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SORIANO v. NLRC
155 SCRA 124
[G.R. No. 75510. October 27, 1987.]
RUFINA SORIANO, Petitioner, v. THE NATIONAL
LABOR RELATIONS COMMISSION and KINGLY
COMMODITIES TRADERS AND MULTI-RESOURCES,
INC., Respondents.
RESOLUTION
FELICIANO, J.:
Petitioner started working with respondent commodities
trading Corporation in November 1977 as Investment
Counselor and eventually became Vice-President,
Marketing. On 18 September 1984, petitioner was
charged with allowing or failing to supervise and monitor
certain activities of investment counselors in her
department, which included the signing of a contract
opening an account for a client by an investment
counselor without authority from the client, transfers of
funds from one account to another without the
knowledge and authority of the clients involved,
unauthorized transactions in foreign currency with clients
of the respondent Corporation, unauthorized approval of
leave for members of her department, and resulting in
loss of confidence in petitioner. Petitioner was
preventively suspended and required to explain her acts
or failure to act. Two (2) days later, petitioner submitted
her detailed answer or explanation. On 27 September,
1984, the Executive Vice-President and General
Manager of respondent Corporation found petitioners
written explanation unsatisfactory and notified petitioner
that the Corporation had lost confidence in her ability to
discharge the functions of her office and accordingly
terminated her services.
Petitioner filed a complaint for illegal suspension and
dismissal against respondent Corporation and Mr. Guil
Rivera, Senior Vice-President, and Mr. Richard Tan,
Executive Vice-President and General Manager. She
asked for reinstatement with backwages, as well as
moral and exemplary damages, medical expenses,
attorneys fees and other litigation expenses.
On 8 July 1986, Labor Arbiter A.L. Sevilla rendered a
Decision requiring the respondent Corporation to pay
petitioner: (1) separation pay in the amount of
P10,500.00; (2) six (6) months backwages in the amount
of P120,000.00; (3) moral damages in the amount of
P500,000.00; (4) exemplary damages in the amount of
P100,000.00; and (5) attorneys fees equivalent to 10%
of the award.chanroblesvirtualawlibrary
On appeal by the private respondents, public respondent
NLRC, in a Decision dated 10 March 1986, modified the
Labor Arbiters award by deleting the award of moral and
exemplary damages and requiring respondent
Corporation to pay: (1) separation pay amounting to
P21,000.00; (2) three (3) months backwages without
qualification and deduction amounting to P9,000.00; and
(3)10% of the award as attorneys fees.

Both the Labor Arbiter and respondent NLRC found that

because of the strained relations between petitioner and
respondent Corporation, reinstatement of petitioner was
not feasible. Respondent Corporation had alleged that
petitioner had immediately found employment with
Onapal Philippines Commodities, which had not been
denied or refuted by petitioner. Because respondent
Corporation had failed to specify the definite date of her
employment, respondent NLRC granted petitioner three
(3) months backwages without qualification and
deduction.
In the present Petition for Certiorari, petitioner seeks the
annulment of the Decision of respondent NLRC dated 10
March 1986 and the revival or reinstatement of the
Decision of Labor Arbiter Sevilla dated 8 July 1985.
Petitioner claims that respondent Corporation acted in
bad faith in suspending and terminating her services.
Petitioner asserts that:chanrob1es virtual 1aw library
1.
respondent Corporation had violated her right to
due process by suspending her immediately without the
benefit of hearing. She argues that the notice of
preventive suspension served her on 18 September
1986 was "living proof" that the corporation had already
concluded she was guilty of the charges levelled against
her even before she could submit her written
explanation.
2.
the "true reason" for her "illegal dismissal" was
the "personal grudge which Rivera harbored against
her."cralaw virtua1aw library
3.
respondent Corporations bad faith was also
demonstrated in discrimination against her in relation to
other employees of the Corporation who had been in the
past similarly charged with alleged infractions of the
corporations rules. More specifically, petitioner asserts
discrimination against herself consisting of the failure of
the respondent Corporation to dismiss the two (2)
immediate supervisors of the investment counselor who
had carried out the unauthorized manipulations of
clients accounts in petitioners department.
4.
petitioner also charges respondent Corporation
with having misrepresented the extent of her
participation in or the scope of her duties in respect of
unauthorized acts and transactions of her subordinates
in the marketing department of respondent company.
The Court considers that petitioner has failed to show a
grave abuse of discretion, or an act performed without or
in excess of jurisdiction, on the part of the respondent
NLRC.cralawnad
In respect of Item 1, preventive suspension does not in
itself prove that the company had prejudged that
petitioner was guilty of the charges she was asked to
answer and explain. Preventive suspension may be
necessary for the protection of the company, its
operations and assets, pending investigation of the

2|Page
alleged malfeasance or misfeasance on the part of
officers or employees of the company and pending a
decision on the part of the company (See Sec. 3 of Rule
XIV, Book V, of the Omnibus Rules Implementing the
Labor Code). Considering the very senior and sensitive
character of petitioners position as head of a
Department, a line position as distinguished from a staff
or planning position, and considering the unauthorized
transactions then just discovered by the respondent
Corporation, we do not believe that the preventive
suspension was an arbitrary and capricious act
amounting to bad faith on the part of the respondent
Corporation.
In respect of Item 2, the alleged personal motive behind
petitioners dismissal personal envy or feelings of
personal insecurity on the part of Guil Rivera, Senior
Vice-President, respondent NLRC found that petitioner
had not sufficiently established her assertion. Petitioners
assertion on this point appears no more than a
conjecture or supposition and does not afford an
adequate basis for overturning respondent NLRCs
finding on this point. Further, if petitioner had clearly
proven such personal ill-will on the part of Mr. Rivera, a
serious question would arise as to whether the
respondent Corporation (as distinguished from Mr.
Rivera) could be held liable at all for Mr. Riveras acts in
the absence of clear authorization for, or approval or
adoption of, such act by the respondent Corporation with
knowledge of the personal malice on the part of Mr.
Rivera.
In respect of Item 3, respondent NLRCs decision was
silent. The Court believes, however, that respondent
Corporation must be accorded reasonable latitude in
determining who among erring officers or employees
should be punished by the company and to what extent.
In the instant case, respondent Corporation presumably
found it was not necessary to terminate the services also
of the two (2) section heads in petitioners department,
who clearly are much lower in the corporate hierarchy
than petitioner.
With respect to the last and most important of the above
listed items, the scope of petitioners responsibility for
the operations of her department and the extent of her
supervisory authority over her subordinates in the
marketing department, respondent NLRC set forth the
following discussion and evaluation:chanrobles.com :
virtual law library
"Appellants stressed the point that complainant, as vice
president, marketing, is actually a department head of
one of the companys sales department (sic). As such,
her basic function is the supervision and monitoring the
daily activities of her department and the employees she
supervises (sic). By the nature of the companys
business, complainant as a department head should see
to it that the clients trust and confidence in the company
is upheld through above board transactions, untainted
relations, satisfactory servicing and unquestioned
integrity of its officers and staff, aside from the promotion
of cordial employee relations among her personnel

through unbiased and uniform implementation of

company policies affecting employee benefits and
welfare.
According to the appellants, the finding of the Labor
Arbiter that complainant is not expected to keep an eye
or be aware of all day-to-day transactions of her workers
particularly Investment Consultants in her department
does not conform to the facts prevailing in this case.
In the Panemanglor case, which is the crucial point at
issue, Panemanglor opened an account with the
respondent corporation on June 28, 1984 by depositing
the amount of P50,000 00 through Sofia Nazareno,
investment counsellor. Instead of the client signing the
Customers Agreement, it was Nazareno who signed the
agreement and the signature card in the name of the
client, which is highly irregular. Had she exercised
prudence in the supervision of her investment
consultants, the irregularity could have been earlier
detected. As a result, the sum of P25,000.00 from
Panemanglors account was transferred by Nazareno to
the account of Ramon Lopez, without the knowledge of
Panemanglor on July 9, 1984. On July 13, 1984 the said
client withdrew the sum of P25.000.00 through a
Payment Instruction Form that was approved by the
complainant. On August 6, 1984, the amount of
P4,052.59 was transferred by Nazareno to the account
of Panemanglor from the account of Ramon Lopez. This
transaction was with the approval of the complainant. On
September 3, 1984. Panemanglor demanded the
payment of the balance of P25,000.00 from the
respondent company to close his account and the letter
of Panemanglor was referred to complainant by
respondent Guil Rivera for necessary action. In her
memorandum to senior vice president Guil Rivera,
complainant confirmed the irregularity in the handling of
the account of Panemanglor, but she failed to take
appropriate action against the erring employee which
was within her power to discipline employees under her
supervision. Later on February 4, 1985, a complaint was
filed before the Securities and Exchange Commission by
Panemanglor for the recovery of the P25,000.00 plus
damages against the respondent corporation, contrary to
her claim that the client will not file a recovery suit
against the corporation since the obligation was purely
personal to Nazareno.
Respondents contend that complainant could have
immediately discovered the unauthorized signature of
Sofia Nazareno that led to the illegal transfers of fund,
had she followed the company procedure and practice
for her to be personally acquainted with new clients and
her admission that she was not aware of the complained
acts has brought to light that she was remiss in her
supervisory and monitoring function. On top of this, she
failed to institute disciplinary action against the erring
employee.
As head of one of the companys sales department (sic)
and a managerial employee at that, complainant is
expected to monitor the daily activities of the investment
counsellors and the transactions of clients in her

3|Page
department. As a matter of practice and procedure,
complainant, as vice-president-marketing, is always
informed of new clients for her to be personally
acquainted with the client. We agree with the appellants
that had the complainant adhered to this procedure, she
could have immediately noticed the unauthorized
signature by Sofia Nazareno that enabled her to transfer
funds from one account to another. Likewise, since the
complainant approved the payment instruction for
P25,000.00 on July 13, 1984, the transfer of P4,052.59
on August 6, 1984 from the account of Ramon Lopez to
Panemanglors account, and the withdrawal of the
transferred amount on August 7, 1984, she could have
easily suspected that something was irregular with the
transaction. Yet, it took several months before she knew
of the anomaly and it took her superior, respondent Guil
Rivera, to bring the matter to her attention. Under the
circumstances, it cannot be truthfully said that
complainant has not been without any fault whatsoever.
For this reason, the basis for the award of the moral and
exemplary damages has not been sufficiently or
satisfactorily established by the complainant. And
besides the dismissal of the complainant by the
respondent was done in good faith. . . ." (Emphasis
supplied).

deposit incentive") are not properly includible in such

base figure since such commissions must be earned by
actual market transactions attributable to petitioner.
Neither should "travels equivalent" [an unusual and
unexplained term; P10,000.00 a month] and
"commission in trading personal clients" [P3,000.00 a
month] he included in such base figure. Considering that
the charge of bad faith on the part of private respondents
was not proven the respondent NLRC having, on the
contrary, made a finding that petitioners dismissal was
made in good faith there appears no real basis for the
award of attorneys fees (Art. 2208 [5], Civil Code). This
award should not exceed a nominal amount which we
set at P1,500.00.chanrobles.com:cralaw:red

Petitioners argument that, because she was head of the

entire marketing (sales) department, she could not be
expected to monitor the detailed or day-to-day acts and
behavior of the staff members of her department, does
not address what appears to be the thrust of the
respondent NLRCs decision. And that is, that as head of
the department, it was her responsibility to adopt ways
and means of keeping herself sufficiently informed of the
activities of her staff members so as to prevent or at
least discover at an early stage, e.g., unauthorized or
illegal transactions and manipulation of clients accounts.
On the one hand, the above position taken by the
respondent NLRC cannot be regarded as so obviously
unreasonable and despotic as to constitute a grave
abuse of discretion, given the character of the business
of a commodities trading company and the fact that very
substantial sums of money are handled daily by
petitioners department. Upon the other hand,
petitioners logic would lead to the conclusion that the
more senior the management position, the slighter the
responsibility for malfeasance or nonfeasance that can
be laid upon the position-holder; the chief executive
officer of a corporation would effectively have, under this
logic, little or no responsibility at all.

