G.R. Nos.

116476-84 May 21, 1998

ROSEWOOD PROCESSING, INC., petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION, NAPOLEON C. MAMON, ARSENIO GAZZINGAN, ROMEO C.
VELASCO, ARMANDO L. BALLON, VICTOR E. ALDEZA, JOSE L. CABRERA, VETERANS PHILIPPINE SCOUT
SECURITY AGENCY, and/or ENGR. SERGIO JAMILA IV, respondents.

Under the Labor Code, an employer is solidarily liable for legal ages due security guards for the period of time they were
assigned to it by its contracted security agency. However, in the absence of proof that the employer itself committed the
acts constitutive of illegal dismissal or conspired with the security agency in the performance of such acts, the employer
shall not be liable for back wages and/or separation pay arising as a consequence of such unlawful termination.

The Case

These are the legal principles on which this Court bases its resolution of this special civil action for certiorari, seeking the
nullification of the April 28, 1994 Resolution and the July 12, 1994 Order of the National Labor Relations Commission,
which dismissed petitioner's appeal from the labor arbiter's Decision and denied its Motion for Reconsideration,
respectively, in NLRC NCR Case Nos. 00-05-02834-91, 00-08-04630-91, 00-07-03966-91, 00-09-05617-91, 00-07-
03967-91, 00-07-04455-91, 00-08-05030-91, 00-11-06389-91, and 00-03-01642-92.

On May 13, 1991, a complaint for illegal dismissal; underpayment of wages; and for nonpayment of overtime pay, legal
holiday pay, premium pay for holiday and rest day, thirteenth month pay, cash bond deposit, unpaid wages and damages
was filed against Veterans Philippine Scout Security Agency and/or Sergio Jamila IV (collectively referred to as the
"security agency," for brevity). Thereafter, petitioner was impleaded as a third-party respondent by the security agency. In due
course, Labor Arbiter Ricardo C. Nora rendered a consolidated Decision dated March 26, 1993, which disposed as follows:1

IN VIEW OF ALL THE FOREGOING, respondents Veterans Philippine Scout Security Agency, Sergio Jamila IV,
and third-party respondent Rosewood Processing, Inc. are hereby ordered to pay jointly and severally complainants
the following amounts, to wit:

Xxxxx
Xxxxx
Xxxxx

representing their monetary benefits in the amount of SEVEN HUNDRED EIGHTY NINE THOUSAND ONE
HUNDRED FIFTY FOUR PESOS AND 39/100 CENTAVOS (P789,154.39).

Respondents are likewise ordered to pay attorney's fees in the amount of P78,915.43 within ten (10) days from
receipt of this Decision.

All other issues are hereby [d]ismissed for failure of the complainants to fully substantiate their claims.

The appeal filed by petitioner was dismissed by the National Labor Relations Commission 2 in its Resolution promulgated
April 28, 1994, for failure of the petitioner to file the required appeal bond within the reglementary period. 3 Pertinent
portions of the challenged Resolution are herewith quoted:

It appears on record that [petitioner] received their copy of the [labor arbiter's] decision on April 2, 1993 and
subsequently filed a "Notice of Appeal with Memorandum of Appeal" on April 26, 1993, in violation of Rule VI,
Section 1, 3, and 6 of the 1990 New Rules of Procedure of the NLRC . . . .

xxx xxx xxx

Clearly, the appeal filed by the [petitioners] on April 12, 1993 was not perfected within the reglementary period, and
the decision dated March 26, 1993 became final and executory as of April 23, 1993.

WHEREFORE, the appeal is hereby DISMISSED.

In its motion for reconsideration, petitioner contended that it received a copy of the labor arbiter's Decision only on April
6, 1993, and that it filed on April 16, 1993 within the prescribed time a Notice of Appeal with a Memorandum on Appeal,
a Motion to Reduce Appeal Bond and a surety bond issued by Prudential Guarantee and Assurance, Inc. in the amount of
P50,000.4 Though not opposed by the complainants and the security agency, the arguments stated in the motion were not
taken up by Respondent Commission. Reconsideration was nonetheless denied by Respondent Commission in its Order
of July 12, 1994, quoted below:5

Section 14, Rule VII of the NLRC New Rules of Procedure allows [u]s to entertain a motion for reconsideration only
on "palpable or patent" errors [w]e may have committed in [o]ur disputed April 28, 1994 resolution.

There being no such assignment here, [petitioner's] motion for reconsideration dated May 19, 1994 is hereby
DENIED for lack of merit.
Hence, this recourse. 6

In a Resolution dated March 20, 1995, this Court issued a temporary restraining order enjoining the respondents and their
agents from implementing and enforcing the assailed Resolution and Order until further notice.7

The Facts

Undisputed are the facts of this case, narrated by the labor arbiter as follows:

All the complainants were employed by the [security agency] as security guards: Napoleon Mamon on October 7,
1989; Arsenio Gazzingan on September 25, 1988; Rodolfo C. Velasco on January 5, 1987; Armando Ballon on June
28, 1990; Victor Aldeza on March 21, 1990; and Jose L. Cabrera [in] January 1988.

