G.R. No.
85073 August 24, 1993 the Supreme Court decision in the case of San Miguel Corporation v. Inciong
DAVAO FRUITS CORPORATION, petitioner,
vs.
ASSOCIATED LABOR UNIONS (ALU) for in behalf of all the rank-and-
file workers/employees of DAVAO FRUITS CORPORATION and
NATIONAL LABOR RELATIONS COMMISSION, respondents.
Dominguez & Paderna Law Offices for petitioners.
The Solicitor General for public respondents.
QUIASON, J.:
This is a petition for certiorari to set aside the resolution of the National Labor
Relations Commission (NLRC), dismissing for lack of merit petitioner's appeal
from the decision of the Labor Arbiter in NLRC Case No. 1791-MC-X1-82.
On December 28, 1982 respondent Associated Labor Unions (ALU), for and in
behalf of all the rank-and-file workers and employees of petitioner, filed a
complaint (NLRC Case No. 1791-MC-XI-82) before the Ministry of Labor and
Employment, Regional Arbitration Branch XI, Davao City, against petitioner,
for "Payment of the Thirteenth-Month Pay Differentials." Respondent ALU
sought to recover from petitioner the thirteenth month pay differential for
1982 of its rank-and-file employees, equivalent to their sick, vacation and
maternity leaves, premium for work done on rest days and special holidays,
and pay for regular holidays which petitioner, allegedly in disregard of
company practice since 1975, excluded from the computation of the
thirteenth month pay for 1982.
In its answer, petitioner claimed that it erroneously included items subject of
the complaint in the computation of the thirteenth month pay for the years
prior to 1982, upon a doubtful and difficult question of law. According to
petitioner, this mistake was discovered only in 1981 after the promulgation of
(103 SCRA 139).
A decision was rendered on March 7, 1984 by Labor Arbiter Pedro C. Ramos,
in favor of respondent ALU. The dispositive portion of the decision reads as
follows:
WHEREFORE, in view of all the foregoing considerations, judgment is hereby
rendered ordering respondent to pay the 1982 — 13th month pay differential
to all its rank-and-file workers/employees herein represented by complainant
Union (Rollo, p. 32).
Petitioner appealed the decision of the Labor Arbiter to the NLRC, which
affirmed the said decision accordingly dismissed the appeal for lack of merit.
Petitioner elevated the matter to this Court in a petition for review under Rule
45 of the Revised Rules of Court. This error notwithstanding and in the
interest of justice, this Court resolved to treat the instant petition as a special
civil action for certiorari under Rule 65 of the Revised Rules of Court (P.D. No.
1391, Sec. 5; Rules Implementing P.D. No. 1391, Rule II, Sec. 7; Cando v.
National Labor Relations Commission, 189 SCRA 666 [1990]: Pearl S. Buck
Foundation, Inc. v. National Labor Relations Commission, 182 SCRA 446
[1990]).
The crux of the present controversy is whether in the computation of the
thirteenth month pay given by employers to their employees under P.D.
No. 851, payments for sick, vacation and maternity leaves, premiums for
work done on rest days and special holidays, and pay for regular holidays
may be excluded in the computation and payment thereof, regardless of
long-standing company practice.
Presidential Decree No. 851, promulgated on December 16, 1975, mandates
all employers to pay their employees a thirteenth month pay. How this pay
shall be computed is set forth in Section 2 of the "Rules and Regulations
Implementing Presidential Decree No. 851," thus:
SECTION 2. . . .
(a) "Thirteenth month pay" shall mean one twelfth (1/12) of the basic salary
of an employee within a calendar year.
(b) "Basic Salary" shall include all renumerations or earnings paid by an
employer to an employee for services rendered but may not include cost of
living allowances granted pursuant to Presidential Decree No. 525 or Letter of
Instructions No. 174, profit-sharing payments, and all allowances and
monetary benefits which are not considered or integrated as part of the
regular or basic salary of the employee at the time of the promulgation of the
Decree on December 16, 1975.
The Department of Labor and Employment issued on January 16, 1976 the
"Supplementary Rules and Regulations Implementing P.D. No. 851" which in
paragraph 4 thereof further defines the term "basic salary," thus:
4. Overtime pay, earnings and other renumerations which are not part of the
basic salary shall not be included in the computation of the 13th month pay.
Clearly, the term "basic salary" includes renumerations or earnings paid by
the employer to employee, but excludes cost-of-living allowances, profit-
sharing payments, and all allowances and monetary benefits which have not
been considered as part of the basic salary of the employee as of December
16, 1975. The exclusion of cost-of-living allowances and profit sharing
payments shows the intention to strip "basic salary" of payments which are
otherwise considered as "fringe" benefits. This intention is emphasized in the
catch all phrase "all allowances and monetary benefits which are not
considered or integrated as part of the basic salary." Basic salary, therefore
does not merely exclude the benefits expressly mentioned but all payments
which may be in the form of "fringe" benefits or allowances (San Miguel
Corporation v. Inciong, supra, at 143-144). In fact, the Supplementary Rules
and Regulations Implementing P.D. No. 851 are very emphatic in declaring
that overtime pay, earnings and other renumerations shall be excluded in
computing the thirteenth month pay.
In other words, whatever compensation an employee receives for an eight-
hour work daily or the daily wage rate in the basic salary. Any compensation
or remuneration other than the daily wage rate is excluded. It follows
therefore, that payments for sick, vacation and maternity leaves, premium
for work done on rest days special holidays, as well as pay for regular
holidays, are likewise excluded in computing the basic salary for the purpose
of determining the thirteen month pay.
Petitioner claims that the mistake in the interpretation of "basic salary" was
caused by the opinions, orders and rulings rendered by then Acting Labor
Secretary Amado C. Inciong, expressly including the subject items in
computing the thirteenth month pay. The inclusion of these items is clearly
not sanctioned under P.D. No. 851, the governing law and its implementing
rules, which speak only of "basis salary" as the basis for determining the
thirteenth month pay.
Moreover, whatever doubt arose in the interpretation of P.D. No. 851 was
erased by the Supplementary Rules and Regulations which clarified the
definition of "basic salary."
As pointed out in San Miguel Corporation v. Inciong, (supra):
While doubt may have been created by the prior Rules and Regulations and
Implementing Presidential Decree 851 which defines basic salary to include
all remunerations or earnings paid by an employer to an employee, this cloud
is dissipated in the later and more controlling Supplementary Rules and
Regulations which categorically, exclude from the definition of basic salary
earnings and other remunerations paid by employer to an employee. A
cursory perusal of the two sets of Rules indicates that what has hitherto been
the subject of broad inclusion is now a subject of broad exclusion. The
Supplementary Rules and Regulations cure the seeming tendency of the
former rules to include all remunerations and earnings within the definition of
basic salary.
The all-embracing phrase "earnings and other remunerations which are
deemed not part of the basic salary includes within its meaning payments for
sick, vacation, or maternity leaves, premium for work performed on rest days
and special holidays, pay for regular holidays and night differentials. As such
they are deemed not part of the basic salary and shall not be considered in
the computation of the 13th-month pay. If they were not so excluded, it is
hard to find any "earnings and other remunerations" expressly excluded in
computation of the 13th month-pay. Then the exclusionary provision would
prove to be idle and with purpose.
The "Supplementary Rules and Regulations Implementing P.D. No. 851,"
which put to rest all doubts in the computation of the thirteenth month pay,
was issued by the Secretary of Labor as early as January 16, 1976, barely
one month after the effectivity of P.D. No. 851 and its Implementing Rules.
And yet, petitioner computed and paid the thirteenth month pay, without
excluding the subject items therein until 1981. Petitioner continued its
practice in December 1981, after promulgation of the afore-quoted San
Miguel decision on February 24, 1981, when petitioner purportedly
"discovered" its mistake.
From 1975 to 1981, petitioner had freely, voluntarily and continuously
included in the computation of its employees' thirteenth month pay, the
payments for sick, vacation and maternity leaves, premiums for work done
on rest days and special holidays, and pay for regular holidays. The
considerable length of time the questioned items had been included by
petitioner indicates a unilateral and voluntary act on its part, sufficient in
itself to negate any claim of mistake.
A company practice favorable to the employees had indeed been established
and the payments made pursuant thereto, ripened into benefits enjoyed by
them. And any benefit and supplement being enjoyed by the employees
cannot be reduced, diminished, discontinued or eliminated by the employer,
by virtue of Section 10 of the Rules and Regulations Implementing P.D. No.
851, and Article 100 of the labor of the Philippines, which prohibit the
diminution or elimination by the employer of the employees' existing benefits
(Tiangco v. Leogardo, Jr., 122 SCRA 267, [1983]).
Petitioner cannot invoke the principle of solutio indebiti which as a civil law
concept that is not applicable in Labor Law. Besides, in solutio indebiti, the
obligee is required to return to the obligor whatever he received from the
latter (Civil Code of the Philippines, Arts. 2154 and 2155). Petitioner in the
instant case, does not demand the return of what it paid respondent ALU
from 1975 until 1981; it merely wants to "rectify" the error it made over
these years by excluding unilaterally from the thirteenth month pay in 1982
the items subject of litigation. Solutio indebiti, therefore, is not applicable to
the instant case.
WHEREFORE, finding no grave abuse of discretion on the part of the NLRC,
the petition is hereby DISMISSED, and the questioned decision of respondent
NLRC is AFFIRMED accordingly.
Cruz, Griño-Aquino, Davide, Jr. and Bellosillo, JJ., concur.
FIRST DIVISION
[G.R. No. 118506. April 18, 1997.]
NORMA MABEZA, Petitioner, v. NATIONAL LABOR RELATIONS
COMMISSION, PETER NG/HOTEL SUPREME, Respondents.
Tenefrancia Agranzamendez, Liceralde & Associates for Petitioner.
Romeo M. Rome for Private Respondent.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; DISMISSAL; JUST CAUSE, BURDEN OF
PROOF. — In termination cases the employer bears the burden of proof to
show that the dismissal is for just cause, the failure of which would mean that
the dismissal is not justified and the employee is entitled to reinstatement.
2. ID.; ID.; ID.; ABANDONMENT; REQUISITES; CASE AT BAR. — For
abandonment to arise, there must be concurrence of two things: 1) lack of
intention to work., and 2) the presence of overt acts signifying the
employee’s intention not to work. While absence from work for a prolonged
period may suggest abandonment in certain instances, mere absence of one
or two days would not be enough to sustain such a claim. The over act
(absence) ought to unerringly point to the fact that the employee has no
intention to return to work, which is patently not the case here.
3. ID.; ID.; ID.; LOSS OF CONFIDENCE; NOT APPLICABLE IN CASE AT BAR.
— Loss of confidence as a just cause for dismissal was never intended to
provide employers with a blank check for terminating their employees. Loss
of confidence should ideally apply only to cases involving employees
occupying positions to trust and confidence or to those situations where the
employee is routinely charged with the care and custody of the employer’s
money or property. An ordinary chambermaid who has to sign out for linen
and other hotel property from the property custodian each day and who has
to account for each and every towel or bedsheet utilized by the hotel’s guests
at the end of her shift would not fall under any of these two classes of
employees for which loss of confidence, if ably supported by evidence, would
normally apply. Loss of confidence should not be simulated in order to justify
what would otherwise be, under the provisions of law an illegal dismissal. "It
should not be used as a subterfuge for causes which are illegal, improper and
unjustified. It must be genuine, not a mere afterthought to justify, an earlier
action taken in bad faith.
4. ID.; EMPLOYERS; UNFAIR LABOR PRACTICES; CASE AT BAR. — The
pivotal question in any case where unfair labor practice on the part of the
employer is alleged is whether or not the employer has exerted pressure, in
the form of restraint, interference or coercion, against his employee’s right to
institute concerted action for better terms and conditions of employment.
Without doubt, the act of compelling employees to sign an instrument
indicating that the employer observed labor standards provisions of law when
he might have not, together with the act of terminating or coercing those
who refuse to cooperate with the employer’s scheme constitutes unfair labor
practice. The first act clearly preempts the right of the hotel’s workers to seek
better terms and conditions of employment through concerted action. We
agree with the Solicitor General’s observation in his manifestation that" [t]his
actuation . . . is analogous to the situation envisaged in paragraph (f) of
Article 248 of the Labor Code" which distinctly makes it an unfair labor
practice "to dismiss, discharge or otherwise prejudice or discriminate against
an employee for having given or being about to give testimony" under the
Labor Code. For in not giving positive testimony in favor of her employer,
petitioner had reserved not only her right to dispute the claim and proffer
evidence in support thereof but also to work for better terms and conditions
of employment.
5. ID.; WAGES; SALARY LESS THAN MINIMUM BECAUSE OF OTHER
FACILITIES PROVIDED NOT JUSTIFIED. — Labor Arbiter Pati accepted hook,
line and sinker the private respondent’s bare claim that the reason the
monetary benefits received by petitioner between 1981 to 1987 were less
than minimum wage was because petitioner did not factor in the meals,
lodging, electric consumption and water she received during the period in her
computations. Granting that meals and lodging were provided and indeed
constituted facilities, such facilities could not be deducted without the
employer complying first with certain legal requirements. Without satisfying
these requirements, the employer simply cannot deduct the value from the
employee’s wages. First, proof must be shown that such facilities are
customarily furnished by the trade. Second, the provision of deductible
facilities must be voluntarily accepted in writing by the employee. Finally,
facilities must be charged at fair and reasonable value. These requirements
were not met in the instant case. More significantly, the food and lodging, or
the electricity and water consumed by the petitioner were not facilities but
supplements. A benefit or privilege granted to an employee for the
convenience of the employer is not a facility. The criterion in making a
distinction between the two not so much lies in the kind (food, lodging) but
the purpose. Considering., therefore, that hotel workers are required to work
different shifts and are expected to be available at various odd hours. their
ready availability is a necessary matter in the operations of a small hotel,
such as the private respondent’s hotel.
6. ID.; MONEY CLAIMS; PROPER MONETARY AWARD IN CASE AT BAR. —
Petitioner is entitled to the payment of the deficiency in her wages equivalent
to the full wage applicable from May 13, 1988 up to the date of her illegal
dismissal. Additionally, petitioner is entitled to payment of service incentive
leave pay, emergency cost of living allowance, night differential pay, and
13th month pay for the periods alleged by the petitioner as the private
respondent has never been able to adduce proof that petitioner was paid the
aforestated benefits. However, the claims covering the period of October
1987 up to the time of filing the case on May 13, 1988 are barred by
prescription as P.D. 442 (as amended) and its implementing rules limit all
money claims arising out of employer-employee relationship to three (3)
years from the time the cause of action accrues.
7. ID.; ILLEGAL DISMISSAL; SEPARATION PAY IN LIEU OF REINSTATEMENT
PROPER IN VIEW OF STRAINED RELATIONS BETWEEN THE PARTIES. — We
depart from the settled rule that an employee who is unjustly dismissed from
work normally should be reinstated without loss of seniority rights and other
privileges. Owing to the strained relations between petitioner and private
respondent, allowing the former to return to her job would only subject her to
possible harassment and future embarrassment. In the instant case,
separation pay equivalent to one month’s salary for every year of continuous
service with the private respondent would be proper, starting with her job at
the Belfront Hotel.
8. ID.; ID.; BACKWAGES. — In addition to separation pay, backwages are in
order. Pursuant to R.A. 6715 and our decision in Osmalik Bustamante, et al v.
National Labor Relations Commission, petitioner is entitled to full backwages
from the time of her illegal dismissal up to the date of promulgation of this
decision without qualification or deduction. Also, the dismissal of petitioner
without the benefit of notice and hearing prior to her termination violated her
constitutional right to due process. Under the circumstances, an award of One
Thousand Pesos (P1,000.00) on top of payment of the deficiency in wages
and benefits for the period aforestated would be proper.
DECISION
KAPUNAN, J.:
This petition seeking the nullification of a resolution of public respondent
National Labor Relations Commission dated April 28, 1994 vividly illustrates
why courts should be ever vigilant in the preservation of the constitutionally
enshrined rights of the working class. Without the protection accorded by our
laws and the tempering of courts, the natural and historical inclination of
capital to ride roughshod over the rights of labor would run unabated.
The facts of the case at bar, culled from the conflicting versions of petitioner
and private respondent, are illustrative.
Petitioner Norma Mabeza contends that around the first week of May, 1991,
she and her co-employees at the Hotel Supreme in Baguio City were asked
by the hotel’s management to sign an instrument attesting to the latter’s
compliance with minimum wage and other labor standard provisions of law. 1
The instrument provides: 2
JOINT AFFIDAVIT
We, SYLVIA IGANA, HERMINIGILDO AQUINO, EVELYN OGOY, MACARIA
JUGUETA, ADELAIDA NONOG, NORMA MABEZA, JONATHAN PICART and JOSE
DIZON, all of legal ages (sic), Filipinos and residents of Baguio City, under
oath, depose and say: chanrob1es virtual 1aw library
1. That we are employees of Mr. Peter L. Ng of his Hotel Supreme situated at
No. 416 Magsaysay Ave., Baguio City;
2. That the said Hotel is separately operated from the Ivy’s Grill and
Restaurant;
3. That we are all (8) employees in the hotel and assigned in each respective
shifts;

