPG) to support its claim that it did not withhold the full amount of the meals� value,
Our Haus is burdened to present evidence to corroborate its claim. The records however, are
bereft of any evidence to support Our Haus� meal expense computation. Even the value it
assigned for the respondents� living accommodations was not supported by any documentary
evidence. Without any corroborative evidence, it cannot be said that Our Haus complied with this
third requisite.

A claim not raised in the pro forma complaint may still be raised in the position paper.�

Our Haus questions the respondents� entitlement to SIL pay by pointing out that this claim
was not included in the pro forma complaint filed with the NLRC. However, we agree with the CA
that such omission does not bar the labor tribunals from touching upon this cause of action since
this was raised and discussed in the respondents� position paper. In Samar-Med Distribution
v. National Labor Relations Commission,53 we held:chanRoblesvirtualLawlibrary

Firstly, petitioner�s contention that the validity of Gutang�s dismissal should

not be determined because it had not been included in his complaint before the
NLRC is bereft of merit. The complaint of Gutang was a mere checklist of
possible causes of action that he might have against Roleda. Such manner of
preparing the complaint was obviously designed to facilitate the filing of
complaints by employees and laborers who are thereby enabled to expediently
set forth their grievances in a general manner. But the non-inclusion in the
complaint of the issue on the dismissal did not necessarily mean that the
validity of the dismissal could not be an issue. The rules of the NLRC require
the submission of verified position papers by the parties should they fail to
agree upon an amicable settlement, and bar the inclusion of any cause of action
not mentioned in the complaint or position paper from the time of their submission
by the parties. In view of this, Gutang�s cause of action should be
ascertained not from a reading of his complaint alone but also from
a consideration and evaluation of both his complaint and position paper.54

The respondents� entitlement to the other monetary benefits Generally a party who alleges
payment as a defense has the burden of proving it. Particularly in labor cases, the burden of
proving payment of monetary claims rests on the employer on the reasoning that the
pertinent personnel files, payrolls, records, remittances and other similar documents � which
will show that overtime, differentials, service incentive leave and other claims of workers have
been paid � are not in the possession of the worker but in the custody and absolute
control of the employer.55cralawred

Unfortunately, records will disclose the absence of any credible document which will show that
respondents had been paid their 13th month pay, holiday and SIL pays. Our Haus merely
presented a hand-written certification from its administrative officer that its employees
automatically become entitled to five days of service incentive leave as soon as they pass
probation. This certification was not even subscribed under oath. Our Haus could have at least
submitted its payroll or copies of the pay slips of respondents to show payment of these benefits.
However, it failed to do so.
 G.R. No. 128845 June 1, 2000

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner,

vs.
HON. LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor and Employment;
HON. CRESENCIANO B. TRAJANO in his capacity as the Acting Secretary of Labor and
Employment; DR. BRIAN MACCAULEY in his capacity as the Superintendent of International
School-Manila; and INTERNATIONAL SCHOOL, INC., respondents.

FACTS:
This case upholds principle long honored in this jurisdiction point that employees should be
given equal pay for work of equal value.
Private respondent International School, Inc. (the School, for short), pursuant to Sec. 2 (c) of
PD 732, employ its own teaching and management personnel selected either locally or abroad, from
Philippine or other nationalities.
Accordingly, the School hires both foreign and local teachers as members of its faculty,
classifying the same into two: (1) foreign-hires and (2) local-hires. The School grants foreign-hires
certain benefits not accorded local-hires These include housing, transportation, shipping costs, taxes,
and home leave travel allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%)
more than local-hires. The School justifies the difference on two "significant economic disadvantages"
foreign-hires have to endure, namely: (a) the "dislocation factor" and (b) limited tenure.
The school further claimed that the compensation scheme is simply the School's adaptive
measure to remain competitive on an international level in terms of attracting competent professionals
in the field of international education.

