[G.R. No.

154628, December 06, 2006]

ESTRELLITA G. SALAZAR PETITIONER, VS PHILIPPINE
DUPLICATORS, INC., AND /OR LEONORA FONTANILLA,
RESPONDENTS.
FACTS
Petitioner Estrellita Salazar became Sales Representative of
respondent company, Philippine Duplicators, Inc. on May 1, 1987. She
was assigned at the Southern Section of Metro Manila under the direct
supervision of respondent Leonora Fontanilla. Petitioner received her
last compensation in the amount of PhP 14,095.73 which covered her
basic salary and monthly commission.
Petitioner alleged that on December 7, 1998, respondent Fontanilla
called her to the latters office and handed her a memorandum with a
ball pen requesting her to receive it. Petitioner refused to receive it
because it stated her termination from employment and asked
Fontanilla why she should be terminated as she had done nothing
wrong.
On December 9, 1998, respondent Fontanilla directed Salazar, through
a memorandum to explain, within 72 hours from receipt of said
document, why no disciplinary action should be taken against her in
violation of Section 8, Category V of the companys Handbook on
Constructive Discipline for falsifying company records.
On December 8, 1999, Labor Arbiter Manuel R. Caday rendered his
Decision finding that petitioners dismissal was for a just cause, but
respondent Duplicators breached the twin-notice requirement for
dismissal under Section 2 (c), Rule XXIII, Book V of the
Implementing Rules and Regulations of the Labor Code. Thus,
Duplicators was ordered to pay an indemnity of PhP 10,000.00 to
petitioner Salazar.

strained relationship between the parties, separation pay was ordered

paid to petitioner in lieu of reinstatement.
The CA AFFIRMED the decision of the NLRC with modification.
The dismissal of the petitioner is perforce declared lawful and valid.
Nonetheless, as a measure of compassion and social justice, she is
hereby pronounced entitled to separation pay equivalent to one
months salary for every year of service rendered.
Simply stated, the CA ruled that the termination of Salazars
employment was legal and valid. While the dismissed employee was
not entitled to separation pay, the CA nonetheless awarded severance
pay pursuant to settled jurisprudence and in the interest of social
justice. Lastly, it ruled that there was no breach of the due process
requirements prescribed for dismissal from employment.
Under Petition for Review on Certiorari is before SC, Salazar contends
that NLRC should not have deleted the award of indemnity of PhP
10,000.00 in her favor since both Duplicators and Fontanilla did not
interpose any appeal from the Decision of Labor Arbiter Manuel
Caday and hence, no affirmative relief could be granted to said
respondents.
ISSUE
Whether or not the NLRC could validly delete the award of indemnity
in Salazars favor since respondents did not appeal.
RULING
WHEREFORE, the petition is DENIED and the March 15, 2002
Decision of the Court of Appeals and the August 7, 2002 Resolution in
CA-G.R. SP No. 62556 are AFFIRMED.
HELD

On January 26, 2000, Salazar filed a Memorandum of Appeal from the

adverse Decision. On August 28, 2000, the NLRC decided the appeal
finding that there was actually no termination of Salazars employment
but considering that reinstatement was not advisable due to the

As a general rule, a party who has not appealed cannot obtain from
the appellate court any affirmative relief other than the ones granted in
the appealed decision.

The reason for this rule is that since parties did not appeal from the
decision or resolution, they are presumed to be satisfied with the
adjudication. Furthermore, Rule 141 on Legal Fees provides that if the
fee is not paid, then the court may refuse to proceed with the action
until they are paid and may dismiss the appeal or the action or
proceeding. The case or appeal is deemed filed only upon payment of
the docket or appeal fee considering that jurisdiction is acquired by the
court over the case or the appeal only upon full payment of the
prescribed fee. Thus, the court has no jurisdiction or authority to grant
affirmative relief to the party who did not appeal as there is no
obligation to pay any fee. Furthermore, in the interest of fairness, it
would not be proper and just to award affirmative relief to the
appellees since they did not comply with the requirements of appeal.
In this case, Rule VI, Section 3 of the NLRC Rules of Procedure
[2000] prescribes the following:
Section 3. REQUISITES FOR PERFECTION OF APPEAL. a) The
Appeal shall be filed within the reglementary period as provided in
Section 1 of this Rule; shall be under oath with proof of payment of
the required appeal fee and the posting of a cash or surety bond as
provided in Section 6 of this Rule; shall be accompanied by
memorandum of appeal which shall state the grounds relied upon and
the arguments in support thereof; the relief prayed for; and a statement
of the date when the appellant received the appealed decision, order or
award and proof of service on the other party of such appeal.
Complying with these specifications is a difficult and tedious process,
specifically the posting of cash or surety bond. It would be
discriminatory and inequitable if a party who has not complied with
these requirements will be granted affirmative relief.
In the instant case, did the NLRC violate the rule in labor cases that an
appellee cannot be awarded any affirmative relief?
We find no deviation from the doctrine.
The Labor Arbiter ruled that petitioner Salazars dismissal was for a
just cause but discovered an infraction of the two-notice requirement

on the dismissal of an employee for which he ordered Duplicators to

pay the indemnity of PhP 10,000.00 to Salazar. However, on
petitioners appeal, the NLRC believed that there was after all no
dismissal of petitioner Salazar but due to strained relationship, the
company was made to pay separation pay of PhP 14,095.73 instead of
paying the indemnity of PhP 10,000.00 imposed by the Labor Arbiter.
It is the deletion of the PhP 10,000.00 indemnity that is being assailed
by the petitioner as a grant of affirmative relief to respondent
Duplicators.
We are not persuaded.
Petitioners first ground in her Memorandum of Appeal before the
NLRC stated that Labor Arbiter Cadays rulingthat she was not
illegally dismissed was erroneous. In resolving this issue, the NLRC
overturned Cadays finding of petitioners valid dismissal, and instead
concluded that there was no termination of petitioners employment.
As a consequence, the NLRC had to recall the award of PhP 10,000.00
indemnity imposed by Arbiter Caday although not prayed for by
respondent Duplicators since the said award was inconsistent with the
finding that petitioners employment subsisted. Without petitioners
dismissal, there can be no legal basis for the indemnity; hence,
Duplicators is not obliged to comply with the two (2)notice
requirement. In annulling the award, the NLRC merely exercised its
authority under Article 218 (d) of the Labor Code to correct or amend
any error committed by a labor arbiter in aid of its exclusive appellate
jurisdiction. Petitioner has no reason to complain that she was
deprived of monetary benefits since the NLRCs Decision did not
actually benefit Duplicators as the PhP 14,095.76 separation pay
granted to petitioner is certainly greater than the PhP 10,000.00
indemnity deleted by the NLRC.
WHEREFORE, the petition is DENIED and the March 15, 2002
Decision of the Court of Appeals and the August 7, 2002 Resolution in
CA-G.R. SP No. 62556 are AFFIRMED.

CENTRAL PANGASINAN
MACARAEG

ELECTRIC

COOP

INC

395 SCRA 720

PUNO; January 22, 2003
NATURE: Petition for review on certiorari
FACTS
- De Vera was employed as teller and Geronima Macaraeg as cashier
by Central Pangasinan Electric cooperative inc. They accommodated
and encashed two hundred eleven crossed checks of Evelyn Joy
Estrada (de Veras sister) amounting to P6,945,128.95 payable to the
cooperative despite the absence of any transaction or any outstanding
obligation with it. They credited the checks as part of their collection
and deposited the same together with their cash collection to the
coops account at the Rural Bank of Central Pangasinan.
- The finance department noticed these checks which bounced
(insufficient funds).De Vera and Macaraeg were confronted with the
discovery. De Vera admitted that the checks were issued by her sister
and that she encashed them from the money collected from petitioners
customers.
- De Vera testified and admitted that she encashed the checks of
Evelyn Joy Estrada because the latter is her older sister. Macaraeg
admitted that she knew of the accommodations given by respondent de
Vera to her sister; that she allowed her subordinate to do it because
respondent de Vera is her kumare, and that she knew that Mrs.
Estradas checks were sufficiently funded.