Napoleon Mamon started working for the [security agency] on October 7, 1989 and was assigned as office guard for
three (3) days without any pay nor allowance as it was allegedly an on[-the-]job training so there [was] no pay[.] On
October 10, 1989, he was transferred to the residence of Mr. Benito Ong with 12 hours duty a day receiving a salary
very much less than the minimum wage for eight (8) hours work until February 3, 1990 when he received an order
transferring him to Rosewood Processing, Inc. effective that date . . . ; [a]t Rosewood Processing, Inc., he was
required to render also 12 hours duty every day with a salary of P2,600.00/month. He was not given his pay for
February 1 and 2 by the paymaster of [the security agency] allegedly because the payroll could not be located so
after 3 to 4 times of going back and forth to [the security agency's] office to get his salary[;] [after] . . . two (2) days
he gave up because he was already spending more than what he could get thru transportation alone. On May 16,
1991, Rosewood Processing, Inc. asked for the relief of Mamon and other guards at Rosewood because they came to
know that complainants filed a complaint for underpayment on May 13, 1991 with the National Labor Relations
Commission[.] On May 18 to 19, 1991, [the security agency] assigned him to their [m]ain [o]ffice. After that,
complainant was floated until May 29, 1991 when he was assigned to Mead Johnson Philippines Corporation. [A]t
about a week later, [the security agency] received summons on complainant's complaint for underpayment and he
was called to [the security agency's] office. When he reported, he was told to sign a "Quitclaim and Waiver['] by Lt.
R. Rodriguez because according to the latter, he [could] only get a measly sum from his complaint with the NLRC
and if he (complainant) [signed] the quitclaim and waiver he [would] be retained at his present assignment which
[was] giving quite a good salary and other benefits but if he [did] not sign the quitclaim and waiver, he [would] be
relieved from his post and [would] no longer be given any assignment. . . . He was given up to the end of July 1991
to think it over. At the end of July 1991, h[e] was approached by the Security in Charge A. Azuela and asked him to
sign the quitclaim and waiver and when he refused to sign, he was told that the following day August 1, 1991, he
[would have] no more assignment and should report to their office. Thinking that it was only a joke, he reported the
following day to the detachment commander Mr. A. Yadao and he was told that the main office . . . relieved him
because he did not sign the quitclaim and waiver. He reported to their office asking for an assignment but he was told
by R. Rodriguez that "I no longer can be given an assignment so I had better resign". He went back several times to
the office of the [security agency] but every time the answer was the same[:] that he better tender his resignation
because he cannot be given any assignment although respondent was recruiting new guards and posting them.

Arsenio Gazzingan started to work for the [security agency] on September 29, 1988. [Note: the introductory
paragraph stated September 25, 1988.] He was assigned to Purefoods Breeding Farm at Calauan, Laguna and given a
salary of P54.00 a day working eight (8) hours. After three (3) months, he was given an examination and passed the
same. On December 26, 1988, he was given an increase and was paid P64.00/day working eight (8) hours; [h]e
remained at the same post for 8 months and transferred to Purefoods Feed Mill at Sta. Rosa, Laguna, with the same
salary and the same tour of duty, 8 hours[.] After four (4) months, he was transferred to Purefoods Grand Perry at
Sta. Rosa, Laguna, and after eleven (11) days on June 1989, he was transferred to Rosewood Processing, Inc. at
Meycauayan, Bulacan and required to work for 12 hours at a salary of P94.00/day for one year. [In] June 1990, he
was assigned at Purefoods DELPAN [to] guard . . . a barge loaded with corn and rendered 12 hours work/day with a
salary of only P148.00/day and after 24 days, he was floated for one month. He reported to [the security agency's]
office and was assigned to Purefoods Breeder Farm in Canlubang rendering 8 hours work per day receiving only
P178.00/day. After 11 days, he asked to be transferred to Manila[.] [B]ecause of the distance from his home . . . the
transfer was approved but instead of being transferred to Manila, he was assigned to Purefoods B-F-4 in Batangas
rendering 12 hours duty/day and receiving only P148.00 per day until January 28, 1991[;] and again he requested for
transfer which was also approved by the [security agency's] office[,] but since then he was told to come back again
and again. [U]p to the present he has not been given any assignment. Because of the fact that his family [was] in
danger of going hungry, he sought relief from the NLRC-NCR-Arbitration Branch.