Turning to the specific award made by respondent

NLRC, the salary base properly used in computing the
separation pay and the backwages due to petitioner
should include not just the basic salary but also the
regular allowances that petitioner had been receiving
(See Santos v. National Labor Relations Commission,
G.R. No. 76721, 21 September 1987). In petitioners
case, the base figure properly includes her: (a) basic
salary of P3,000.00 a month; and (b) living allowance of
P2,400 a month (petitioners Affidavit, dated 12 April
1985, Exhibit "G", Rollo, p. 105). The commissions also
claimed by petitioner ("override commission" plus "net

Thus, the appropriate computation would be:chanrob1es

virtual 1aw library
A.

Separation pay P5,400.00/month x 7 =

P37,800.00

in view of petitioners seven (7) years of service)

B.

Backwages P5,400.00/month x 3 mos. =

P16,200.00

Sub-Total

P54,000.00

plus nominal attorneys fees

1,500.00

TOTAL P55,500.00
========
ACCORDINGLY, the Court Resolved to DISMISS the
Petition for Certiorari for lack of merit. The Decision of
the respondent NLRC dated 10 March 1986 is modified
so as to award petitioner the following items: a)
separation pay in the amount of P37,800.00; b)
backwages for three (3) months in the amount of
P16,200.00: and c) attorney s fees of P1,500.00, making
a total of P55,500.00.
SO ORDERED.
Fernan, Gutierrez, Jr., Bidin and Cortes, JJ., concur.
---------xxx---------

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SONGCO v. NLRC
G.R. No. L-50999
March 23, 1990
MEDIALDEA, J.:
This is a petition for certiorari seeking to modify the
decision of the National Labor Relations Commission in
NLRC Case No. RB-IV-20840-78-T entitled, "Jose
Songco and Romeo Cipres, Complainants-Appellants, v.
F.E. Zuellig (M), Inc., Respondent-Appellee" and NLRC
Case No. RN- IV-20855-78-T entitled, "Amancio Manuel,
Complainant-Appellant, v. F.E. Zuellig (M), Inc.,
Respondent-Appellee," which dismissed the appeal of
petitioners herein and in effect affirmed the decision of
the Labor Arbiter ordering private respondent to pay
petitioners separation pay equivalent to their one month
salary (exclusive of commissions, allowances, etc.) for
every year of service.
The antecedent facts are as follows:
Private respondent F.E. Zuellig (M), Inc., (hereinafter
referred to as Zuellig) filed with the Department of Labor
(Regional Office No. 4) an application seeking clearance
to terminate the services of petitioners Jose Songco,
Romeo Cipres, and Amancio Manuel (hereinafter
referred to as petitioners) allegedly on the ground of
retrenchment due to financial losses. This application
was seasonably opposed by petitioners alleging that the
company is not suffering from any losses. They alleged
further that they are being dismissed because of their
membership in the union. At the last hearing of the case,
however, petitioners manifested that they are no longer
contesting their dismissal. The parties then agreed that
the sole issue to be resolved is the basis of the
separation pay due to petitioners. Petitioners, who were
in the sales force of Zuellig received monthly salaries of
at least P40,000. In addition, they received commissions
for every sale they made.
The collective Bargaining Agreement entered into
between Zuellig and F.E. Zuellig Employees Association,
of which petitioners are members, contains the following
provision (p. 71, Rollo):
ARTICLE XIV Retirement Gratuity
Section l(a)-Any employee, who is separated from
employment due to old age, sickness, death or
permanent lay-off not due to the fault of said employee
shall receive from the company a retirement gratuity in
an amount equivalent to one (1) month's salary per year
of service. One month of salary as used in this
paragraph shall be deemed equivalent to the salary at
date of retirement; years of service shall be deemed
equivalent to total service credits, a fraction of at least
six months being considered one year, including
probationary employment. (Emphasis supplied)
On the other hand, Article 284 of the Labor Code then
prevailing provides:

Art. 284. Reduction of personnel. The termination of

employment of any employee due to the installation of
labor saving-devices, redundancy, retrenchment to
prevent losses, and other similar causes, shall entitle the
employee affected thereby to separation pay. In case of
termination due to the installation of labor-saving devices
or redundancy, the separation pay shall be equivalent to
one (1) month pay or to at least one (1) month pay for
every year of service, whichever is higher. In case of
retrenchment to prevent losses and other similar causes,
the separation pay shall be equivalent to one (1) month
pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6)
months shall be considered one (1) whole year.
(Emphasis supplied)
In addition, Sections 9(b) and 10, Rule 1, Book VI of the
Rules Implementing the Labor Code provide:
Sec. 9(b). Where the termination of employment is due
to retrechment initiated by the employer to prevent
losses or other similar causes, or where the employee
suffers from a disease and his continued employment is
prohibited by law or is prejudicial to his health or to the
health of his co-employees, the employee shall be
entitled to termination pay equivalent at least to his one
month salary, or to one-half month pay for every year of
service, whichever is higher, a fraction of at least six (6)
months being considered as one whole year.
Sec. 10. Basis of termination pay. The computation of
the termination pay of an employee as provided herein
shall be based on his latest salary rate, unless the same
was reduced by the employer to defeat the intention of
the Code, in which case the basis of computation shall
be the rate before its deduction. (Emphasis supplied)
On June 26,1978, the Labor Arbiter rendered a decision,
the dispositive portion of which reads (p. 78, Rollo):
RESPONSIVE TO THE FOREGOING, respondent
should be as it is hereby, ordered to pay the
complainants separation pay equivalent to their one
month salary (exclusive of commissions, allowances,
etc.) for every year of service that they have worked with
the company.
SO ORDERED.
The appeal by petitioners to the National Labor
Relations Commission was dismissed for lack of merit.
Hence, the present petition.
On June 2, 1980, the Court, acting on the verified
"Notice of Voluntary Abandonment and Withdrawal of
Petition dated April 7, 1980 filed by petitioner Romeo
Cipres, based on the ground that he wants "to abide by
the decision appealed from" since he had "received, to
his full and complete satisfaction, his separation pay,"
resolved to dismiss the petition as to him.

5|Page
The issue is whether or not earned sales commissions
and allowances should be included in the monthly salary
of petitioners for the purpose of computation of their
separation pay.
The petition is impressed with merit.
Petitioners' position was that in arriving at the correct
and legal amount of separation pay due them, whether
under the Labor Code or the CBA, their basic salary,
earned sales commissions and allowances should be
added together. They cited Article 97(f) of the Labor
Code which includes commission as part on one's
salary, to wit;
(f) 'Wage' paid to any employee shall mean the
remuneration or earnings, however designated, capable
of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece, or commission basis,
or other method of calculating the same, which is
payable by an employer to an employee under a written
or unwritten contract of employment for work done or to
be done, or for services rendered or to be rendered, and
includes the fair and reasonable value, as determined by
the Secretary of Labor, of board, lodging, or other
facilities customarily furnished by the employer to the
employee. 'Fair reasonable value' shall not include any
profit to the employer or to any person affiliated with the
employer.
Zuellig argues that if it were really the intention of the
Labor Code as well as its implementing rules to include
commission in the computation of separation pay, it
could have explicitly said so in clear and unequivocal
terms. Furthermore, in the definition of the term "wage",
"commission" is used only as one of the features or
designations attached to the word remuneration or
earnings.
Insofar as the issue of whether or not allowances should
be included in the monthly salary of petitioners for the
purpose of computation of their separation pay is
concerned, this has been settled in the case of Santos v.
NLRC, et al., G.R. No. 76721, September 21, 1987, 154
SCRA 166, where We ruled that "in the computation of
backwages and separation pay, account must be taken
not only of the basic salary of petitioner but also of her
transportation and emergency living allowances." This
ruling was reiterated in Soriano v. NLRC, et al., G.R. No.
75510, October 27, 1987, 155 SCRA 124 and recently,
in Planters Products, Inc. v. NLRC, et al., G.R. No.
78524, January 20, 1989.
We shall concern ourselves now with the issue of
whether or not earned sales commission should be
included in the monthly salary of petitioner for the
purpose of computation of their separation pay.
Article 97(f) by itself is explicit that commission is
included in the definition of the term "wage". It has been
repeatedly declared by the courts that where the law
speaks in clear and categorical language, there is no
room for interpretation or construction; there is only room

for application (Cebu Portland Cement Co. v.

Municipality of Naga, G.R. Nos. 24116-17, August 22,
1968, 24 SCRA 708; Gonzaga v. Court of Appeals,
G.R.No. L-2 7455, June 28,1973, 51 SCRA 381). A plain
and unambiguous statute speaks for itself, and any
attempt to make it clearer is vain labor and tends only to
obscurity. How ever, it may be argued that if We
correlate Article 97(f) with Article XIV of the Collective
Bargaining Agreement, Article 284 of the Labor Code
and Sections 9(b) and 10 of the Implementing Rules,
there appears to be an ambiguity. In this regard, the
Labor Arbiter rationalized his decision in this manner (pp.
74-76, Rollo):
The definition of 'wage' provided in Article 96 (sic) of the
Code can be correctly be (sic) stated as a general
definition. It is 'wage ' in its generic sense. A careful
perusal of the same does not show any indication that
commission is part of salary. We can say that
commission by itself may be considered a wage. This is
not something novel for it cannot be gainsaid that certain
types of employees like agents, field personnel and
salesmen do not earn any regular daily, weekly or
monthly salaries, but rely mainly on commission earned.
Upon the other hand, the provisions of Section 10, Rule
1, Book VI of the implementing rules in conjunction with
Articles 273 and 274 (sic) of the Code specifically states
that the basis of the termination pay due to one who is
sought to be legally separated from the service is 'his
latest salary rates.
Even Articles 273 and 274 (sic) invariably use 'monthly
pay or monthly salary'.
The above terms found in those Articles and the
particular Rules were intentionally used to express the
intent of the framers of the law that for purposes of
separation pay they mean to be specifically referring to
salary only.
.... Each particular benefit provided in the Code and
other Decrees on Labor has its own pecularities and
nuances and should be interpreted in that light. Thus, for
a specific provision, a specific meaning is attached to
simplify matters that may arise there from. The general
guidelines in (sic) the formation of specific rules for
particular purpose. Thus, that what should be controlling
in matters concerning termination pay should be the
specific provisions of both Book VI of the Code and the
Rules. At any rate, settled is the rule that in matters of
conflict between the general provision of law and that of
a particular- or specific provision, the latter should
prevail.
On its part, the NLRC ruled (p. 110, Rollo):
From the aforequoted provisions of the law and the
implementing rules, it could be deduced that wage is
used in its generic sense and obviously refers to the
basic wage rate to be ascertained on a time, task, piece
or commission basis or other method of calculating the
same. It does not, however, mean that commission,
allowances or analogous income necessarily forms part