- On March 19, 1999, on the basis of the findings and recommendation

of Atty. Fernandez (presided over the hearing), the General Manager
issued to respondents separate notices of termination for serious
misconduct, and breach of trust and confidence reposed on them by
management.
- Respondents questioned their dismissal before the National
Conciliation and Mediation Board (NCMB),claiming that their
dismissal was without just cause and in violation of the Collective
Bargaining Agreement (CBA), which requires that the case should first
be brought before a grievance committee. Eventually, the parties
agreed to submit the case to a voluntary arbitrator for arbitration.
- LA-ruled in favor of defendants and ordered their reinstatement
CA-affirmed
ISSUES
1. WON the procedure leading to the termination of respondents
Maribeth de Vera and Geronima Macaraeg was in violation of the
provisions of the CBA
2. WON the respondents were validly dismissed
HELD
1. Issue is moot and academic
- The parties active participation in the voluntary arbitration
proceedings, and their failure to insist that the case be remanded to the
grievance machinery, shows a clear intention on their part to have the
issue of respondents illegal dismissal directly resolved by the
voluntary arbitrator.
2. YES

- The respondents were validly dismissed. Article 282(c) of the Labor

Code allows an employer to dismiss employees for willful breach of
trust or loss of confidence. Proof beyond reasonable doubt of their
misconduct is not required, it being sufficient that there is some basis
for the same or that the employer has reasonable ground to believe that
they are responsible for the misconduct and their participation therein
rendered them unworthy of the trust and confidence demanded of their
position.

deposit at petitioners bank. They did not live up to their duties and
obligations.

Reasoning

Facts: This is a petition for review on certiorari, petitioner Central

Pangasinan Electric Cooperative, Inc. challenges the decision of the
Court of Appeals in CA-G.R. SP No. 55128 affirming the decision of
the voluntary arbitrator in NCMB-RBI-PM-VA-5-03-99 ordering the
reinstatement of respondents to petitioners employ and payment of
their backwages.

- the acts of the respondents were clearly inimical to the financial

interest of the petitioner. During the investigation, they admitted
accommodating Evelyn Joy Estrada by encashing her checks from its
funds for more than a year. They did so without petitioners
knowledge, much less its permission.
- there was willful breach of trust on the respondents part, as they took
advantage of their highly sensitive positions to violate their duties.
- the acts of the respondents caused damage to the petitioner. During
those times the checks were illegally encashed, petitioner was not able
to fully utilize the collections, primarily in servicing its debts.
- it is not material that they did not misappropriate any amount of
money, nor incur any shortage relative to the funds in their
possession. The basic premise for dismissal on the ground of loss of
confidence is that the employees concerned hold positions of trust.
The betrayal of this trust is the essence of the offence for which an
employee is penalized.
- the respondents held positions of utmost trust and confidence. As
teller and cashier, respectively, they are expected to possess a high
degree of fidelity. They are entrusted with a considerable amount of
cash. Respondent de Vera accepted payments from petitioners
consumers while respondent Macaraeg received remittances for

CENTRAL PANGASINAN
MACARAEG, 395 SCRA 720

ELECTRIC

COOP

INC.

V.

Petitioner is an electric cooperative while the respondents, Geronima

Macaraeg and Maribeth de Vera are employees of petitioner at its
office in Area V, Bayambang, Pangasinan. Respondent de Vera was
employed as teller whose primary duty was to accept payments from
petitioners consumers in Bayambang and remit her collections to the
cashier, herein co-respondent Geronima Macaraeg.
From January 1998 to January 1999, respondent de Vera
accommodated and encashed the crossed checks of her sister,
Evelyn Joy Estrada amounting to P6,945,128.95 payable to petitioner
cooperative. In turn, respondent de Vera, with the knowledge and
consent of respondent Macaraeg, paid the full value of these checks
from the cash collections of petitioner. Such act was discovered in
January 1999 by the petitioner, through its Finance Department.
Petitioner confronted respondents with their discovery. Respondent de
Vera admitted that the checks were issued by her sister and that
she encashed them from the money collected from petitioners
customers. A memo was submitted to the GM detailing the findings
about the bounced checks. Petitioner, through de Guzman, issued a
memorandum to respondents placing them under preventive
suspension and requiring them to explain in writing within forty-eight
(48) hours why they misappropriated cooperative funds. A hearing
was also held at the board room of the petitioner with the assistance of

respondents counsel. Respondents provided answers/explanations. On

March 10, 1999, Atty. Fernandez submitted his findings to the General
Manager of petitioner.
On the basis of said findings and recommendation, the General
Manager issued to respondents separate notices of termination,
effective April 9, 1999, for serious misconduct, and breach of trust
and confidence reposed on them by management.
Respondents, with the help of the President and representative of the
Union, Central Pangasinan Electric Cooperative (CENPELCO)
Employees Association-Tupas Local Chapter No. R01-0012,
questioned their dismissal before the National Conciliation and
Mediation Board (NCMB). They claimed that their dismissal was
without just cause and in violation of the Collective Bargaining
Agreement (CBA), which requires that the case should first be
brought before a grievance committee. Eventually, the parties agreed
to submit the case to a voluntary arbitrator for arbitration.
On August 12, 1999, the voluntary arbitrator rendered a decision in
favor of respondents and asffirmed by the CA on August 17, 2000.
Hence, this petition;
ISSUE: Whether respondents were validly dismissed.
HELD: YES. The SC held that there exists a valid reason to dismiss
both employees. Article 282(c) of the Labor Code allows an
employer to dismiss employees for willful breach of trust or loss of
confidence. Proof beyond reasonable doubt of their misconduct is not
required, it being sufficient that there is some basis for the same or that
the employer has reasonable ground to believe that they are
responsible for the misconduct and their participation therein rendered
them unworthy of the trust and confidence demanded of their position.
Here, the acts of the respondents were clearly inimical to the financial
interest of the petitioner. During the investigation, they admitted
accommodating Evelyn Joy Estrada by encashing her checks from its
funds. They did so without petitioners knowledge, much less its
permission. These inimical acts lasted for more than a year, and
probably would have continued had it not been discovered in time. All

along, they were aware that these acts were prohibited by the Coop
Checks Policy. Clearly, there was willful breach of trust on the
respondents part, as they took advantage of their highly sensitive
positions to violate their duties.
Also, petitioner observed procedural due process in dismissing the
respondents.
IN VIEW WHEREOF, the petition is
GRANTED. The Decision and Resolution of the Court of Appeals in
CA-G.R. SP No. 55128 (affirming the decision of the voluntary
arbitrator in NCMB-RBI-PM-VA-5-03-99) are reversed and set aside.

4.
--------------------------------------------145. MILAN v. NLRC
G.R. No. 202961
February 04, 2015
Digested By: Joyce Baylon
--------------------------------------------Petitioners: EMER MILAN, RANDY MASANGKAY, WILFREDO
JAVIER, RONALDO DAVID, BONIFACIO MATUNDAN, NORA
MENDOZA, ET AL., (Milan et.al)
Respondents: NATIONAL LABOR RELATIONS COMMISSION,
SOLID MILLS, INC., AND/OR PHILIP ANG

5.

Petition: Petition for Review of CA Decision

Ponente: LEONEN

7.

FACTS:
1. Milan et.al are Solid Mills, Inc.s (Solid Mills) employees. They
are represented by the National Federation of Labor Unions
(NAFLU), their collective bargaining agent.
2. As Solid Mills employees, Milan et.al. and their families were
allowed to occupy SMI Village, a property owned by Solid Mills.
According to Solid Mills, this was [o]ut of liberality and for the
convenience of its employees . . . [and] on the condition that the
employees would vacate the premises anytime the Company deems
fit.
3. In September 2003, Milan et.al were informed that effective
October 10, 2003, Solid Mills would cease its operations due to
serious business losses. NAFLU recognized Solid Mills closure
due to serious business losses in the memorandum of agreement
dated September 1, 2003. The memorandum of agreement
provided for Solid Mills grant of separation pay less
accountabilities, accrued sick leave benefits, vacation leave
benefits, and 13th month pay to the employees. The agreement was

6.