Rodolfo Velasco started working for the [security agency] on January 5, 1987. He was assigned to PCI Bank Elcano,
Tondo Branch, as probationary, and [for] working 8 hours a day for 9 days he received only P400.00. On January 16,
1987, he was assigned to [the security agency's] headquarters up to January 31, 1987, working 12 hours a day[; he]
received only P650.00 for the 16 days. On September 1, 1988, he was assigned to Imperial Synthetic Rubber
Products rendering 12 hours duty per day until December 31, 1988 and was given a salary of P1,600.00/month. He
was later transferred to various posts like Polypaper Products working 12 hours a day given a salary of P1,800.00 a
month; Paramount Electrical, Inc. working 12 hours a day given P1,100.00 for 15 days; Rosewood Processing, Inc.,
rendering 12 hours duty per day receiving P2,200.00/month until May 16, 1991[;] Alen Engineering rendering 12
hours duty/day receiving P1,100/month; Purefoods Corporation on Delta II rendering 12 hours duty per day received
P4,200.00 a month. He was relieved on August 24 and his salary for the period August 20 to 23 has not been paid by
[the security agency.] He was suspended for no cause at all.
 Armando Ballon started as security guard with [the security agency] July 1990 [Note: the introductory paragraph
stated June 28, 1990] and was assigned to Purefoods Corporation in Marikina for five (5) months and received a
salary of P50.00 per day for 8 hours. He was transferred to Rosewood Processing, Inc. on November 6, 1990
rendering 12 hours duty as [d]etachment [c]ommander and a salary of P2,700.00/month including P200.00 officer's
allowance until May 15, 1991. On May 16, 1991, he applied for sick leave on orders of his doctor for 15 days but the
HRM, Miss M. Andres[,] got angry and crumpled his application for sick leave, that [was] why he was not able to
forward it to the SSS. After 15 days, he came back to the office of [the security agency] asking for an assignment and
he was told that he [was] already terminated. Complainant found out that the reason why Miss Andres crumpled his
application for sick leave was because of the complaint he previously filed and was dismissed for failure to appear.
He then refiled this case to seek redress from this Office.

Jose L. Cabrera started working for the [security agency] as security guard January, 1988 and was assigned to
Alencor Residence rendering 12 hours duty per day and received a salary of P2,400.00 a month for 3 months[.] [I]n
May, 1988, he was transferred to E & L Restaurant rendering 12 hours duty per day and receiv[ing] a salary of
P1,500.00 per month for 6 months[.] [I]n January, 1989, he was transferred to Paramount rendering 12 hours duty
per day receiving only P1,800.00 per month for 6 months[.] [I]n July 1989, he was transferred to Benito Ong['s]
residence rendering 12 hours duty per day and receiving a salary of P1,400.00 per month for 4 months[.] [I]n
December, 1989, he was transferred to Sea Trade International rendering . . . 12 hours duty per day and receiving a
salary of P1,900 per month for 6 months[.] [I]n July, 1990, he was transferred to Holland Pacific & Paper Mills
rendering 8 hours duty per day and receiving a salary of P2,400.00 per month until September 1990[.] [In] October
1990, he was transferred to RMG residence rendering 12 hours duty per day receiving a salary of P2,200.00 per
month for 3 months[.] [In] February 1991, he was transferred to Purefoods Corporation at Mabini, Batangas
rendering 12 hours duty per day with a salary of P3,600.00 per month for only one month because he was
hospitalized due to a stab wound inflicted by his [d]etachment [c]ommander. When he was discharged from the
hospital and after he was examined and declared "fit to work" by the doctor, he reported back to [the security
agency's] office but was given the run-around [and was told to] "come back tomorrow[.]" [H]e [could] see that [the
agency was] posting new recruits. He then complained to this Honorable Office to seek redress, hiring the services of
a counsel.

Victor Aldeza started working for the [security agency] on March 21, 1990 and was assigned to Meridian
Condominium, rendering 12 hours work per day and receiving a salary of P1,500.00 per month. Although he knew
that the salary was below minimum yet he persevered because he had spent much to get this job and stayed on until
October 15, 1990[.] On October 16, 1990, he was transferred to Rosewood Processing, Inc., rendering 12 hours duty
per day and receiving a salary of P2,600.00 per month up to May 15, 1991[.] On the later part of May 1991, he was
assigned to UPSSA (Sandoval Shipyard) rendering 12 hours duty per day receiving a salary of P3,200.00 per month.
[Aldeza] complained to [the security agency] about the salary but [the agency] did not heed him; thus, he filed his
complaint for underpayment[.] [The agency] upon complainant's complaint for underpayment . . . , instead of
adjusting his salary to meet the minimum prescribed by law[,] relieved him and left him floating[.] . . . When he
complained of the treatment, he was told to resign because he could no longer be given any assignment. Because of
this, complainant was forced to file another complaint for illegal dismissal.

Labor Arbiter's Ruling

The labor arbiter noted the failure of the security agency to present evidence to refute the complainants' allegation.
Instead, it impleaded the petitioner as third-party respondent, contending that its actions were primarily caused by
petitioner's noncompliance with its obligations under the contract for security services, and the subsequent cancellation of
the said contract.

The labor arbiter held petitioner jointly and severally liable with the security agency as the complainants' indirect
employer under Articles 106, 107 and 109 of the Labor Code, citing the case of Spartan Security & Detective Agency,
Inc. vs. National Labor Relations Commission.8

Although the security agency could lawfully place the complainants on floating status for a period not exceeding six
months, the act was "illegal" because the former had issued a newspaper advertisement for new security guards. Since the
relation between the complainants and the agency was already strained, the labor arbiter ordered the payment of
separation pay in lieu of reinstatement.