6|Page
of the employee's salary because to do so would lead to
anomalies (sic), if not absurd, construction of the word
"salary." For what will prevent the employee from
insisting that emergency living allowance, 13th month
pay, overtime, and premium pay, and other fringe
benefits should be added to the computation of their
separation pay. This situation, to our mind, is not the real
intent of the Code and its rules.
We rule otherwise. The ambiguity between Article 97(f),
which defines the term 'wage' and Article XIV of the
Collective Bargaining Agreement, Article 284 of the
Labor Code and Sections 9(b) and 10 of the
Implementing Rules, which mention the terms "pay" and
"salary", is more apparent than real. Broadly, the word
"salary" means a recompense or consideration made to
a person for his pains or industry in another man's
business. Whether it be derived from "salarium," or more
fancifully from "sal," the pay of the Roman soldier, it
carries with it the fundamental idea of compensation for
services rendered. Indeed, there is eminent authority for
holding that the words "wages" and "salary" are in
essence synonymous (Words and Phrases, Vol. 38
Permanent Edition, p. 44 citing Hopkins vs. Cromwell, 85
N.Y.S. 839,841,89 App. Div. 481; 38 Am. Jur. 496).
"Salary," the etymology of which is the Latin word
"salarium," is often used interchangeably with "wage",
the etymology of which is the Middle English word
"wagen". Both words generally refer to one and the
same meaning, that is, a reward or recompense for
services performed. Likewise, "pay" is the synonym of
"wages" and "salary" (Black's Law Dictionary, 5th Ed.).
Inasmuch as the words "wages", "pay" and "salary" have
the same meaning, and commission is included in the
definition of "wage", the logical conclusion, therefore, is,
in the computation of the separation pay of petitioners,
their salary base should include also their earned sales
commissions.
The aforequoted provisions are not the only
consideration for deciding the petition in favor of the
petitioners.
We agree with the Solicitor General that granting, in
gratia argumenti, that the commissions were in the form
of incentives or encouragement, so that the petitioners
would be inspired to put a little more industry on the jobs
particularly assigned to them, still these commissions
are direct remuneration services rendered which
contributed to the increase of income of Zuellig .
Commission is the recompense, compensation or
reward of an agent, salesman, executor, trustees,
receiver, factor, broker or bailee, when the same is
calculated as a percentage on the amount of his
transactions or on the profit to the principal (Black's Law
Dictionary, 5th Ed., citing Weiner v. Swales, 217 Md.
123, 141 A.2d 749, 750). The nature of the work of a
salesman and the reason for such type of remuneration
for services rendered demonstrate clearly that
commission are part of petitioners' wage or salary. We
take judicial notice of the fact that some salesmen do not
receive any basic salary but depend on commissions
and allowances or commissions alone, are part of

petitioners' wage or salary. We take judicial notice of the

fact that some salesman do not received any basic
salary but depend on commissions and allowances or
commissions alone, although an employer-employee
relationship exists. Bearing in mind the preceeding
dicussions, if we adopt the opposite view that
commissions, do not form part of wage or salary, then, in
effect, We will be saying that this kind of salesmen do
not receive any salary and therefore, not entitled to
separation pay in the event of discharge from
employment. Will this not be absurd? This narrow
interpretation is not in accord with the liberal spirit of our
labor laws and considering the purpose of separation
pay which is, to alleviate the difficulties which confront a
dismissed employee thrown the the streets to face the
harsh necessities of life.
Additionally, in Soriano v. NLRC, et al., supra, in
resolving the issue of the salary base that should be
used in computing the separation pay, We held that:
The commissions also claimed by petitioner ('override
commission' plus 'net deposit incentive') are not properly
includible in such base figure since such commissions
must be earned by actual market transactions
attributable to petitioner.
Applying this by analogy, since the commissions in the
present case were earned by actual market transactions
attributable to petitioners, these should be included in
their separation pay. In the computation thereof, what
should be taken into account is the average
commissions earned during their last year of
employment.
The final consideration is, in carrying out and interpreting
the Labor Code's provisions and its implementing
regulations, the workingman's welfare should be the
primordial and paramount consideration. This kind of
interpretation gives meaning and substance to the liberal
and compassionate spirit of the law as provided for in
Article 4 of the Labor Code which states that "all doubts
in the implementation and interpretation of the provisions
of the Labor Code including its implementing rules and
regulations shall be resolved in favor of labor" (Abella v.
NLRC, G.R. No. 71812, July 30,1987,152 SCRA 140;
Manila Electric Company v. NLRC, et al., G.R. No.
78763, July 12,1989), and Article 1702 of the Civil Code
which provides that "in case of doubt, all labor legislation
and all labor contracts shall be construed in favor of the
safety and decent living for the laborer.
ACCORDINGLY, the petition is hereby GRANTED. The
decision of the respondent National Labor Relations
Commission is MODIFIED by including allowances and
commissions in the separation pay of petitioners Jose
Songco and Amancio Manuel. The case is remanded to
the Labor Arbiter for the proper computation of said
separation pay.
SO ORDERED.
----------xxx------------

7|Page
JAVIER v. FLY ACE
G.R. No. 192558
February 15, 2012
DECISION
MENDOZA, J.:
This is a petition under Rule 45 of the Rules of Civil
Procedure assailing the March 18, 2010 Decision[1] of
the Court of Appeals (CA) and its June 7, 2010
Resolution,[2] in CA-G.R. SP No. 109975, which
reversed the May 28, 2009 Decision[3] of the National
Labor Relations Commission (NLRC) in the case entitled
Bitoy Javier v. Fly Ace/Flordelyn Castillo,[4] holding that
petitioner Bitoy Javier (Javier) was illegally dismissed
from employment and ordering Fly Ace Corporation (Fly
Ace) to pay backwages and separation pay in lieu of
reinstatement.
Antecedent Facts
On May 23, 2008, Javier filed a complaint before the
NLRC for underpayment of salaries and other labor
standard benefits. He alleged that he was an employee
of Fly Ace since September 2007, performing various
tasks at the respondents warehouse such as cleaning
and arranging the canned items before their delivery to
certain locations, except in instances when he would be
ordered to accompany the companys delivery vehicles,
as pahinante; that he reported for work from Monday to
Saturday from 7:00 oclock in the morning to 5:00 oclock
in the afternoon; that during his employment, he was not
issued an identification card and payslips by the
company; that on May 6, 2008, he reported for work but
he was no longer allowed to enter the company
premises by the security guard upon the instruction of
Ruben Ong (Mr. Ong), his superior;[5] that after several
minutes of begging to the guard to allow him to enter, he
saw Ong whom he approached and asked why he was
being barred from entering the premises; that Ong
replied by saying, Tanungin mo anak mo; [6] that he then
went home and discussed the matter with his family; that
he discovered that Ong had been courting his daughter
Annalyn after the two met at a fiesta celebration in
Malabon City; that Annalyn tried to talk to Ong and
convince him to spare her father from trouble but he
refused to accede; that thereafter, Javier was terminated
from his employment without notice; and that he was
neither given the opportunity to refute the cause/s of his
dismissal from work.
To support his allegations, Javier presented an affidavit
of one Bengie Valenzuela who alleged that Javier was a
stevedore or pahinante of Fly Ace from September 2007
to January 2008. The said affidavit was subscribed
before the Labor Arbiter (LA).
For its part, Fly Ace averred that it was engaged in the
business of importation and sales of groceries.
Sometime in December 2007, Javier was contracted by
its employee, Mr. Ong, as extra helper on a pakyaw
basis at an agreed rate of 300.00 per trip, which was
later increased to 325.00 in January 2008. Mr. Ong

contracted Javier roughly 5 to 6 times only in a month

whenever the vehicle of its contracted hauler, Milmar
Hauling Services, was not available. On April 30, 2008,
Fly Ace no longer needed the services of Javier. Denying
that he was their employee, Fly Ace insisted that there
was no illegal dismissal.[8] Fly Ace submitted a copy of
its agreement with Milmar Hauling Services and copies
of acknowledgment receipts evidencing payment to
Javier for his contracted services bearing the words,
daily manpower (pakyaw/piece rate pay) and the latters
signatures/initials.
Ruling of the Labor Arbiter
On November 28, 2008, the LA dismissed the complaint
for lack of merit on the ground that Javier failed to
present proof that he was a regular employee of Fly Ace.
He wrote:
Complainant has no employee ID showing his
employment with the Respondent nor any document
showing that he received the benefits accorded to
regular employees of the Respondents. His contention
that Respondent failed to give him said ID and payslips
implies that indeed he was not a regular employee of Fly
Ace considering that complainant was a helper and that
Respondent company has contracted a regular trucking
for the delivery of its products.
Respondent Fly Ace is not engaged in trucking business
but in the importation and sales of groceries. Since there
is a regular hauler to deliver its products, we give
credence to Respondents claim that complainant was
contracted on pakiao basis.
As to the claim for underpayment of salaries, the payroll
presented by the Respondents showing salaries of
workers on pakiao basis has evidentiary weight because
although the signature of the complainant appearing
thereon are not uniform, they appeared to be his true
signature.
xxxx
Hence, as complainant received the rightful salary as
shown by the above described payrolls, Respondents
are not liable for salary differentials.
Ruling of the NLRC
On appeal with the NLRC, Javier was favored. It ruled
that the LA skirted the argument of Javier and
immediately concluded that he was not a regular
employee simply because he failed to present proof. It
was of the view that a pakyaw-basis arrangement did not
preclude
the
existence
of
employer-employee
relationship. Payment by result x x x is a method of
compensation and does not define the essence of the
relation. It is a mere method of computing compensation,
not a basis for determining the existence or absence of
an employer-employee relationship.[10] The NLRC
further averred that it did not follow that a worker was a
job contractor and not an employee, just because the

8|Page
work he was doing was not directly related to the
employers trade or business or the work may be
considered as extra helper as in this case; and that the
relationship of an employer and an employee was
determined by law and the same would prevail whatever
the parties may call it. In this case, the NLRC held that
substantial evidence was sufficient basis for judgment on
the existence of the employer-employee relationship.
Javier was a regular employee of Fly Ace because there
was reasonable connection between the particular
activity performed by the employee (as a pahinante) in
relation to the usual business or trade of the employer
(importation, sales and delivery of groceries). He may
not be considered as an independent contractor
because he could not exercise any judgment in the
delivery of company products. He was only engaged as
a helper.
Finding Javier to be a regular employee, the NLRC ruled
that he was entitled to a security of tenure. For failing to
present proof of a valid cause for his termination, Fly Ace
was found to be liable for illegal dismissal of Javier who
was likewise entitled to backwages and separation pay
in lieu of reinstatement. The NLRC thus ordered:
WHEREFORE, premises considered, complainants
appeal is partially GRANTED. The assailed Decision of
the labor arbiter is VACATED and a new one is hereby
entered holding respondent FLY ACE CORPORATION
guilty of illegal dismissal and non-payment of 13th month
pay. Consequently, it is hereby ordered to pay
complainant DANILO Bitoy JAVIER the following:
1. Backwages -45,770.83
2. Separation pay, in lieu of reinstatement - 8,450.00
3. Unpaid 13th month pay (proportionate) - 5,633.33
TOTAL -59,854.16
All other claims are dismissed for lack of merit.

xxx
It is incumbent upon private respondent to prove, by
substantial evidence, that he is an employee of
petitioners, but he failed to discharge his burden. The
non-issuance of a company-issued identification card to
private respondent supports petitioners contention that
private respondent was not its employee.
The CA likewise added that Javiers failure to present
salary vouchers, payslips, or other pieces of evidence to
bolster his contention, pointed to the inescapable
conclusion that he was not an employee of Fly Ace.
Further, it found that Javiers work was not necessary
and desirable to the business or trade of the company,
as it was only when there were scheduled deliveries,
which a regular hauling service could not deliver, that Fly
Ace would contract the services of Javier as an extra
helper. Lastly, the CA declared that the facts alleged by
Javier did not pass the control test.
He contracted work outside the company premises; he
was not required to observe definite hours of work; he
was not required to report daily; and he was free to
accept other work elsewhere as there was no exclusivity
of his contracted service to the company, the same
being co-terminous with the trip only.[13] Since no
substantial evidence was presented to establish an
employer-employee relationship, the case for illegal
dismissal could not prosper.
The petitioners moved for reconsideration, but to no
avail.
Hence, this appeal anchored on the following grounds:
I.
WHETHER THE HONORABLE COURT OF APPEALS
ERRED IN HOLDING THAT THE PETITIONER WAS
NOT A REGULAR EMPLOYEE OF FLY ACE.
II.
WHETHER THE HONORABLE COURT OF APPEALS
ERRED IN HOLDING THAT THE PETITIONER IS NOT
ENTITLED TO HIS MONETARY CLAIMS.