When negotiations for a new collective bargaining agreement were held petitioner
International School Alliance of Educators, "a legitimate labor union and the collective bargaining
representative of all faculty members" of the School, contested the difference in salary rates between
foreign and local-hires. Petitioner then filed a notice of strike.
The DOLE Acting Secretary issued an Order resolving the parity and representation issues in
favor of the School. Then DOLE Secretary subsequently denied petitioner's motion for reconsideration
claiming that the the Principle "equal pay for equal work" does not find applications in the present
case as international character of the School requires the hiring of foreign personnel to deal with
different nationalities and different cultures, among the student population. It further argued the Union
cannot also invoke the equal protection clause to justify its claim of parity as it allows reasonable
classification.
A classification is reasonable if it is based on substantial distinctions and apply to all members
of the same class. Verily, there is a substantial distinction between foreign hires and local hires, the
former enjoying only a limited tenure, having no amenities of their own in the Philippines and have to
be given a good compensation package in order to attract them to join the teaching faculty of the
School.
Petitioner then filed the instant petition to the Court claiming that the point-of-hire
classification employed by the School is discriminatory to Filipinos and that the grant of higher salaries
to foreign-hires constitutes racial discrimination.

ISSUE: WON the point-of-hire classification used by the respondent School International Inc. justifies
the salary disparity between foreign and local hires.

HELD:
The court ruled that the point-of-hire classification used by the respondent, School
International Inc., in justifying the salary disparity between foreign and local hires amounts to
discrimination among local hires having the same rank and functions as foreign hires.
The Constitution specifically provides that labor is entitled to "humane conditions of work."
These conditions are not restricted to the physical workplace — the factory, the office or the field —
but include as well the manner by which employers treat their employees.The Constitution also
directs the State to promote "equality of employment opportunities for all." Similarly, the Labor
Code provides that the State shall "ensure equal work opportunities regardless of sex, race or creed."
Thus, it would be an affront to both the spirit and letter of these provisions if the State, in spite of its
primordial obligation to promote and ensure equal employment opportunities, tolerates unequal and
discriminatory terms and conditions of employment.

Where there is discrimination as to wage, the State upholds the long honored legal truism of
"equal pay for equal work." Persons who work with substantially equal qualifications, skill, effort and
responsibility, under similar conditions, should be paid similar salaries. This rule applies to the School,
regardless of its "international character". Settled is the rule that if an employer accords employees
the same position and rank, the presumption is that these employees perform equal work. This
presumption is borne by logic and human experience. If the employer pays one employee less than
the rest, it is not for that employee to explain why he receives less or why the others receive more.
That would be adding insult to injury. The employer has discriminated against that employee; it is for
the employer to explain why the employee is treated unfairly.

The employer in this case has failed to discharge this burden. There is no evidence here that
foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups have similar
functions and responsibilities, which they perform under similar working conditions. The School
cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the distinction in
salary rates without violating the principle of equal work for equal pay.

"Salary" as defined in Black's Law Dictionary is “a reward or recompense for services

performed." Similarly, the Philippine Legal Encyclopedia states that "salary" is the "[c]onsideration
paid at regular intervals for the rendering of services." Generally, it carries with it the fundamental idea
of compensation for services rendered.

While the court recognize the need of the School to attract foreign-hires, salaries should not
be used as an enticement to the prejudice of local-hires. The local-hires perform the same services as
foreign-hires and they ought to be paid the same salaries as the latter. For the same reason, the
"dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the
distinction in salary rates. The dislocation factor and limited tenure affecting foreign-hires are
adequately compensated by certain benefits accorded them which are not enjoyed by local-hires,
such as housing, transportation, shipping costs, taxes and home leave travel allowances.
The Constitution enjoins the State to "protect the rights of workers and promote their
welfare," "to afford labor full protection." The State, therefore, has the right and duty to regulate the
relations between labor and capital. These relations are not merely contractual but are so impressed
with public interest that labor contracts, collective bargaining agreements included, must yield to the
common good. 28 Should such contracts contain stipulations that are contrary to public policy, courts
will not hesitate to strike down these stipulations.

In this case, the court finds that the point-of-hire classification employed by respondent
School to justify the distinction in the salary rates of foreign-hires and local hires to be an invalid
classification. There is no reasonable distinction between the services rendered by foreign-hires and
local-hires. The practice of the School of according higher salaries to foreign-hires contravenes public
policy and, certainly, does not deserve the sympathy of this Court.
 [G.R. NO. 144619 November 11, 2005]

C. PLANAS COMMERCIAL and/or MARCIAL COHU, Petitioners, v. NATIONAL LABOR

RELATIONS COMMISSION (Second Division), ALFREDO OFIALDA, DIOLETO MORENTE
and RUDY ALLAUIGAN, Respondents.