4. That we have no complaints against the management of the Hotel
Supreme as we are paid accordingly and that we are treated well.
5. That we are executing this affidavit voluntarily without any force or
intimidation and for the purpose of informing the authorities concerned and
to dispute the alleged report of the Labor Inspector of the Department of
Labor and Employment conducted on the said establishment on February 2,
1991.
IN WITNESS WHEREOF, we have hereunto set our hands this 7th day of May,
1991 at Baguio City, Philippines.
(Sgd.) (Sgd.) (Sgd.)
SYLVIA IGAMA HERMINIGILDO AQUINO EVELYN OGOY
(Sgd) (Sgd.) (Sgd.)
MACARIA JUGUETA ADELAIDA NONOG NORMA MABEZA
(Sgd) (Sgd.)
JONATHAN PICART JOSE DIZON
SUBSCRIBED AND SWORN to before me this 7th day of May, 1991, at Baguio
City, Philippines.
Asst. City Prosecutor
Petitioner signed the affidavit but refused to go to the City Prosecutor’s Office
to swear to the veracity and contents of the affidavit as instructed by
management. The affidavit was nevertheless submitted on the same day to
the Regional Office of the Department of Labor and Employment in Baguio
City.
As gleaned from the affidavit, the same was drawn by management for the
sole purpose of refuting findings of the Labor Inspector of DOLE (in an
inspection of respondent’s establishment on February 2, 1991) apparently
adverse to the private Respondent. 3
After she refused to proceed to the City Prosecutor’s Office — on the same
day the affidavit was submitted to the Cordillera Regional Office of DOLE —
petitioner avers that she was ordered by the hotel management to turn over
the keys to her living quarters and to remove her belongings from the hotel
premises. 4 According to her, respondent strongly chided her for refusing to
proceed to the City Prosecutor’s Office to attest to the affidavit. 5 She
thereafter reluctantly filed a leave of absence from her job which was denied
by management. When she attempted to return to work on May 10, 1991,
the hotel’s cashier, Margarita Choy, informed her that she should not report
to work and, instead, continue with her unofficial leave of absence.
Consequently, on May 13, 1991, three days after her attempt to return to
work, petitioner filed a complaint for illegal dismissal before the Arbitration
Branch of the National Labor Relations Commission — CAR Baguio City. In
addition to her complaint for illegal dismissal, she alleged underpayment of
wages, non-payment of holiday pay, service incentive leave pay, 13th month
pay, night differential and other benefits. The complaint was docketed as
NLRC Case No. RAB-CAR-05-0198-91 and assigned to Labor Arbiter Felipe P.
Pati.
Responding to the allegations made in support of petitioner’s complaint for
illegal dismissal, private respondent Peter Ng alleged before Labor Arbiter Pati
that petitioner "surreptitiously left (her job) without notice to the
management" 6 and that she actually abandoned her work. He maintained
that there was no basis for the money claims for underpayment and other
benefits as these were paid in the form of facilities to petitioner and the
hotel’s other employees. 7 Pointing to the Affidavit of May 7, 1991, the
private respondent asserted that his employees actually have no problems
with management. In a supplemental answer submitted eleven (11) months
after the original complaint for illegal dismissal was filed, private respondent
raised a new ground, loss of confidence, which was supported by a criminal
complaint for Qualified Theft he filed before the prosecutor’s office of the City
of Baguio against petitioner on July 4, 1991. 8
On May 14, 1993, Labor Arbiter Pati rendered a decision dismissing
petitioner’s complaint on the ground of loss of confidence. His disquisitions in
support of his conclusion read as follows: chanrob1es virtual 1aw library
It appears from the evidence of respondent that complainant carted away or
stole one (1) blanket, 1 piece bedsheet, 1 piece thermos, 2 pieces towel
(Exhibits ‘9’, ‘9-A,’ ‘9-B,’ ‘9-C’ and ‘10’ pages 12-14 TSN, December 1, 1992).
cdti
In fact, this was the reason why respondent Peter Ng lodged a criminal
complaint against complainant for qualified theft and perjury. The fiscal’s
office finding a prima facie evidence that complainant committed the crime of
qualified theft issued a resolution for its filing in court but dismissing the
charge of perjury (Exhibit ‘4’ for respondent and Exhibit ‘B-7’ for
complainant). As a consequence, complainant was charged in court for the
said crime (Exhibit ‘5’ for respondent and Exhibit ‘B-6’ for the complainant).
With these pieces of evidence, complainant committed serious misconduct
against her employer which is one of the just and valid grounds for an
employer to terminate an employee (Article 282 of the Labor Code as
amended). 9
On April 28, 1994, respondent NLRC promulgated its assailed Resolution 10
affirming the Labor Arbiter’s decision. The resolution substantially
incorporated the findings of the Labor Arbiter. 11 Unsatisfied, petitioner
instituted the instant special civil action for certiorari under Rule 65 of the
Rules of Court on the following grounds: 12
1. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO
GRAVE ABUSE OF DISCRETION IN ITS FAILURE TO CONSIDER THAT THE
ALLEGED LOSS OF CONFIDENCE IS A FALSE CAUSE AND AN AFTERTHOUGHT
ON THE PART OF THE RESPONDENT-EMPLOYER TO JUSTIFY, ALBEIT
ILLEGALLY, THE DISMISSAL OF THE COMPLAINANT FROM HER EMPLOYMENT;
2. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO
GRAVE ABUSE OF DISCRETION IN ADOPTING THE RULING OF THE LABOR
ARBITER THAT THERE WAS NO UNDERPAYMENT OF WAGES AND BENEFITS
ON THE BASIS OF EXHIBIT "8" (AN UNDATED SUMMARY OF COMPUTATION
PREPARED BY ALLEGEDLY BY RESPONDENT’S EXTERNAL ACCOUNTANT)
WHICH IS TOTALLY INADMISSIBLE AS AN EVIDENCE TO PROVE PAYMENT OF
WAGES AND BENEFITS;
3. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO
GRAVE ABUSE OF DISCRETION IN FAILING TO CONSIDER THE EVIDENCE
ADDUCED BEFORE THE LABOR ARBITER AS CONSTITUTING UNFAIR LABOR
PRACTICE COMMITTED BY THE RESPONDENT.
The Solicitor General, in a Manifestation in lieu of Comment dated August 8,
1995 rejects private respondent’s principal claims and defenses and urges
this Court to set aside the public respondent’s assailed resolution. 13
We agree.
It is settled that in termination cases the employer bears the burden of proof
to show that the dismissal is for just cause, the failure of which would mean
that the dismissal is not justified and the employee is entitled to
reinstatement. 14
In the case at bar, the private respondent initially claimed that petitioner
abandoned her job when she failed to return to work on May 8, 1991.
Additionally, in order to strengthen his contention that there existed sufficient
cause for the termination of petitioner, he belatedly included a complaint for
loss of confidence, supporting this with charges that petitioner had stolen a
blanket, a bedsheet and two towels from the hotel. 15 Appended to his last
complaint was a suit for qualified theft filed with the Baguio City prosecutor’s
office.
From the evidence on record, it is crystal clear that the circumstances upon
which private respondent anchored his claim that petitioner "abandoned" her
job were not enough to constitute just cause to sanction the termination of
her services under Article 283 of the Labor Code. For abandonment to arise,
there must be concurrence of two things: 1) lack of intention to work; 16 and
2) the presence of overt acts signifying the employee’s intention not to work.
17
In the instant case, respondent does not dispute the fact that petitioner tried
to file a leave of absence when she learned that the hotel management was
displeased with her refusal to attest to the affidavit. The fact that she made
this attempt clearly indicates not an intention to abandon but an intention to
return to work after the period of her leave of absence, had it been granted,
shall have expired.
Furthermore, while absence from work for a prolonged period may suggest
abandonment in certain instances, mere absence of one or two days would
not be enough to sustain such a claim. The overt act (absence) ought to
unerringly point to the fact that the employee has no intention to return to
work, 18 which is patently not the case here. In fact, several days after she
had been advised to take an informal leave, petitioner tried to resume
working with the hotel, to no avail. It was only after she had been repeatedly
rebuffed that she filed a case for illegal dismissal. These acts militate against
the private respondent’s claim that petitioner abandoned her job. As the
Solicitor General in his manifestation observed: chanrob1es virtual 1aw library
Petitioner’s absence on that day should not be construed as abandonment of
her job. She did not report because the cashier told her not to report
anymore, and that private respondent Ng did not want to see her in the hotel
premises. But two days later or on the 10th of May, after realizing that she
had to clarify her employment status, she again reported for work. However,
she was prevented from working by private respondents. 19
We now come to the second cause raised by private respondent to support
his contention that petitioner was validly dismissed from her job.
Loss of confidence as a just cause for dismissal was never intended to
provide employers with a blank check for terminating their employees. Such
a vague, all-encompassing pretext as loss of confidence, if unqualifiedly given
the seal of approval by this Court, could readily reduce to barren form the
words of the constitutional guarantee of security of tenure. Having this in
mind, loss of confidence should ideally apply only to cases involving
employees occupying positions of trust and confidence or to those situations
where the employee is routinely charged with the care and custody of the
employer’s money or property. To the first class belong managerial
employees, i.e., those vested with the powers or prerogatives to lay down
management policies and/or to hire, transfer, suspend, lay-off, recall,
discharge, assign or discipline employees or effectively recommend such
managerial actions; and to the second class belong cashiers, auditors,
property custodians, etc., or those who, in the normal and routine exercise of
their functions, regularly handle significant amounts of money or property.
Evidently, an ordinary chambermaid who has to sign out for linen and other
hotel property from the property custodian each day and who has to account
for each and every towel or bedsheet utilized by the hotel’s guests at the end
of her shift would not fall under any of these two classes of employees for
which loss of confidence, if ably supported by evidence, would normally
apply. Illustrating this distinction, this Court, in Marina Port Services, Inc. v.
NLRC, 20 has stated that: chanrob1es virtual 1aw library
To be sure, every employee must enjoy some degree of trust and confidence
from the employer as that is one reason why he was employed in the first
place. One certainly does not employ a person he distrusts. Indeed, even the
lowly janitor must enjoy that trust and confidence in some measure if only
because he is the one who opens the office in the morning and closes it at
night and in this sense is entrusted with the care or protection of the
employer’s property. The keys he holds are the symbol of that trust and
confidence.
By the same token, the security guard must also be considered as enjoying
the trust and confidence of his employer, whose property he is safeguarding.
chanroblesvirtualawlibrary Like the janitor, he has access to this property. He too, is charged with its
care and protection.
Notably, however, and like the janitor again, he is entrusted only with the
physical task of protecting that property. The employer’s trust and confidence
in him is limited to that ministerial function. He is not entrusted, in the Labor
Arbiter’s words, ‘with the duties of safekeeping and safeguarding company
policies, management instructions, and company secrets such as operation
devices.’ He is not privy to these confidential matters, which are shared only
in the higher echelons of management. It is the persons on such levels who,
because they discharge these sensitive duties, may be considered holding
positions of trust and confidence. The security guard does not belong in such
category. 21
More importantly, we have repeatedly held that loss of confidence should not
be simulated in order to justify what would otherwise be, under the
provisions of law, an illegal dismissal. "It should not be used as a subterfuge
for causes which are illegal, improper and unjustified. It must be genuine, not
a mere afterthought to justify an earlier action taken in bad faith." 22
In the case at bar, the suspicious delay in private respondent’s filing of
qualified theft charges against petitioner long after the latter exposed the
hotel’s scheme (to avoid its obligations as employer under the Labor Code)
by her act of filing illegal dismissal charges against the private respondent
would hardly warrant serious consideration of loss of confidence as a valid
ground for dismissal. Notably, the Solicitor General has himself taken a
position opposite the public respondent and has observed that: chanrob1es virtual 1aw library
If petitioner had really committed the acts charged against her by private
respondents (stealing supplies of respondent hotel), private respondents
should have confronted her before dismissing her on that ground. Private
respondents did not do so. In fact, private respondent Ng did not raise the
matter when petitioner went to see him on May 9, 1991, and handed him her
application for leave. It took private respondents 52 days or up to July 4,
1991 before finally deciding to file a criminal complaint against petitioner, in
an obvious attempt to build a case against her.
The manipulations of private respondents should not be countenanced. 23
Clearly, the efforts to justify petitioner’s dismissal — on top of the private
respondent’s scheme of inducing his employees to sign an affidavit absolving
him from possible violations of the Labor Code — taints with evident bad faith
and deliberate malice petitioner’s summary termination from employment.
Having said this, we turn to the important question of whether or not the
dismissal by the private respondent of petitioner constitutes an unfair labor
practice.
The answer in this case must inevitably be in the affirmative.
The pivotal question in any case where unfair labor practice on the part of the
employer is alleged is whether or not the employer has exerted pressure, in
the form of restraint, interference or coercion, against his employee’s right to
institute concerted action for better terms and conditions of employment.
Without doubt, the act of compelling employees to sign an instrument
indicating that the employer observed labor standards provisions of law when
he might have not, together with the act of terminating or coercing those
who refuse to cooperate with the employer’s scheme constitutes unfair labor
practice. The first act clearly preempts the right of the hotel’s workers to seek
better terms and conditions of employment through concerted action. chanrobles law library
We agree with the Solicitor General’s observation in his manifestation that"
[t]his actuation . . . is analogous to the situation envisaged in paragraph (f)
of Article 248 of the Labor Code" 24 which distinctly makes it an unfair labor
practice "to dismiss, discharge or otherwise prejudice or discriminate against
an employee for having given or being about to give testimony" 25 under the
Labor Code. For in not giving positive testimony in favor of her employer,
petitioner had reserved not only her right to dispute the claim and proffer
evidence in support thereof but also to work for better terms and conditions
of employment.
For refusing to cooperate with the private respondent’s scheme, petitioner
was obviously held up as an example to all of the hotel’s employees, that
they could only cause trouble to management at great personal
inconvenience. Implicit in the act of petitioner’s termination and the
subsequent filing of charges against her was the warning that they would not
only be deprived of their means of livelihood, but also possibly, their personal
liberty.
This Court does not normally overturn findings and conclusions of quasi-
judicial agencies when the same are ably supported by the evidence on
record. However, where such conclusions are based on a misperception of
facts or where they patently fly in the face of reason and logic, we will not
hesitate to set aside those conclusions. Going into the issue of petitioner’s
money claims, we find one more salient reason in this case to set things
right: the labor arbiter’s evaluation of the money claims in this case
incredibly ignores existing law and jurisprudence on the matter. Its blatant
one-sidedness simply raises the suspicion that something more than the
facts, the law and jurisprudence may have influenced the decision at the level
of the Arbiter.
Labor Arbiter Pati accepted hook, line and sinker the private respondent’s
bare claim that the reason the monetary benefits received by petitioner
between 1981 to 1987 were less than minimum wage was because petitioner
did not factor in the meals, lodging, electric consumption and water she
received during the period in her computations. 26 Granting that meals and
lodging were provided and indeed constituted facilities, such facilities could
not be deducted without the employer complying first with certain legal
requirements. Without satisfying these requirements, the employer simply
cannot deduct the value from the employee’s wages. First, proof must be
shown that such facilities are customarily furnished by the trade. Second, the
provision of deductible facilities must be voluntarily accepted in writing by the
employee. Finally, facilities must be charged at fair and reasonable value. 27
These requirements were not met in the instant case. Private respondent
"failed to present any company policy or guideline to show that the meal and
lodging . . . (are) part of the salary;" 28 he failed to provide proof of the
employee’s written authorization; and, he failed to show how he arrived at
the valuations. 29
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." 30
More significantly, the food and lodging, or the electricity and water
consumed by the petitioner were not facilities but supplements. A benefit or
privilege granted to an employee for the convenience of the employer is not a
facility. The criterion in making a distinction between the two not so much
lies in the kind (food, lodging) but the purpose. 31 Considering, therefore,
that hotel workers are required to work different shifts and are expected to
be available at various odd hours, their ready availability is a necessary
matter in the operations of a small hotel, such as the private respondent’s
hotel.
It is therefore evident that petitioner is entitled to the payment of the
deficiency in her wages equivalent to the full wage applicable from May 13,
1988 up to the date of her illegal dismissal.
Additionally, petitioner is entitled to payment of service incentive leave pay,
emergency cost of living allowance, night differential pay, and 13th month
pay for the periods alleged by the petitioner as the private respondent has
never been able to adduce proof that petitioner was paid the aforestated
benefits.
However, the claims covering the period of October 1987 up to the time of
filing the case on May 13, 1988 are barred by prescription as P.D. 442 (as
amended) and its implementing rules limit all money claims arising out of
employer-employee relationship to three (3) years from the time the cause of
action accrues. 32
We depart from the settled rule that an employee who is unjustly dismissed
from work normally should be reinstated without loss of seniority rights and Relations Commission dated April 24, 1994 is REVERSED and SET ASIDE,
other privileges. Owing to the strained relations between petitioner and with costs. For clarity, the economic benefits due the petitioner are hereby
private respondent, allowing the former to return to her job would only summarized as follows: chanrob1es virtual 1aw library