SO ORDERED.
Ruling of the Court of Appeals
On March 18, 2010, the CA annulled the NLRC findings
that Javier was indeed a former employee of Fly Ace and
reinstated the dismissal of Javiers complaint as ordered
by the LA. The CA exercised its authority to make its
own factual determination anent the issue of the
existence of an employer-employee relationship
between the parties. According to the CA:
In an illegal dismissal case the onus probandi rests on
the employer to prove that its dismissal was for a valid
cause. However, before a case for illegal dismissal can
prosper, an employer-employee relationship must first be
established. x x x it is incumbent upon private
respondent to prove the employee-employer relationship
by substantial evidence.

The petitioner contends that other than its bare

allegations and self-serving affidavits of the other
employees, Fly Ace has nothing to substantiate its claim
that Javier was engaged on a pakyaw basis. Assuming
that Javier was indeed hired on a pakyaw basis, it does
not preclude his regular employment with the company.
Even the acknowledgment receipts bearing his signature
and the confirming receipt of his salaries will not show
the true nature of his employment as they do not reflect
the necessary details of the commissioned task.
Besides, Javiers tasks as pahinante are related,
necessary and desirable to the line of business by Fly
Ace which is engaged in the importation and sale of
grocery items. On days when there were no scheduled
deliveries, he worked in petitioners warehouse,
arranging and cleaning the stored cans for delivery to
clients. More importantly, Javier was subject to the
control and supervision of the company, as he was made
to report to the office from Monday to Saturday, from

9|Page
7:00 oclock in the morning until 5:00 oclock in the
afternoon. The list of deliverable goods, together with the
corresponding clients and their respective purchases
and addresses, would necessarily have been prepared
by Fly Ace. Clearly, he was subjected to compliance with
company rules and regulations as regards working
hours, delivery schedule and output, and his other duties
in the warehouse.
The petitioner chiefly relied on Chavez v. NLRC, where
the Court ruled that payment to a worker on a per trip
basis is not significant because this is merely a method
of computing compensation and not a basis for
determining the existence of employer-employee
relationship. Javier likewise invokes the rule that, in
controversies between a laborer and his master, x x x
doubts reasonably arising from the evidence should be
resolved in the formers favour. The policy is reflected is
no less than the Constitution, Labor Code and Civil
Code.[18]
Claiming to be an employee of Fly Ace, petitioner
asserts that he was illegally dismissed by the latters
failure to observe substantive and procedural due
process. Since his dismissal was not based on any of
the causes recognized by law, and was implemented
without notice, Javier is entitled to separation pay and
backwages.
In its Comment,[19] Fly Ace insists that there was no
substantial evidence to prove employer-employee
relationship. Having a service contract with Milmar
Hauling Services for the purpose of transporting and
delivering company products to customers, Fly Ace
contracted Javier as an extra helper or pahinante on a
mere per trip basis. Javier, who was actually a loiterer in
the area, only accompanied and assisted the company
driver when Milmar could not deliver or when the
exigency of extra deliveries arises for roughly five to six
times a month. Before making a delivery, Fly Ace would
turn over to the driver and Javier the delivery vehicle
with its loaded company products. With the vehicle and
products in their custody, the driver and Javier would
leave the company premises using their own means,
method, best judgment and discretion on how to deliver,
time to deliver, where and [when] to start, and manner of
delivering the products.[20]
Fly Ace dismisses Javiers claims of employment as
baseless assertions. Aside from his bare allegations, he
presented nothing to substantiate his status as an
employee. It is a basic rule of evidence that each party
must prove his affirmative allegation. If he claims a right
granted by law, he must prove his claim by competent
evidence, relying on the strength of his own evidence
and not upon the weakness of his opponent. Invoking
the case of Lopez v. Bodega City, Fly Ace insists that in
an illegal dismissal case, the burden of proof is upon the
complainant who claims to be an employee. It is
essential that an employer-employee relationship be
proved by substantial evidence. Thus, it cites:

In an illegal dismissal case, the onus probandi rests on

the employer to prove that its dismissal of an employee
was for a valid cause. However, before a case for illegal
dismissal can prosper, an employer-employee
relationship must first be established.
Fly Ace points out that Javier merely offers factual
assertions that he was an employee of Fly Ace, which
are unfortunately not supported by proof, documentary
or otherwise.[23] Javier simply assumed that he was an
employee of Fly Ace, absent any competent or relevant
evidence to support it. He performed his contracted work
outside the premises of the respondent; he was not even
required to report to work at regular hours; he was not
made to register his time in and time out every time he
was contracted to work; he was not subjected to any
disciplinary sanction imposed to other employees for
company violations; he was not issued a company I.D.;
he was not accorded the same benefits given to other
employees; he was not registered with the Social
Security System (SSS) as petitioners employee; and, he
was free to leave, accept and engage in other means of
livelihood as there is no exclusivity of his contracted
services with the petitioner, his services being coterminus with the trip only. All these lead to the
conclusion that petitioner is not an employee of the
respondents.[24]
Moreover, Fly Ace claims that it had no right to control
the result, means, manner and methods by which Javier
would perform his work or by which the same is to be
accomplished.[25] In other words, Javier and the
company driver were given a free hand as to how they
would perform their contracted services and neither were
they subjected to definite hours or condition of work.
Fly Ace likewise claims that Javiers function as a
pahinante was not directly related or necessary to its
principal business of importation and sales of groceries.
Even without Javier, the business could operate its usual
course as it did not involve the business of inland
transportation. Lastly, the acknowledgment receipts
bearing Javiers signature and words pakiao rate,
referring to his earned salaries on a per trip basis, have
evidentiary weight that the LA correctly considered in
arriving at the conclusion that Javier was not an
employee of the company.
The Court affirms the assailed CA decision.
It must be noted that the issue of Javiers alleged illegal
dismissal is anchored on the existence of an employeremployee relationship between him and Fly Ace. This is
essentially a question of fact. Generally, the Court does
not review errors that raise factual questions. However,
when there is conflict among the factual findings of the
antecedent deciding bodies like the LA, the NLRC and
the CA, it is proper, in the exercise of Our equity
jurisdiction, to review and re-evaluate the factual issues
and to look into the records of the case and re-examine
the questioned findings. In dealing with factual issues in
labor cases, substantial evidence that amount of
relevant evidence which a reasonable mind might accept
as adequate to justify a conclusion is sufficient.

10 | P a g e
As the records bear out, the LA and the CA found
Javiers claim of employment with Fly Ace as wanting
and deficient. The Court is constrained to agree.
Although Section 10, Rule VII of the New Rules of
Procedure of the NLRC[28] allows a relaxation of the
rules of procedure and evidence in labor cases, this rule
of liberality does not mean a complete dispensation of
proof. Labor officials are enjoined to use reasonable
means to ascertain the facts speedily and objectively
with little regard to technicalities or formalities but
nowhere in the rules are they provided a license to
completely discount evidence, or the lack of it. The
quantum of proof required, however, must still be
satisfied. Hence, when confronted with conflicting
versions on factual matters, it is for them in the exercise
of discretion to determine which party deserves
credence on the basis of evidence received, subject only
to the requirement that their decision must be supported
by substantial evidence.[29] Accordingly, the petitioner
needs to show by substantial evidence that he was
indeed an employee of the company against which he
claims illegal dismissal.
Expectedly, opposing parties would stand poles apart
and proffer allegations as different as chalk and cheese.
It is, therefore, incumbent upon the Court to determine
whether the party on whom the burden to prove lies was
able to hurdle the same. No particular form of evidence
is required to prove the existence of such employeremployee relationship. Any competent and relevant
evidence to prove the relationship may be admitted.
Hence, while no particular form of evidence is required,
a finding that such relationship exists must still rest on
some substantial evidence. Moreover, the substantiality
of the evidence depends on its quantitative as well as its
qualitative aspects. Although substantial evidence is not
a function of quantity but rather of quality, the x x x
circumstances of the instant case demand that
something more should have been proffered. Had there
been other proofs of employment, such as x x x inclusion
in petitioners payroll, or a clear exercise of control, the
Court would have affirmed the finding of employeremployee relationship.
In sum, the rule of thumb remains: the onus probandi
falls on petitioner to establish or substantiate such claim
by the requisite quantum of evidence. Whoever claims
entitlement to the benefits provided by law should
establish his or her right thereto x x x.[33] Sadly, Javier
failed to adduce substantial evidence as basis for the
grant of relief.

the company premises during weekdays arranging and

cleaning grocery items for delivery to clients, no other
proof was submitted to fortify his claim. The lone affidavit
executed by one Bengie Valenzuela was unsuccessful in
strengthening Javiers cause. In said document, all
Valenzuela attested to was that he would frequently see
Javier at the workplace where the latter was also hired
as stevedore.[34] Certainly, in gauging the evidence
presented by Javier, the Court cannot ignore the
inescapable conclusion that his mere presence at the
workplace falls short in proving employment therein. The
supporting affidavit could have, to an extent, bolstered
Javiers claim of being tasked to clean grocery items
when there were no scheduled delivery trips, but no
information was offered in this subject simply because
the witness had no personal knowledge of Javiers
employment status in the company. Verily, the Court
cannot accept Javiers statements, hook, line and sinker.
The Court is of the considerable view that on Javier lies
the burden to pass the well-settled tests to determine the
existence of an employer-employee relationship, viz: (1)
the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4)
the power to control the employees conduct. Of these
elements, the most important criterion is whether the
employer controls or has reserved the right to control the
employee not only as to the result of the work but also
as to the means and methods by which the result is to
be accomplished.[35]
In this case, Javier was not able to persuade the Court
that the above elements exist in his case. He could not
submit competent proof that Fly Ace engaged his
services as a regular employee; that Fly Ace paid his
wages as an employee, or that Fly Ace could dictate
what his conduct should be while at work. In other
words, Javiers allegations did not establish that his
relationship with Fly Ace had the attributes of an
employer-employee relationship on the basis of the
above-mentioned four-fold test. Worse, Javier was not
able to refute Fly Aces assertion that it had an
agreement with a hauling company to undertake the
delivery of its goods. It was also baffling to realize that
Javier did not dispute Fly Aces denial of his services
exclusivity to the company. In short, all that Javier laid
down were bare allegations without corroborative proof.

In this case, the LA and the CA both concluded that

Javier failed to establish his employment with Fly Ace.
By way of evidence on this point, all that Javier
presented were his self-serving statements purportedly
showing his activities as an employee of Fly Ace.
Clearly, Javier failed to pass the substantiality
requirement to support his claim. Hence, the Court sees
no reason to depart from the findings of the CA.

Fly Ace does not dispute having contracted Javier and

paid him on a per trip rate as a stevedore, albeit on a
pakyaw basis. The Court cannot fail to note that Fly Ace
presented documentary proof that Javier was indeed
paid on a pakyaw basis per the acknowledgment
receipts admitted as competent evidence by the LA.
Unfortunately for Javier, his mere denial of the
signatures affixed therein cannot automatically sway us
to ignore the documents because forgery cannot be
presumed and must be proved by clear, positive and
convincing evidence and the burden of proof lies on the
party alleging forgery.

While Javier remains firm in his position that as an

employed stevedore of Fly Ace, he was made to work in

Considering the above findings, the Court does not see

the necessity to resolve the second issue presented.