8.
9.

entered into with full knowledge by the parties of their rights under
the law and they bound themselves not to conduct any concerted
action of whatsoever kind, otherwise the grant of financial
assistance as discussed above will be withheld.
Solid Mills filed its Department of Labor and Employment
termination report on September 2, 2003.
Later, Solid Mills, through Alfredo Jingco, sent to Milan et.al
individual notices to vacate SMI Village.
Milan et.al. were no longer allowed to report for work by October
10, 2003. They were required to sign a memorandum of agreement
with release and quitclaim before their vacation and sick leave
benefits, 13th month pay, and separation pay would be released.
Employees who signed the memorandum of agreement were
considered to have agreed to vacate SMI Village, and to the
demolition of the constructed houses inside as condition for the
release of their termination benefits and separation pay. Milan et.al.
refused to sign the documents and demanded to be paid their
benefits and separation pay.
Hence, they filed complaints before the Labor Arbiter for alleged
non-payment of separation pay, accrued sick and vacation leaves,
and 13th month pay. They argued that their accrued benefits and
separation pay should not be withheld because their payment is
based on company policy and practice. Moreover, the 13th month
pay is based on law, specifically, Presidential Decree No. 851.
Their possession of Solid Mills property is not an accountability
that is subject to clearance procedures. They had already turned
over to Solid Mills their uniforms and equipment when Solid Mills
ceased operations.
On the other hand, Solid Mills argued that Milan et.al.s complaint
was premature because they had not vacated its property.
The Labor Arbiter ruled in favor of Milan et.al. According to the
Labor Arbiter, Solid Mills illegally withheld petitioners benefits
and separation pay. The memorandum of agreement dated
September 1, 2003 stated no condition to the effect that petitioners
must vacate Solid Mills property before their benefits could be
given to them. Milan et.al.s possession should not be construed as
theiraccountabilities that must be cleared first before the release
of benefits. er.

10. Silodd Mills appealed to the National Labor Relations

Commission. The National Labor Relations Commission affirmed
part of the decision but reversed and set aside another part and
decided that Milan et.al.s monetary claims in the form of
separation pay, accrued 13th month pay for 2003, accrued vacation
and sick leave pays are held in abeyance pending compliance of
their accountabilities to respondent company by turning over the
subject lots they respectively occupy at SMI Village Sucat
Muntinlupa City, Metro Manila to Solid Mills. Linga and four
other were already paid their respective separation pays and
benefits. Meanwhile, Teodora Mahilom already retired long before
Solid Mills closure. She was already given her retirement benefits.
11. The National Labor Relations Commission ruled that because of
petitioners failure to vacate Solid Mills property, Solid Mills was
justified in withholding their benefits and separation pay.35 Solid
Mills granted the petitioners the privilege to occupy its property on
account of petitioners employment.36 It had the prerogative to
terminate such privilege.37 The termination of Solid Mills and
petitioners employer-employee relationship made it incumbent
upon petitioners to turn over the property to Solid Mills.
12. The Court of Appeals ruled that Solid Mills act of allowing its
employees to make temporary dwellings in its property was a
liberality on its part. It may be revoked any time at its discretion.
ISSUE: Whether or not an employer is allowed to withhold terminal
pay and benefits pending the employees return of its properties
RULING/RATIO: Yes. The fact that majority of NAFLUs members
were not occupants of respondent Solid Mills property is evidence
that possession of the property was not contemplated in the agreement.
Accountabilities should be interpreted to refer only to
accountabilities that were incurred by petitioners while they were
performing their duties as employees at the worksite. Moreover,
applicable laws, company practice, or policies do not provide that 13th
month pay, and sick and vacation leave pay benefits, may be withheld
pending satisfaction of liabilities by the employee.
Requiring clearance before the release of last payments to the
employee is a standard procedure among employers, whether public or

private. Clearance procedures are instituted to ensure that the

properties, real or personal, belonging to the employer but are in the
possession of the separated employee, are returned to the employer
before the employees departure.
As a general rule, employers are prohibited from withholding wages
from employees (Art. 116, Labor Code). The Labor Code also
prohibits the elimination or diminution of benefits (Art. 100, Labor
Code).
However, our law supports the employers institution of clearance
procedures before the release of wages. As an exception to the general
rule that wages may not be withheld and benefits may not be
diminished, the Labor Code provides: Art. 113. Wage deduction. No
employer, in his own behalf or in behalf of any person, shall make any
deduction from the wages of his employees, except:
1. In cases where the worker is insured with his consent by the
employer, and the deduction is to recompense the employer for
the amount paid by him as premium on the insurance;
2. For union dues, in cases where the right of the worker or his
union to check-off has been recognized by the employer or
authorized in writing by the individual worker concerned; and
3. In cases where the employer is authorized by law or regulations
issued by the Secretary of Labor and Employment.
The Civil Code provides that the employer is authorized to withhold
wages for debts due: Article 1706. Withholding of the wages, except
for a debt due, shall not be made by the employer. Debt in this case
refers to any obligation due from the employee to the employer. It
includes any accountability that the employee may have to the
employer. There is no reason to limit its scope to uniforms and
equipment, as petitioners would argue.
More importantly, respondent Solid Mills and NAFLU, the union
representing petitioners, agreed that the release of petitioners benefits
shall be less accountabilities. Accountabilities of employees are
personal. They need not be uniform among all employees in order to
be included in accountabilities incurred by virtue of an employeremployee relationship. Milan et.al. do not categorically deny Solid

Mills ownership of the property, and they do not claim superior right
to it. What can be gathered from the findings of the Labor Arbiter,
National Labor Relations Commission, and the Court of Appeals is
that Solid Mills allowed the use of its property for the benefit of Milan
et.al. as its employees. Milan et.al were merely allowed to possess and
use it out of Solid Mills liberality. The employer may, therefore,
demand the property at will.
DISPOSITIVE: Solid Mills won.
DOCTRINE: An employer is allowed to withhold terminal pay and
benefits pending the employees return of its properties. As a general
rule, No employer, in his own behalf or in behalf of any person, shall
make any deduction from the wages of his employees. The following
cases are considered exceptions:
1. In cases where the worker is insured with his consent by the
employer, and the deduction is to recompense the employer for
the amount paid by him as premium on the insurance;
2. For union dues, in cases where the right of the worker or his
union to check-off has been recognized by the employer or
authorized in writing by the individual worker concerned; and
3. In cases where the employer is authorized by law or regulations
issued by the Secretary of Labor and Employment.

G.R. No. 202961, February 04, 2015

EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER,
RONALDO DAVID, BONIFACIO MATUNDAN, NORA
MENDOZA,
ET
AL., Petitioners, v. NATIONAL
LABOR
RELATIONS COMMISSION, SOLID MILLS, INC., AND/OR
PHILIP ANG, Respondents.

FACTS: Petitioners are Solid Mills, Inc.s employees. They are

represented by the National Federation of Labor Unions (NAFLU),
their
collective
bargaining
agent.2chanroblesvirtuallawlibrary
Petitioners and their families were allowed to occupy SMI Village, a
property owned by Solid Mills oout of liberality and for the
convenience of its employees . . . [and] on the condition that the
employees . . . would vacate the premises anytime the Company deems
fit.4chanroblesvirtuallawlibrary
Petitioners were informed that effective October 10, 2003, Solid Mills
would cease its operations due to serious business losses. NAFLU
recognized Solid Mills closure due to serious business losses in the
memorandum of agreement. The memorandum of agreement provided
for Solid Mills grant of separation pay less accountabilities, accrued
sick leave benefits, vacation leave benefits, and 13th month pay to the
employees.
Later, Solid Mills, sent to petitioners individual notices to vacate SMI
Village. They were required to sign a memorandum of agreement with
release and quitclaim before their pay would be released. Petitioners
refused to sign the documents and demanded to be paid their benefits
and
separation
pay.14chanroblesvirtuallawlibrary
Hence, petitioners filed complaints before the Labor Arbiter for
alleged non-payment. They argued that their accrued benefits and
separation pay should not be withheld because their payment is based
on company policy and practice. Moreover, the 13th month pay is
based on law. Their possession of Solid Mills property is not an
accountability that is subject to clearance procedures.