subject her to possible harassment and future embarrassment. In the instant

case, separation pay equivalent to one month’s salary for every year of 1) Deficiency wages and the applicable ECOLA from May 13, 1988 up to the
continuous service with the private respondent would be proper, starting with date of petitioner’s illegal dismissal;
her job at the Belfront Hotel.
chanrobles virtual lawlibrary

In addition to separation pay, backwages are in order. Pursuant to R.A. 6715
and our decision in Osmalik Bustamante, Et. Al. v. National Labor Relations
Commission, 33 petitioner is entitled to full backwages from the time of her
illegal dismissal up to the date of promulgation of this decision without
qualification or deduction.
2) Service incentive leave pay; night differential pay and 13th month pay for
the same period;
3) Separation pay equal to one month’s salary for every year of petitioner’s
continuous service with the private respondent starting with her job at the
Belfront Hotel; cdtech

Finally, in dismissal cases, the law requires that the employer must furnish 4) Full backwages, without qualification or deduction, from the date of
the employee sought to be terminated from employment with two written petitioner’s illegal dismissal up to the date of promulgation of this decision
notices before the same may be legally effected. The first is a written notice pursuant to our ruling in Bustamante v. NLRC. 34
containing a statement of the cause(s) for dismissal; the second is a notice
informing the employee of the employer’s decision to terminate him stating 5) P1,000.00.
the basis of the dismissal. During the process leading to the second notice,
the employer must give the employee ample opportunity to be heard and SO ORDERED.
defend himself, with the assistance of counsel if he so desires.
G.R. No. 157634 May 16, 2005
Given the seriousness of the second cause (qualified theft) of the petitioner’s
dismissal, it is noteworthy that the private respondent never even bothered
to inform petitioner of the charges against her. Neither was petitioner given
the opportunity to explain the loss of the articles. It was only almost two MAYON HOTEL & RESTAURANT, PACITA O. PO and/or JOSEFA PO
months after petitioner had filed a complaint for illegal dismissal, as an LAM, petitioners,
afterthought, that the loss was reported to the police and added as a
supplemental answer to petitioner’s complaint. Clearly, the dismissal of vs.
petitioner without the benefit of notice and hearing prior to her termination
violated her constitutional right to due process. Under the circumstances, an
ROLANDO ADANA, CHONA BUMALAY, ROGER BURCE, EDUARDO
award of One Thousand Pesos (P1,000.00) on top of payment of the
ALAMARES, AMADO ALAMARES, EDGARDO TORREFRANCA, LOURDES
deficiency in wages and benefits for the period aforestated would be proper.
CAMIGLA, TEODORO LAURENARIA, WENEFREDO LOVERES, LUIS
GUADES, AMADO MACANDOG, PATERNO LLARENA, GREGORIO
WHEREFORE, premises considered, the RESOLUTION of the National Labor
 NICERIO, JOSE ATRACTIVO, MIGUEL TORREFRANCA, and SANTOS Front Desk Clerk
BROÑOLA, respondents.
3. Gregorio Nicerio

DECISION
Supervisory Waiter
PUNO, J.:
4. Amado Macandog
This is a petition for certiorari to reverse and set aside the Decision issued by
the Court of Appeals (CA)1 in CA-G.R. SP No. 68642, entitled "Rolando Roomboy
Adana, Wenefredo Loveres, et. al. vs. National Labor Relations Commission
(NLRC), Mayon Hotel & Restaurant/Pacita O. Po, et al.," and the Resolution2 5. Luis Guades
denying petitioners' motion for reconsideration. The assailed CA decision
reversed the NLRC Decision which had dismissed all of respondents' Utility/Maintenance Worker
complaints,3 and reinstated the Joint Decision of the Labor Arbiter4 which
ruled that respondents were illegally dismissed and entitled to their money 6. Santos Broñola
claims.
Roomboy
The facts, culled from the records, are as follows:5
7. Teodoro Laurenaria
Petitioner Mayon Hotel & Restaurant is a single proprietor business registered
in the name of petitioner Pacita O. Po,6 whose mother, petitioner Josefa Po
Waiter
Lam, manages the establishment.7 The hotel and restaurant employed about
sixteen (16) employees.
8. Eduardo Alamares
Records show that on various dates starting in 1981, petitioner hotel and
Roomboy/Waiter
restaurant hired the following people, all respondents in this case, with the
following jobs:8
9. Lourdes Camigla
1. Wenefredo Loveres
Cashier
Accountant and Officer-in-charge
10. Chona Bumalay
2. Paterno Llarena
Cashier
11. Jose Atractivo

On various dates of April and May 1997, the 16 employees filed complaints
for underpayment of wages and other money claims against petitioners, as
Technician follows:12

12. Amado Alamares

Dishwasher and Kitchen Helper Wenefredo Loveres, Luis Guades, Amado Macandog and Jose Atractivo for
illegal dismissal, underpayment of wages, nonpayment of holiday and rest
13. Roger Burce day pay; service incentive leave pay (SILP) and claims for separation pay
plus damages;
Cook

14. Rolando Adana

Paterno Llarena and Gregorio Nicerio for illegal dismissal with claims for
Waiter underpayment of wages; nonpayment of cost of living allowance (COLA) and
overtime pay; premium pay for holiday and rest day; SILP; nightshift
15. Miguel Torrefranca differential pay and separation pay plus damages;

Cook

16. Edgardo Torrefranca Miguel Torrefranca, Chona Bumalay and Lourdes Camigla for underpayment
of wages; nonpayment of holiday and rest day pay and SILP;
Cook

Due to the expiration and non-renewal of the lease contract for the rented
space occupied by the said hotel and restaurant at Rizal Street, the hotel Rolando Adana, Roger Burce and Amado Alamares for underpayment of
operations of the business were suspended on March 31, 1997.9 The wages; nonpayment of COLA, overtime, holiday, rest day, SILP and nightshift
operation of the restaurant was continued in its new location at Elizondo differential pay;
Street, Legazpi City, while waiting for the construction of a new Mayon Hotel
& Restaurant at Peñaranda Street, Legazpi City.10 Only nine (9) of the
sixteen (16) employees continued working in the Mayon Restaurant at its
new site.11 Eduardo Alamares for underpayment of wages, nonpayment of holiday, rest
day and SILP and night shift differential pay;

Santos Broñola for illegal dismissal, underpayment of wages, overtime pay,
rest day pay, holiday pay, SILP, and damages;13 and
Teodoro Laurenaria for underpayment of wages; nonpayment of COLA and
overtime pay; premium pay for holiday and rest day, and SILP.
On July 14, 2000, Executive Labor Arbiter Gelacio L. Rivera, Jr. rendered a
Joint Decision in favor of the employees. The Labor Arbiter awarded
substantially all of respondents' money claims, and held that respondents
Loveres, Macandog and Llarena were entitled to separation pay, while
respondents Guades, Nicerio and Alamares were entitled to their retirement
pay. The Labor Arbiter also held that based on the evidence presented, Josefa
Po Lam is the owner/proprietor of Mayon Hotel & Restaurant and the proper
respondent in these cases.
On appeal to the NLRC, the decision of the Labor Arbiter was reversed, and
all the complaints were dismissed.
Respondents filed a motion for reconsideration with the NLRC and when this
was denied, they filed a petition for certiorari with the CA which rendered the
now assailed decision.
After their motion for reconsideration was denied, petitioners now come to
this Court, seeking the reversal of the CA decision on the following grounds:
I. The Honorable Court of Appeals erred in reversing the decision of the
National Labor Relations Commission (Second Division) by holding that the
findings of fact of the NLRC were not supported by substantial evidence
despite ample and sufficient evidence showing that the NLRC decision is
indeed supported by substantial evidence;
II. The Honorable Court of Appeals erred in upholding the joint decision of the
labor arbiter which ruled that private respondents were illegally dismissed
from their employment, despite the fact that the reason why private
respondents were out of work was not due to the fault of petitioners but to
causes beyond the control of petitioners.
III. The Honorable Court of Appeals erred in upholding the award of monetary
benefits by the labor arbiter in his joint decision in favor of the private
respondentS, including the award of damages to six (6) of the private
respondents, despite the fact that the private respondents have not proven
by substantial evidence their entitlement thereto and especially the fact that
they were not illegally dismissed by the petitioners.
IV. The Honorable Court of Appeals erred in holding that Pacita Ong Po is the
owner of the business establishment, petitioner Mayon Hotel and Restaurant,
thus disregarding the certificate of registration of the business establishment
ISSUED by the local government, which is a public document, and the
unqualified admissions of complainants-private respondents.14