FACTS:
Private respondents together with 5 others filed a complaint for underpayment of wages,
nonpayment of overtime pay, holiday pay, service incentive leave pay and premium pay for
holiday and rest day and night shift differential against petitioners with the Arbitration Branch of
the NLRC.
In their position paper, private respondents alleged that petitioner Cohu, owner of C.
Planas Commercial, is engaged in wholesale of plastic products and fruits of different kinds with
more than 24 employees; that private respondents were hired by petitioners respectively, as
helpers/laborers; that they were paid below the minimum wage law for the past 3 years; that they
were required to work for more than 8 hours a day without overtime pay; that they never enjoyed
holiday pay and did not have a rest day as they worked for 7 days a week; and they were not
paid service incentive leave pay although they had been working for more than one year. Private
respondent Ofialda asked for night shift differential as he had worked from 8 p.m. to 8 a.m. the
following day for more than one year.

Petitioners filed their comment admitting that private respondents were their helpers who
used to accompany the delivery trucks and helped in the loading and unloading of merchandise
being distributed to clients; that they usually started their work from 10 a.m. to 6 p.m.; that private
respondents stopped working with petitioners sometime in September 1993 as they were already
working in other establishments/stalls in Divisoria; that they only worked for 6 days a week; that
they were not entitled to holiday and service incentive leave pays for they were employed in a
retail and service establishment regularly employing less than ten workers.

The LA rendered a decsiion in favor the petitioners on the basis that employers who are
regularly employing not more than ten workers in retail establishments are exempt from the
coverage of the minimum wage law. The NLRC, however, modified the decision and order
petitioners payments of money claims. The CA denied the petition for lack of merit and
affirmed in toto the NLRC decision.

ISSUE:WON petitioner is exempted from the coverage of the mininum wage laws or order.

HELD:
Having claimed exemption from the coverage of the minimum wage laws or order, it was
incumbent upon petitioner to prove such claim. Apart from simply denying private respondents'
allegation that it employs more than 24 workers in its business, petitioner failed to adduce
evidence to prove that it is, indeed, a "retail establishment" which employs less than ten (10)
employees. Its failure to present records of its workers and their respective wages gives rise to
the presumption that these are adverse to its claims.

R.A. No. 6727 known as the Wage Rationalization Act provides for the statutory
minimum wage rate of all workers and employees in the private sector. Section 4 of the
Act provides for exemption from the coverage, thus:

Sec. 4.

. . .(c) Exempted from the provisions of this Act are household or domestic helpers and persons
employed in the personal service of another, including family drivers.

Retail/service establishments regularly employing not more than ten (10) workers may be
exempted from the applicability of this Act upon application with and as determined by the
appropriate Regional Board in accordance with the applicable rules and regulations issued by
the Commission. Whenever an application for exemption has been duly filed with the appropriate
Regional Board, action on any complaint for alleged non-compliance with this Act shall be
deferred pending resolution of the application for exemption by the appropriate Regional Board.

In the event that applications for exemptions are not granted, employees shall receive the
appropriate compensation due them as provided for by this Act plus interest of one percent (1%)
per month retroactive to the effectivity of this Act.

Clearly, for a retail/service establishment to be exempted from the coverage of the minimum
wage law, it must be shown that the establishment is regularly employing not more than ten (10)
workers and had applied for exemptions with and as determined by the appropriate Regional
Board in accordance with the applicable rules and regulations issued by the Commission.
Petitioners' main defense in controverting private respondents' claim for underpayment of wages
is that they are exempted from the application of the minimum wage law, thus the burden of
proving such exemption rests on petitioners. Petitioners had not shown any evidence to show
that they had applied for such exemption and if they had applied, the same was granted.

Moreover, in C. Planas Commercial v. NLRC,19 where herein petitioners are also involved in a
case filed by one of its employees, we ruled:

Petitioners invoke the exemption provided by law for retail establishments which employ not
more than ten (10) workers to justify their non-liability for the salary differentials in question. They
insist that PLANAS is a retail establishment leasing a very small and cramped stall in the
Divisoria market which cannot accommodate more than ten (10) workers in the conduct of its
business.

In this case, the award of salary differentials by the NLRC in favor of de los Reyes was
made pursuant to RA 6727 otherwise known as the Wage Rationalization Act, and the Rules
Implementing Wage Order Nos. NCR-01 and NCR-01-A and Wage Order Nos. NCR-02 and
NCR-02-A. However, the best proof that they could have adduced was their approved application
for exemption in accordance with applicable guidelines issued by the Commission. Section 4,
subpar. (c) of RA 6727 categorically provides:

Retail/service establishments regularly employing not more than ten (10) workers may be
exempted from the applicability of this Act upon application with and as determined by the
appropriate Regional Board in accordance with the applicable rules and regulations issued by
the Commission. Whenever an application for exemption has been duly filed with the appropriate
Regional Board, action on any complaint for alleged non-compliance with this Act shall be
deferred pending resolution of the application for exemption by the appropriate Regional Board.
In the event that applications for exemptions are not granted, employees shall receive the
appropriate compensation due them as provided for by this Act plus interest of one percent (1%)
per month retroactive to the effectivity of this Act .