DECISION
LEONEN, J.:

Petitioners argue that respondent Solid Mills and NAFLUs

memorandum of agreement has no provision stating that benefits shall

be paid only upon return of the possession of respondent Solid Mills

property. It only provides that the benefits shall be less
accountabilities, which should not be interpreted to include such
possession.

ISSUE: WON PAYMENT OF THE MONETARY CLAIMS OF

PETITIONERS SHOULD BE HELD IN ABEYANCE PENDING
COMPLIANCE
OF
THEIR
ACCOUNTABILITIES
TO
RESPONDENT SOLID MILLS BY TURNING OVER THE
SUBJECT LOTS THEY RESPECTIVELY OCCUPY AT SMI
VILLAGE, SUCAT, MUNTINLUPA CITY.

employees,

except:chanRoblesvirtualLawlibrary

3. In cases where the employer is authorized by law or regulations

issued by the Secretary of Labor and Employment.
The Civil Code provides that the employer is authorized to withhold
wages for debts due:chanRoblesvirtualLawlibrary
Article 1706. Withholding of the wages, except for a debt due, shall
not be made by the employer.cralawred

HELD: YES.

Debt in this case refers to any obligation due from the employee to
the employer. It includes any accountability that the employee may
have to the employer. There is no reason to limit its scope to uniforms
and
equipment,
as
petitioners
would
argue.

Requiring clearance before the release of last payments to the

employee is a standard procedure among employers, whether public or
private. Clearance procedures are instituted to ensure that the
properties, real or personal, belonging to the employer but are in the
possession of the separated employee, are returned to the employer
before
the
employees
departure.

Accountability, in its ordinary sense, means obligation or debt. As

long as the debt or obligation was incurred by virtue of the employeremployee relationship, generally, it shall be included in the employees
accountabilities that are subject to clearance procedures.

As a general rule, employers are prohibited from withholding wages

from
employees.
The
Labor
Code
provides:chanRoblesvirtualLawlibrary
Art. 116. Withholding of wages and kickbacks prohibited.
Art. 100. Prohibition against elimination or diminution of benefits.
Art. 113. Wage deduction. No employer, in his own behalf or in
behalf of any person, shall make any deduction from the wages of his

In this case, respondent Solid Mills claims that its properties are in
petitioners possession by virtue of their status as its employees.
Respondent Solid Mills allowed petitioners to use its property as an act
of liberality. Put in other words, it would not have allowed petitioners
to use its property had they not been its employees.
It may be true that not all employees enjoyed the privilege of staying
in respondent Solid Mills property. However, this alone does not
imply that this privilege when enjoyed was not a result of the
employer-employee relationship. Petitioners possession should,

therefore,

be

included

in

the

term

accountability.

The return of the propertys possession became an obligation or

liability on the part of the employees when the employer-employee
relationship ceased. Thus, respondent Solid Mills has the right to
withhold petitioners wages and benefits because of this existing debt
or liability.

The law does not sanction a situation where employees who do not
even assert any claim over the employers property are allowed to take
all the benefits out of their employment while they simultaneously
withhold possession of their employers property for no rightful
reason.
Withholding of payment by the employer does not mean that the
employer may renege on its obligation to pay employees their wages,
termination payments, and due benefits. The employees benefits are
also not being reduced. It is only subjected to the condition that the
employees return properties properly belonging to the employer. This
is only consistent with the equitable principle that no one shall be
unjustly
enriched
or
benefited
at
the
expense
of
82
another. chanroblesvirtuallawlibrary
Almirante: Return of occupied property
Friday, August 28, 2015
By
DOMINADOR ALMIRANTE
LABOR CASE DIGEST
PETITIONERS are employees of respondent Solid Mills, Inc. They
are represented by the National Federation of Labor Unions (NAFLU),

their collective bargaining agent. As Solid Mills employees, they and

their families were allowed to occupy SMI Village, a property owned
by Solid Mills.
In September 2003, petitioners were informed that effective Oct. 10,
2003, Solid Mills would cease its operations due to serious business
losses. NAFLU recognized Solid Mills closure due to serious business
losses in the memorandum of agreement dated Sept. 1, 2003. The
memorandum of agreement provided for Solid Mills grant of
separation pay less accountabilities, accrued sick leave benefits,
vacation leave benefits, and 13th month pay to the employees.
Later, Solid Mills sent petitioners individual notices to vacate SMI
Village. They were made to sign a memorandum of agreement with
release and quitclaim before their benefits would be released.
Petitioners refused to sign the documents and instead filed complaints
before the Labor Arbiter alleging non-payment of their benefits. In
defense, Solid Mills argued that petitioners complaint was premature
because they had not vacated its property. Does this defense find
merit?
Ruling: Yes.
Accountability, in its ordinary sense, means obligation or debt. The
ordinary meaning of the term accountability does not limit the
definition of accountability to those incurred in the worksite. As long
as the debt or obligation was incurred by virtue of the employeremployee relationship, generally, it shall be included in the employees
accountabilities that are subject to clearance procedures.
It may be true that not all employees enjoyed the privilege of staying
in respondent Solid Mills property. However, this alone does not
imply that this privilege when enjoyed was not a result of the
employer-employee relationship. Those who did avail of the privilege
were employees of respondent Solid Mills. Petitioners possession
should, therefore, be included in the term accountability.

Accountabilities of employees are personal. They need not be uniform

among all employees in order to be included in accountabilities
incurred by virtue of an employer-employee relationship.
Petitioners do not categorically deny respondent Solid Mills
ownership of the property, and they do not claim superior right to it.
What can be gathered from the findings of the Labor Arbiter, National
Labor Relations Commission, and the Court of Appeals is that
respondent Solid Mills allowed the use of its property for the benefit of
petitioners as its employees. Petitioners were merely allowed to
possess and use it out of respondent Solid Mills liberality. The
employer may, therefore, demand the property at will.
The return of the propertys possession became an obligation or
liability on the part of the employees when the employer-employee
relationship ceased. Thus, respondent Solid Mills has the right to
withhold petitioners wages and benefits because of this existing debt
or liability.
The law does not sanction a situation where employees who do not
even assert any claim over the employers property are allowed to take
all the benefits out of their employment while they simultaneously
withhold possession of their employers property for no rightful
reason.
xxx
Withholding of payment by the employer does not mean that the
employer may renege on its obligation to pay employees their wages,
termination payments, and due benefits. The employees benefits are
also not being reduced. It is only subjected to the condition that the
employees return properties properly belonging to the employer. This
is only consistent with the equitable principle that no one shall be
unjustly enriched or benefited at the expense of another. (Leonen, J.,
SC Second Division; Emer Milan, et. al. vs. NLRC, et. al., G.R. No.
202961, February 4, 2015).

The Supreme Court ruled that while it is true that a medical

repatriation has the effect of terminating the seafarers contract of
employment, it is, however, enough that the work-related illness,
which eventually became the proximate cause of death, occurred while
the contract was effective for recovery to be had.

Racelis vs UPL
PINOY SEAFARERS RIGHTS: Seafarers death compensable even
if it occurred after medical repatriation
OPINION March 22, 2016, Comments Off
BY ATTY. DENNIS R. GORECHO
WILL the heirs of a deceased seafarer be denied of death benefits
if he dies after his medical repatriation?
The Supreme Court ruled in the negative in the case of Racelis vs
United Philippine Lines (GR No. 198408 Nov. 12, 2014).
In the course of his last employment contract on board the vessel MS
Prinsendam, Rodolfo Racelis experienced severe pain in his ears and
high blood pressure, causing him to collapse while in the performance
of his duties. He was medically repatriated on Feb. 20, 2008 and was
later diagnosed to be suffering from Brainstem (pontine) Cavernous
Malformation. He underwent surgery twice for the said ailment but
developed complications 12 and died on March 2, 2008.
Respondents assert that Rodolfos death occurred beyond the term of
his employment, considering his prior medical repatriation on Feb. 20,
2008 which had the effect of contract termination, which had
supposedly supervened during the term of his employment.