In essence, the petition calls for a review of the following issues:
1. Was it correct for petitioner Josefa Po Lam to be held liable as the owner of
petitioner Mayon Hotel & Restaurant, and the proper respondent in this case?
2. Were respondents Loveres, Guades, Macandog, Atractivo, Llarena and
Nicerio illegally dismissed?
3. Are respondents entitled to their money claims due to underpayment of
wages, and nonpayment of holiday pay, rest day premium, SILP, COLA,
overtime pay, and night shift differential pay?
It is petitioners' contention that the above issues have already been threshed
out sufficiently and definitively by the NLRC. They therefore assail the CA's
reversal of the NLRC decision, claiming that based on the ruling in Castillo v.
NLRC,15 it is non sequitur that the CA should re-examine the factual findings
of both the NLRC and the Labor Arbiter, especially as in this case the NLRC's
findings are allegedly supported by substantial evidence.
We do not agree.
There is no denying that it is within the NLRC's competence, as an appellate
agency reviewing decisions of Labor Arbiters, to disagree with and set aside
the latter's findings.16 But it stands to reason that the NLRC should state an
acceptable cause therefore, otherwise it would be a whimsical, capricious,
oppressive, illogical, unreasonable exercise of quasi-judicial prerogative,
subject to invalidation by the extraordinary writ of certiorari.17 And when the
factual findings of the Labor Arbiter and the NLRC are diametrically opposed
and this disparity of findings is called into question, there is, necessarily, a
re-examination of the factual findings to ascertain which opinion should be
sustained.18 As ruled in Asuncion v. NLRC,19
Although, it is a legal tenet that factual findings of administrative bodies are
entitled to great weight and respect, we are constrained to take a second
look at the facts before us because of the diversity in the opinions of the
Labor Arbiter and the NLRC. A disharmony between the factual findings of the
Labor Arbiter and those of the NLRC opens the door to a review thereof by
this Court.20
The CA, therefore, did not err in reviewing the records to determine which
opinion was supported by substantial evidence.
Moreover, it is explicit in Castillo v. NLRC21 that factual findings of
administrative bodies like the NLRC are affirmed only if they are supported by
substantial evidence that is manifest in the decision and on the records. As
stated in Castillo:
[A]buse of discretion does not necessarily follow from a reversal by the NLRC
of a decision of a Labor Arbiter. Mere variance in evidentiary assessment
between the NLRC and the Labor Arbiter does not automatically call for a full
review of the facts by this Court. The NLRC's decision, so long as it is not
bereft of substantial support from the records, deserves respect from this
Court. As a rule, the original and exclusive jurisdiction to review a decision or
resolution of respondent NLRC in a petition for certiorari under Rule 65 of the
Rules of Court does not include a correction of its evaluation of the evidence
but is confined to issues of jurisdiction or grave abuse of discretion. Thus, the
NLRC's factual findings, if supported by substantial evidence, are entitled to
great respect and even finality, unless petitioner is able to show that it simply
and arbitrarily disregarded the evidence before it or had misappreciated the
evidence to such an extent as to compel a contrary conclusion if such
evidence had been properly appreciated. (citations omitted)22
After careful review, we find that the reversal of the NLRC's decision was in
order precisely because it was not supported by substantial evidence.
1. Ownership by Josefa Po Lam
The Labor Arbiter ruled that as regards the claims of the employees,
petitioner Josefa Po Lam is, in fact, the owner of Mayon Hotel & Restaurant.
Although the NLRC reversed this decision, the CA, on review, agreed with the
Labor Arbiter that notwithstanding the certificate of registration in the name
of Pacita Po, it is Josefa Po Lam who is the owner/proprietor of Mayon Hotel &
Restaurant, and the proper respondent in the complaints filed by the
employees. The CA decision states in part:
[Despite] the existence of the Certificate of Registration in the name of Pacita
Po, we cannot fault the labor arbiter in ruling that Josefa Po Lam is the owner
of the subject hotel and restaurant. There were conflicting documents
submitted by Josefa herself. She was ordered to submit additional documents
to clearly establish ownership of the hotel and restaurant, considering the
testimonies given by the [respondents] and the non-appearance and failure
to submit her own position paper by Pacita Po. But Josefa did not comply with
the directive of the Labor Arbiter. The ruling of the Supreme Court in
Metropolitan Bank and Trust Company v. Court of Appeals applies to Josefa
Po Lam which is stated in this wise:
When the evidence tends to prove a material fact which imposes a liability on
a party, and he has it in his power to produce evidence which from its very
nature must overthrow the case made against him if it is not founded on fact,
and he refuses to produce such evidence, the presumption arises that the
evidence[,] if produced, would operate to his prejudice, and support the case
of his adversary.
Furthermore, in ruling that Josefa Po Lam is the real owner of the hotel and
restaurant, the labor arbiter relied also on the testimonies of the witnesses,
during the hearing of the instant case. When the conclusions of the labor
arbiter are sufficiently corroborated by evidence on record, the same should
be respected by appellate tribunals, since he is in a better position to assess
and evaluate the credibility of the contending parties.23 (citations omitted)
Petitioners insist that it was error for the Labor Arbiter and the CA to have
ruled that petitioner Josefa Po Lam is the owner of Mayon Hotel & Restaurant.
They allege that the documents they submitted to the Labor Arbiter
sufficiently and clearly establish the fact of ownership by petitioner Pacita Po,
and not her mother, petitioner Josefa Po Lam. They contend that petitioner
Josefa Po Lam's participation was limited to merely (a) being the overseer;
(b) receiving the month-to-month and/or year-to-year financial reports
prepared and submitted by respondent Loveres; and (c) visitation of the
premises.24 They also put emphasis on the admission of the respondents in
their position paper submitted to the Labor Arbiter, identifying petitioner
Josefa Po Lam as the manager, and Pacita Po as the owner.25 This, they
claim, is a judicial admission and is binding on respondents. They protest the
reliance the Labor Arbiter and the CA placed on their failure to submit
additional documents to clearly establish ownership of the hotel and
restaurant, claiming that there was no need for petitioner Josefa Po Lam to
submit additional documents considering that the Certificate of Registration is
the best and primary evidence of ownership.
We disagree with petitioners. We have scrutinized the records and find the
claim that petitioner Josefa Po Lam is merely the overseer is not borne out by
the evidence.
First. It is significant that only Josefa Po Lam appeared in the proceedings
with the Labor Arbiter. Despite receipt of the Labor Arbiter's notice and
summons, other notices and Orders, petitioner Pacita Po failed to appear in
any of the proceedings with the Labor Arbiter in these cases, nor file her
position paper.26 It was only on appeal with the NLRC that Pacita Po signed
the pleadings.27 The apathy shown by petitioner Pacita Po is contrary to
human experience as one would think that the owner of an establishment
would naturally be concerned when all her employees file complaints against
her.
Second. The records of the case belie petitioner Josefa Po Lam's claim that
she is merely an overseer. The findings of the Labor Arbiter on this question
were based on credible, competent and substantial evidence. We again quote
the Joint Decision on this matter:
Mayon Hotel and Restaurant is a [business name] of an enterprise. While
[petitioner] Josefa Po Lam claims that it is her daughter, Pacita Po, who owns
the hotel and restaurant when the latter purchased the same from one
Palanos in 1981, Josefa failed to submit the document of sale from said
Palanos to Pacita as allegedly the sale was only verbal although the license to
operate said hotel and restaurant is in the name of Pacita which, despite our
Order to Josefa to present the same, she failed to comply (p. 38, tsn. August
13, 1998). While several documentary evidences were submitted by Josefa
wherein Pacita was named therein as owner of the hotel and restaurant (pp.
64, 65, 67 to 69; vol. I, rollo)[,] there were documentary evidences also that
were submitted by Josefa showing her ownership of said enterprise (pp. 468
to 469; vol. II, rollo). While Josefa explained her participation and interest in
the business as merely to help and assist her daughter as the hotel and
restaurant was near the former's store, the testimonies of [respondents] and
Josefa as well as her demeanor during the trial in these cases proves (sic)
that Josefa Po Lam owns Mayon Hotel and Restaurant. [Respondents]
testified that it was Josefa who exercises all the acts and manifestation of
ownership of the hotel and restaurant like transferring employees from the
Greatwall Palace Restaurant which she and her husband Roy Po Lam
previously owned; it is Josefa to whom the employees submits (sic) reports,
draws money for payment of payables and for marketing, attending (sic) to
Labor Inspectors during ocular inspections. Except for documents whereby
Pacita Po appears as the owner of Mayon Hotel and Restaurant, nothing in
the record shows any circumstance or manifestation that Pacita Po is the
owner of Mayon Hotel and Restaurant. The least that can be said is that it is
absurd for a person to purchase a hotel and restaurant in the very heart of
the City of Legazpi verbally. Assuming this to be true, when [petitioners],
particularly Josefa, was directed to submit evidence as to the ownership of
Pacita of the hotel and restaurant, considering the testimonies of
[respondents], the former should [have] submitted the lease contract
between the owner of the building where Mayon Hotel and Restaurant was
located at Rizal St., Legazpi City and Pacita Po to clearly establish ownership
by the latter of said enterprise. Josefa failed. We are not surprised why some
employers employ schemes to mislead Us in order to evade liabilities. We
therefore consider and hold Josefa Po Lam as the owner/proprietor of Mayon
Hotel and Restaurant and the proper respondent in these cases.28
Petitioners' reliance on the rules of evidence, i.e., the certificate of
registration being the best proof of ownership, is misplaced. Notwithstanding
the certificate of registration, doubts were cast as to the true nature of
petitioner Josefa Po Lam's involvement in the enterprise, and the Labor
Arbiter had the authority to resolve this issue. It was therefore within his
jurisdiction to require the additional documents to ascertain who was the real
owner of petitioner Mayon Hotel & Restaurant.
Article 221 of the Labor Code is clear: technical rules are not binding, and the
application of technical rules of procedure may be relaxed in labor cases to
serve the demand of substantial justice.29 The rule of evidence prevailing in
court of law or equity shall not be controlling in labor cases and it is the spirit
and intention of the Labor Code that the Labor Arbiter shall use every and all
reasonable means to ascertain the facts in each case speedily and objectively
and without regard to technicalities of law or procedure, all in the interest of
due process.30 Labor laws mandate the speedy administration of justice, with
least attention to technicalities but without sacrificing the fundamental
requisites of due process.31
Similarly, the fact that the respondents' complaints contained no allegation
that petitioner Josefa Po Lam is the owner is of no moment. To apply the
concept of judicial admissions to respondents — who are but lowly employees
- would be to exact compliance with technicalities of law that is contrary to
the demands of substantial justice. Moreover, the issue of ownership was an
issue that arose only during the course of the proceedings with the Labor
Arbiter, as an incident of determining respondents' claims, and was well
within his jurisdiction.32
Petitioners were also not denied due process, as they were given sufficient
opportunity to be heard on the issue of ownership.33 The essence of due
process in administrative proceedings is simply an opportunity to explain
one's side or an opportunity to seek reconsideration of the action or ruling
complained of.34 And there is nothing in the records which would suggest
that petitioners had absolute lack of opportunity to be heard.35 Obviously,
the choice not to present evidence was made by petitioners themselves.36
But more significantly, we sustain the Labor Arbiter and the CA because even
when the case was on appeal with the NLRC, nothing was submitted to
negate the Labor Arbiter's finding that Pacita Po is not the real owner of the
subject hotel and restaurant. Indeed, no such evidence was submitted in the
proceedings with the CA nor with this Court. Considering that petitioners
vehemently deny ownership by petitioner Josefa Po Lam, it is most telling
that they continue to withhold evidence which would shed more light on this
issue. We therefore agree with the CA that the failure to submit could only
mean that if produced, it would have been adverse to petitioners' case.37
Thus, we find that there is substantial evidence to rule that petitioner Josefa
Po Lam is the owner of petitioner Mayon Hotel & Restaurant.
2. Illegal Dismissal: claim for separation pay

Of the sixteen employees, only the following filed a case for illegal dismissal:
respondents Loveres, Llarena, Nicerio, Macandog, Guades, Atractivo and
Broñola.38
The Labor Arbiter found that there was illegal dismissal, and granted
separation pay to respondents Loveres, Macandog and Llarena. As
respondents Guades, Nicerio and Alamares were already 79, 66 and 65 years
old respectively at the time of the dismissal, the Labor Arbiter granted
retirement benefits pursuant to Article 287 of the Labor Code as amended.39
The Labor Arbiter ruled that respondent Atractivo was not entitled to
separation pay because he had been transferred to work in the restaurant
operations in Elizondo Street, but awarded him damages. Respondents
Loveres, Llarena, Nicerio, Macandog and Guades were also awarded
damages.40
The NLRC reversed the Labor Arbiter, finding that "no clear act of termination
is attendant in the case at bar" and that respondents "did not submit any
evidence to that effect, but the finding and conclusion of the Labor Arbiter
[are] merely based on his own surmises and conjectures."41 In turn, the
NLRC was reversed by the CA.
It is petitioners contention that the CA should have sustained the NLRC
finding that none of the above-named respondents were illegally dismissed,
or entitled to separation or retirement pay. According to petitioners, even the
Labor Arbiter and the CA admit that when the illegal dismissal case was filed
by respondents on April 1997, they had as yet no cause of action. Petitioners
therefore conclude that the filing by respondents of the illegal dismissal case
was premature and should have been dismissed outright by the Labor
Arbiter.42 Petitioners also claim that since the validity of respondents'
dismissal is a factual question, it is not for the reviewing court to weigh the
conflicting evidence.43
We do not agree. Whether respondents are still working for petitioners is a
factual question. And the records are unequivocal that since April 1997, when
petitioner Mayon Hotel & Restaurant suspended its hotel operations and
transferred its restaurant operations in Elizondo Street, respondents Loveres,
Macandog, Llarena, Guades and Nicerio have not been permitted to work for
petitioners. Respondent Alamares, on the other hand, was also laid-off when
the Elizondo Street operations closed, as were all the other respondents.
Since then, respondents have not been permitted to work nor recalled, even
after the construction of the new premises at Peñaranda Street and the
reopening of the hotel operations with the restaurant in this new site. As
stated by the Joint Decision of the Labor Arbiter on July 2000, or more than
three (3) years after the complaint was filed:44
[F]rom the records, more than six months had lapsed without [petitioner]
having resumed operation of the hotel. After more than one year from the
temporary closure of Mayon Hotel and the temporary transfer to another site
of Mayon Restaurant, the building which [petitioner] Josefa allege[d] w[h]ere
the hotel and restaurant will be transferred has been finally constructed and
the same is operated as a hotel with bar and restaurant nevertheless, none of
[respondents] herein who were employed at Mayon Hotel and Restaurant
which was also closed on April 30, 1998 was/were recalled by [petitioner] to
continue their services...
Parenthetically, the Labor Arbiter did not grant separation pay to the other
respondents as they had not filed an amended complaint to question the
cessation of their employment after the closure of Mayon Hotel & Restaurant
on March 31, 1997.45
The above factual finding of the Labor Arbiter was never refuted by
petitioners in their appeal with the NLRC. It confounds us, therefore, how the
NLRC could have so cavalierly treated this uncontroverted factual finding by
ruling that respondents have not introduced any evidence to show that they
were illegally dismissed, and that the Labor Arbiter's finding was based on
conjecture.46 It was a serious error that the NLRC did not inquire as to the
legality of the cessation of employment. Article 286 of the Labor Code is clear
— there is termination of employment when an otherwise bona fide
suspension of work exceeds six (6) months.47 The cessation of employment
for more than six months was patent and the employer has the burden of
proving that the termination was for a just or authorized cause.48
Moreover, we are not impressed by any of petitioners' attempts to exculpate
themselves from the charges. First, in the proceedings with the Labor Arbiter,
they claimed that it could not be illegal dismissal because the lay-off was
merely temporary (and due to the expiration of the lease contract over the
old premises of the hotel). They specifically invoked Article 286 of the Labor
Code to argue that the claim for separation pay was premature and without
legal and factual basis.49 Then, because the Labor Arbiter had ruled that
there was already illegal dismissal when the lay-off had exceeded the six-
month period provided for in Article 286, petitioners raise this novel
argument, to wit:
It is the firm but respectful submission of petitioners that reliance on Article
286 of the Labor Code is misplaced, considering that the reason why private
respondents were out of work was not due to the fault of petitioners. The
failure of petitioners to reinstate the private respondents to their former
positions should not likewise be attributable to said petitioners as the private
respondents did not submit any evidence to prove their alleged illegal
dismissal. The petitioners cannot discern why they should be made liable to
the private respondents for their failure to be reinstated considering that the
fact that they were out of work was not due to the fault of petitioners but due
to circumstances beyond the control of petitioners, which are the termination
and non-renewal of the lease contract over the subject premises. Private
respondents, however, argue in their Comment that petitioners themselves
sought the application of Article 286 of the Labor Code in their case in their
Position Paper filed before the Labor Arbiter. In refutation, petitioners humbly
submit that even if they invoke Article 286 of the Labor Code, still the fact
remains, and this bears stress and emphasis, that the temporary suspension
of the operations of the establishment arising from the non-renewal of the
lease contract did not result in the termination of employment of private
respondents and, therefore, the petitioners cannot be faulted if said private
respondents were out of work, and consequently, they are not entitled to
their money claims against the petitioners.50
It is confounding how petitioners have fashioned their arguments. After
having admitted, in effect, that respondents have been laid-off since April
1997, they would have this Court excuse their refusal to reinstate
respondents or grant them separation pay because these same respondents
purportedly have not proven the illegality of their dismissal.
Petitioners' arguments reflect their lack of candor and the blatant attempt to
use technicalities to muddle the issues and defeat the lawful claims of their
employees. First, petitioners admit that since April 1997, when hotel
operations were suspended due to the termination of the lease of the old
premises, respondents Loveres, Macandog, Llarena, Nicerio and Guades have
not been permitted to work. Second, even after six months of what should
have been just a temporary lay-off, the same respondents were still not
recalled to work. As a matter of fact, the Labor Arbiter even found that as of
the time when he rendered his Joint Decision on July 2000 — or more than
three (3) years after the supposed "temporary lay-off," the employment of all
of the respondents with petitioners had ceased, notwithstanding that the new
premises had been completed and the same operated as a hotel with bar and
restaurant. This is clearly dismissal — or the permanent severance or
complete separation of the worker from the service on the initiative of the
employer regardless of the reasons therefor.51
On this point, we note that the Labor Arbiter and the CA are in accord that at
the time of the filing of the complaint, respondents had no cause of action to
file the case for illegal dismissal. According to the CA and the Labor Arbiter,
the lay-off of the respondents was merely temporary, pending construction of
the new building at Peñaranda Street.52
While the closure of the hotel operations in April of 1997 may have been
temporary, we hold that the evidence on record belie any claim of petitioners
that the lay-off of respondents on that same date was merely temporary. On
the contrary, we find substantial evidence that petitioners intended the
termination to be permanent. First, respondents Loveres, Macandog, Llarena,
Guades, Nicerio and Alamares filed the complaint for illegal dismissal
immediately after the closure of the hotel operations in Rizal Street,
notwithstanding the alleged temporary nature of the closure of the hotel
operations, and petitioners' allegations that the employees assigned to the
hotel operations knew about this beforehand. Second, in their position paper
submitted to the Labor Arbiter, petitioners invoked Article 286 of the Labor
Code to assert that the employer-employee relationship was merely
suspended, and therefore the claim for separation pay was premature and
without legal or factual basis.53 But they made no mention of any intent to
recall these respondents to work upon completion of the new premises. Third,
the various pleadings on record show that petitioners held respondents,
particularly Loveres, as responsible for mismanagement of the establishment
and for abuse of trust and confidence. Petitioner Josefa Po Lam's affidavit on
July 21, 1998, for example, squarely blamed respondents, specifically
Loveres, Bumalay and Camigla, for abusing her leniency and causing
petitioner Mayon Hotel & Restaurant to sustain "continuous losses until it is
closed." She then asserts that respondents "are not entitled to separation pay
for they were not terminated and if ever the business ceased to operate it
was because of losses."54 Again, petitioners make the same allegation in
their memorandum on appeal with the NLRC, where they alleged that three
(3) years prior to the expiration of the lease in 1997, the operation of the
Hotel had been sustaining consistent losses, and these were solely attributed
to respondents, but most especially due to Loveres's mismanagement and
abuse of petitioners' trust and confidence.55 Even the petition filed in this
court made reference to the separation of the respondents due to "severe
financial losses and reverses," again imputing it to respondents'
mismanagement.56 The vehemence of petitioners' accusation of
mismanagement against respondents, especially against Loveres, is
inconsistent with the desire to recall them to work. Fourth, petitioners'
memorandum on appeal also averred that the case was filed "not because of
the business being operated by them or that they were supposedly not
receiving benefits from the Labor Code which is true, but because of the fact
that the source of their livelihood, whether legal or immoral, was stopped on
March 31, 1997, when the owner of the building terminated the Lease
Contract."57 Fifth, petitioners had inconsistencies in their pleadings (with the
NLRC, CA and with this Court) in referring to the closure,58 i.e., in the
petition filed with this court, they assert that there is no illegal dismissal
because there was "only a temporary cessation or suspension of operations of
the hotel and restaurant due to circumstances beyond the control of
petitioners, and that is, the non-renewal of the lease contract..."59 And yet,
in the same petition, they also assert that: (a) the separation of respondents
was due to severe financial losses and reverses leading to the closure of the
business; and (b) petitioner Pacita Po had to close shop and was bankrupt
and has no liquidity to put up her own building to house Mayon Hotel &
Restaurant.60 Sixth, and finally, the uncontroverted finding of the Labor
Arbiter that petitioners terminated all the other respondents, by not
employing them when the Hotel and Restaurant transferred to its new site on
Peñaranda Street.61 Indeed, in this same memorandum, petitioners referred
to all respondents as "former employees of Mayon Hotel & Restaurant."62