In this case, petitioner Cohu did not submit any employment record to prove otherwise. As
employer, Manager Cohu ought to be the keeper of the employment records of all his workers.
Thus, it was well within his means to refute any monetary claim alleged to be unpaid. His inability
to produce the payrolls from their files without any satisfactory explanation can be interpreted no
less as suppression of vital evidence adverse to PLANAS.
 G.R. No. 166647 March 31, 2006

PAG-ASA STEEL WORKS, INC., Petitioner,

vs.
COURT OF APPEALS, FORMER SIXTH DIVISION and PAG-ASA STEEL WORKERS UNION
(PSWU), Respondent.

FACTS:
Petitioner Pag-Asa Steel Works, Inc. is a corporation duly organized and existing under
Philippine laws and is engaged in the manufacture of steel bars and wire rods. Pag-Asa Steel
Workers Union is the duly authorized bargaining agent of the rank-and-file employees of
petitioner.
The Regional Tripartite Wages and Productivity Board (Wage Board) of the National
Capital Region (NCR) issued Wage Order No. NCR-06. It provided for an increase of P13.00 per
day in the salaries of employees receiving the minimum wage, and a consequent increase in the
minimum wage rate to P198.00 per day.On October 14, 1999, Wage Order No. NCR-07 7 was
issued, and on October 26, 1999, its Implementing Rules and Regulations. It provided for
a P25.50 per day increase in the salary of employees receiving the minimum wage and
increased the minimum wage to P223.50 per day. Petitioner paid the P25.50 per day increase to
all of its rank-and-file employees.
The rank-and-file employees were granted the second year increase provided in the CBA
in the amount of P25.00 per day. Then Union president Lucenio Brin requested petitioner to
implement the increase under Wage Order No. NCR-08 in favor of the company’s rank-and-file
employees. Petitioner rejected the request, claiming that since none of the employees were
receiving a daily salary rate lower than P250.00 and there was no wage distortion, it was not
obliged to grant the wage increase.

The Union elevated the matter to the National Conciliation and Mediation.

ISSUE: WON the company was obliged to grant the wage increase under Wage Order No. NCR-
08 as a matter of practice.

HELD:
In any case, petitioner avers that respondent Union is not entitled to the wage increase
provided under Wage Order No. NCR-08 as a matter of practice. There is no company practice
of granting a wage-order-mandated increase in addition to the CBA-mandated wage increase. It
points out that, as admitted by respondent Union, the previous wage orders were not
automatically implemented and were made applicable only after negotiations. Petitioner argues
that the previous wage orders were implemented because at that time, some employees were
receiving salaries below the minimum wage and the resulting wage distortion had to be
remedied.31

The petition is meritorious. We rule that petitioner is not obliged to grant the wage
increase under Wage Order No. NCR-08 either by virtue of the CBA, or as a matter of company
practice.
The Wage Order No. NCR-08 specifically provides that only those in the private sector in
the NCR receiving the prescribed daily minimum wage rate of P223.00 per day would receive an
increase of P26.50 a day, thereby setting the new minimum wage rate in said region to P250.00
per day. There is no dispute that, when the order was issued, the lowest paid employee of
petitioner was receiving a wage higher than P250.00 a day. As such, its employees had no right
to demand for an increase under said order. As correctly ruled by the VA:

There is no legal basis to implement the same across-the-board. A perusal of the record shows
that the lowest paid employee before the implementation of Wage Orde is P250.00/day and none
was receiving below P223.50 minimum. This could only mean that the union can no longer
demand for any wage distortion adjustment. Neither could they insist for an adjustment of P26.50
increase under Wage Order #8. The provision of wage order #8 and its implementing rules are
very clear as to who are entitled to the P26.50/day increase, i.e., "private sector workers and
employees in the National Capital Region receiving the prescribed daily minimum wage rate
of P223.50 shall receive an increase of Twenty-Six Pesos and Fifty Centavos (P26.50) per day,"
and since the lowest paid is P250.00/day the company is not obliged to adjust the wages of the
workers.