The award for wage differential, limited back wages and separation pay contained the following details:

Xxxxx
Xxxxx
Xxxxx

Ruling of Respondent Commission

As earlier stated, Respondent Commission dismissed petitioner's appeal, because it was allegedly not perfected within the
reglementary ten-day period. Petitioner received a copy of the labor arbiter's Decision on April 2, 1993, and it filed its
Memorandum of Appeal on April 12, 1993. However, it submitted the appeal bond on April 26, 1993, or twelve days
after the expiration of the period for appeal per Rule VI, Section 1, 3 and 6 of the 1990 Rules of Procedure of the National
Labor Relations Commission. Thus, it ruled that the labor arbiter's Decision became final and executory on April 13, 1993.
In the assailed Order, Respondent Commission denied reconsideration, because petitioner allegedly failed to raise any
palpable or patent error committed by said commission.

Assignment of Errors

Petitioner imputes the following errors to Respondent Commission:

Respondent NLRC committed grave abuse of discretion amounting to lack of jurisdiction when it dismissed
petitioner's appeal despite the fact that the same was perfected within the reglementary period provided by law.

Respondent NLRC committed grave abuse of discretion amounting to lack of jurisdiction when it dismissed
petitioner's appeal despite the clearly meritorious grounds relied upon therein.

Otherwise stated, the petition raises these two issues: first, whether the appeal from the labor arbiter to the NLRC was
perfected on time; and second, whether petitioner is solidarily liable with the security agency for the payment of back
wages, wage differential and separation pay.

The Court's Ruling

The petition is impressed with some merit and deserves partial grant.

First Issue: Substantial Compliance with the Appeal Bond Requirement

The perfection of an appeal within the reglementary period and in the manner prescribed by law is jurisdictional, and
noncompliance with such legal requirement is fatal and effectively renders the judgment final and executory. 9 The Labor
Code provides:

Art. 223. Appeal. Decisions, awards or orders of the Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. . . .

xxx xxx xxx

In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting
of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount
equivalent to the monetary award in the judgment appealed from.

xxx xxx xxx

Indisputable is the legal doctrine that the appeal of a decision involving a monetary award in labor cases may be perfected
"only upon the posting of a cash or surety bond." 10 The lawmakers intended the posting of the bond to be an
indispensable requirement to perfect an employer's appeal. 11

However, in a number of cases, this Court has relaxed this requirement in order to bring about the immediate and
appropriate resolution of controversies on the merits. 12 Some of these cases include: "(a) counsel's reliance on the
footnote of the notice of the decision of the labor arbiter that the aggrieved party may appeal . . . within ten (10) working
days; (b) fundamental consideration of substantial justice; (c) prevention of miscarriage of justice or of unjust enrichment,
as where the tardy appeal is from a decision granting separation pay which was already granted in an earlier final
decision; and (d) special circumstances of the case combined with its legal merits or the amount and the issue
involved." 13

In Quiambao vs. National Labor Relations Commission, 14 this Court ruled that a relaxation of the appeal bond
requirement could be justified by substantial compliance with the rule.

In Globe General Services and Security Agency vs. National Labor Relations Commission, 15 the Court observed that the
NLRC, in actual practice, allows the reduction of the appeal bond upon motion of the appellant and on meritorious
grounds; hence, petitioners in that case should have filed a motion to reduce the bond within the reglementary period for
appeal.

That is the exact situation in the case at bar. Here, petitioner claims to have received the labor arbiter's Decision on April
6, 1993. 16 On April 16, 1993, it filed, together with its memorandum on appeal 17 and notice of appeal, a motion to
reduce the appeal bond 18 accompanied by a surety bond for fifty thousand pesos issued by prudential Guarantee and
Assurance, Inc. 19 Ignoring petitioner's motion (to reduce bond), Respondent Commission rendered its assailed Resolution
dismissing the appeal due to the late filing of the appeal bond.

The solicitor general argues for the affirmation of the assailed Resolution for the sole reason that the appeal bond, even if
it was filed on time, was defective, as it was not in an amount "equivalent to the monetary award in the judgment
appealed from." The Court disagrees.
We hold that petitioner's motion to reduce the bond is a substantial compliance with the Labor Code. This holding is
consistent with the norm that letter-perfect rules must yield to the broader interest of substantial justice. 20

Where a decision may be made to rest on informed judgment rather than rigid rules, the equities of the case must be
accorded their due weight because labor determinations should not only be "secundum rationembut also secundum
caritatem." 21 A judicious reading of the memorandum of appeal would have made it evident to Respondent Commission
that the recourse was meritorious. Respondent Commission acted with grave abuse of discretion in peremptorily
dismissing the appeal without passing upon in fact, ignoring the motion to reduce the appeal bond.

We repeat: Considering the clear merits which appear, res ipsa loquitur, in the appeal from the labor arbiter's Decision,
and the petitioner's substantial compliance with rules governing appeals, we hold that the NLRC gravely abused its
discretion in dismissing said appeal and in failing to pass upon the grounds alleged in the Motion for Reconsideration.