These factors may be inconclusive individually, but when taken together, they
lead us to conclude that petitioners really intended to dismiss all respondents
and merely used the termination of the lease (on Rizal Street premises) as a
means by which they could terminate their employees.
Moreover, even assuming arguendo that the cessation of employment on
April 1997 was merely temporary, it became dismissal by operation of law
when petitioners failed to reinstate respondents after the lapse of six (6)
months, pursuant to Article 286 of the Labor Code.
We are not impressed by petitioners' claim that severe business losses
justified their failure to reinstate respondents. The evidence to prove this fact
is inconclusive. But more important, serious business losses do not excuse
the employer from complying with the clearance or report required under
Article 283 of the Labor Code and its implementing rules before terminating
the employment of its workers.63 In the absence of justifying circumstances,
the failure of petitioners to observe the procedural requirements set out
under Article 284, taints their actuations with bad faith, especially since they
claimed that they have been experiencing losses in the three years before
1997. To say the least, if it were true that the lay-off was temporary but then
serious business losses prevented the reinstatement of respondents, then
petitioners should have complied with the requirements of written notice. The
requirement of law mandating the giving of notices was intended not only to
enable the employees to look for another employment and therefore ease the
impact of the loss of their jobs and the corresponding income, but more
importantly, to give the Department of Labor and Employment (DOLE) the
opportunity to ascertain the verity of the alleged authorized cause of
termination.64
And even assuming that the closure was due to a reason beyond the control
of the employer, it still has to accord its employees some relief in the form of
severance pay.65
While we recognize the right of the employer to terminate the services of an
employee for a just or authorized cause, the dismissal of employees must be
made within the parameters of law and pursuant to the tenets of fair play.66
And in termination disputes, the burden of proof is always on the employer to
prove that the dismissal was for a just or authorized cause.67 Where there is
no showing of a clear, valid and legal cause for termination of employment,
the law considers the case a matter of illegal dismissal.68
Under these circumstances, the award of damages was proper. As a rule,
moral damages are recoverable where the dismissal of the employee was
attended by bad faith or fraud or constituted an act oppressive to labor, or
was done in a manner contrary to morals, good customs or public policy.69
We believe that the dismissal of the respondents was attended with bad faith
and meant to evade the lawful obligations imposed upon an employer.
To rule otherwise would lead to the anomaly of respondents being terminated
from employment in 1997 as a matter of fact, but without legal redress. This
runs counter to notions of fair play, substantial justice and the constitutional
mandate that labor rights should be respected. If doubts exist between the
evidence presented by the employer and the employee, the scales of justice
must be tilted in favor of the latter — the employer must affirmatively show
rationally adequate evidence that the dismissal was for a justifiable cause.70
It is a time-honored rule that in controversies between a laborer and his
master, doubts reasonably arising from the evidence, or in the interpretation
of agreements and writing should be resolved in the former's favor.71 The
policy is to extend the doctrine to a greater number of employees who can
avail of the benefits under the law, which is in consonance with the avowed
policy of the State to give maximum aid and protection of labor.72
We therefore reinstate the Labor Arbiter's decision with the following
modifications:
(a) Separation pay for the illegal dismissal of respondents Loveres, Macandog
and Llarena; (Santos Broñola cannot be granted separation pay as he made
no such claim);
(b) Retirement pay for respondents Guades, Nicerio, and Alamares, who at
the time of dismissal were entitled to their retirement benefits pursuant to
Article 287 of the Labor Code as amended;73 and
(c) Damages for respondents Loveres, Macandog, Llarena, Guades, Nicerio,
Atractivo, and Broñola.
3. Money claims
The CA held that contrary to the NLRC's ruling, petitioners had not discharged
the burden of proving that the monetary claims of the respondents have been
paid.74 The CA thus reinstated the Labor Arbiter's grant of respondents'
monetary claims, including damages.
Petitioners assail this ruling by repeating their long and convoluted argument
that as there was no illegal dismissal, then respondents are not entitled to
their monetary claims or separation pay and damages. Petitioners' arguments
are not only tiring, repetitive and unconvincing, but confusing and confused
— entitlement to labor standard benefits is a separate and distinct concept
from payment of separation pay arising from illegal dismissal, and are
governed by different provisions of the Labor Code.
We agree with the CA and the Labor Arbiter. Respondents have set out with
particularity in their complaint, position paper, affidavits and other
documents the labor standard benefits they are entitled to, and which they
alleged that petitioners have failed to pay them. It was therefore petitioners'
burden to prove that they have paid these money claims. One who pleads
payment has the burden of proving it, and even where the employees must
allege nonpayment, the general rule is that the burden rests on the
defendant to prove nonpayment, rather than on the plaintiff to prove non
payment.75 This petitioners failed to do.
We also agree with the Labor Arbiter and the CA that the documents
petitioners submitted, i.e., affidavits executed by some of respondents during
an ocular inspection conducted by an inspector of the DOLE; notices of
inspection result and Facility Evaluation Orders issued by DOLE, are not
sufficient to prove payment.76 Despite repeated orders from the Labor
Arbiter,77 petitioners failed to submit the pertinent employee files, payrolls,
records, remittances and other similar documents which would show that
respondents rendered work entitling them to payment for overtime work,
night shift differential, premium pay for work on holidays and rest day, and
payment of these as well as the COLA and the SILP – documents which are
not in respondents' possession but in the custody and absolute control of
petitioners.78 By choosing not to fully and completely disclose information
and present the necessary documents to prove payment of labor standard
benefits due to respondents, petitioners failed to discharge the burden of
proof.79 Indeed, petitioners' failure to submit the necessary documents
which as employers are in their possession, inspite of orders to do so, gives
rise to the presumption that their presentation is prejudicial to its cause.80
As aptly quoted by the CA:
[W]hen the evidence tends to prove a material fact which imposes a liability
on a party, and he has it in his power to produce evidence which from its
very nature must overthrow the case made against him if it is not founded on
fact, and he refuses to produce such evidence, the presumption arises that
the evidence, if produced, would operate to his prejudice, and support the
case of his adversary.81
Petitioners next claim that the cost of the food and snacks provided to
respondents as facilities should have been included in reckoning the payment
of respondents' wages. They state that although on the surface respondents
appeared to receive minimal wages, petitioners had granted respondents
other benefits which are considered part and parcel of their wages and are
allowed under existing laws.82 They claim that these benefits make up for
whatever inadequacies there may be in compensation.83 Specifically, they
invoked Sections 5 and 6, Rule VII-A, which allow the deduction of facilities
provided by the employer through an appropriate Facility Evaluation Order
issued by the Regional Director of the DOLE.84 Petitioners also aver that they
give five (5) percent of the gross income each month as incentives. As proof
of compliance of payment of minimum wages, petitioners submitted the
Notice of Inspection Results issued in 1995 and 1997 by the DOLE Regional
Office.85
The cost of meals and snacks purportedly provided to respondents cannot be
deducted as part of respondents' minimum wage. As stated in the Labor
Arbiter's decision:86
While [petitioners] submitted Facility Evaluation Orders (pp. 468, 469; vol. II,
rollo) issued by the DOLE Regional Office whereby the cost of meals given by
[petitioners] to [respondents] were specified for purposes of considering the
same as part of their wages, We cannot consider the cost of meals in the
Orders as applicable to [respondents]. [Respondents] were not interviewed
by the DOLE as to the quality and quantity of food appearing in the
applications of [petitioners] for facility evaluation prior to its approval to
determine whether or not [respondents] were indeed given such kind and
quantity of food. Also, there was no evidence that the quality and quantity of
food in the Orders were voluntarily accepted by [respondents]. On the
contrary; while some [of the respondents] admitted that they were given
meals and merienda, the quality of food serve[d] to them were not what
were provided for in the Orders and that it was only when they filed these
cases that they came to know about said Facility Evaluation Orders (pp. 100;
379[,] vol. II, rollo; p. 40, tsn[,] June 19, 1998). [Petitioner] Josefa herself,
who applied for evaluation of the facility (food) given to [respondents],
testified that she did not inform [respondents] concerning said Facility
Evaluation Orders (p. 34, tsn[,] August 13, 1998).
Even granting that meals and snacks were provided and indeed constituted
facilities, such facilities could not be deducted without compliance with certain
legal requirements. As stated in Mabeza v. NLRC,87 the employer simply
cannot deduct the value from the employee's wages without satisfying the
following: (a) proof that such facilities are customarily furnished by the trade;
(b) the provision of deductible facilities is voluntarily accepted in writing by
the employee; and (c) the facilities are charged at fair and reasonable value.
The records are clear that petitioners failed to comply with these
requirements. There was no proof of respondents' written authorization.
Indeed, the Labor Arbiter found that while the respondents admitted that
they were given meals and merienda, the quality of food served to them was
not what was provided for in the Facility Evaluation Orders and it was only
when they filed the cases that they came to know of this supposed Facility
Evaluation Orders.88 Petitioner Josefa Po Lam herself admitted that she did
not inform the respondents of the facilities she had applied for.89
Considering the failure to comply with the above-mentioned legal
requirements, the Labor Arbiter therefore erred when he ruled that the cost
of the meals actually provided to respondents should be deducted as part of
their salaries, on the ground that respondents have availed themselves of the
food given by petitioners.90 The law is clear that mere availment is not
sufficient to allow deductions from employees' wages.
More important, we note the uncontroverted testimony of respondents on
record that they were required to eat in the hotel and restaurant so that they
will not go home and there is no interruption in the services of Mayon Hotel &
Restaurant. As ruled in Mabeza, food or snacks or other convenience provided
by the employers are deemed as supplements if they are granted for the
convenience of the employer. The criterion in making a distinction between a
supplement and a facility does not so much lie in the kind (food, lodging) but
the purpose.91 Considering, therefore, that hotel workers are required to
work different shifts and are expected to be available at various odd hours,
their ready availability is a necessary matter in the operations of a small
hotel, such as petitioners' business.92 The deduction of the cost of meals
from respondents' wages, therefore, should be removed.
We also do not agree with petitioners that the five (5) percent of the gross
income of the establishment can be considered as part of the respondents'
wages. We quote with approval the Labor Arbiter on this matter, to wit:
While complainants, who were employed in the hotel, receive[d] various
amounts as profit share, the same cannot be considered as part of their
wages in determining their claims for violation of labor standard benefits.
Although called profit share[,] such is in the nature of share from service
charges charged by the hotel. This is more explained by [respondents] when
they testified that what they received are not fixed amounts and the same
are paid not on a monthly basis (pp. 55, 93, 94, 103, 104; vol. II, rollo).
Also, [petitioners] failed to submit evidence that the amounts received by
[respondents] as profit share are to be considered part of their wages and
had been agreed by them prior to their employment. Further, how can the
amounts receive[d] by [respondents] be considered as profit share when the
same [are] based on the gross receipt of the hotel[?] No profit can as yet be
determined out of the gross receipt of an enterprise. Profits are realized after
expenses are deducted from the gross income.
On the issue of the proper minimum wage applicable to respondents, we
sustain the Labor Arbiter. We note that petitioners themselves have admitted
that the establishment employs "more or less sixteen (16) employees,"93
therefore they are estopped from claiming that the applicable minimum wage
should be for service establishments employing 15 employees or less.
As for petitioners repeated invocation of serious business losses, suffice to
say that this is not a defense to payment of labor standard benefits. The
employer cannot exempt himself from liability to pay minimum wages
because of poor financial condition of the company. The payment of minimum
wages is not dependent on the employer's ability to pay.94
Thus, we reinstate the award of monetary claims granted by the Labor
Arbiter.
4. Conclusion
There is no denying that the actuations of petitioners in this case have been
reprehensible. They have terminated the respondents' employment in an
underhanded manner, and have used and abused the quasi-judicial and
judicial processes to resist payment of their employees' rightful claims,
thereby protracting this case and causing the unnecessary clogging of
dockets of the Court. They have also forced respondents to unnecessary
hardship and financial expense. Indeed, the circumstances of this case would
have called for exemplary damages, as the dismissal was effected in a
wanton, oppressive or malevolent manner,95 and public policy requires that
these acts must be suppressed and discouraged.96
Nevertheless, we cannot agree with the Labor Arbiter in granting exemplary
damages of P10,000.00 each to all respondents. While it is true that other
forms of damages under the Civil Code may be awarded to illegally dismissed
employees,97 any award of moral damages by the Labor Arbiter cannot be
based on the Labor Code but should be grounded on the Civil Code.98 And
the law is clear that exemplary damages can only be awarded if plaintiff
shows proof that he is entitled to moral, temperate or compensatory
damages.99
As only respondents Loveres, Guades, Macandog, Llarena, Nicerio, Atractivo
and Broñola specifically claimed damages from petitioners, then only they are
entitled to exemplary damages.sjgs1
Finally, we rule that attorney's fees in the amount to P10,000.00 should be
granted to each respondent. It is settled that in actions for recovery of wages
or where an employee was forced to litigate and incur expenses to protect his
rights and interest, he is entitled to an award of attorney's fees.100 This case
undoubtedly falls within this rule.
IN VIEW WHEREOF, the petition is hereby DENIED. The Decision of January
17, 2003 of the Court of Appeals in CA-G.R. SP No. 68642 upholding the Joint
Decision of July 14, 2000 of the Labor Arbiter in RAB V Case Nos. 04-00079-
97 and 04-00080-97 is AFFIRMED, with the following MODIFICATIONS:
(1) Granting separation pay of one-half (1/2) month for every year of service
to respondents Loveres, Macandog and Llarena;
(2) Granting retirement pay for respondents Guades, Nicerio, and Alamares;
(3) Removing the deductions for food facility from the amounts due to all
respondents;
(4) Awarding moral damages of P20,000.00 each for respondents Loveres,
Macandog, Llarena, Guades, Nicerio, Atractivo, and Broñola;
(5) Deleting the award of exemplary damages of P10,000.00 from all
respondents except Loveres, Macandog, Llarena, Guades, Nicerio, Atractivo,
and Broñola; and
(6) Granting attorney's fees of P10,000.00 each to all respondents.
The case is REMANDED to the Labor Arbiter for the RECOMPUTATION of the
total monetary benefits awarded and due to the employees concerned in