Neither do we find merit in the argument that under the CBA, such increase should be
implemented across-the-board. The provision in the CBA that "Any Wage Order to be
implemented by the Regional Tripartite Wage and Productivity Board shall be in addition to the
wage increase adverted above" cannot be interpreted in support of an across-the-board
increase. If such were the intentions of this provision, then the company could have simply
accepted the original demand of the union for such across-the-board implementation, as set forth
in their original proposal. The fact that the company rejected this proposal can only mean that it
was never its intention to agree, to such across-the-board implementation. Thus, the union will
have to be contented with the increase of P30.00 under the CBA which is due on July 31, 2001
barely a month from now.

The list of the employees’ salaries before Wage Order No. NCR-06 was implemented belie
respondent Union’s claim that the wage-order-mandated increases were given to employees
despite the fact that they were receiving salaries above the minimum wage. This list proves that
some employees were in fact receiving salaries below the P198.00 minimum wage rate
prescribed by the wage order — two rank-and-file employees in particular. As petitioner explains,
a wage distortion occurred as a result of granting the increase to those employees who were
receiving salaries below the prescribed minimum wage. The wage distortion necessitated the
upward adjustment of the salaries of the other employees and not because it was a matter of
company practice or usage. The situation of the employees before Wage Order No. NCR-08,
however, was different. Not one of the members of respondent Union was then receiving less
than P250.00 per day, the minimum wage requirement in said wage order.

The only instance when petitioner admittedly implemented a wage order despite the fact that the
employees were not receiving salaries below the minimum wage was under Wage Order No.
NCR-07. Petitioner, however, explains that it did so because it was agreed upon in the CBA that
should a wage increase be ordered within six months from its signing, petitioner would give the
increase to the employees in addition to the CBA-mandated increases. Respondent’s isolated act
could hardly be classified as a "company practice" or company usage that may be considered an
enforceable obligation.

Moreover, to ripen into a company practice that is demandable as a matter of right, the giving of
the increase should not be by reason of a strict legal or contractual obligation, but by reason of
an act of liberality on the part of the employer. Hence, even if the company continuously grants a
wage increase as mandated by a wage order or pursuant to a CBA, the same would not
automatically ripen into a company practice. In this case, petitioner granted the increase under
Wage Order No. NCR-07 on its belief that it was obliged to do so under the CBA.
 G.R. No. 183934

ERNESTO GALANG and MA. OLGA JASMIN CHAN, Petitioners,

vs
BOIE TAKEDA CHEMICALS, INC. and/or KAZUHIKO NOMURA, Respondents.

FACTS:
Respondent pharmaceutical company Boie Takeda Chemicals, Inc. (BTCI) hired
petitioners. Through the years, petitioners rose from the ranks and were promoted to Regional
Sales Managers in 2000. Petitioners held these positions until their separation from BTCI.
As Regional Sales Managers, they belong to the sales department of BTCI. They
primarily managed regional sales budget and target, and were responsible for market share and
company growth within their respective regions. Within the organizational hierarchy, they
reported to the National Sales Director. In 2002, when the National Sales Director position
became vacant petitioners assumed and shared the functions and responsibilities of this higher
position, and reported directly to the General Manager.

In February 2003, the new General Manager, asked petitioners to apply for the position
of National Sales Director. All four employees submitted themselves to interviews with the
management. In the end, Nomura hired an outsider from Novartis Company as Marketing
Director, while the position of National Sales Director remained vacant.11
Later, however, petitioners were informed that BTCI promoted Villanueva as National
Sales Director. BTCI explained that the appointment was pursuant to its management
prerogative, and that it arrived at such decision only "after careful assessment of the situation,
the needs of the position and the qualifications of the respective candidates." The promotion of
Villanueva as the National Sales Director caused ill-feelings on petitioners' part. They believed
that Villanueva did not apply for the position; has only three years of experience in sales; and
was reportedly responsible for losses in the marketing department. Petitioners further resented
Villanueva's appointment because they heard that the appointment was made only because he
threatened to leave the office along with the company's top cardio-medical doctors. 16

After Villanueva's promotion, petitioners claimed that Nomura threatened to dismiss them
from office if they failed to perform well under the newly appointed National Sales Director. 17 This
prompted petitioners to inquire if they could avail of early retirement package due to health
reasons. Specifically, they requested Nomura if they could avail of the early retirement package
of 150% plus 120% of monthly salary for every year of service tax free, and full ownership of
service vehicle tax free. They claimed that this is the same retirement package given to previous
retirees.
Petitioners intimated their intention to retire in a joint written letter of resignation. Upon
petitioners' retirement, the positions of Regional Sales Manager were abolished, and a new
position of Operations Manager was created.Petitioners filed the complaint for constructive
dismissal and money claims before the NLRC Regional Arbitration Branch.