Consistent with the States avowed policy to afford full protection to

labor as enshrined in Article XIII of the 1987 Philippine
Constitution, the POEA-Standard Employment Contract (SEC) was
designed primarily for the protection and benefit of Filipino seafarers
in the pursuit of their employment on board ocean-going vessels. As
such, it is a standing principle that its provisions are to be construed
and applied fairly, reasonably, and liberally in their favor.
Guided by this principle, the Court recognized that a medical
repatriation case constitutes an exception to the second requirement
under Section 20 (A) (1) of the 2000 POEA-SEC, i.e., that the
seafarers death had occurred during the term of his employment, in
view of the terminative consequences of a medical repatriation under
Section 18 (B) of the same.
In essence, the Court held that under such circumstance, the workrelated death need not precisely occur during the term of his
employment as it is enough that the seafarers work-related injury or
illness which eventually causes his death had occurred during the term
of his employment.
Employing the spirit of liberality, the Court finds that it would be
highly inequitable and even repugnant to the States policy on labor to
deny the heirs claim for death benefits for the mere technicality
triggered by Rodolfos prior medical repatriation.
Taking all things into account, the Court reckons that it is by this
method of construction that undue prejudice to the laborer and his
heirs may be obviated and the State policy on labor protection be
championed. For if the laborers death was brought about (whether

fully or partially) by the work he had harbored for his masters profit,
then it is but proper that his demise be compensated.

After

Racelis vs UPL

vessel on January 25, 2008. Prior thereto, Rodolfo was repeatedly

The beneficiaries of a deceased seafarer may be able to claim death

benefits for as long as they are able to establish that (a) the seafarers

complying

with the

required

pre-employment

medical

examination where he was declared fit to work, Rodolfo joined the

contracted by said respondents and was deployed under various
contracts since December 17, 1985.

death is work-related, and (b) such death had occurred during the

On his last employment, Rodolfo experienced severe pain in his ears

term of his employment contract.

and high blood pressure causing him to collapse while in the

G.R. No. 198408, 12 November 2014

performance of his duties. He consulted a doctor in Argentina and was

medically repatriated on February 20, 2008 for further medical

Complainant Conchita J. Racelis, as the surviving spouse of Rodolfo

treatment. Upon arrival in Manila, he was immediately brought to

L. Racelis, initiated a claim for death benefits pursuant to the

Medical City, Pasig City, where he was seen by a company-designated

International Transport Workers Federation-Collective Bargaining

physician, Dr. Gerardo Legaspi, M.D. (Dr. Legaspi), and was

Agreement (ITWF-CBA), of which her husband was a member.

diagnosed to be suffering from Brainstem (pontine) Cavernous

However, her claim was denied by the employer on the ground that the

Malformation. He underwent surgery twice for the said ailment but

death was not work-related as it was due to Brainstem (pontine)

developed complications and died on March 2, 2008.

Cavernous Malformation, which was congenital and it had familiar

strains according to a doctor. Thus, complainant instituted a labor case
against them.

HELD: The employer was held liable. Deemed incorporated in every

seafarers employment contract, denominated as the POEA-SEC or the
Philippine

Overseas

Employment

Administration-Standard

Previously, Rodolfo L. Racelis was recruited and hired by respondent

Employment Contract, is a set of standard provisions determined and

United Philippine Lines, Inc. (UPL) for its principal, respondent

implemented by the POEA, called the Standard Terms and Conditions

Holland America Lines, Inc. (HAL) to serve as Demi Chef De Partie

Governing the Employment of Filipino Seafarers on Board Ocean

on board the vessel MS Prinsendam, with a basic monthly salary of

Going Vessels, which are considered to be the minimum requirements

US$799.55.5 The Contract of Employment was for a term of four (4)

acceptable to the government for the employment of Filipino seafarers

months, extendible for another two (2) months upon mutual consent.

on board foreign ocean-going vessels.

In the 2000 POEA-SEC, it stipulates that the beneficiaries of a

Section 20 (B) (4) of the same explicitly provides that [t[he liabilities

deceased seafarer may be able to claim death benefits for as long as

of the employer when the seafarer suffers work-related injury or

they are able to establish that (a) the seafarers death is work-

illness during the term of his contract are as follows: (t)hose

related, and (b) such death had occurred during the term of his

illnesses not listed in Section 32 of this Contract are dispuatbly

employment contract.

presumed as work related. In other words, the 2000 POEA-SEC

has created a disputable presumption in favor of compensability[,]

Under the 2000 POEA-SEC, work-related injury is defined as

injury(ies) resulting in disability or death arising out of and in the
course of employment. On the other hand, work-related illness is
defined as any sickness resulting to disability or death as a result of
an occupational disease listed under Section 32-A of this contract with
the conditions set therein satisfied.
Jurisprudence provides that [t]he words arising out of refer to the
origin or cause of the accident, and are descriptive of its character,
while the words in the course of refer to the time, place, and
circumstances under which the accident takes place. As a matter of
general proposition, an injury or accident is said to arise in the course
of employment when it takes place within the period of the
employment, at a place where the employee reasonably may be, and
while he is fulfilling his duties or is engaged in doing something
incidental thereto.
Here, the death of the seafarer is evidently work-related. While it is
true that Brainstem (pontine) Cavernous Malformation is not listed as
an occupational disease under Section 32-A of the 2000 POEA-SEC,

saying that those illnesses not listed in Section 32 are disputably

presumed as work-related. This means that even if the illness is not
listed under Section 32-A of the POEA-SEC as an occupational
disease or illness, it will still be presumed as work-related, and it
becomes incumbent on the employer to overcome the presumption.
This presumption should be overturned only when the employers
refutation is found to be supported by substantial evidence, which, as
traditionally defined is such relevant evidence as a reasonable mind
might accept as sufficient to support a conclusion.
Further, the seafarers death occurred during the term of employment.
While it is true that a medical repatriation has the effect of
terminating the seafarers contract of employment, it is, however,
enough that the work-related illness, which eventually becomes the
proximate cause of death, occurred while the contract was effective for
recovery to be had.
The 1987 Constitution affords full protection to labor. Consistent with
the States avowed policy to afford full protection to labor as enshrined
in Article XIII of the 1987 Philippine Constitution, the POEA-SEC

was designed primarily for the protection and benefit of Filipino

Moreover, conformably with existing case law, the NLRCs grant of

seafarers in the pursuit of their employment on board ocean-going

attorneys fees in the amount of US$6,100.00 was called for since

vessels. As such, it is a standing principle that its provisions are to be

petitioner was forced to litigate to protect her valid claim. Where an

construed and applied fairly, reasonably, and liberally in their favor.

employee is forced to litigate and incur expenses to protect his right

and interest, he is entitled to an award of attorneys fees equivalent to

Guided by these principles, it has been held that a medical

10% of the award.

repatriation case constitutes an exception to the second requirement

under Section 20 (A) (1) of the 2000 POEA-SEC, i.e., that the
seafarers death had occurred during the term of his employment, in
view of the terminative consequences of a medical repatriation under
Section 18 (B) of the same. In essence, the Court held that under such
circumstance, the work-related death need not precisely occur during
the term of his employment as it is enough that the seafarers workrelated injury or illness which eventually causes his death had occurred
during the term of his employment.
As for the award, respondents never died and therefore admitted that
the late Rodolfos membership in the AMOSUP that had entered into
a collective bargaining agreement with HAL, or the ITWF-CBA is
applicable. Its provisions therefore must prevail over the standard
terms and benefits formulated by the POEA in its Standard

G.R.

No.