accordance with the decision. The Labor Arbiter is ORDERED to submit his
compliance thereon within thirty (30) days from notice of this decision, with
copies furnished to the parties.
SO ORDERED.
G.R. No. 181806               March 12, 2014
WESLEYAN UNIVERSITY-PHILIPPINES, Petitioner,
vs.
WESLEYAN UNIVERSITY-PHILIPPINES FACULTY and STAFF
ASSOCIATION, Respondent.
DECISION
DEL CASTILLO, J.:
A Collective Bargaining Agreement (CBA) is a contract entered into by an
employer and a legitimate labor organization concerning the terms and
conditions of employment.1 Like any other contract, it has the force of law
between the parties and, thus, should be complied with in good
faith.2 Unilateral changes or suspensions in the implementation of the
provisions of the CBA, therefore, cannot be allowed without the consent of
both parties.
This Petition for Review on Certiorari3 under Rule 45 of the Rules of Court
assails the September 25, 2007 Decision4 and the February 5, 2008
Resolution5 of the Court of Appeals (CA) in CA-G.R. SP No. 97053.
Factual Antecedents
Petitioner Wesleyan University-Philippines is a non-stock, non-profit
educational institution duly organized and existing under the laws of the
Philippines.6 Respondent Wesleyan University-Philippines Faculty and Staff
Association, on the other hand, is a duly registered labor organization7 acting
as the sole and exclusive bargaining agent of all rank-and-file faculty and staff
employees of petitioner.8
In December 2003, the parties signed a 5-year CBA9 effective June 1, 2003
until May 31, 2008.10
On August 16, 2005, petitioner, through its President, Atty. Guillermo T.
Maglaya (Atty. Maglaya), issued a Memorandum11 providing guidelines on the
implementation of vacation and sick leave credits as well as vacation leave
commutation. The pertinent portions of the Memorandum read:
1. VACATION AND SICK LEAVE CREDITS
 Vacation and sick leave credits are not automatic. They have to be
earned. Monthly, a qualified employee earns an equivalent of 1.25
days credit each for VL and SL. Vacation Leave and Sick Leave credits
of 15 days become complete at the cut off date of May 31 of each
year. (Example, only a total of 5 days credit will be given to an
employee for each of sick leave [or] vacation leave, as of month end
September, that is, 4 months from June to September multiplied by
1.25 days). An employee, therefore, who takes VL or SL beyond his
leave credits as of date will have to file leave without pay for leaves
beyond his credit.
2. VACATION LEAVE COMMUTATION
Only vacation leave is commuted or monetized to cash. Vacation leave
commutation is effected after the second year of continuous service of
an employee. Hence, an employee who started working June 1, 2005
will get his commutation on May 31, 2007 or thereabout.12
On August 25, 2005, respondent’s President, Cynthia L. De Lara (De Lara)
wrote a letter13 to Atty. Maglaya informing him that respondent is not
amenable to the unilateral changes made by petitioner.14 De Lara questioned
the guidelines for being violative of existing practices and the
CBA,15 specifically Sections 1 and 2, Article XII of the CBA, to wit:
ARTICLE XII
VACATION LEAVE AND SICK LEAVE
SECTION 1. VACATION LEAVE - All regular and non-tenured rank-and-file
faculty and staff who are entitled to receive shall enjoy fifteen (15) days
vacation leave with pay annually.
1.1 All unused vacation leave after the second year of service shall be
converted into cash and be paid to the entitled employee at the end of each
school year to be given not later than August 30 of each year.
SECTION 2. SICK LEAVE - All regular and non-tenured rank-and-file faculty
and staff shall enjoy fifteen (15) days sick leave with pay annually.16
On February 8, 2006, a Labor Management Committee (LMC) Meeting was
held during which petitioner advised respondent to file a grievance complaint
on the implementation of the vacation and sick leave policy.17 In the same
meeting, petitioner announced its plan of implementing a one-retirement
policy,18 which was unacceptable to respondent.
Ruling of the Voluntary Arbitrator
Unable to settle their differences at the grievance level, the parties referred
the matter to a Voluntary Arbitrator. During the hearing, respondent submitted
affidavits to prove that there is an established practice of giving two retirement
benefits, one from the Private Education Retirement Annuity Association
(PERAA) Plan and another from the CBA Retirement Plan. Sections 1, 2, 3
and 4 of Article XVI of the CBA provide:
ARTICLE XVI
SEPARATION, DISABILITY AND RETIREMENT PAY
SECTION 1. ELIGIBILITY FOR MEMBERSHIP - Membership in the Plan
shall be automatic for all full-time, regular staff and tenured faculty of the
University, except the University President. Membership in the Plan shall
commence on the first day of the month coincident with or next following his
statement of Regular/Tenured Employment Status.
SECTION 2. COMPULSORY RETIREMENT DATE - The compulsory
retirement date of each Member shall be as follows:
 a. Faculty – The last day of the School Year, coincident with his
attainment of age sixty (60) with at least five (years) of unbroken,
credited service.
b. Staff – Upon reaching the age of sixty (60) with at least five (5) years
of unbroken, credited service.
SECTION 3. OPTIONAL RETIREMENT DATE - A Member may opt for an
optional retirement prior to his compulsory retirement. His number of years of
service in the University shall be the basis of computing x x x his retirement
benefits regardless of his chronological age.
SECTION 4. RETIREMENT BENEFIT - The retirement benefit shall be a sum
equivalent to 100% of the member’s final monthly salary for compulsory
retirement.
For optional retirement, the vesting schedule shall be:
x x x x19
On November 2, 2006, the Voluntary Arbitrator rendered a
Decision20 declaring the one-retirement policy and the Memorandum dated
August 16, 2005 contrary to law. The dispositive portion of the Decision
reads:
WHEREFORE, the following award is hereby made:
1. The assailed University guidelines on the availment of vacation and
sick leave credits and vacation leave commutation are contrary to law.
The University is consequently ordered to reinstate the earlier scheme,
practice or policy in effect before the issuance of the said guidelines on
August 16, 2005;
2. The "one retirement" policy is contrary to law and is hereby revoked
and rescinded. The University is ordered x x x to resume and proceed
with the established practice of extending to qualified employees
retirement benefits under both the CBA and the PERAA Plan.
3. The other money claims are denied.21
Ruling of the Court of Appeals
Aggrieved, petitioner appealed the case to the CA via a Petition for Review
under Rule 43 of the Rules of Court.
On September 25, 2007, the CA rendered a Decision22 finding the rulings of
the Voluntary Arbitrator supported by substantial evidence. It also affirmed the
nullification of the one-retirement policy and the Memorandum dated August
16, 2005 on the ground that these unilaterally amended the CBA without the
consent of respondent.23 Thus:
WHEREFORE, the instant appeal is DISMISSED for lack of merit.
SO ORDERED.24
Petitioner moved for reconsideration but the same was denied by the CA in its
February 5, 2008 Resolution.25
Issues
Hence, this recourse by petitioner raising the following issues:
a.
Whether x x x the [CA] committed grave and palpable error in sustaining the
Voluntary Arbitrator’s ruling that the Affidavits submitted by Respondent WU-
PFSA are substantial evidence as defined by the rules and jurisprudence that
would substantiate that Petitioner WU-P has long been in the practice of
granting its employees two (2) sets of Retirement Benefits.
b.
Whether x x x the [CA] committed grave and palpable error in sustaining the
Voluntary Arbitrator’s ruling that a university practice of granting its
employees two (2) sets of Retirement Benefits had already been established
as defined by the law and jurisprudence especially in light of the illegality and
lack of authority of such alleged grant.
c.
Whether x x x the [CA] committed grave and palpable error in sustaining the
Voluntary Arbitrator’s ruling that it is incumbent upon Petitioner WU-P to show
proof that no Board Resolution was issued granting two (2) sets of Retirement
Benefits.
d.
Whether x x x the [CA] committed grave and palpable error in revoking the 16
August 2005 Memorandum of Petitioner WU-P for being contrary to extant
policy.26
Petitioner’s Arguments
Petitioner argues that there is only one retirement plan as the CBA
Retirement Plan and the PERAA Plan are one and the same.27 It maintains
that there is no established company practice or policy of giving two
retirement benefits to its employees.28 Assuming, without admitting, that two
retirement benefits were released,29 petitioner insists that these were done by
mere oversight or mistake as there is no Board Resolution authorizing their
release.30 And since these benefits are unauthorized and irregular, these
cannot ripen into a company practice or policy.31 As to the affidavits submitted
by respondent, petitioner claims that these are self-serving declarations,32 and
thus, should not be given weight and credence.33
In addition, petitioner claims that the Memorandum dated August 16, 2005,
which provides for the guidelines on the implementation of vacation and sick
leave credits as well as vacation leave commutation, is valid because it is in
full accord with existing policy.34
Respondent’s Arguments
Respondent belies the claims of petitioner and asserts that there are two
retirement plans as the PERAA Retirement Plan, which has been
implemented for more than 30 years, is different from the CBA Retirement
Plan.35 Respondent further avers that it has always been a practice of
petitioner to give two retirement benefits36 and that this practice was
established by substantial evidence as found by both the Voluntary Arbitrator
and the CA.37
As to the Memorandum dated August 16, 2005, respondent asserts that it is
arbitrary and contrary to the CBA and existing practices as it added
qualifications or limitations which were not agreed upon by the parties.38
Our Ruling
The Petition is bereft of merit.
The Non-Diminution Rule found in Article 10039 of the Labor Code explicitly
prohibits employers from eliminating or reducing the benefits received by their
employees. This rule, however, applies only if the benefit is based on an
express policy, a written contract, or has ripened into a practice.40 To be
considered a practice, it must be consistently and deliberately made by the
employer over a long period of time.41
An exception to the rule is when "the practice is due to error in the
construction or application of a doubtful or difficult question of law."42 The
error, however, must be corrected immediately after its discovery;43 otherwise,
the rule on Non-Diminution of Benefits would still apply.
The practice of giving two retirement
benefits to petitioner’s employees is
supported by substantial evidence.
In this case, respondent was able to present substantial evidence in the form
of affidavits to support its claim that there are two retirement plans. Based on
the affidavits, petitioner has been giving two retirement benefits as early as
1997.44 Petitioner, on the other hand, failed to present any evidence to refute
the veracity of these affidavits. Petitioner’s contention that these affidavits are
self-serving holds no water. The retired employees of petitioner have nothing
to lose or gain in this case as they have already received their retirement
benefits. Thus, they have no reason to perjure themselves. Obviously, the
only reason they executed those affidavits is to bring out the truth. As we see
it then, their affidavits, corroborated by the affidavits of incumbent employees,
are more than sufficient to show that the granting of two retirement benefits to
retiring employees had already ripened into a consistent and deliberate
practice.
Moreover, petitioner’s assertion that there is only one retirement plan as the
CBA Retirement Plan and the PERAA Plan are one and the same is not
supported by any evidence. There is nothing in Article XVI of the CBA to
indicate or even suggest that the "Plan" referred to in the CBA is the PERAA
Plan. Besides, any doubt in the interpretation of the provisions of the CBA
should be resolved in favor of respondent. In fact, petitioner’s assertion is
negated by the announcement it made during the LMC Meeting on February
8, 2006 regarding its plan of implementing a "one-retirement plan." For if it
were true that petitioner was already implementing a one-retirement policy,
there would have been no need for such announcement. Equally damaging is
the letter-memorandum45 dated May 11, 2006, entitled "Suggestions on the
defenses we can introduce to justify the abolition of double retirement policy,"
prepared by the petitioner’s legal counsel.
These circumstances, taken together, bolster the finding that the two-
retirement policy is a practice.1âwphi1 Thus, petitioner cannot, without the
consent of respondent, eliminate the two-retirement policy and implement a
one-retirement policy as this would violate the rule on non-diminution of
benefits.
As a last ditch effort to abolish the two-retirement policy, petitioner contends
that such practice is illegal or unauthorized and that the benefits were
erroneously given by the previous administration. No evidence, however, was
presented by petitioner to substantiate its allegations.
Considering the foregoing disquisition, we agree with the findings of the
Voluntary Arbitrator, as affirmed by the CA, that there is substantial evidence
to prove that there is an existing practice of giving two retirement benefits,
one under the PERAA Plan and another under the CBA Retirement Plan.
The Memorandum dated August 16,
2005 is contrary to the existing CBA.
Neither do we find any reason to disturb the findings of the CA that the
Memorandum dated August 16, 2005 is contrary to the existing CBA.
Sections 1 and 2 of Article XII of the CBA provide that all covered employees
are entitled to 15 days sick leave and 15 days vacation leave with pay every
year and that after the second year of service, all unused vacation leave shall
be converted to cash and paid to the employee at the end of each school
year, not later than August 30 of each year.
The Memorandum dated August 16, 2005, however, states that vacation and
sick leave credits are not automatic as leave credits would be earned on a
month-to-month basis. This, in effect, limits the available leave credits of an
employee at the start of the school year. For example, for the first four months
of the school year or from June to September, an employee is only entitled to
five days vacation leave and five days sick leave.46 Considering that the
Memorandum dated August 16, 2005 imposes a limitation not agreed upon by
the parties nor stated in the CBA, we agree with the CA that it must be struck
down.
In closing, it may not be amiss to mention that when the provision of the CBA
is clear, leaving no doubt on the intention of the parties, the literal meaning of
the stipulation shall govem.47
However, if there is doubt in its interpretation, it should be resolved in favor of
labor,48 as this is mandated by no less than the Constitution.49
WHEREFORE, the Petition is hereby DENIED. The assailed September 25,
2007 Decision and the February 5, 2008 Resolution of the Court of Appeals in
CA-G.R. SP No. 97053 are hereby AFFIRMED.
SO ORDERED.
G.R. No. 179593               September 14, 2011
UNIVERSITY OF THE EAST, Petitioner,
vs.
UNIVERSITY OF THE EAST EMPLOYEES' ASSOCIATION, Respondent.
DECISION
MENDOZA, J.:
Before the Court is a petition for review under Rule 45 of the Rules of Court
assailing the February 26, 2007 Decision1 and September 5, 2007
Resolution2 of the Court of Appeals (CA), in CA-G.R. SP No. 90740, which
set aside the February 28, 2005 Decision and May 31, 2005 Resolution of the
National Labor Relations Commission (NLRC) in NLRC-NCR-00-04-05015-
99. The dispositive portion of the CA decision reads:
WHEREFORE, the instant petition is GRANTED. The Decision dated 28
February 2005 and Resolution dated 31 May 2005 rendered by the NLRC are
SET ASIDE. The final resolutions dated 29 April 2004 and 24 August 2004
hereby REMAIN in effect.
SO ORDERED.3
Facts of the Case
Petitioner University of the East (UE) is an educational institution duly
organized and existing under Philippine laws. On the other hand, respondent
University of the East Employees’ Association (UEEA) is a duly registered
labor union of the rank-and-file employees of UE.
It appears from the records that prior to school year (SY) 1983-1984, the 70%
incremental proceeds from tuition fee increases as mandated by Presidential
Decree No. 451 (P.D. No. 451), as amended, was distributed by UE in
proportion to the average number of academic and non-academic personnel.
The distribution scheme became the subject of an Agreement4 dated October
18, 1983 signed by the management, faculty association and
respondent.5 Starting SY 1994-1995, however, the 70% incremental proceeds
from the tuition fee increase was distributed by UE to its covered employees
based on a new formula of percentage of salary.
Not in conformity, UEEA, thru its president Ernesto C. Verceles (Verceles),