ISSUES: WON petitioners were constructively dismissed from service; and WON petitioners are
entitled to a higher retirement package.

HELD:

I. Petitioners voluntarily retired from the service, thus were not constructively dismissed.

Constructive dismissal has often been defined as a "dismissal in disguise" or "an act amounting
to dismissal but made to appear as if it were not." It exists where there is cessation of work
because continued employment is rendered impossible, unreasonable or unlikely, as an offer
involving a demotion in rank and a diminution in pay. In some cases, while no demotion in rank
or diminution in pay may be attendant, constructive dismissal may still exist when continued
employment has become so unbearable because of acts of clear discrimination, insensibility or
disdain by the employer, that the employee has no choice but to resign. 52 Under these two
definitions, what is essentially lacking is the voluntariness in the employee's separation from
employment.

In this case, petitioners were neither demoted nor did they receive a diminution in pay and
benefits. Petitioners also failed to show that employment is rendered impossible, unreasonable
or unlikely.Petitioners admitted that they have previously intended to retire and were actually the
ones who requested to avail of an early retirement. More, the circumstances which petitioners
claim to have forced them into early retirement are not of such character that rendered their
continued employment with BTCI as impossible.

Our labor laws respect the employer's inherent right to control and manage effectively its
enterprise and do not normally allow interference with the employer's judgment in the conduct of
his business. Management has exclusive prerogatives to determine the qualifications and fitness
of workers for hiring and firing, promotion or reassignment. It is only in instances of unlawful
discrimination, limitations imposed by law and collective bargaining agreement can this
prerogative of management be reviewed.

The reluctance to interfere with management's prerogative in determining who to promote all the
more applies when we consider that the position of National Sales Director is a managerial
position. Managerial positions are offices which can only be held by persons who have the trust
of the corporation and its officers.57 The promotion of employees to managerial or executive
positions rests upon the discretion of management. 58 Thus, we have repeatedly reminded that
the Labor Arbiters, the different Divisions of the NLRC, and even courts, are not vested with
managerial authority.59 The employer's exercise of management prerogatives, with or without
reason, does not per se constitute unjust discrimination, unless there is a showing of grave
abuse of discretion.60 In this case, there is none.

Petitioners did not present any evidence showing BTCI's adopted rules and policies laying out
the standards of promotion of an employee to National Sales Director. They did not present the
qualification standards (which BTCl did not allegedly follow) needed for the position. Petitioners
merely assumed that one of them was better for the job compared to Villanueva. Mere
allegations without proof cannot sustain petitioners' claim. In any case, a perusal of Villanueva's
resume shows that he has combined experiences in both sales and marketing. 61 The NLRC also
found that an independent consulting agency, K Search Asia Consulting, was engaged by BTCI
to determine who to appoint as National Sales Director. 62 The consulting agency recommended
Villanueva to the position. In the absence of any qualification standards that BTCI allegedly
gravely abused to refuse to follow, we cannot substitute our own judgment on the qualifications
of Villanueva.

It is true that in constructive dismissal cases, the employer is charged with the burden of proving
that its conduct and action or the transfer of an employee are for valid and legitimate grounds
such as genuine business necessity.64 However, it is likewise true that in constructive dismissal
cases, the employee has the burden to prove first the fact of dismissal by substantial
evidence.65 Only then when the dismissal is established that the burden shifts to the employer to
prove that the dismissal was for just and/or authorized cause.66 The logic is simple-if there is no
dismissal, there can be no question as to its legality or illegality.67

What is undisputed is the fact that petitioner availed himself of respondent bank's
early voluntary retirement program and accordingly received his retirement pay in the amount of
P1.324 Million under such program. Consequently, the burden of proof will not vest on
respondent bank to prove the legality of petitioner's separation from employment but aptly
remains with the petitioner to prove his allegation that his availment of the early voluntary
retirement program was, in fact, done involuntarily.
Verily, petitioner did not present any clear, positive or convincing evidence in the present case to
support his claims. Indeed, he never presented any evidence at all other than his own self-
serving declarations. We must bear in mind the legal dictum that, "he who asserts, not he who
denies, must prove."69 (Citations omitted, emphases in the original.)