NACHURA,J.:

compensation for the death of Rodolfo in accordance with Article

FACTS:

award of burial assistance in the amount of US$1,000.00 which is

provided under Section 20 (A) (4) (c) of the 2000 POEA-SEC.

March

28,

2011

SUPREME
STEEL
CORPORATION,
Petitioner,
v.
NAGKAKAISANG
MANGGAGAWA
NG
SUPREME
INDEPENDENT
UNION
(NMS-IND-APL),
Respondent.

Employment Contract. Hence, the NLRCs award of US$60,000.00 as

21.2.1 of the ITWF-CBA was in order. The same holds true for the

185556:

Petitioner Supreme Steel Pipe Corporation is a domestic corporation

engaged in the business of manufacturing steel pipes for domestic and
foreign markets. Respondent Nagkakaisang Manggagawa ng Supreme

Independent Union is the certified bargaining agent of petitioners rankand-file

employees.
Respondent filed a notice of strike with the National Conciliation and
Mediation Board on the ground that petitioner violated certain
provisions of the CBA. The parties failed to settle their dispute.
Consequently, the Secretary of Labor certified the case to the NLRC
for compulsory arbitration pursuant to Article 263(g) of the Labor
Code. Respondent cited eleven violations committed by petitioner.
Out of the eleven issues raised by respondent, eight were decided in its
favor; two (denial of paternity leave benefit and discrimination of
union members) were decided in favor of petitioner; while the issue on
visitors free access to company premises was deemed settled during
the
mandatory
conference.
On appeal, the CA affirmed the NLRC decision. Upon denial of its
motion for reconsideration, petitioner filed this petition for review on
certiorari, contending that the CA erred in finding that it violated
certain
provisions
of
the
CBA.
ISSUE:
Whether or not petitioner violated certain provisions of the CBA
HELD:
LABOR LAW
CBA is the law between the parties and compliance therewith is
mandated by the express policy of the law. If the terms of a CBA are
clear and there is no doubt as to the intention of the contracting parties,
the
literal
meaning
of
its
stipulation
shall
prevail.
Upon these well-established precepts, we sustain the CAs findings and
conclusions on all the issues, except the issue pertaining to the denial

of the COLA under Wage Order No. RBIII-10 and 11 to the employees
who
are
not
minimum
wage
earners.
The wording of the CBA on general wage increase cannot be
interpreted any other way: The CBA increase should be given to all
employees "over and above" the amount they are receiving, even if
that amount already includes an anniversary increase. Stipulations in a
contract must be read together, not in isolation from one another.
Clearly then, even if petitioner had already awarded an anniversary
increase to its employees, such increase cannot be credited to the
"contractual" increase as provided in the CBA, which is considered
"separate
and
distinct."
Petitioner claims that it has been the company practice to offset the
anniversary increase with the CBA increase. It however failed to prove
such material fact. Company practice, just like any other fact, habits,
customs, usage or patterns of conduct must be proven. The offering
party must allege and prove specific, repetitive conduct that might
constitute evidence of habit,or company practice. Evidently, the pay
slips of the four employees do not serve as sufficient proof.
Petitioners excuse in not providing a shuttle service to its employees is
unacceptable. In fact, it can hardly be considered as an excuse.
Petitioner simply says that it is difficult to implement the provision. It
relies on the fact that "no time element is explicitly stated in the CBA
within which to fulfill the undertaking." We cannot allow petitioner to
dillydally in complying with its obligation and take undue advantage
of the fact that no period is provided in the CBA. Petitioner should
recondition the company vehicle at once, lest it be charged with and
found
guilty
of
unfair
labor
practice.

Petitioner gave a narrow construction to the wording of the CBA when

it denied (a) reimbursement for the first-aid medicines taken by
Rodrigo Solitario when he was injured during the company sportsfest
and the transportation cost incurred by Alberto Guevara and Job
Canizares in going to the hospital, (b) payment of the wages of certain
employees during the time they spent at the grievance meetings, and
(c) payment of the employees wages during the brownout that
occurred on July 25, 2002. As previously stated, the CBA must be
construed liberally rather than narrowly and technically.
We likewise agree with the CA on the issue of nonpayment of the
time-off for attending grievance meetings. The intention of the parties
is obviously to compensate the employees for the time that they spend
in a grievance meeting as the CBA provision categorically states that
the company will pay the employee "a paid time-off for handling of
grievances, investigations, labor-management conferences." It does not
make a qualification that such meeting should be held during office
hours
or
within
the
company
premises.
On the issue of contracting-out labor, we sustain the CA. Petitioner, in
effect, admits having hired "temporary" employees, but it maintains
that it was an exercise of management prerogative, necessitated by the
increase
in
demand
for
its
product.

limitations provided by law, collective bargaining agreements, and

general
principles
of
fair
play
and
justice.
The implementation of the COLA under Wage Order No. RBIII-10
across the board, which only lasted for less than a year, cannot be
considered as having been practiced "over a long period of time."
While it is true that jurisprudence has not laid down any rule requiring
a specific minimum number of years in order for a practice to be
considered as a voluntary act of the employer, under existing
jurisprudence on this matter, an act carried out within less than a year
would certainly not qualify as such. Hence, the withdrawal of the
COLA Wage Order No. RBIII-10 from the salaries of non-minimum
wage earners did not amount to a "diminution of benefits" under the
law.
Hence, the order for petitioner to continue implementing Wage Order
No. RBIII-10 and 11 across the board is SET ASIDE.
G.R.
No.
185556
:
March
28,
2011.
SUPREME
STEEL
CORPORATION,
Petitioner,
v.
NAGKAKAISANG
MANGGAGAWA
NG
SUPREME
INDEPENDENT
UNION
(NMS-IND-APL),
Respondent.
NACHURA,

J.:

FACTS:
Indeed, jurisprudence recognizes the right to exercise management
prerogative. Labor laws also discourage interference with an
employer's judgment in the conduct of its business. For this reason, the
Court often declines to interfere in legitimate business decisions of
employers. The law must protect not only the welfare of employees,
but also the right of employers.However, the exercise of management
prerogative is not unlimited. Managerial prerogatives are subject to

On July 27, 2005, respondent filed a notice of strike with the National
Conciliation and Mediation Board (NCMB) on the ground that
petitioner violated certain provisions of the CBA. The parties failed to
settle their dispute. Consequently, the Secretary of Labor certified the
case to the NLRC for compulsory arbitration pursuant to Article
263(g)
of
the
Labor
Code.

Respondent alleged eleven CBA violations, enumerated as follows: (1)

denial to four employees of the CBA- provided wage increase, (2)
contracting-out labor, (3) failure to provide shuttle service, (4) refusal
to answer for medical expenses incurred by three employees, (5)
failure to comply with time-off provision, (6) visitors free access to
company premises, (7) failure to comply with reporting time-off
provision, (8) dismissal of an employee supposedly due to disease, (9)
denial of paternity leave benefit to two employees, (10) discrimination
and harassment, and (11) non-implementation of COLA in Wage Order
Nos.
RBIII-10
and
11.
Out of the eleven issues raised by respondent, eight were decided in its
favor; two (denial of paternity leave benefit and discrimination of
union members) were decided in favor of petitioner; while the issue on
visitors free access to company premises was deemed settled during
the mandatory conference. Petitioners appeal to the CA was dismissed.
According to the CA, petitioner failed to show that the NLRC
committed grave abuse of discretion in finding that it violated certain
provisions of the CBA.With regard to wage increase, The CA
concluded that, based on the wording of the CBA, which uses the
words "general increase" and "over and above," it cannot be said that
the parties have intended the anniversary increase to be given in lieu of
the CBA wage increase. The CA declared that the withdrawal of the
COLA under Wage Order No. RBIII-10 from the employees who were
not minimum wage earners amounted to a diminution of benefits
because such grant has already ripened into a company practice. Based
on the principle of liberal construction of the CBA, the CA likewise
sustained the NLRCs rulings on theissues pertaining to medical
expenses, the shuttle service, time-off for attendance in grievance
meetings/hearings, and time-off due to brownouts. Finally, the CA
affirmed the NLRCs finding that Madayags dismissal was illegal. It
emphasized that the burden to prove that the employees disease is of
such nature or at such stage that it cannot be cured within a period of
six months rests on the employer, who failed to prove such.
ISSUE: Whether or not the CA erred in affirming the NLRC
HELD:

The

petition

is

partially

granted.