sent a letter6 dated December 22, 1994 to then UE President, Dr. Rosalina S.
Cajucom (Dr. Cajucom), questioning the manner of distribution of the
employees’ share in the 1994-1995 tuition fee increase. The letter reads:
Dear President Cajucom:
This is with reference to the recent distribution of the employees’ share in the
1994-95 tuition fee increase.
We understand that the University unilaterally instituted a partial distribution of
FIVE PERCENT (5%) only of the basic wage of employees, faculty members
and administration personnel.
This, to our mind, is quite irregular and unfair in view of the following
considerations:
1.) We have all along instituted the practice of having a Tripartite
Meeting where the three (3) sectors involved, i.e. management, faculty
and employees’ representatives go over the incremental proceeds that
have been realized and come to an agreement on the distribution of
the share whether partial or total in nature;
2.) The accepted and traditional practice was that for every ₱ 1.00 per
share of faculty members based on the "full load equivalent,"
management personnel and rank-and-file employees receive ₱ 100.00
a month;
3.) Using as a basis 5% of the wages of University personnel entitled
thereto besides being a departure from past practices, creates that
unfair situation where those who have higher salaries receive more to
the prejudice of low salaried employees and faculty members;
4.) There is an existing Tripartite Agreement, with a xerox copy
attached hereto as ANNEX "A," clearly specifying the agreed manner
of distribution. Even [if] the May 17, 1994 letter to UE President
Rosa[lina] Cajucom by then Secretary of Education, Culture and
Sports Armand V. Fabella, states under the third paragraph thereof
that ‘the discretion is vested upon the school authorities xxx," but, in
the same breath, the Secretary qualifies the distribution or manner of
remittance thereof with the phrase "(except where it forms part of a
collective bargaining agreement but accrues to school personnel in any
case) xxx." In this light, Article XX Section 5 of our past and current
CBAs provide succinctly that:
"The UNIVERSITY agrees to continue the implementation of all
benefits hitherto enjoyed by the employees not embodied herein and are the
subject of communication between the UNIVERSITY and the ASSOCIATION
provided they are not inconsistent with the provisions of the Agreement or of
the Labor Code. All other existing clauses, covenants, provisions
or agreements shall remain in force."
We, therefore, urge the University to rectify the aforementioned erroneous,
unfair and irregular distribution instituted last December 13, 1994.
We believe that you may have been misled by your staff in so arriving at such
objectionable manner of distributing our tuition fee shares. We therefore hope
that in the spirit of the season, the University thru your good self would
institute the necessary correction, thereby affording our lower salaried
employees and faculty members the means to have a more meaningful
Christmas celebration.
xxx
On February 23, 1995, UEEA sent another letter7 to the UE President
reiterating its earlier objection to the distribution scheme of the 70%
incremental proceeds from the tuition fee increase and requested a tripartite
conference among management, faculty, administration, and rank-and-file
representatives to address the issue.
On June 19, 1995, a tripartite meeting was held among the representatives of
management, faculty union and UEEA. In the said meeting, it was agreed that
the distribution of the incremental proceeds would now be based on
percentage of salary, and not anymore on the average number of personnel.
The Minutes8 of the June 19, 1995 meeting was signed and attested to by
UEEA officers who attended.
On April 27, 1999, UEEA filed a complaint before the NLRC for non-
payment/underpayment of the rank-and-file employees’ share of the tuition
fee increases against UE pursuant to P.D. No. 451, as amended, and
Republic Act (R.A.) No. 6728 otherwise known as Government Assistance to
Students and Teachers in Private Education Act.
In its position paper,9 UEEA alleged that starting SY 1994-1995, UE had been
withholding from the rank-and-file employees a sizeable portion of their share
in the tuition fee increases as mandated by P.D. No. 451, as amended. It
asserted that before SY 1994-1995, shares of tuition fee increases were
distributed proportionately among the management, faculty and rank-and-file
employees based on equal sharing or on a share-and-share alike basis. In SY
1994-1995, however, UE arbitrarily and unilaterally distributed the tuition fee
increase proceeds through percentage based on salaries, thereby reducing
the shares of the rank-and-file employees, while increasing those of the
management personnel.
In its reply, 10 UE denied that the implementation of the new scheme in the
distribution of the 70% incremental proceeds derived from tuition fee
increases starting SY 1994-1995 was made arbitrarily and/or unilaterally. It
explained that the distribution scheme was only implemented after inquiry
from the Department of Education, Culture and Sports (DECS) regarding the
provision of R.A. No. 6728. DECS explained that the law was silent on the
manner of the distribution of the 70% incremental proceeds and stated that
discretion in the distribution was vested in the school authorities. What the
law clearly required was that the incremental proceeds from the tuition fee
increases should be allocated for the payment of salaries/wages, allowances
and other benefits of the teaching and non-teaching personnel except the
administrators who were principal stockholders of the school. Thus, UE
insisted that it may distribute the entire 70% incremental proceeds for an
across-the-board salary increase, or for merit increase, or for allowances and
other employment benefits.
Furthermore, UE pointed out that the new distribution scheme was
implemented after a tripartite meeting was held on June 19, 1995 among the
representatives of the management, UE Faculty Association (UEFA) and the
UEEA, wherein it was agreed that for SY 1994-1995, the distribution of the
incremental increase would be 9.96% of the salaries of the employees as of
May 31, 1994. In fact, copies of the minutes of the meeting were distributed
and signed by the participants. Hence, UEEA was estopped from questioning
the distribution scheme when it accepted the benefits.
Lastly, UE asserted that the claim of the UEEA was already barred since it
was filed three (3) years from the time its supposed cause of action accrued.
On September 4, 2002, Labor Arbiter Francisco A. Robles (LA) rendered a
decision11 favoring UEEA, the fallo of which reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering
the respondent University of the East, to pay the members of University of the
East Employees Association (UEEA) the amount of TWENTY-FIVE MILLION
SEVEN HUNDRED FORTY-NINE THOUSAND NINE HUNDRED NINETY-
FIVE PESOS AND 40/100 (₱ 25,749,995.40) representing the portions of the
tuition fee increases for the school year 1994-1995 and up to May 31, 2002
which were denied/withheld and/or lost by the members of the aforesaid
Union as a result of the disputed distribution scheme based on percentage of
salary which was arbitrarily and unilaterally adopted and implemented by the
respondent. Furthermore, the respondent is hereby directed to submit to this
Office a report to show compliance to the order herein stated.
SO ORDERED.12
The LA ruled that the equal sharing distribution scheme in relation to the
incremental proceeds from the tuition fee increases had been adopted as a
matter of policy by UE since 1983 and was made part of its collective
bargaining agreement with the UEEA. In addition, the LA noted that the
existence of the said policy or practice in the university was made part of the
tripartite agreement dated October 18, 1983, among UE, UEFA and UEEA.
There was no evidence on record that the said agreement was superseded
by another agreement between UE and UEEA. Furthermore, UE’s reliance on
the letter-reply of then DECS Secretary Armand V. Fabella was misplaced as
the law imposed a limitation on the extent of the discretionary authority given
to the school officials such as when the disposition had been agreed upon in
a collective bargaining agreement. The LA concluded that UE was legally
bound to keep and maintain the established practice of distributing equally
among its employees the incremental proceeds from the tuition fee increases
particularly in light of the aforesaid tripartite agreement dated October 18,
1983 and the provisions of Article XX, Section 5 of the UE-UEEA collective
bargaining agreement.
Undaunted, UE interposed an appeal before the NLRC. The NLRC, in its April
29, 2004 Resolution,13 dismissed the appeal and sustained the LA decision.
UE filed a motion for reconsideration but it was denied in a resolution14 dated
August 24, 2004 with a warning that no further motion for reconsideration
shall be entertained.
Nonetheless, on September 20, 2004, UE filed a motion for leave to file and
admit a second motion for reconsideration, incorporating therein its second
motion for reconsideration. UE alleged that the NLRC resolution was not valid
for failure to pass upon and consider the new and vital issues raised in its
motion for reconsideration and for failure to comply with the prescribed form
for NLRC resolutions pursuant to Section 13, Rule VII, NLRC New Rules of
Procedure.15
On February 28, 2005, the NLRC gave due course to the second motion for
reconsideration, reversed its earlier ruling and declared valid the distribution
of the 70% incremental proceeds from tuition fee increases based on the
percentage of salary of the covered
employees.16 http://sc.judiciary.gov.ph/jurisprudence/1998/oct1998/130473.ht
m - _edn8 Consequently, UEEA filed a motion for reconsideration17 but it was
denied in the NLRC Resolution18 dated May 31, 2005.
Aggrieved, UEEA filed a petition before the CA. The appellate court granted
the petition and set aside the questioned decision and resolution of the
NLRC.19 The CA declared that since the second motion for reconsideration
was a prohibited pleading, it did not interrupt the running of the reglementary
period. Therefore, the NLRC Resolution dated August 24, 2004 became final
and executory after ten (10) days from receipt of the copy thereof by the
parties. Accordingly, the said resolution had attained finality and could no
longer be modified in any respect, even if the modification was meant to
correct what was perceived to be an erroneous conclusion of fact or law.
UE filed a motion for reconsideration of the CA decision but it was denied in a
resolution20 dated September 5, 2007. Hence, this appeal, anchored on the
following:
GROUNDS:
I
 WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT
DECLARED THAT PETITIONER’S SECOND MOTION FOR
RECONSIDERATION IS A PROHIBITED PLEADING.
II
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT
HELD THAT THERE ARE "[NO] EXTRAORDINARY PERSUASIVE
REASONS" IN THE INSTANT CASE WARRANTING THE
ALLOWANCE OF A SECOND MOTION FOR RECONSIDERATION.
III
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT
RULED THAT THE ISSUANCE OF THE ENTRY OF JUDGMENT
DATED OCTOBER 15, 2004 IS NOT PREMATURE.
IV
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT
FOUND PETITIONER UNIVERSITY’S MOTION FOR
RECONSIDERATION A "PRO FORMA" MOTION.
The issues for resolution are: (1) whether or not UE’s second motion for
reconsideration (MR) before the NLRC is a prohibited pleading; and (2)
whether or not the change in the scheme of distribution of the incremental
proceeds from tuition fee increase is a diminution of benefit.
UE argues that the CA erred in holding that the second MR was a prohibited
pleading.1âwphi1 It asserts that while a second MR is generally a prohibited
pleading, it may be allowed in meritorious cases. Section 14 of the NLRC
rules cannot be construed as to prevent the NLRC from relieving itself from
patent errors in order to render justice. UE stresses that the technical rules of
procedure are not meant to frustrate but to facilitate justice.21
UE further contends that the Court in resolving the issue on the second MR
should not be too dogmatic in its ruling. It persuades the Court to adopt a
complete and holistic view, taking into consideration the peculiar
circumstances of the case as well as the provisions on the liberal
interpretation of the rules and the inherent power of the NLRC to amend and
reverse its findings and conclusions as may be necessary to render justice.22
Petitioner further contends that there exist extraordinary persuasive reasons
warranting the allowance of the second MR. First, it argues that the complaint
is a money claim arising from employer-employee relationship; hence, it
prescribes in three (3) years. Since the complaint was filed only on April 27,
1999, more than three (3) years from the alleged violation in 1994,
prescription has set in. Second, UE maintains that the distribution of tuition
fee increase based on percentage of salary was not arbitrary and/or unilateral
because the new distribution scheme was taken up and agreed upon in the
tripartite meeting held on June 19, 1995 and was adopted only after
consultation with the DECS Secretary Armand Fabella. Third, the faculty
union, UE Faculty Association (UEFA), a party to the Agreement dated
October 18, 1983, did not complain against the new distribution
scheme. Lastly, the new distribution scheme is in accordance with law. UE
claims that the law and jurisprudence are clear that a private educational
institution has the discretion on the disposition of the 70% incremental
proceeds from tuition fee increase, with the only condition imposed that the
proceeds should go to the salaries, wages and allowances and other benefits
of teachers and non-teaching personnel.23
Indeed, a second MR as a rule, is generally a prohibited
pleading.24 http://www.supremecourt.gov.ph/resolutions/2006/july/122472.htm
- _ftn The Court, however, does not discount instances when it may authorize
the suspension of the rules of procedure so as to allow the resolution of a
second motion for reconsideration, in cases of extraordinarily persuasive
reasons25 such as when the decision is a patent nullity.26
Time and again, the Court has upheld the theory that the rules of procedure
are designed to secure and not to override substantial justice.27 These are
mere tools to expedite the decision or resolution of cases, hence, their strict
and rigid application which would result in technicalities that tend to frustrate
rather than promote substantial justice must be avoided.28
On the second issue, after a careful review of the records and the arguments
of the parties, the Court finds the position of the petitioner meritorious.
The Court agrees with petitioner UE that the change in the distribution of the
70% incremental proceeds from tuition fee increase from equal sharing to
percentage of salaries is not a diminution of benefits. Its distribution to
covered employees based on equal sharing scheme cannot be considered to
have ripened into a company practice that the respondents have a right to
demand.
Generally, employees have a vested right over existing benefits voluntarily
granted to them by their employer, thus, said benefits cannot be reduced,
diminished, discontinued or eliminated by the latter.29 This principle against
diminution of benefits, however, is applicable only if the grant or benefit is
founded on an express policy or has ripened into a practice over a long period
of time which is consistent and deliberate.30 It does not contemplate the
continuous grant of unauthorized or irregular compensation but it
presupposes that a company practice, policy and tradition favourable to the
employees has been clearly established; and that the payments made by the
company pursuant to it have ripened into benefits enjoyed by them.31 The test
or rationale of this rule on long practice requires an indubitable showing that
the employer agreed to continue giving the benefits knowing fully well that
said employees are not covered by the law requiring payment thereof.32 In
sum, the benefit must be characterized by regularity, voluntary and deliberate
intent of the employer to grant the benefits over a significant period of time.33
In the case at bench, contrary to UEEA’s claim, the distribution of the 70%
incremental proceeds based on equal sharing scheme cannot be held to have
ripened into a company practice that the respondents have a right to demand.
Jurisprudence is replete with the rule specifying a minimum number of years
within which a company practice must be exercised in order to constitute
voluntary company practice.34 Even if UE had been continuously distributing
the 70% incremental proceeds based on equal sharing scheme to all its
covered employees, the same could not have ripened into a vested right
because such grant would not have been characterized by a deliberate and
voluntary act on the part of the petitioner.
As pronounced by the Court in the case of Globe Mackay Cable and Radio
Corporation v. NLRC,35 the grant by an employer of benefits through an
erroneous application of the law due to absence of clear administrative
guidelines is not considered a voluntary act which cannot be unilaterally
discontinued. Here, no vested rights accrued to respondents. R.A. No. 6728