Second Issue: Liability of an Indirect Employer

The overriding premise in the labor arbiter's Decision holding the security agency and the petitioner liable was that said
parties offered no evidence refuting or rebutting the complainants' computation of their monetary claims. The arbiter
ruled that petitioner was liable in solidum with the agency for salary differentials based on Articles 106, 107 and 109 of
the Labor Code which hold an employer jointly and severally liable with its contractor or subcontractor, as if it is the
direct employer. We quote said provisions below:

Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the
performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be
paid in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this
Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the
extent of the work performed under the contract, in the same manner and extent that he is liable to employees
directly employed by him.

xxx xxx xxx

Art. 107. Indirect employer. The provisions of the immediately preceding Article shall likewise apply to any
person, partnership, association or corporation which, not being an employer, contracts with an independent
contractor for the performance of any work, task, job or project.

Art. 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every employer or
indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of
this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered
as direct employers.

Upon the other hand, back wages and separation pay were awarded because the complainants were constructively and
illegally dismissed by the security agency, which placed them on floating status and at the same time gave assignments to
newly hired security guards. Noting that the relationship between the security agency and the complainants was already
strained, the labor arbiter granted separation pay in lieu of reinstatement.

22
In its memorandum of appeal, petitioner controverts its liability for the mentioned monetary awards on the following grounds:

A. Complainant Jose Cabrera never rendered security services to [petitioner] or was [n]ever assigned as security
guard [for] the latter's business establishment;

B. Complainants Napoleon Mamon, Arsenio Gazzingan, Rodolfo Velasco, Armando Ballon and Victor Aldeza
rendered security services to [petitioner] for a fixed period and were thereafter assigned to other entities or
establishments or were floated or recalled to the headquarters of Veterans; and,

C. The relationship between [petitioner] and Veterans was governed by a Contract for Guard Services under which
[petitioner] dutifully paid a contract price of P3,500.00 a month for 12 hour duty per guard and later increased to
P4,250.00 a month for 12 hour duty per guard which are within the prevailing rates in the industry and in accordance
with labor standard laws.

The first two grounds are meritorious. Legally untenable, however, is the contention that petitioner is not liable
for any wage differential for the reason that it paid the employees in accordance with the contract for security
services which it had entered into with the security agency. Notwithstanding the service contract between the
petitioner and the security agency, the former is still solidarily liable to the employees, who were not privy to said
contract, pursuant to the aforecited provisions of the Code. Labor standard legislations are enacted to alleviate the
plight of workers whose wages barely meet the spiraling costs of their basic needs. They are considered written in
every contract, and stipulations in violation thereof are considered not written. Similarly, legislated wage
increases are deemed amendments to the contract. Thus, employers cannot hide behind their contracts in order to
evade their or their contractors' or subcontractors' liability for noncompliance with the statutory minimum wage.
The joint and several liability of the employer or principal was enacted to ensure compliance with the provisions of the
Code, principally those on statutory minimum wage. The contractor or subcontractor is made liable by virtue of his or her
status as a direct employer, and the principal as the indirect employer of the contractor's employees. This liability
facilitates, if not guarantees, payment of the workers' compensation, thus, giving the workers ample protection as
mandated by the 1987 Constitution. 23 This is not unduly burdensome to the employer. Should the indirect employer be
constrained to pay the workers, it can recover whatever amount it had paid in accordance with the terms of the service
contract between itself and the contractor. 24

Withal, fairness likewise dictates that the petitioner should not, however, be held liable for wage differentials incurred
while the complainants were assigned to other companies. Under these cited provisions of the Labor Code, should the
contractor fail to pay the wages of its employees in accordance with law, the indirect employer (the petitioner in this
case), is jointly and severally liable with the contractor, but such responsibility should be understood to be limited to the
extent of the work performed under the contract, in the same manner and extent that he is liable to the employees directly
employed by him. This liability of petitioner covers the payment of the workers' performance of any work, task, job or
project. So long as the work, task, job or project has been performed for petitioner's benefit or on its behalf, the liability
accrues for such period even if, later on, the employees are eventually transferred or reassigned elsewhere.

We repeat: The indirect employer's liability to the contractor's employees extends only to the period during which they
were working for the petitioner, and the fact that they were reassigned to another principal necessarily ends such
responsibility. The principal is made liable to his indirect employees, because it can protect itself from irresponsible
contractors by withholding such sums and paying them directly to the employees or by requiring a bond from the
contractor or subcontractor for this purpose.

Similarly, the solidary liability for payment of back wages and separation pay is limited, under Article 106, "to the extent
of the work performed under the contract"; under Article 107, to "the performance of any work, task, job or project"; and
under Article 109, to "the extent of their civil liability under this Chapter [on payment of wages]."

These provisions cannot apply to petitioner, considering that the complainants were no longer working for or assigned to
it when they were illegally dismissed. Furthermore, an order to pay back wages and separation pay is invested with a
punitive character, such that an indirect employer should not be made liable without a finding that it had committed or
conspired in the illegal dismissal.