Here, records show that petitioners failed to establish the fact of their dismissal when they failed
to prove that their decision to retire is involuntary. Consequently, no constructive dismissal can
be found.

II. Petitioners were not discriminated against in terms of their retirement package.

The entitlement of employees to retirement benefits must specifically be granted under

existing laws, a collective bargaining agreement or employment contract, or an established
employer policy. Based on both parties' evidence, petitioners are not covered by any agreement.
There is also no dispute that petitioners received more than what is mandated by Article 287 71 of
the Labor Code. Petitioners, however, claim that they should have received a larger pay because
BTCI has given more than what they received to previous retirees. In essence, they claim that
they were discriminated against because BTCI did not give them the package of 150% of
monthly salary for every year of service on top of the normal retirement package.

In Vergara v. Coca-Cola Bottlers Philippines, Inc.,72we explained that the burden of proof that the
benefit has ripened into company practice, i.e., giving of the benefit is done over a long period of
time, and that it has been made consistently and deliberately, rests with the employee:

To he considered as a regular company practice the employee must prove by

substantial evidence that the giving of the benefit is done over a long
period of time, and that it has been made consistently and
deliberately. Jurisprudence has not laid down any hard-and-fast rule as to the
length of time that company practice should have been exercised in order to
constitute voluntary employer practice. The common denominator in previously
decided cases appears to be the regularity and deliberateness of the grant of
benefits over a significant period of time. It requires an indubitable showing
that the employer agreed to continue giving the benefit knowing fully well
that the employees are not covered by any provision of the law or
agreement requiring payment thereof. In sum, the benefit must be
characterized by regularity, voluntary and deliberate intent of the employer to
grant the benefit over a considerable period of time. 73 (Citations omitted,
emphases supplied.)

To prove that their claim on the additional grant of 150% of salary, petitioners presented
evidence showing that Anita Ducay,75 Rolando Arada,76 Marcielo Rafael,77 and
78
Sarmiento, received significantly larger retirement benefits.

In fact, the affidavit79 of Anita Ducay affirms BTCI's position that in practice, the CBA
provisions govern the employees' retirement pay. And while it may also support petitioners'
allegation that in some cases, a more generous package is given to retiring employees higher
than that provided in the CBA, the affidavit candidly states that the retirement package given to
Sarmiento, Melchor Barreto, Marcielo Rafael, and Rolando Arada was not in accordance with
standard of merit or company practice.
 [ G.R. No. 200010, August 27, 2020 ]
HOME CREDIT MUTUAL BUILDING AND LOAN ASSOCIATION AND/OR RONNIE B.
ALCANTARA, PETITIONERS, VS. MA. ROLLETTE G. PRUDENTE, RESPONDENT. D E C I S
ION
LOPEZ, J.:

Whether an employer violated the rule on non-diminution of benefits when it adopted a

cost sharing scheme in its care plan for employees is the core issue in this Petition for Review
on Certiorari under Rule 45 of the Rules of Court assailing the Court of Appeal's (CA)
Decision[1] dated August 31, 2011 in CA-G.R. SP No. 117332, which reversed the findings of the
National Labor Relations Commission (NLRC).
FACTS:
In 1997, Home Credit Mutual Building and Loan Association gave its employee Rollette Prudente
her first service vehicle. Later, Rollete purchased the vehicle from Home Credit at its depreciated
value. In 2003, Home Credit granted Rollete's request for a second service vehicle. However,
Home Credit required Rollete to pay for additional equity in excess of the maximum limit of
P660,000.00. In 2008, Rollete again purchased the vehicle at its depreciated value.

In 2009, Rollette applied for a third service vehicle. This time, Home Credit informed Rollette that
she must pay the equity more than P550,000.00. Home Credit likewise adopted a cost sharing
scheme where Rollette must shoulder 40% of the acquisition price. Aggrieved, Rollette filed a
complaint against Home Credit for violation of Article 100 of the Labor Code on non-diminution of
benefits before the Labor Arbiter (LA).

ISSUE:

RULING

There is no dispute that Rollette received service vehicles from Home Credit in 1997 and in
2003. The LA and the NLRC both held that the car plan has ripened into a company practice but
the specific manner by which it is given may vary and is subject to management prerogative. On
the other hand, the CA ruled that Rollette is entitled to a service vehicle at full company cost as
this benefit was part of her hiring package. Also, Home Credit may not diminish this benefit which
it had practiced for a long period of time. The question now is whether the CA committed
reversible error in finding that Home Credit violated the rule against diminution of benefits.