simply mandates that the 70% incremental proceeds arising from tuition fee
increases should go to the payment of salaries, wages, allowances, and other
benefits of the teaching and non-teaching personnel except administrators
who are principal stockholders of the school.36 As to the manner of its
distribution, however, the law is silent. The letter37 of then DECS Secretary
Armand Fabella, correctly stated that the discretion on what distribution
scheme to adopt is vested upon the school authorities. In fact, the school can
distribute the entire 70% for an across-the-board salary increase, for merit
increase and/or for allowances or other benefits. The only limitations provided
are [1] the benefit must accrue to specific individual school personnel; and [2]
the benefit once given for a specific year cannot be revoked for that same
year.
Neither can UEEA claim that the change in the distribution scheme from
equal sharing to percentage of salary was done peremptorily. Verceles wrote
two (2) letters dated December 22, 199438 and February 23, 1995,39 to then
UE President, Dr. Cajucom, questioning the change in the distribution
scheme from equal sharing to percentage of salary and requesting a tripartite
meeting to settle the issue.
Consequently, a tripartite meeting was held on June 19, 1995. The said
meeting was attended by the representatives of the management, UEFA and
UEEA. From the minutes of the meeting, the tuition fee incremental proceeds
for SY 1994-95 and the manner of its distribution based on percentage of the
salaries of the covered employees were discussed and UEEA
representatives, namely, Salvador Blancia and Miguel Teaño, did not object.
They even later signed the minutes of the meeting to signify their conformity
to it.
It was likewise erroneous for UEEA to rely on the October 18, 1983
Agreement40 which provides:
The University of the East, represented by its Chairman of the Board and
Chief Executive Officer, the UE Faculty Association (UEFA), represented by
its President, and the UE Employees Association (UEEA), represented by its
President , all assisted by their respective panels, hereby mutually agree:
1. That in determining the allocation of the 60% incremental proceeds
from the approved increase in school fees effective school year 1982-
83 among the three sectors (faculty, rank-and-file, and management
personnel), the formula used in previous years shall be followed –
namely, the allocation shall be in proportion to the average number of
academic and non-academic personnel in the service as of the start of
the first and second semesters of the school year 1982-83;
2. That the proposal of the UEEA, whereby the number of academic
personnel is to be determined by using the "full load equivalent", shall
be adopted in allocating the 60% incremental proceeds from the
approved increase in school fees effective school year 1983-84.
Manila, October 18, 1983.
Clearly, the said agreement only pertains to the distribution of incremental
proceeds for SY 1982-83. Besides, such agreement is deemed superseded
by another agreement taken up during tripartite meeting held on June 19,
1995.
The Court agrees with UE and holds that UEEA’s right to question the
distribution of the incremental proceeds for SY 1994-1995 has already
prescribed. Article 291 of the Labor Code provides that money claims arising
from an employer-employee relationship must be filed within three (3) years
from the time the cause of action accrued. In the present case, the cause of
action accrued when the distribution of the incremental proceeds based on
percentage of salary of the covered employees was discussed in the tripartite
meeting held on June 19, 1995. UEEA did not question the manner of its
distribution and only on April 27, 1999 did it file an action based therein.
Hence, prescription had set in.
WHEREFORE, the petition is GRANTED. The Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 90740 are REVERSED and SET ASIDE.
The Decision of the National Labor Relations Commission dated February 28,
2005 is REINSTATED.
SO ORDERED.
G.R. No. 96169 September 24, 1991
 EMPLOYERS CONFEDERATION OF THE PHILIPPINES, petitioner,
vs.
NATIONAL WAGES AND PRODUCTIVITY COMMISSION AND REGIONAL
TRIPARTITE WAGES AND PRODUCTIVITY BOARD-NCR, TRADE UNION
CONGRESS OF THE PHILIPPINES, respondents.
Sycip Salazar, Hernandez & Gatmaitan for petitioner.
Gilbert P. Lorenzo for private respondent.
SARMIENTO, J.:
The petition is given due course and the various pleadings submitted being
sufficient to aid the Court in the proper resolution of the basic issues raised in
this case, we decide it without further ado.
The Employers Confederation of the Philippines (ECOP) is questioning the
validity of Wage Order No. NCR-01-A dated October 23, 1990 of the Regional
Tripartite Wages and Productivity Board, National Capital Region,
promulgated pursuant to the authority of Republic Act No. 6727, "AN ACT TO
RATIONALIZE WAGE POLICY DETERMINATION BY ESTABLISHING THE
MECHANISM AND PROPER STANDARDS THEREFORE, AMENDING FOR
THE PURPOSE ARTICLE 99 OF, AND INCORPORATING ARTICLES 120,
121, 122, 123, 124, 126, AND 127 INTO, PRESIDENTIAL DECREE NO. 442
AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE
PHILIPPINES, FIXING NEW WAGE RATES, PROVIDING WAGE
INCENTIVES FOR INDUSTRIAL DISPERSAL TO THE COUNTRYSIDE,
AND FOR OTHER PURPOSES," was approved by the President on June 9,
1989. Aside from providing new wage rates,1 the "Wage Rationalization Act"
also provides, among other things, for various Regional Tripartite Wages and
Productivity Boards in charge of prescribing minimum wage rates for all
workers in the various regions2 and for a National Wages and Productivity
Commission to review, among other functions, wage levels determined by the
boards.3
On October 15, 1990, the Regional Board of the National Capital Region
issued Wage Order No. NCR-01, increasing the minimum wage by P17.00
daily in the National Capital Region.4 The Trade Union Congress of the
Philippines (TUCP) moved for reconsideration; so did the Personnel
Management Association of the Philippines (PMAP).5 ECOP opposed.
On October 23, 1990, the Board issued Wage Order No. NCR-01-A
amending Wage Order No. NCR-01, as follows:
Section 1. Upon the effectivity of this Wage Order, all workers and
employees in the private sector in the National Capital Region already
receiving wages above the statutory minimum wage rates up to one
hundred and twenty-five pesos (P125.00) per day shall also receive an
increase of seventeen pesos (P17.00) per day.
ECOP appealed to the National Wages and Productivity Commission. On
November 6, 1990, the Commission promulgated an Order, dismissing the
appeal for lack of merit. On November 14, 1990, the Commission denied
reconsideration.
The Orders of the Commission (as well as Wage Order No. NCR-01-A) are
the subject of this petition, in which. ECOP assails the board's grant of an
"across-the-board" wage increase to workers already being paid more than
existing minimum wage rates (up to P125. 00 a day) as an alleged excess of
authority, and alleges that under the Republic Act No. 6727, the boards may
only prescribe "minimum wages," not determine "salary ceilings." ECOP
likewise claims that Republic Act No. 6727 is meant to promote collective
bargaining as the primary mode of settling wages, and in its opinion, the
boards can not preempt collective bargaining agreements by establishing
ceilings. ECOP prays for the nullification of Wage Order No. NCR 01-A and
for the "reinstatement" of Wage Order No. NCR-01.
The Court directed the Solicitor General to comment on behalf of the
Government, and in the Solicitor General's opinion, the Board, in prescribing
an across-the-board hike did not, in reality, "grant additional or other benefits
to workers and employees, such as the extension of wage increases to
employees and workers already receiving more than minimum wages ..."6 but
rather, fixed minimum wages according to the "salary-ceiling method."
ECOP insists, in its reply, that wage is a legislative function, and Republic Act
No. 6727 delegated to the regional boards no more "than the power to grant
minimum wage adjustments"7 and "in the absence of clear statutory
authority,"8 the boards may no more than adjust "floor wages."9
The Solicitor General, in his rejoinder, argues that Republic Act No. 6727 is
intended to correct "wage distortions" and the salary-ceiling method (of
determining wages) is meant, precisely, to rectify wage distortions.10
The Court is inclined to agree with the Government. In the National Wages
and Productivity Commission's Order of November 6, 1990, the Commission
noted that the determination of wages has generally involved two methods,
the "floor-wage" method and the "salary-ceiling" method. We quote:
Historically, legislation involving the adjustment of the minimum wage
made use of two methods. The first method involves the fixing of
determinate amount that would be added to the prevailing statutory
minimum wage. The other involves "the salary-ceiling method"
whereby the wage adjustment is applied to employees receiving a
certain denominated salary ceiling. The first method was adopted in
the earlier wage orders, while the latter method was used in R.A. Nos.
6640 and 6727. Prior to this, the salary-ceiling method was also used
in no less than eleven issuances mandating the grant of cost-of-living
allowances (P.D. Nos. 525, 1123, 1614, 1634, 1678, 1713 and Wage
Order Nos. 1, 2, 3, 5 and 6). The shift from the first method to the
second method was brought about by labor disputes arising from wage
distortions, a consequence of the implementation of the said wage
orders. Apparently, the wage order provisions that wage distortions
shall be resolved through the grievance procedure was perceived by
legislators as ineffective in checking industrial unrest resulting from
wage order implementations. With the establishment of the second
method as a practice in minimum wage fixing, wage distortion disputes
were minimized.11
As the Commission noted, the increasing trend is toward the second mode,
the salary-cap method, which has reduced disputes arising from wage
distortions (brought about, apparently, by the floor-wage method). Of course,
disputes are appropriate subjects of collective bargaining and grievance
procedures, but as the Commission observed and as we are ourselves
agreed, bargaining has helped very little in correcting wage distortions.
Precisely, Republic Act No. 6727 was intended to rationalize wages, first, by
providing for full-time boards to police wages round-the-clock, and second, by
giving the boards enough powers to achieve this objective. The Court is of the
opinion that Congress meant the boards to be creative in resolving the annual
question of wages without labor and management knocking on the
legislature's door at every turn. The Court's opinion is that if Republic No.
6727 intended the boards alone to set floor wages, the Act would have no
need for a board but an accountant to keep track of the latest consumer price
index, or better, would have Congress done it as the need arises, as the
legislature, prior to the Act, has done so for years. The fact of the matter is
that the Act sought a "thinking" group of men and women bound by statutory
standards. We quote:
ART. 124. Standards / Criteria for Minimum Wage Fixing. — The
regional minimum wages to be established by the Regional Board shall
 be as nearly adequate as is economically feasible to maintain the
minimum standards of living necessary for the health, efficiency and
general well-being of the employees within the framework of the
national economic and social development program. In the
determination of such regional minimum wages, the Regional Board
shall, among other relevant factors, consider the following:
(a) The demand for living wages;
(b) Wage adjustment vis-a-vis the consumer price index;
(c) The cost of living and changes or increases therein;
(d) The needs of workers and their families;
(e) The need to induce industries to invest in the countryside;
(f) Improvements in standards of living;
(g) The prevailing wage levels;
(h) Fair return of the capital invested and capacity to pay of emphasis
employers;
(i) Effects of employment generation and family income; and
(j) The equitable distribution of income and wealth along the
imperatives of economic and social development.12
The Court is not convinced that the Regional Board of the National Capital
Region, in decreeing an across-the-board hike, performed an unlawful act of
legislation. It is true that wage-fixing, like rate constitutes an act Congress;13 it
is also true, however, that Congress may delegate the power to fix
rates14 provided that, as in all delegations cases, Congress leaves sufficient
standards. As this Court has indicated, it is impressed that the above-quoted
standards are sufficient, and in the light of the floor-wage method's failure, the
Court believes that the Commission correctly upheld the Regional Board of
the National Capital Region.
Apparently, ECOP is of the mistaken impression that Republic Act No. 6727
is meant to "get the Government out of the industry" and leave labor and
management alone in deciding wages. The Court does not think that the law
intended to deregulate the relation between labor and capital for several
reasons: (1) The Constitution calls upon the State to protect the rights of
workers and promote their welfare;15 (2) the Constitution also makes it a duty
of the State "to intervene when the common goal so demands" in regulating
property and property relations;16 (3) the Charter urges Congress to give
priority to the enactment of measures, among other things, to diffuse the
wealth of the nation and to regulate the use of property;17 (4) the Charter
recognizes the "just share of labor in the fruits of production;"18 (5) under the
Labor Code, the State shall regulate the relations between labor and
management;19 (6) under Republic Act No. 6727 itself, the State is interested
in seeing that workers receive fair and equitable wages;20 and (7) the
Constitution is primarily a document of social justice, and although it has
recognized the importance of the private sector,21 it has not embraced fully
the concept of laissez faire22 or otherwise, relied on pure market forces to
govern the economy; We can not give to the Act a meaning or intent that will
conflict with these basic principles.
It is the Court's thinking, reached after the Court's own study of the Act, that
the Act is meant to rationalize wages, that is, by having permanent boards to
decide wages rather than leaving wage determination to Congress year after
year and law after law. The Court is not of course saying that the Act is an
effort of Congress to pass the buck, or worse, to abdicate its duty, but simply,
to leave the question of wages to the expertise of experts. As Justice Cruz
observed, "[w]ith the proliferation of specialized activities and their attendant
peculiar problems, the national legislature has found it more necessary to
entrust to administrative agencies the power of subordinate legislation' as it is
caned."23
The Labor Code defines "wage" as follows:
"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 reasonably value,
as determined by the Secretary of Labor, of board, lodging, or other
facilities customarily furnished by the employer to the employee. "Fair
and reasonable value" shall not include any profit to the employer or to
any person affiliated with the employer.24
It is another question, to be sure, had Congress created "roving" boards, and
were that the case, a problem of undue delegation would have ensued; but as
we said, we do not see a Board (National Capital Region) "running riot" here,
and Wage Order No. NCR-01-A as an excess of authority.
It is also another question whether the salary-cap method utilized by the
Board may serve the purposes of Republic Act No. 6727 in future cases and
whether that method is after all, a lasting policy of the Board; however, it is a
question on which we may only speculate at the moment. At the moment, we
find it to be reasonable policy (apparently, it has since been Government
policy); and if in the future it would be perceptibly unfair to management, we
will take it up then.
WHEREFORE, premises considered, the petition is DENIED. No
pronouncement as to costs.
IT IS SO ORDERED.

The concept of "minimum wage" is, however, a different thing, and certainly, it
means more than setting a floor wage to upgrade existing wages, as ECOP
takes it to mean. "Minimum wages" underlies the effort of the State, as
Republic Act No. 6727 expresses it, "to promote productivity-improvement
and gain-sharing measures to ensure a decent standard of living for the
workers and their families; to guarantee the rights of labor to its just share in
the fruits of production; to enhance employment generation in the countryside
through industry dispersal; and to allow business and industry reasonable
returns on investment, expansion and growth,"25 and as the Constitution
expresses it, to affirm "labor as a primary social economic force."26 As the
Court indicated, the statute would have no need for a board if the question
were simply "how much". The State is concerned, in addition, that wages are
not distributed unevenly, and more important, that social justice is subserved.