The liability arising from an illegal dismissal is unlike an order to pay the statutory minimum wage, because the workers'
right to such wage is derived from law. The proposition that payment of back wages and separation pay should be
covered by Article 109, which holds an indirect employer solidarily responsible with his contractor or subcontractor for
"any violation of any provision of this Code," would have been tenable if there were proof there was none in this case
that the principal/employer had conspired with the contractor in the acts giving rise to the illegal dismissal.

With the foregoing discussion in mind, we now take up in detail the petitioner's liability to each of the complainants.

Case No. NCR-00-08-04630-91

Mamon worked for petitioner for a period of a little more than one year beginning February 3, 1990 until May 16, 1991.
Inasmuch as petitioner was his indirect employer during such rime, it should thus be severally liable for wage differential
from the time of his employment until his relief from duty. He was relieved upon the request of petitioner, after it had
learned of the complaint for underpayment of wages filed by Mamon and several other security guards.

However, this was not a dismissal from work because Mamon was still working for the security agency and was
immediately assigned, on May 29, 1991, to its other client, Mead Johnson Philippines. His dismissal came about later,
when he refused to sign a quitclaim and waiver in favor of the security agency. Thus, he was illegally dismissed by the
agency when he was no longer employed by petitioner, which cannot thus be held liable for back wages and separation
pay in his case.

Napoleon Mamon . . . received an order transferring him to Rosewood Processing, Inc. effective . . . February 3, 1990;
. . . . On May 16, 1991, Rosewood Processing, Inc. asked for the relief of Mamon and other guards at Rosewood
because they came to know that complainants filed a complaint for underpayment on May 13, 1991 with the National
Labor Relations Commission[,] . . . After that, complainant was floated until May 29, 1991 when he was assigned to
Mead Johnson Philippines Corporation. . . . [A] week later, [the security agency] received summons on complainant's
complaint for underpayment and he was called to [the security agency] office. When he reported, he was told to sign a
"Quitclaim and Waiver['] by Lt. R. Rodriguez . . . and . . . if he [did] not sign the quitclaim and waiver, he [would] be
relieved from his post and [would] no longer be given any assignment. . . . At the end of July 1991, he was approached
by the Security in Charge, A. Azuela, . . . [for him] to sign the quitclaim and waiver[,] and when he refused to sign, he
was told that . . . he ha[d] no more assignment and should report to their office. . . . [H]e reported the following day to
the detachment commander, Mr. A. Yadao and he was told that the main office ha[d] relieved him . . . . He reported to
their office asking for an assignment but he was told by R. Rodriguez that "I no longer can be given an assignment so I
had better resign." He went back several times to the office of the [security agency] but every time the answer was the
same . . . although respondent was recruiting new guards and posting them. 25
 Case No. NCR-00-07-03966-91

Gazzingan was assigned to petitioner as a security guard for a period of one year. For said period, petitioner is solidarily
liable with the agency for underpayment of wages based on Articles 106, 107 and 109 of the Code.

Arsenio Gazzingan . . . after eleven (11) days on June 1989, . . . was transferred to Rosewood Processing,
Inc. . . . . [I]n June 1990, he was assigned at Purefoods DELPAN . . . . After 11 days, he asked to be
transferred to Manila because of the distance from his home and the transfer was approved but instead of
being transferred to Manila, he was assigned to Purefoods B-F-4 in Batangas . . . again he requested for
transfer which was also approved by the [security agency] office but since then he was told to come back
again and again and up to the present he has not been given any assignment. . . . . 26

His dismissal cannot be blamed on the petitioner. Like Mamon, Gazzingan had already been assigned to another client of
the agency when he was illegally dismissed. Thus, Rosewood cannot be held liable, jointly and severally with the agency,
for back wages and separation pay.

Case No. NCR-00-07-03967-91

Rodolfo Velasco was assigned to petitioner from December 31, 1988 until May 16, 1991. Thus, petitioner is solidarily
liable for wage differentials during such period. Petitioner is not, however, liable for back wages and separation pay,
because Velasco was no longer working for petitioner at the time of his illegal dismissal.

Rodolfo Velasco started working for the [security agency] on January 5, 1987. . . . [On] December 31,
1988 . . . he was . . . transferred to various posts like . . . Rosewood Processing, Inc., . . . until May 16,
1991 . . . . He was relieved on August 24 and his salary for the period August 20 to 23 has not been paid
by [the security agency]; [h]e was suspended for no cause at all. 27

Case No. NCR-00-07-0445-91

Petitioner was the indirect employer of Ballon during the period beginning November 6, 1990 until May 15, 1991; thus, it
is liable for wage differentials for said period. However, it is not liable for back wages and separation pay, as there was no
evidence presented to show that it participated in Ballon's illegal dismissal.