LABOR LAW: Construing CBA provisions; diminution of

benefits.
It is a familiar and fundamental doctrine in labor law that the CBA is
the law between the parties and compliance therewith is mandated by
the express policy of the law. If the terms of aCBA are clear and there
is no doubt as to the intention of the contracting parties, the literal
meaning of its stipulation shall prevail. Moreover, the CBA must be
construed liberally rather than narrowly and technically and the Court
must place a practical and realistic construction upon it. Any doubt in
the interpretation of any law or provision affecting labor should be
resolved in favor of labor. Upon these well-established precepts, the
CAs findings and conclusions on all the issues are sustained, except
the issue pertaining to the denial of the COLA under Wage Order No.
RBIII-10 and 11 to the employees who are not minimum wage earners,
which respondent avers as a diminution of benefits.
Diminution of benefits is the unilateral withdrawal by the employer of
benefits already enjoyed by the employees. There is diminution of
benefits when it is shown that:
(1) the grant or benefit is founded on a policy or has ripened into a
practice over a long period of time;
(2) the practice is consistent and deliberate;
(3) the practice is not due to error in the construction or application of
a doubtful or difficult question of law; and
(4) the diminution or discontinuance is done unilaterally by the
employer.
The implementation of the COLA under Wage Order No. RBIII-10
across the board, which only lasted for less than a year, cannot be
considered as having been practiced "over a long period of time."
While it is true that jurisprudence has not laid down any rule requiring

a specific minimum number of years in order for a practice to be

considered as a voluntary act of the employer, under existing
jurisprudence on this matter, an act carried out within less than a year
would certainly not qualify as such. Hence, the withdrawal of the
COLA Wage Order No. RBIII-10 from the salaries of non-minimum
wage earners did not amount to a "diminution of benefits" under the
law.
PARTIALLY GRANTED.

Songco, et al. vs. National Labor Relations Commission

G.R. Nos. 50999-51000

ISSUE: Whether or not earned sales commissions and allowances

should be included in the monthly salary of Songco, et al. for the

(March 23, 1990)

purpose of computing their separation pay.

FACTS: Zuelig filed an application for clearance to terminate the

RULING:

services of Songco, and others, on the ground of retrenchment due to

financial losses. During the hearing, the parties agreed that the sole

In the computation of backwages and separation pay, account must be

issue to be resolved was the basis of the separation pay due. The

taken not only of the basic salary of the employee, but also of the

salesmen received monthly salaries of at least P400.00 and

transportation and emergency living allowances.

commission for every sale they made.

Even if the commissions were in the form of incentives or
The Collective Bargaining Agreements between Zuelig and the union

encouragement, so that the salesman would be inspired to put a little

of which Songco, et al. were members contained the following

more industry on jobs particularly assigned to them, still these

provision: "Any employee who is separated from employment due to

commissions are direct remunerations for services rendered which

old age, sickness, death or permanent lay-off, not due to the fault of

contributed to the increase of income of the employee. Commission is

said employee, shall receive from the company a retirement gratuity in

the recompense compensation or reward of an agent, salesman,

an amount equivalent to one (1) month's salary per year of service."

executor, trustee, receiver, factor, broker or bailee, when the same is

calculated as a percentage on the amount of his transactions or on the

The Labor Arbiter ordered Zuelig to pay Songco et al., separation pay

profit to the principal. The nature of the work of a salesman and the

equivalent to their one month salary (exclusive of commissions,

reason for such type of remuneration for services rendered

allowances, etc.) for every year of service with the company.

demonstrate that commissions are part of Songco, et al's wage or

salary.

The National Labor Relations Commission sustained the Arbiter.

The Court takes judicial notice of the fact that some salesmen do not
receive any basic salary, but depend on commissions and allowances
or commissions alone, although an employer-employee relationships
exists.
If the opposite view is adopted, i.e., that commissions do not form part
of the wage or salary, then in effect, we will be saying that this kind of
salesmen do not receive any salary and, therefore, not entitled to

Subject: Transportation and emergency living allowances are included

in the computation of separation pay; Earned sales commissions are
included in the computation of separation pay; Judicial Notice: some
salesmen do not receive any basic salary but depend on commissions
and allowances or commissions alone; Commissions must be earned
by actual market transactions attributable to the employee; All doubts
in the implementation and interpretation of the provisions of the Labor
Code
shall
be
resolved
in
favor
of
labor
Facts:

separation pay in the event of discharge from employment. This

narrow interpretation is not in accord with the liberal spirit of the labor
laws, and considering the purpose of separation pay which is, to
alleviate the difficulties which confront a dismissed employee thrown
to the streets to face the harsh necessities of life.
In Soriano vs. NLRC (155 SCRA 124), we held that the commissions
also claimed by the employee (override commission plus net deposit
incentive) are not properly includible in such base figure since such

F.E. Zuellig (M), Inc., filed with the Department of Labor an

application seeking clearance to terminate the services of Jose Songco,
Romeo Cipres, and Amancio Manuel allegedly on the ground of
retrenchment due to financial losses. This application was seasonably
opposed by the employees alleging that the company is not suffering
from
any
losses.
Songco, Cipres and Manile alleged that they are being dismissed
because of their membership in the union. At the last hearing of the
case, they manifested that they are no longer contesting their dismissal.
However, they argued that they should receive separation pay.

commissions must be earned by actual market transactions attributable

to the petitioner [salesman]. Since the commissions in the present case
were earned by actual transactions attributable to Song, et al., these
should be included in their separation pay. In the computation thereof,
what should be taken into account is the average commission earned
during their last year of employment.
Songco v. NLRC (1990)
G.R. Nos. 50999-51000 | 1990-03-23

Under the employment contract, each of the dismissed employees

receive a monthly salary of P40,000 plus commissions for every sale
they made. On the other hand, the CBA entered between Zuellig and
the union contained the provision that an employee who is permanent
lay-off, should receive an amount equivalent to one month's salary per
year of service. On the other hand, Article 284 of the Labor Code and
Implementing Rules provide that the retrenched employees should
receive a separation pay equivalent to one month pay or at least onehalf month pay for every year of service, whichever is higher.

The dismissed employees alleged that their earned sales commission

should be included in their monthly salary for the purpose of
computation
of
their
separation
pay.
In defense, Zuellig argued that if it were really the intention of the
Labor Code to include commission in the computation of separation
pay, it could have explicitly said so in clear and unequivocal terms.
Furthermore, in the definition of the term "wage", "commission" is
used only as one of the features or designations attached to the word
remuneration
or
earnings.
The Labor Arbiter ordered the company to pay the dismissed
employees their separation pay equivalent to their one month salary
(exclusive of commissions, allowances, etc.) for every year of service.
The
NLRC
affirmed
the
Labor
Arbiters
decision.
Held:
Transportation and emergency living allowances are included in
the
computation
of
separation
pay
1. In the computation of backwages and separation pay, the
transportation and emergency living allowances should also be taken
together with the basic salary. (See Santos v. NLRC)
Earned sales commissions are included in the computation of
separation
pay
2. Article 97(f) of the Labor Code
included in the definition of the term
declared that where the law speaks in
there is no room for interpretation
application.

is explicit that commission is

"wage". It has been repeatedly
clear and categorical language,
or construction but only for

3. The words salary and wage are generally refer to one and the
same meaning, that is, a reward or recompense for services performed.
Likewise, "pay" is the synonym of "wages" and "salary". Since the
words "wages", "pay" and "salary" have the same meaning, and
commission is included in the definition of "wage", it only follows that
in the computation of the separation pay, the salary base should also
include
the
earned
sales
commissions.
4. Whether the commissions were in the form of incentives or
encouragement, still these are direct remuneration services rendered
and contributed to the increase of income of Zuellig .
Judicial Notice: some salesmen do not receive any basic salary but
depend on commissions and allowances or commissions alone
5. 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. The nature of the work of
a salesman and the reason for such type of remuneration for services
rendered demonstrate clearly that commissions are part of their wage
or
salary.
6. The Supreme Court took judicial notice of the fact that some
salesmen do not receive any basic salary but depend on commissions
and allowances or commissions alone, although an employeremployee
relationship
exists.
Commissions must be earned by actual market transactions
attributable
to
the
employee
7. The commissions also claimed ('override commission' plus 'net
deposit incentive') are not properly includible in such base figure since
such commissions must be earned by actual market transactions

attributable

to

the

employee.