Generally, employees have a vested right over existing benefits that the employer voluntarily
granted them.[10] These benefits cannot be reduced, diminished, discontinued or
eliminated[11] consistent with the constitutional mandate to protect the rights of workers and
promote their welfare.[12] Apropos is Article 100 of the Labor Code, viz.:
ART. 100. Prohibition against Elimination or Diminution of Benefits. - Nothing in
this Book shall be construed to eliminate or in any way diminish supplements, or
other employee benefits being enjoyed at the time of promulgation of this
Code. (Emphasis Supplied.)
In Arco Metal Products, Co., Inc. v. Samahan ng mga Manggagawa sa Arco Metal-NAFLU
(SAMARM-NAFLU, et al.),[13] we stressed that the principle of non-diminution of benefits is
founded on the constitutional mandate to "protect the rights of workers and promote their
welfare" and "to afford labor full protection." In his separate concurring opinion, Justice Arturo
Brion clarified that the basis for non-diminution rule is not Article 100 which refers solely to
"benefits enjoyed at the time of the promulgation of the Labor Code" thus:
x x x Article 100 refers solely to the non-diminution of benefits enjoyed at the time
of the promulgation of the Labor Code. Employer-employee relationship is
contractual and is based on the express terms of the employment contract
as well as on its implied terms, among them, those not expressly agreed
upon but which the employer has freely, voluntarily and consistently
 extended to its employees. Under the principle of mutuality of contracts
embodied in Article 1308 of the Civil Code, the terms of a contract - both express
and implied - cannot be withdrawn except by mutual consent or agreement of the
contracting parties, x x x[14] (Emphasis supplied.)
Clearly, the non-diminution rule applies only if the benefit is based on an express policy, a written
contract, or has ripened into a practice. [15] In this case, Rollette's claim that the car plan was part
of her hiring package was unsubstantiated. Admittedly, Home Credit has no existing car plan at
the time Rollette was hired. Rollette's employment contract does not even contain any express
provision on her entitlement to a service vehicle at full company cost. [16] Therefore, it is
incongruous for the CA to conclude that the grant of a service vehicle was part of Rollette's hiring
package.

Similarly, we find that the car plan has not ripened into a company practice. As a rule, "practice"
or "custom" is not a source of a legally demandable or enforceable right. In labor cases,
however, benefits which were voluntarily given by the employer, and which have ripened into
company practice, are considered as rights and are subject to the non-diminution rule. [17] To be
considered a company practice, the benefit must be consistently and deliberately granted by the
employer over a long period of time. It requires an indubitable showing that the employer agreed
to continue giving the benefit knowing fully well that the employee is not covered by any provision
of law or agreement for its payment. [18] The burden to establish that the benefit has ripened into a
company practice rests with the employee.[19]

Here, the labor tribunals correctly held that Home Credit's act of giving service vehicles to
Rollette has been a company practice - but not as to the non-participation aspect. There was no
substantial evidence to prove that the car plan at full company cost had ripened into company
practice. Notably, the only time Rollette was given a service vehicle fully paid for by the company
was for her first car. For the second vehicle, the company already imposed a maximum limit of
P660,000.00 but Rollette never questioned this. She willingly paid for the equity in excess of said
limit. Thus, the elements of consistency and deliberateness are not present.

At this point, we emphasize that any employee benefit enjoyed cannot be reduced and
discontinued. Otherwise, the constitutional mandate to afford full protection to labor is offended.
[20]
But, even as the law is solicitous of the welfare of employees, it must also protect the right of
an employer to exercise what are clearly management prerogatives, like the adoption of a new
car plan at a new cost sharing scheme, with a reduced maximum limit. The free will of
management to conduct its own business affairs to achieve its purpose cannot be denied,
[21]
especially in this case wherein Home Credit is willing to give one hand by giving a service
vehicle to Rollette but she wanted to grab the entire arm.

FOR THESE REASONS, the petition is GRANTED. The Court of Appeals' Decision dated
August 31, 2011 in CA-G.R. SP No. 117332 is REVERSED and SET ASIDE. The National Labor
Relations Commission's Decision dated August 5, 2010, which affirmed the labor arbiter's
dismissal of the complaint is REINSTATED.

SO ORDERED.