. . . [H]e [Armando Ballon] was transferred to Rosewood Processing, Inc. on November 6, 1990 rendering 12 hours
duty as [d]etachment [c]ommander and received a salary of P2,700.00/month including P200.00 officer's allowance
until May 15, 1991. On May 16, 1991, he applied for sick leave on orders of his doctor for 15 days but the HRM,
Miss M. Andres[,] got angry and crumpled his application for sick leave that is why he was not able to forward it to
the SSS. After 15 days, he came back to the office of [the security agency] asking for an assignment and he was
told that he [was] already terminated. Complainant found out that the reason why Miss Andres crumpled his
application for sick leave was because of the complaint he previously filed and was dismissed for failure to appear.
He then refiled this case to seek redress from this Office. 28

Case No. NCR-00-08-05030-91

Petitioner is liable for wage differentials in favor of Aldeza during the period he worked with petitioner, that is, October
16, 1990 until May 15, 1991.

. . . On October 16, 1990, he [Aldeza] was transferred to Rosewood Processing, Inc., . . . up to May 15, 1991[.] On
the later part of May 1991, he was assigned to UPSSA (Sandoval Shipyard) . . . . Complainant [sic] complained to
[the security agency] about the salary but [the security agency] did not heed him; thus, he filed his complaint for
underpayment[.] [The security agency] upon complainant's complaint for underpayment reacted . . . , instead of
adjusting his salary to meet the minimum prescribed by law[,] relieved him and left him floating[;] and when he
complained of the treatment, he was told to resign because he could no longer be given any assignment. Because of
this, complainant was forced to file another complaint for illegal dismissal. 29

The cause of Aldeza's illegal dismissal is imputable, not to petitioner, but solely to the security agency. In Aldeza's case, the
solidary liability for back wages and separation pay arising from Articles 106, 107 and 109 of the Code has no application.

Case No. NCR-00-09-05617-91

Cabrera was an employee of the security agency, but he never rendered security services to petitioner. This fact is evident
in the labor arbiter's findings:

Jose L. Cabrera started working for the [security agency] as [a] security guard on January, 1988 and was assigned to
Alencor Residence . . . . [I]n May, 1988, he was transferred to E & L, Restaurant . . . [.] [I]n January, 1989, he was
transferred to Paramount . . . [.] [I]n July 1989, he was transferred to Benito Ong['s] residence . . . [.] [I]n December,
1989, he was transferred to Sea Trade International . . . [.] [I]n July, 1990, he was transferred to Holland Pacific &
Paper Mills . . . [.] [I]n October 1990, he was transferred to RMG [R]esidence . . . [.] [I]n February 1991, he was
transferred to Purefoods Corporation at Mabini, Batangas . . . . When he was discharged from the hospital and after
 he was examined and declared "fit to work" by the doctor, he reported back to [the security agency] office but was
given the run-around [and was told to] "come back tomorrow[,]" although he [could] see that [it was] posting new
recruits. He then complained to this Honorable Office to seek redress, hiring the services of a counsel. 30

Hence, petitioner is not liable to Cabrera for anything.

In all these cases, however, the liability of the security agency is without question, as it did not appeal from the Decisions
of the labor arbiter and Respondent Commission.

WHEREFORE, the petition is partially GRANTED. The assailed Decision is hereby MODIFIED, such that petitioner,
with the Security agency, is solidarily liable to PAY the complainants only wage differentials during the period that the
complainants were actually under its employ, as above detailed. Petitioner is EXONERATED from the payment of back
wages and separation pay.

The temporary restraining order issued earlier is LIFTED, but the petitioner is deemed liable only for the aforementioned
wage differentials, which Respondent Commission is required to RECOMPUTE within fifteen days from the finality of
this Decision. No costs.

SO ORDERED.
 G.R. No. 172161 March 2, 2011
SLL INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON, Petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION, 4th DIVISION, ROLDAN LOPEZ, EDGARDO ZUIGA and DANILO
CAETE, Respondents.

Assailed in this petition for review on certiorari are the January 11, 2006 Decision 1 and the March 31, 2006
Resolution2 of the Court of Appeals (CA), in CA-G.R. SP No. 00598 which affirmed with modification the March 31,
2004 Decision3 and December 15, 2004 Resolution4 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 145.00, the minimum prescribed daily wage for Region VII. In July 1997, the amount of 145
was increased to 150.00 by the Regional Wage Board (RWB) and in October of the same year, the latter was increased
to 155.00. 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 145.00 daily. The
minimum prescribed wage for Rizal at that time was 160.00.

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 145.00. 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. Their contract would expire on February 28, 2000, the period of
completion of the project. From May 21, 1997-December 1999, private respondents received the wage of 145.00. At this
time, the minimum prescribed rate for Manila was 198.00. In January to February 28, the three received the wage of
165.00. The existing rate at that time was 213.00.