11 | P a g e
One final note. The Courts decision does not contradict
the settled rule that payment by the piece is just a
method of compensation and does not define the
essence of the relation.[37] Payment on a piece-rate
basis does not negate regular employment. The term
wage is broadly defined in Article 97 of the Labor Code
as remuneration or earnings, capable of being
expressed in terms of money whether fixed or
ascertained on a time, task, piece or commission basis.
Payment by the piece is just a method of compensation
and does not define the essence of the relations. Nor
does the fact that the petitioner is not covered by the
SSS affect the employer-employee relationship.
However, in determining whether the relationship is that
of employer and employee or one of an independent
contractor, each case must be determined on its own
facts and all the features of the relationship are to be
considered.[38] Unfortunately for Javier, the attendant
facts and circumstances of the instant case do not
provide the Court with sufficient reason to uphold his
claimed status as employee of Fly Ace.
While the Constitution is committed to the policy of social
justice and the protection of the working class, it should
not be supposed that every labor dispute will be
automatically decided in favor of labor. Management
also has its rights which are entitled to respect and
enforcement in the interest of simple fair play. Out of its
concern for the less privileged in life, the Court has
inclined, more often than not, toward the worker and
upheld his cause in his conflicts with the employer. Such
favoritism, however, has not blinded the Court to the rule
that justice is in every case for the deserving, to be
dispensed in the light of the established facts and the
applicable law and doctrine.[39]
WHEREFORE, the petition is DENIED. The March 18,
2010 Decision of the Court of Appeals and its June 7,
2010 Resolution, in CA-G.R. SP No. 109975, are hereby
AFFIRMED.
SO ORDERED.
---------xxx-----------

SLL INTERNATIONAL v. NLRC

G.R. No. 172161
March 2, 2011
DECISION
MENDOZA, J.:
Assailed in this petition for review on certiorari are the
January 11, 2006 Decision[1] and the March 31, 2006
Resolution[2] of the Court of Appeals (CA), in CA-G.R.
SP No. 00598 which affirmed with modification the
March 31, 2004 Decision[3] and December 15, 2004
Resolution[4] of the National Labor Relations
Commission (NLRC). The NLRC Decision found the
petitioners, SLL International Cables Specialist (SLL)
and its manager, Sonny L. Lagon (petitioners), not liable
for the illegal dismissal of Roldan Lopez, Danilo Caete
and Edgardo Zuiga (private respondents) but held them
jointly and severally liable for payment of certain
monetary claims to said respondents.
A chronicle of the factual antecedents has been
succinctly summarized by the CA as follows:
Sometime in 1996, and January 1997, private
respondents Roldan Lopez (Lopez for brevity) and
Danilo Caete (Caete for brevity), and Edgardo Zuiga
(Zuiga for brevity) respectively, were hired by petitioner
Lagon as apprentice or trainee cable/lineman. The three
were paid the full minimum wage and other benefits but
since they were only trainees, they did not report for
work regularly but came in as substitutes to the regular
workers or in undertakings that needed extra workers to
expedite completion of work. After their training, Zuiga,
Caete and Lopez were engaged as project employees
by the petitioners in their Islacom project in Bohol.
Private respondents started on March 15, 1997 until
December 1997. Upon the completion of their project,
their employment was also terminated. Private
respondents received the amount of P145.00, the
minimum prescribed daily wage for Region VII. In July
1997, the amount of P145 was increased to P150.00 by
the Regional Wage Board (RWB) and in October of the
same year, the latter was increased to P155.00.
Sometime in March 1998, Zuiga and Caete were
engaged again by Lagon as project employees for its
PLDT Antipolo, Rizal project, which ended sometime in
(sic) the late September 1998. As a consequence, Zuiga
and Caetes employment was terminated. For this
project, Zuiga and Caete received only the wage of
P145.00 daily. The minimum prescribed wage for Rizal
at that time was P160.00.
Sometime in late November 1998, private respondents
re-applied in the Racitelcom project of Lagon in Bulacan.
Zuiga and Caete were re-employed. Lopez was also
hired for the said specific project. For this, private
respondents received the wage of P145.00. Again, after
the completion of their project in March 1999, private
respondents went home to Cebu City.
On May 21, 1999, private respondents for the 4th time
worked with Lagons project in Camarin, Caloocan City
with Furukawa Corporation as the general contractor.

12 | P a g e
Their contract would expire on February 28, 2000, the
period of completion of the project. From May 21, 1997December 1999, private respondents received the wage
of P145.00. At this time, the minimum prescribed rate for
Manila was P198.00. In January to February 28, the
three received the wage of P165.00. The existing rate at
that time was P213.00.
For reasons of delay on the delivery of imported
materials from Furukawa Corporation, the Camarin
project was not completed on the scheduled date of
completion. Face[d] with economic problem[s], Lagon
was constrained to cut down the overtime work of its
worker[s][,] including private respondents. Thus, when
requested by private respondents on February 28, 2000
to work overtime, Lagon refused and told private
respondents that if they insist, they would have to go
home at their own expense and that they would not be
given anymore time nor allowed to stay in the quarters.
This prompted private respondents to leave their work
and went home to Cebu. On March 3, 2000, private
respondents filed a complaint for illegal dismissal, nonpayment of wages, holiday pay, 13th month pay for 1997
and 1998 and service incentive leave pay as well as
damages and attorneys fees.
In their answers, petitioners admit employment of private
respondents but claimed that the latter were only project
employees[,] for their services were merely engaged for
a specific project or undertaking and the same were
covered by contracts duly signed by private
respondents. Petitioners further alleged that the food
allowance of P63.00 per day as well as private
respondents allowance for lodging house, transportation,
electricity, water and snacks allowance should be added
to their basic pay. With these, petitioners claimed that
private respondents received higher wage rate than that
prescribed in Rizal and Manila.
Lastly, petitioners alleged that since the workplaces of
private respondents were all in Manila, the complaint
should be filed there. Thus, petitioners prayed for the
dismissal of the complaint for lack of jurisdiction and
utter lack of merit. (Citations omitted.)
On January 18, 2001, Labor Arbiter Reynoso Belarmino
(LA) rendered his decision[5] declaring that his office
had jurisdiction to hear and decide the complaint filed by
private respondents. Referring to Rule IV, Sec. 1 (a) of
the NLRC Rules of Procedure prevailing at that time,[6]
the LA ruled that it had jurisdiction because the
workplace, as defined in the said rule, included the place
where the employee was supposed to report back after a
temporary detail, assignment or travel, which in this case
was Cebu.
As to the status of their employment, the LA opined that
private respondents were regular employees because
they were repeatedly hired by petitioners and they
performed activities which were usual, necessary and
desirable in the business or trade of the employer.

With regard to the underpayment of wages, the LA found

that private respondents were underpaid. It ruled that the
free board and lodging, electricity, water, and food
enjoyed by them could not be included in the
computation of their wages because these were given
without their written consent.
The LA, however, found that petitioners were not liable
for illegal dismissal. The LA viewed private respondents
act of going home as an act of indifference when
petitioners decided to prohibit overtime work.[7]
In its March 31, 2004 Decision, the NLRC affirmed the
findings of the LA. In addition, the NLRC noted that not a
single report of project completion was filed with the
nearest Public Employment Office as required
by the Department of Labor and Employment (DOLE)
Department Order No. 19, Series of 1993.[8] The NLRC
later denied[9] the motion for reconsideration[10]
subsequently filed by petitioners.
When the matter was elevated to the CA on a petition for
certiorari, it affirmed the findings that the private
respondents were regular employees. It considered the
fact that they performed functions which were the regular
and usual business of petitioners. According to the CA,
they were clearly members of a work pool from which
petitioners drew their project employees.
The CA also stated that the failure of petitioners to
comply with the simple but compulsory requirement to
submit a report of termination to the nearest Public
Employment Office every time private respondents
employment was terminated was proof that the latter
were not project employees but regular employees.
The CA likewise found that the private respondents were
underpaid. It ruled that the board and lodging, electricity,
water, and food enjoyed by the private respondents
could not be included in the computation of their wages
because these were given without their written consent.
The CA added that the private respondents were entitled
to 13th month pay.
The CA also agreed with the NLRC that there was no
illegal dismissal. The CA opined that it was the
petitioners prerogative to grant or deny any request for
overtime work and that the private respondents act of
leaving the workplace after their request was denied was
an act of abandonment.
In modifying the decision of the labor tribunal, however,
the CA noted that respondent Roldan Lopez did not work
in the Antipolo project and, thus, was not entitled to
wage differentials. Also, in computing the differentials for
the period January and February 2000, the CA
disagreed in the award of differentials based on the
minimum daily wage of P223.00, as the prevailing
minimum daily wage then was only P213.00. Petitioners
sought reconsideration but the CA denied it in its March
31, 2006 Resolution.

13 | P a g e
In this petition for review on certiorari, petitioners seek
the reversal and setting aside of the CA decision
anchored on this lone:
GROUND/
ASSIGNMENT OF ERROR
THE PUBLIC RESPONDENT NLRC COMMITTED A
SERIOUS ERROR IN LAW IN AWARDING WAGE
DIFFERENTIALS TO THE PRIVATE COMPLAINANTS
ON THE BASES OF MERE TECHNICALITIES, THAT IS,
FOR LACK OF WRITTEN CONFORMITY x x x AND
LACK OF NOTICE TO THE DEPARTMENT OF LABOR
AND EMPLOYMENT (DOLE)[,] AND THUS, THE
COURT OF APPEALS GRAVELY ERRED IN
AFFIRMING WITH MODIFICATION THE NLRC
DECISION IN THE LIGHT OF THE RULING IN THE
CASE OF JENNY M. AGABON and VIRGILIO AGABON
vs, NLRC, ET AL., GR NO. 158963, NOVEMBER 17,
2004, 442 SCRA 573, [AND SUBSEQUENTLY IN THE
CASE OF GLAXO WELLCOME PHILIPPINES, INC. VS.
NAGAKAKAISANG EMPLEYADO NG
WELLCOME-DFA (NEW DFA), ET AL., GR NO. 149349,
11 MARCH 2005], WHICH FINDS APPLICATION IN
THE INSTANT CASE BY ANALOGY.[13]
Petitioners reiterated their position that the value of the
facilities that the private respondents enjoyed should be
included in the computation of the wages received by
them. They argued that the rulings in Agabon v.
NLRC[14]and Glaxo Wellcome Philippines, Inc. v.
Nagkakaisang Empleyado Ng Wellcome-DFA[15] should
be applied by analogy, in the sense that the lack of
written acceptance of the employees of the facilities
enjoyed by them should not mean that the value of the
facilities could not be included in the computation of the
private respondents wages.
On November 29, 2006, the Court resolved to issue a
Temporary Restraining Order (TRO) enjoining the public
respondent from enforcing the NLRC and CA decisions
until further orders from the Court.
After a thorough review of the records, however, the
Court finds no merit in the petition.
This petition generally involves factual issues, such as,
whether or not there is evidence on record to support the
findings of the LA, the NLRC and the CA that private
respondents were project or regular employees and that
their salary differentials had been paid. This calls for a
re-examination of the evidence, which the Court cannot
entertain. Settled is the rule that factual findings of labor
officials, who are deemed to have acquired expertise in
matters within their respective jurisdiction, are generally
accorded not only respect but even finality, and bind the
Court when supported by substantial evidence. It is not
the Courts function to assess and evaluate the evidence
all over again, particularly where the findings of both the
Labor tribunals and the CA concur.
As a general rule, on payment of wages, a party who
alleges payment as a defense has the burden of proving
it. Specifically with respect to labor cases, the burden of

proving payment of monetary claims rests on the

employer, the rationale being that the pertinent
personnel files, payrolls, records, remittances and other
similar documents which will show that overtime,
differentials, service incentive leave and other claims of
workers have been paid are not in the possession of the
worker but in the custody and absolute control of the
employer.
In this case, petitioners, aside from bare allegations that
private respondents received wages higher than the
prescribed minimum, failed to present any evidence,
such as payroll or payslips, to support their defense of
payment. Thus, petitioners utterly failed to discharge the
onus probandi.
Private respondents, on the other hand, are entitled to
be paid the minimum wage, whether they are regular or
non-regular employees.
Section 3, Rule VII of the Rules to Implement the Labor
Code[19] specifically enumerates those who are not
covered by the payment of minimum wage. Project
employees are not among them.
On whether the value of the facilities should be included
in the computation of the wages received by private
respondents, Section 1 of DOLE Memorandum Circular
No. 2 provides that an employer may provide subsidized
meals and snacks to his employees provided that the
subsidy shall not be less that 30% of the fair and
reasonable value of such facilities. In such cases, the
employer may deduct from the wages of the employees
not more than 70% of the value of the meals and snacks
enjoyed by the latter, provided that such deduction is
with the written authorization of the employees
concerned.
Moreover, before the value of facilities can be deducted
from the employees wages, the following requisites must
all be attendant: 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; and finally, facilities
must be charged at reasonable value. Mere availment is
not sufficient to allow deductions from employees
wages.
These requirements, however, have not been met in this
case. SLL failed to present any company policy or
guideline showing that provisions for meals and lodging
were part of the employees salaries. It also failed to
provide proof of the employees written authorization,
much less show how they arrived at their valuations. At
any rate, it is not even clear whether private respondents
actually enjoyed said facilities.
The Court, at this point, makes a distinction between
facilities and supplements. It is of the view that the food
and lodging, or the electricity and water allegedly
consumed by private respondents in this case were not
facilities but supplements. In the case of Atok-Big Wedge
Assn. v. Atok-Big Wedge Co.,[22] the two terms were
distinguished from one another in this wise:

14 | P a g e
"Supplements," therefore, constitute extra remuneration
or special privileges or benefits given to or received by
the laborers over and above their ordinary earnings or
wages. "Facilities," on the other hand, are items of
expense necessary for the laborer's and his family's
existence and subsistence so that by express provision
of law (Sec. 2[g]), they form part of the wage and when
furnished by the employer are deductible therefrom,
since if they are not so furnished, the laborer would
spend and pay for them just the same.
In short, the benefit or privilege given to the employee
which constitutes an extra remuneration above and over
his basic or ordinary earning or wage is supplement; and
when said benefit or privilege is part of the laborers'
basic wages, it is a facility. The distinction lies not so
much in the kind of benefit or item (food, lodging, bonus
or sick leave) given, but in the purpose for which it is
given.[23] In the case at bench, the items provided were
given freely by SLL for the purpose of maintaining the
efficiency and health of its workers while they were
working at their respective projects.
For said reason, the cases of Agabon and Glaxo are
inapplicable in this case. At any rate, these were cases
of dismissal with just and authorized causes. The
present case involves the matter of the failure of the
petitioners to comply with the payment of the prescribed
minimum wage.
The Court sustains the deletion of the award of
differentials with respect to respondent Roldan Lopez.
As correctly pointed out by the CA, he did not work for
the project in Antipolo.
WHEREFORE, the petition is DENIED. The temporary
restraining order issued by the Court on November 29,
2006 is deemed, as it is hereby ordered, DISSOLVED.

May 16, 2005

DECISION
PUNO, J.:
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 Adana,
Wenefredo Loveres, et. al. vs. National Labor Relations
Commission (NLRC), Mayon Hotel & Restaurant/Pacita
O. Po, et al., and the Resolution[2] denying petitioners
motion for reconsideration. The assailed CA decision
reversed the NLRC Decision which had dismissed all of
respondents complaints,[3] and reinstated the Joint
Decision of the Labor Arbiter[4] which ruled that
respondents were illegally dismissed and entitled to their
money claims.
The facts, culled from the records, are as follows:[5]
Petitioner Mayon Hotel & Restaurant is a single
proprietor business registered in the name of petitioner
Pacita O. Po,[6] whose mother, petitioner Josefa Po
Lam, manages the establishment.[7] The hotel and
restaurant employed about sixteen (16) employees.
Records show that on various dates starting in 1981,
petitioner hotel and restaurant hired the following people,
all respondents in this case, with the following jobs:[8]
1. Wenefredo Loveres - Accountant and Officer-incharge
2. Paterno Llarena - Front Desk Clerk
3. Gregorio Nicerio - Supervisory Waiter
4. Amado Macandog - Roomboy
5. Luis Guades - Utility/Maintenance Worker

SO ORDERED.
-----------xxx------------

6. Santos Broola - Roomboy

7. Teodoro Laurenaria - Waiter
8. Eduardo Alamares - Roomboy/Waiter
9. Lourdes Camigla - Cashier
10. Chona Bumalay - Cashier
11. Jose Atractivo - Technician
12. Amado Alamares - Dishwasher and Kitchen Helper
13. Roger Burce - Cook
14. Rolando Adana - Waiter
15. Miguel Torrefranca - Cook

MAYON HOTEL v. ADANA

G.R. No. 157634

16. Edgardo Torrefranca - Cook

Due to the expiration and non-renewal of the lease
contract for the rented space occupied by the said hotel

15 | P a g e
and restaurant at Rizal Street, the hotel operations of the
business were suspended on March 31, 1997.[9] The
operation of the restaurant was continued in its new
location at Elizondo Street, Legazpi City, while waiting
for the construction of a new Mayon Hotel & Restaurant
at Pearanda Street, Legazpi City. Only nine (9) of the
sixteen (16) employees continued working in the Mayon
Restaurant at its new site.[11]

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.

On various dates of April and May 1997, the 16

employees filed complaints for underpayment of wages
and other money claims against petitioners, as follows:
[12]

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;

Wenefredo Loveres, Luis Guades, Amado Macandog

and Jose Atractivo for illegal dismissal, underpayment of
wages, nonpayment of holiday and rest day pay; service
incentive leave pay (SILP) and claims for separation
pay plus damages;
Paterno Llarena and Gregorio Nicerio for illegal
dismissal with claims for underpayment of wages;
nonpayment of cost of living allowance (COLA) and
overtime pay; premium pay for holiday and rest day;
SILP; nightshift differential pay and separation pay plus
damages;
Miguel Torrefranca, Chona Bumalay and Lourdes
Camigla for underpayment of wages; nonpayment of
holiday and rest day pay and SILP;
Rolando Adana, Roger Burce and Amado Alamares for
underpayment of wages; nonpayment of COLA,
overtime, holiday, rest day, SILP and nightshift
differential pay;
Eduardo Alamares for underpayment of wages,
nonpayment of holiday, rest day and SILP and night shift
differential pay;
Santos Broola 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.

After their motion for reconsideration was denied,

petitioners now come to this Court, seeking the reversal
of the CA decision on the following grounds:

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?

16 | P a g e
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 CAs reversal of the
NLRC decision, claiming that based on the ruling in
Castillo v. NLRC, it is non sequitur that the CA should reexamine the factual findings of both the NLRC and the
Labor Arbiter, especially as in this case the NLRCs
findings are allegedly supported by substantial evidence.

discretion.
Thus, the NLRCs 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)
After careful review, we find that the reversal of the
NLRCs decision was in order precisely because it was
not supported by substantial evidence.
1.

Ownership by Josefa Po Lam

We do not agree.
There is no denying that it is within the NLRCs
competence, as an appellate agency reviewing
decisions of Labor Arbiters, to disagree with and set
aside the latters 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 quasijudicial 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 reexamination 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. NLRC[21] 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 NLRCs
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

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.
(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

17 | P a g e
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
Lams participation was limited to merely (a) being the
overseer; (b) receiving the month-to-month and/or yearto-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 Arbiters 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 Lams 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 formers 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.
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 Lams 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. Labor laws mandate the speedy
administration of justice, with least attention to
technicalities but without sacrificing the fundamental
requisites of due process.
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

18 | P a g e
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 ones 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
Arbiters 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 Broola.[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 abovenamed 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 Pearanda 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 Arbiters 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

19 | P a g e
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 Pearanda 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 employeremployee 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 Lams
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 Loveress mismanagement and abuse
of petitioners trust and confidence.[55] Even the petition

20 | P a g e
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 Pearanda
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.
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.
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. 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. 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.
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 formers 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 Arbiters decision with
the following modifications:
(a)
Separation pay for the illegal dismissal of
respondents Loveres, Macandog and Llarena; (Santos
Broola cannot be granted separation pay as he made no
such claim);

21 | P a g e
(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 Broola.
3.

Money claims

The CA held that contrary to the NLRCs 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 Arbiters 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.
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. They claim that these
benefits make up for whatever inadequacies there may
be in compensation. 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 Arbiters 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).

22 | P a g e
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 abovementioned 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.

(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 employers ability to pay.[94]
Thus, we reinstate the award of monetary claims granted
by the Labor Arbiter.
4.

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

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 Broola specifically
claimed damages from petitioners, then only they are
entitled to exemplary damages.

23 | P a g e
Finally, we rule that attorneys 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 Broola;
(5)
Deleting the award of exemplary damages of
P10,000.00 from all respondents except Loveres,
Macandog, Llarena, Guades, Nicerio, Atractivo, and
Broola; and
(6)
Granting attorneys 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.
-----------------xxx---------------

April 18, 1997

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. 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:
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

MABEZA v. NLRC
G.R. No. 118506

(Sgd) (Sgd.) (Sgd.)

24 | P a g e
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.
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.
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:
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).
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 affirming the Labor Arbiter's
decision. The resolution substantially incorporated the
findings of the Labor Arbiter. Unsatisfied, petitioner
instituted the instant special civil action for certiorari
under Rule 65 of the Rules of Court on the following
grounds:
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;

25 | P a g e
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:
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, allencompassing 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. vs. NLRC,[20] has stated that:
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. Like the

26 | P a g e
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."
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:
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.
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.
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

27 | P a g e
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]

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.

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]

In addition to separation pay, backwages are in order.

Pursuant to R.A. 6715 and our decision in Osmalik
Bustamante, et al. vs. 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.

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]

Finally, in dismissal cases, the law requires that the

employer must furnish the employee sought to be
terminated from employment with two written notices
before the same may be legally effected. The first is a
written notice 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 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 defend himself, with
the assistance of counsel if he so desires.

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.

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 months after petitioner
had filed a complaint for illegal dismissal, as an
afterthought, that the loss was reported to the police and
added as a supplemental answer to petitioner's
complaint. Clearly, 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.

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 other
privileges. Owing to the strained relations between

WHEREFORE, premises considered, the RESOLUTION

of the National Labor Relations Commission dated April
24, 1994 is REVERSED and SET ASIDE, with costs. For
clarity, the economic benefits due the petitioner are
hereby summarized as follows:
1) Deficiency wages and the applicable ECOLA from
May 13, 1988 up to the date of petitioner's illegal
dismissal;
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;

28 | P a g e
4) Full backwages, without qualification or deduction,
from the date of petitioner's illegal dismissal up to the
date of promulgation of this decision pursuant to our
ruling in Bustamante vs. NLRC.[34]

DECISION
BRION, J.:
We resolve in this petition for review on certiorari1 the
challenge to the May 7, 2012 decision2 and the
November 27, 2012 resolution3 (assailed CA rulings) of
the Court of Appeals (CA) in CA-G.R. SP No. 123273.
These assailed CA rulings affirmed the July 20, 2011
decision4 and the December 2, 2011 resolution5 (NLRC
rulings) of the National Labor Relations Commission
(NLRC) in NLRC LAC No. 02-000489-11 (NLRC NCR
Case No. 06-08544-10). The NLRC rulings in turn
reversed and set aside the December 10, 2010
decision6 of the labor arbiter (LA).