(See

Soriano

v.

NLRC)

8. In the instant case, since the commissions were earned by actual

market transactions attributable to the employees, 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.
All doubts in the implementation and interpretation of the
provisions of the Labor Code shall be resolved in favor of labor
9. It should always be the final consideration that 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 and Article 1702 of the
Civil Code that all doubts in the implementation and interpretation of
the provisions of the Labor Code shall be resolved in favor of labor.
(See Abella v. NLRC)

PIONEER TEXTURIZING CORP. and/or JULIANO LIM,

De Jesus filed a complaint for illegal dismissal against petitioners. The

petitioners,

Labor Arbiter held petitioners guilty of illegal dismissal and were

vs.

NATIONAL

LABOR

RELATIONS

COMMISSION, PIONEER TEXTURIZING WORKERS UNION

ordered to reinstate de Jesus to her previous position

and LOURDES A. DE JESUS, respondents.

without loss of seniority rights and with full backwages from the time
[G.R. No. 118651. October 16, 1997]

of her suspension. On appeal, the National Labor Relations

Commission (NLRC) declared that the status quo between them

FACTS:

should be maintained and affirmed the Labor Arbiters order of

reinstatement, but without backwages. The NLRC further directed

De Jesus is petitioners reviser/trimmer who based her assigned work

petitioner to pay de Jesus her back salaries from the date she filed her

on a paper note posted by petitioners. The posted paper is identified by

motion for execution up to the date of the promulgation of the

its P.O. Number. De Jesus worked on P.O. No. 3853 by trimming the

decision. Petitioners filed their partial motion for reconsideration

cloths ribs and thereafter submitted tickets corresponding to the work

which the NLRC denied, hence this petition.

done to her supervisor. Three days later, de Jesus received a

memorandum requiring her to explain why no disciplinary action

ISSUE:

should be taken against her for dishonesty and tampering of official

records and documents with the intention of cheating as P.O. No. 3853

Whether or not an order for reinstatement needs a writ of execution?

allegedly required no trimming. The memorandum also placed her

under preventive suspension for thirty days. In her explanation, de

HELD:

Jesus maintained that she merely committed a mistake in trimming

P.O. No. 3853 and admitted that she may have been negligent, but not

No. The provision of Article 223 is clear that an award for

for dishonesty or tampering. Nonetheless, she was terminated from

reinstatement shall be immediately executory even pending appeal and

employment.

the posting of a bond by the employer shall not stay the execution for
reinstatement. To require the application for and issuance of a writ of
execution as prerequisites for the execution of a reinstatement award

would certainly betray and run counter to the very object and intent of
Article 223, i. e., the immediate execution of a reinstatement order.
The reason is simple. An application for a writ of execution and its
issuance could be delayed for numerous reasons. A mere continuance
or postponement of a scheduled hearing, for instance, or an inaction on
the part of the Labor Arbiter or the NLRC could easily delay the
issuance of the writ thereby setting at naught the strict mandate and
noble purpose envisioned by Article 223. On appeal, however, the
appellate tribunal concerned may enjoin or suspend the reinstatement
order in the exercise of its sound discretion.
Furthermore, the rule is that all doubts in the interpretation and
implementation of labor laws should be resolved in favor of labor. In
ruling that an order or award for reinstatement does not require a writ
of execution the Court is simply adhering and giving meaning to this
rule. Henceforth, we rule that an award or order for reinstatement is
self-executory. After receipt of the decision or resolution ordering the
employee's reinstatement, the employer has the right to choose
whether to re-admit the employee to work under the same terms and
conditions prevailing prior to his dismissal or to reinstate the employee
in the payroll. In either instance, the employer has to inform the
employee of his choice. The notification is based on practical
considerations for without notice, the employee has no way of
knowing if he has to report for work or not.
Pioneer v NLRC

Q. In an illegal dismissal case, the Labor Arbiter ruled in favor of the

complainant and ordered his reinstatement. The employer appealed.
Refusing to reinstate the worker pending appeal, the employer claims
that the order of reinstatement needs a writ of execution. The
employer further maintains that even if a writ of execution was issued,
a timely appeal coupled by the posting of appropriate supersedeas
bond effectively forestalled and stayed the execution of the Labor
Arbiters reinstatement order. Is the employers contention correct?
A. No, the employers contention is erroneous. The law as now
worded employs the phrase shall immediately be executory without
qualification emphasizing the need for prompt compliance. The term
shall denotes an imperative obligation and is inconsistent with the
idea of discretion. The Labor Arbiters order of reinstatement does
not need a writ of execution. It is self-executory. The posting of a
bond by the employer shall not stay the execution for reinstatement.
After receipt of the decision ordering reinstatement, the employer has
the right to chose whether to re-admit the employee to work under the
same terms and conditions prevailing prior to his dismissal or to
reinstate the employee in the payroll. In either instance, the employer
has to inform the employee of his choice. (Pioneer Texturizing
Corp. v. NLRC, 280 SCRA 806, October 16, 1997)

benefit principally daily employees. In the case of monthly, only those

whose monthly salary did not yet include payment for the ten (10) paid
legal holidays are entitled to the benefit.
Respondent IBAA by reason of the ruling laid down by the aforecited
rule implementing Article 94 of the Labor Code and by Policy
Instruction No. 9, stopped the payment of holiday pay to all its
employees.

INSULAR BANK OF ASIA AND AMERICA EMPLOYEES

UNION (IBAA-EU), petitioner, vs.HON. AMADO G. INCIONG,
and IBAA, respondents.

Writ of execution of the previously decided case for them to be paid

their holiday pay was filed by the petitioner. Labor arbiter and NLRC
ruled in their favor. IBAA filed an MR to the Office of the Minister of
Labor which set aside the decision of NLRC. Hence this petition.

G.R.
October 23, 1984

ISSUE:
WON holiday pay does not apply to monthly- paid employees.

No.

L-52415

FACTS:
The Department of Labor promulgated the rules and regulations for the
implementation of holidays with pay. The controversial section thereof
reads: Sec. 2. Status of employees paid by the month. Employees
who are uniformly paid by the month, irrespective of the number of
working days therein, with a salary of not less than the statutory or
established minimum wage shall be presumed to be paid for all days in
the month whether worked or not. For this purpose, the monthly
minimum wage shall not be less than the statutory minimum wage
multiplied by 365 days divided by twelve
Later, Policy Instruction No. 9 was issued by the then Secretary of
Labor interpreting the above-quoted rule, pertinent portions of which
read:
xxx
xxx
xxx
The ten (10) paid legal holidays law, to start with, is intended to

HELD:
No.
Section 2, Rule IV, Book III of the implementing rules and Policy
Instruction No. 9 issued by the then Secretary of Labor are null and
void since in the guise of clarifying the Labor Codes provisions on
holiday pay, they in effect amended them by enlarging the scope of
their exclusion.
The provisions of the Labor Code on the entitlement to the benefits of
holiday pay are clear and explicit it provides for both the coverage of
and exclusion from the benefits. In Policy Instruction No. 9, the then
Secretary of Labor went as far as to categorically state that the benefit
is principally intended for daily paid employees, when the law clearly
states that every worker shall be paid their regular holiday pay.