5) P1.000.00.
SO ORDERED.
--------------xxx------------

Factual Antecedents
Respondents Alexander Parian, Jay Erinco, Alexander
Canlas, Jerry Sabulao and Bernardo Tenederowere all
laborers working for petitioner Our Haus Realty
Development Corporation (Our Haus), a company
engaged in the construction business.The respondents
respective employment records and daily wage rates
from 2007 to 2010 are summarized in the table7 below:
OUR HAUS REALTY v. PARIAN
G.R. No. 204651
August 6, 2014
Name

Date Hired

Years of Service

Year and Place of

Assignment

Daily Rate

Alexander M. Parian

October 1999

10 years

2007-2010Quezon City

P353.50

P342.00

Jay C. Erinco

January 2000

10 years

2008Quezon
City
2009Antipolo
2010Quezon City

Alexander R. Canlas

2005

5 years

2007-2010Quezon City

P312.00

P342.00

P383.50

Jerry Q. Sabulao

August 1999

10 years

2008Quezon
City
2009Antipolo
2010Quezon City

Bernardo N. Tenedero

1994

16 years

2007-2010Quezon City

some of its construction projects and asked the affected

workers, including the respondents, to take vacation
leaves.
Eventually, the respondents were asked to report back to
work but instead of doing so, they filed with the LA a
complaint for underpayment of their daily wages. They
claimed that except for respondent Bernardo N.
Tenedero, their wages were below the minimum rates
prescribed in the following wage orders from 2007 to
2010:
Sometime in May 2010, Our Haus experienced financial
distress. To alleviate its condition, Our Haus suspended

1. Wage Order No. NCR-13, which provides for a daily

minimum wage rate of P362.00for the non-agriculture

29 | P a g e
sector (effective from August 28, 2007 until June 13,
2008); and

when they rendered overtime work had not been

proven.22

2. Wage Order No. NCR-14, which provides for a daily

minimum wage rate of P382.00for the non-agriculture
sector (effective from June 14, 2008 until June 30,
2010).

Our Haus moved for the reconsideration23 of the

NLRCs decision and submitted new evidence (the five
kasunduans) to show that the respondents authorized
Our Haus in writing to charge the values of their meals
and lodging to their wages.

The respondents also alleged thatOur Haus failed to pay

them their holiday, service incentive leave (SIL), 13th
month and overtime pays.9
The Labor Arbitration Rulings
Before the LA, Our Haus primarily argued that the
respondents wages complied with the laws minimum
requirement. Aside from paying the monetary amount of
the respondents wages, Our Haus also subsidized their
meals (3 times a day), and gave them free lodging near
the construction project they were assigned to.10 In
determining the total amount of the respondents daily
wages, the value of these benefits should be considered,
in line with Article 97(f)11 of the Labor Code.
Our Haus also rejected the respondents other monetary
claims for lack of proof that they were entitled to it.12
On the other hand, the respondents argued that the
value of their meals should not be considered in
determining their wages total amount since the
requirements set under Section 413 of DOLE14
Memorandum Circular No. 215 were not complied with.
The respondents pointed out that Our Haus never
presented any proof that they agreed in writing to the
inclusion of their meals value in their wages.16 Also,
Our Haus failed to prove that the value of the facilities it
furnished was fair and reasonable.17 Finally, instead of
deducting the maximum amount of 70% of the value of
the meals, Our Haus actually withheld its full value
(which was Php290.00 per week for each employee).18
The LA ruled in favor of Our Haus. He held that if the
reasonable values of the board and lodging would be
taken into account, the respondents daily wages would
meet the minimum wage rate.19 As to the other benefits,
the LA found that the respondents were not able to
substantiate their claims for it.20
The respondents appealed the LAs decision to the
NLRC, which in turn, reversed it. Citing the case of
Mayon Hotel & Restaurant v. Adana,21 the NLRC noted
that the respondents did not authorize Our Haus in
writing to charge the values of their board and lodging to
their wages. Thus, the samecannot be credited.
The NLRC also ruled that the respondents are entitled to
their respective proportionate 13th month payments for
the year 2010 and SIL payments for at least three
years,immediately preceding May 31, 2010, the date
when the respondents leftOur Haus. However, the NLRC
sustained the LAs ruling that the respondents were not
entitled to overtime pay since the exact dates and times

The NLRC denied Our Haus motion, thus it filed a Rule

65 petition24 with the CA. In its petition, Our Haus
propounded a new theory. It made a distinction between
deduction and charging. A written authorization is only
necessary if the facilitys value will be deducted and will
not be needed if it will merely be charged or included in
the computation of wages.25 Our Haus claimed that it
did not actually deduct the values of the meals and
housing benefits. It only considered these in computing
the total amount of wages paid to the respondents for
purposes of compliance with the minimum wage law.
Hence, the written authorization requirement should not
apply.
Our Haus also asserted that the respondents claim for
SIL pay should be denied as this was not included in
their pro formacomplaint. Lastly, it questioned the
respondentsentitlement to attorneys fees because they
were not represented by a private lawyer but by the
Public Attorneys Office (PAO).
The CAs Ruling
The CA dismissed Our Haus certiorari petition and
affirmed the NLRC rulings in toto. It found no real
distinction between deduction and charging,26 and ruled
that the legal requirements before any deduction or
charging can be made, apply to both. Our Haus,
however, failed to prove that it complied with any of the
requirements laid down in Mabeza v. National Labor
Relations Commission.27 Accordingly, it cannot consider
the values of its meal and housing facilities in the
computation of the respondents total wages.
Also, the CA ruled that since the respondents were able
to allege non-payment of SIL in their position paper, and
Our Haus, in fact, opposed it in its various pleadings,28
then the NLRC properly considered it as part of the
respondents causes of action. Lastly, the CA affirmed
the respondents entitlement to attorneys fees.29
Our Haus filed a motion for reconsideration but the CA
denied its motion, prompting it to file the present petition
for review on certiorari under Rule 45.

The Petition
Our Haus submits that the CA erred in ruling that the
legal requirements apply without distinction whether
the facilitys value will be deducted or merely included in
the computation of the wages. At any rate, it complied
with the requirements for deductibility of the value of the

30 | P a g e
facilities. First, the five kasunduans executed by the
respondents constitute the written authorization for the
inclusion of the board and lodgings values to their
wages. Second, Our Haus only withheld the amount of
P290.00 which represents the foods raw value; the
weekly cooking cost (cooks wage, LPG, water) at
P239.40 per person is a separate expense that Our
Haus did not withhold from the respondents wages.30
This disproves the respondentsclaim that it deducted
the full amount of the meals value.
Lastly, the CA erred in ruling that the claim for SIL pay
may still be granted though not raised in the complaint;
and that the respondents are entitled to an award of
attorneys fees.31
The Case for the Respondents
The respondents prayed for the denial of the petition.32
They maintained that the CA did not err inruling that the
values of the board and lodging cannot be deducted
from their wages for failure to comply with the
requirements set by law.33 And though the claim for SIL
pay was not included in their pro forma complaint, they
raised their claims in their position paper and Our Haus
had the opportunity to contradict it in its pleadings.34
Finally, under the PAO law, the availment of the PAOs
legal services does not exempt its clients from an award
of attorneys fees.35
The Courts Ruling
We resolve to DENYthe petition.

did not commit grave abuse of discretion in ruling on the

case? We rule that the CA correctly did.
No substantial distinction between deducting and
charging a facilitys value from the employees wage; the
legal requirements for creditability apply to both
To justify its non-compliance with the requirements for
the deductibility of a facility, Our Haus asks us to believe
that there is a substantial distinction between the
deduction and the charging of a facilitys value to the
wages. Our Haus explains that in deduction, the amount
of the wage (which may already be below the minimum)
would still be lessened by the facilitys value, thus
needing the employees consent. On the other hand, in
charging, there is no reduction of the employees wage
since the facilitys value will just be theoretically added to
the wage for purposes of complying with the minimum
wage requirement.39
Our Haus argument is a vain attempt to circumvent the
minimum wage law by trying to create a distinction
where none exists.
In reality, deduction and charging both operate to lessen
the actual take-home pay of an employee; they are two
sides of the same coin. In both, the employee receives a
lessened amount because supposedly, the facilitys
value, which is part of his wage, had already been paid
to him in kind. As there is no substantial distinction
between the two, the requirements set by law must apply
to both.
As the CA correctly ruled, these requirements, as
summarized in Mabeza, are the following:

The nature of a Rule 45 petition only questions of law

Basic is the rule that only questions of lawmay be raised
in a Rule 45 petition.36 However, in this case, weare
confronted with mixed questions of fact and law that are
subsumed under the issue of whether Our Haus
complied with the legal requirements on the deductibility
of the value of facilities. Strictly, factual issues cannot be
considered under Rule 45 except in the course of
resolving if the CA correctly determined whether or not
the NLRC committed grave abuse of discretion in
considering and appreciating the factual issues before
it.37

a. proof must be shown thatsuch

customarily furnished by the trade;

facilities

are

b. the provision of deductiblefacilities must be voluntarily

accepted in writingby the employee; and
c. The facilities must be charged at fair and reasonable
value.40
We examine Our Haus compliance with each of these
requirements in seriatim.
a. The facility must be customarily furnished by the trade

In ruling for legal correctness, we have to view the CA

decision in the same context that the petition for
certiorariit ruled upon was presented to it; we have to
examine the CA decision from the prism of whether it
correctly determined the presence or absence of grave
abuse of discretion in the NLRC decision before it, not
on the basis of whether the NLRC decision, on the
merits of the case, was correct. In other words, we have
to be keenly aware that the CA undertook a Rule 65
review, not a review on appeal, of the NLRC decision
challenged before it. This is the approach that should
bebasic in a Rule 45 review of a CA ruling in a labor
case. In question form, the question to ask in the present
case is: did the CA correctly determine that the NLRC

In a string of cases, we have concluded that one of the

badges to show that a facility is customarily furnished by
the trade is the existence of a company policy or
guideline showing that provisions for a facility were
designated as part of the employees salaries.41 To
comply with this, Our Haus presented in its motion for
reconsideration with the NLRC the joint sinumpaang
salaysayof four of its alleged employees. These
employees averred that they were recipients of free
lodging, electricity and water, as well as subsidized
meals from Our Haus.42

31 | P a g e
We agree with the NLRCs finding that the sinumpaang
salaysay statements submitted by Our Haus are selfserving.1wphi1 For one, Our Haus only produced the
documents when the NLRC had already earlier
determined that Our Haus failed to prove that it was
traditionally giving the respondents their board and
lodging. This document did not state whether these
benefits had been consistently enjoyed by the rest of
Our Haus employees. Moreover, the records reveal that
the board and lodging were given on a per project basis.
Our Haus did not show if these benefits were also
provided inits other construction projects, thus negating
its claimed customary nature. Even assuming the
sinumpaang salaysay to be true, this document would
still work against Our Haus case. If Our Haus really had
the practice of freely giving lodging, electricity and water
provisions to its employees, then Our Haus should not
deduct its values from the respondents wages.
Otherwise, this will run contrary to the affiants claim that
these benefits were traditionally given free of charge.
Apart from company policy, the employer may also prove
compliance with the first requirement by showing the
existence of an industry-wide practice of furnishingthe
benefits in question among enterprises engaged in the
same line of business. If it were customary among
construction companies to provide board and lodging to
their workers and treat their values as part of their
wages, we would have more reason to conclude that
these benefits were really facilities.
However, Our Haus could not really be expected to
prove compliance with the first requirement since the
living accommodation of workers in the construction
industry is not simply a matter of business practice.
Peculiar to the construction business are the
occupational safety and health (OSH) services which the
law itself mandates employers to provide to their
workers. This isto ensure the humane working conditions
of construction employees despite their constant
exposure to hazardous working environments. Under
Section 16 of DOLE Department Order (DO) No. 13,
series of 1998,43 employers engaged in the construction
business are required to providethe following welfare
amenities:
16.1 Adequate supply of safe drinking water
16.2 Adequate sanitaryand washing facilities
16.3 Suitable living accommodation for workers, and as
may be applicable, for their families
16.4 Separate sanitary, washing and sleeping facilitiesfor
men and women workers. [emphasis ours]
Moreover, DOLE DO No. 56, series of 2005, which sets
out the guidelines for the implementation ofDOLE DO
No. 13, mandates that the cost of the implementation of
the requirements for the construction safety and health
of workers, shall be integrated to the overall project
cost.44 The rationale behind this isto ensure that the

living accommodation of the workers is not substandard

and is strictly compliant with the DOLEs OSH criteria.
As part of the project cost that construction companies
already charge to their clients, the value of the housing
of their workers cannot be charged again to their
employees salaries. Our Haus cannot pass the burden
of the OSH costs of its construction projects to its
employees by deducting it as facilities. This is Our Haus
obligation under the law.
Lastly, even if a benefit is customarily provided by the
trade, it must still pass the purpose testset by
jurisprudence. Under this test, if a benefit or privilege
granted to the employee is clearly for the employers
convenience, it will not be considered as a facility but a
supplement.45 Here, careful consideration is given to
the nature of the employers business in relation to the
work performed by the employee. This test is used to
address inequitable situations wherein employers
consider a benefit deductible from the wages even if the
factual circumstances show that it clearly redounds to
the employers greater advantage.
While the rules serve as the initial test in characterizing a
benefit as a facility, the purpose test additionally
recognizes that the employer and the employee do not
stand at the same bargaining positions on benefits that
must or must not formpart of an employees wage. In the
ultimate analysis, the purpose test seeks to prevent a
circumvention of the minimum wage law.
a1. The purpose test in jurisprudence
Under the law,46 only the value of the facilities may be
deducted from the employees wages but not the value
of supplements. Facilities include articles or services for
the benefit of the employee or his family but exclude
tools of the trade or articles or services primarily for the
benefit of the employer or necessary to the conduct of
the employers business.47
The law also prescribes that the computation of wages
shall exclude whatever benefits, supplementsor
allowances given to employees. Supplements are paid
to employees on top of their basic pay and are free of
charge.48 Since it does not form part of the wage, a
supplements value may not be includedin the
determination of whether an employer complied with the
prescribed minimum wage rates.
In the present case, the board and lodging provided by
Our Haus cannot be categorized asfacilities but as
supplements. In SLL International Cables Specialist v.
National Labor Relations Commission,49 this Court was
confronted with the issue on the proper characterization
of the free board and lodging provided by the employer.
We explained:
The Court, at this point, makes a distinction between
"facilities" and "supplements". It is of the view that the
food and lodging, or the electricity and water allegedly
consumed by private respondents in this case were not

32 | P a g e
facilities but supplements. In the case of Atok-Big Wedge
Assn. v. Atok-Big Wedge Co., the two terms were
distinguished from one another in this wise:
"Supplements", therefore, constitute extra remuneration
or special privileges or benefits given to or received by
the laborers overand above their ordinary earnings or
wages. "Facilities", on the other hand, are items of
expense necessary for the laborer's and his family's
existence and subsistence so thatby express provision
of law (Sec. 2[g]), they form part of the wage and when
furnished by the employer are deductible therefrom,
since if they are not so furnished, the laborer would
spend and pay for them just the same.
In short, the benefit or privilege given to the employee
which constitutes an extra remuneration above and over
his basic or ordinary earning or wage is supplement; and
when said benefit or privilege is part of the laborers'
basic wages, it is a facility. The distinction lies not so
much in the kind of benefit or item (food, lodging, bonus
or sick leave) given, but in the purpose for which it is
given.In the case at bench, the items provided were
given freely by SLLfor the purpose of maintaining the
efficiency and health of its workers while they were
working attheir respective projects.50
Ultimately, the real difference lies not on the kind of the
benefit but on the purpose why it was given by the
employer. If it is primarily for the employees gain, then
the benefit is a facility; if its provision is mainly for the
employers advantage, then it is a supplement. Again,
this is to ensure that employees are protected in
circumstances where the employer designates a benefit
as deductible from the wages even though it clearly
works to the employers greater convenience or
advantage.
Under the purpose test, substantial consideration must
be given to the nature of the employers business
inrelation to the character or type of work performed by
the employees involved.
Our Haus is engaged in the construction business, a
laborintensive enterprise. The success of its projects is
largely a function of the physical strength, vitality and
efficiency of its laborers. Its business will be jeopardized
if its workers are weak, sickly, and lack the required
energy to perform strenuous physical activities. Thus, by
ensuring that the workers are adequately and well fed,
the employer is actually investing on its business.
Unlike in office enterprises where the work is focused on
desk jobs, the construction industry relies heavily and
directly on the physical capacity and endurance of its
workers. This is not to say that desk jobs do not require
muscle strength; wesimply emphasize that in the
construction business, bulk of the work performed are
strenuous physical activities.
Moreover, in the construction business, contractors are
usually faced with the problem ofmeeting target
deadlines. More often than not, work is performed

continuously, day and night, in order to finish the project

on the designated turn-over date. Thus, it will be more
convenient to the employer if itsworkers are housed near
the construction site to ensure their ready availability
during urgent or emergency circumstances. Also,
productivity issues like tardiness and unexpected
absences would be minimized. This observation strongly
bears in the present case since three of the respondents
are not residents of the National Capital Region. The
board and lodging provision might have been a
substantial consideration in their acceptance of
employment in a place distant from their provincial
residences.
Based on these considerations, we conclude that even
under the purpose test, the subsidized meals and free
lodging provided by Our Haus are actually supplements.
Although they also work to benefit the respondents, an
analysis of the nature of these benefits in relation to Our
Haus business shows that they were given primarily for
Our Haus greater convenience and advantage. If
weighed on a scale, the balance tilts more towards Our
Haus side. Accordingly, their values cannot be
considered in computing the total amount of the
respondents wages. Under the circumstances, the
dailywages paid to the respondents are clearly below the
prescribed minimum wage rates in the years 2007-2010.
b. The provision of deductible facilities must be
voluntarily accepted in writing by the employee
In Mayon Hotel, we reiterated that a facility may only be
deducted from the wage if the employer was authorized
in writingby the concerned employee.51 As it diminishes
the take-home pay of an employee, the deduction must
be with his express consent.
Again, in the motion for reconsideration with the NLRC,
Our Haus belatedly submitted five kasunduans,
supposedly executed by the respondents, containing
their conformity to the inclusion of the values of the
meals and housing to their total wages. Oddly, Our Haus
only offered these documents when the NLRC had
already ruled that respondents did not accomplish any
written authorization, to allow deduction from their
wages. These five kasunduans were also undated,
making us wonder if they had reallybeen executed when
respondents first assumed their jobs.
Moreover, in the earlier sinumpaang salaysay by Our
Haus four employees, it was not mentioned that they
also executed a kasunduanfor their board and lodging
benefits. Because of these surrounding circumstances
and
the
suspicious
timing
when
the
five
kasunduanswere submitted as evidence, we agree
withthe CA that the NLRC committed no grave abuse of
discretion in disregarding these documents for being self
serving.
c. The facility must be charged at a fair and reasonable
value

33 | P a g e
Our Haus admitted that it deducted the amount of
P290.00 per week from each of the respondents for their
meals. But it now submits that it did not actually withhold
the entire amount as it did not figure in the computation
the money it expended for the salary of the cook, the
water, and the LPG used for cooking, which amounts to
P249.40 per week per person. From these, it appears
that the total meal expense per week for each person is
P529.40,making Our Haus P290.00 deduction within the
70% ceiling prescribed by the rules.
However, Our Haus valuation cannotbe plucked out of
thin air. The valuation of a facility must besupported by
relevant documents such as receipts and company
records for it to be considered as fair and reasonable. In
Mabeza, we noted:
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 pointedout in the Solicitor
General's manifestation, "secured certified copies
thereof from the nearest regional office of the
Department of Labor, the SSS or the BIR".52 [emphasis
ours]
In the present case, Our Haus never explained how it
came up with the valuesit assigned for the benefits it
provided; it merely listed its supposed expenses without
any supporting document. Since Our Haus is using
these additional expenses (cooks salary, water and
LPG) to support its claim that it did not withhold the full
amount of the meals value, Our Haus is burdened to
present evidence to corroborate its claim. The records
however, are bereft of any evidence to support Our
Haus meal expense computation. Eventhe value it
assigned for the respondents living accommodations
was not supported by any documentary evidence.
Without any corroborative evidence, it cannot be said
that Our Haus complied withthis third requisite.
A claim not raised in the pro forma complaint may still
beraised in the position paper.
Our Haus questions the respondents entitlement to SIL
pay by pointing out that this claim was not included in
the pro forma complaint filed with the NLRC. However,
we agree with the CA that such omission does not bar
the labor tribunals from touching upon this cause of
action since this was raised and discussed inthe
respondents position paper. In Samar-Med Distribution
v. National Labor Relations Commission,53 we held:
Firstly, petitioners contention that the validity of
Gutangs dismissal should not be determined because it
had not been included in his complaint before the NLRC
is bereft of merit. The complaint of Gutang was a mere
checklist of possible causes of action that he might have
against Roleda. Such manner of preparing the complaint

was obviously designed to facilitate the filing of

complaints by employees and laborers who are thereby
enabled to expediently set forth their grievances in a
general manner. But the non-inclusion in the complaint
of the issue on the dismissal did not necessarily mean
that the validity of the dismissal could not be an
issue.The rules of the NLRC require the submission of
verified position papers by the parties should they fail to
agree upon an amicable settlement, and bar the
inclusion of any cause of action not mentioned in the
complaint or position paper from the time of their
submission by the parties. In view of this, Gutangs
cause of action should be ascertained not from a reading
of his complaint alone but also from a consideration and
evaluation of both his complaint and position paper.54
The respondents entitlement to the other monetary
benefits
Generally a party who alleges payment as a defense has
the burden of proving it.Particularly in labor cases, the
burden of proving payment of monetary claims rests on
the employeron the reasoning that the pertinent
personnel files, payrolls, records, remittances and other
similar documents which will show that overtime,
differentials, service incentive leave and other claims of
workers have been paid are not in the possession of
the worker but in the custody and absolute control of the
employer.55
Unfortunately, records will disclose the absence of any
credible document which will show that respondents had
been paid their 13th month pay, holiday and SIL pays.
Our Haus merely presented a handwritten certification
from its administrative officer that its employees
automatically become entitled to five days of service
incentive leave as soon as they pass probation. This
certification was not even subscribed under oath. Our
Haus could have at least submitted its payroll or copies
of the pay slips of respondents to show payment of
these benefits. However, it failed to do so.
Respondents are entitled to attorneys fees.
Finally, we affirm that respondents are entitled to
attorneys fees. Our Haus asserts that respondents
availment of free legal services from the PAO
disqualifies them from such award. We find this
untenable.
It is settled that in actions for recovery of wages or
where an employee was forced to litigate and, thus,
incur expenses to protect his rights and interest, the
award of attorney's fees is legally and morally
justifiable.56 Moreover, under the PAO Law or Republic
Act No. 9406, the costs of the suit, attorney's fees and
contingent fees imposed upon the adversary of the PAO
clients after a successful litigation shall be deposited in
the National Treasury as trust fund and shall be
disbursed for special allowances of authorized officials
and lawyers of the PAO.57

34 | P a g e
Thus, the respondents are still entitled to attorney's fees.
The attorney's fees awarded to them shall be paid to the
PAO. It serves as a token recompense to the PAO for its
provision of free legal services to litigants who have no
means of hiring a private lawyer.
WHEREFORE, in light of these considerations, we
conclude that the Court of Appeals correctly found that
the National Labor Relations Commission did not abuse
its discretion in its decision of July 20, 2011 and
Resolution of December 2, 2011.1wphi1 Consequently
we DENY the petition and AFFIRM the Court of Appeals'
decision dated May 7, 2012 and resolution dated
November 27, 2012 in CA-G.R. SP No. 123273. No
costs.
SO ORDERED.
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