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, non-payment 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 63.00 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 decision5 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
denied9 the motion for reconsideration10 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 223.00,
as the prevailing minimum daily wage then was only 213.00. Petitioners sought reconsideration but the CA denied it in
its March 31, 2006 Resolution.11

In this petition for review on certiorari,12 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 14and Glaxo
Wellcome Philippines, Inc. v. Nagkakaisang Empleyado Ng Wellcome-DFA15 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. 16
As a general rule, on payment of wages, a party who alleges payment as a defense has the burden of proving
it.17Specifically 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.18

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 Code19 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.20 Mere availment is not sufficient to allow deductions from employees wages.21

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:

"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.1avvphi1

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.

SO ORDERED.
 G.R. No. 204651 August 6, 2014
OUR HAUS REALTY DEVELOPMENT CORPORATION, Petitioner, vs.
ALEXANDER PARIAN, JAY C. ERINCO, ALEXANDER CANLAS, BERNARD TENEDERO and JERRY
SABULAO, Respondents.

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).

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:

XXXXX
XXXXX
XXXXX

Sometime in May 2010, Our Haus experienced financial distress. To alleviate its condition, Our Haus suspended some of
its construction projects and asked the affected workers, including the respondents, to take vacation leaves. 8

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:

1. Wage Order No. NCR-13, which provides for a daily minimum wage rate of 362.00for the non-agriculture
sector (effective from August 28, 2007 until June 13, 2008); and

2. Wage Order No. NCR-14, which provides for a daily minimum wage rate of 382.00for the non-agriculture
sector (effective from June 14, 2008 until June 30, 2010).

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. 215were 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 when they rendered overtime work had not been proven.22
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 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 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 290.00 which represents the foods raw value; the weekly cooking cost (cooks wage, LPG, water) at 239.40
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.

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

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 did not commit grave abuse of discretion in ruling on the case?38 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:

a. proof must be shown thatsuch facilities are customarily furnished by the trade;

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 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

We agree with the NLRCs finding that the sinumpaang salaysay statements submitted by Our Haus are self-
serving.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 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

Our Haus admitted that it deducted the amount of 290.00 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 249.40 per week per
person. From these, it appears that the total meal expense per week for each person is 529.40,making Our Haus 290.00
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

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.
 G.R. No. 157634 May 16, 2005
MAYON HOTEL & RESTAURANT, PACITA O. PO and/or JOSEFA PO LAM, petitioners, vs.
ROLANDO ADANA, CHONA BUMALAY, ROGER BURCE, EDUARDO ALAMARES, AMADO ALAMARES,
EDGARDO TORREFRANCA, LOURDES CAMIGLA, TEODORO LAURENARIA, WENEFREDO LOVERES, LUIS
GUADES, AMADO MACANDOG, PATERNO LLARENA, GREGORIO NICERIO, JOSE ATRACTIVO, MIGUEL
TORREFRANCA, and SANTOS BROOLA, respondents.

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 Resolution2 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 Arbiter4 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

XXXXX
XXXXX
XXXXX

Due to the expiration and non-renewal of the lease contract for the rented space occupied by the said hotel and restaurant
at Rizal Street, the hotel 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.10 Only nine (9) of the sixteen (16) employees continued working in
the Mayon Restaurant at its new site.11

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

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.

Respondents filed a motion for reconsideration with the NLRC and when this was denied, they filed a petition
for certiorari with the CA which rendered the now assailed decision.
After their motion for reconsideration was denied, petitioners now come to this Court, seeking the reversal of the CA
decision on the following grounds:

I. The Honorable Court of Appeals erred in reversing the decision of the National Labor Relations Commission
(Second Division) by holding that the findings of fact of the NLRC were not supported by substantial evidence
despite ample and sufficient evidence showing that the NLRC decision is indeed supported by substantial
evidence;

II. The Honorable Court of Appeals erred in upholding the joint decision of the labor arbiter which ruled that
private respondents were illegally dismissed from their employment, despite the fact that the reason why private
respondents were out of work was not due to the fault of petitioners but to causes beyond the control of
petitioners.

III. The Honorable Court of Appeals erred in upholding the award of monetary benefits by the labor arbiter in his
joint decision in favor of the private respondentS, including the award of damages to six (6) of the private
respondents, despite the fact that the private respondents have not proven by substantial evidence their
entitlement thereto and especially the fact that they were not illegally dismissed by the petitioners.

IV. The Honorable Court of Appeals erred in holding that Pacita Ong Po is the owner of the business
establishment, petitioner Mayon Hotel and Restaurant, thus disregarding the certificate of registration of the
business establishment ISSUED by the local government, which is a public document, and the unqualified
admissions of complainants-private respondents.14

In essence, the petition calls for a review of the following issues:

1. Was it correct for petitioner Josefa Po Lam to be held liable as the owner of petitioner Mayon Hotel &
Restaurant, and the proper respondent in this case?

2. Were respondents Loveres, Guades, Macandog, Atractivo, Llarena and Nicerio illegally dismissed?

3. Are respondents entitled to their money claims due to underpayment of wages, and nonpayment of holiday pay,
rest day premium, SILP, COLA, overtime pay, and night shift differential pay?

It is petitioners' contention that the above issues have already been threshed out sufficiently and definitively by the
NLRC. They therefore assail the CA's reversal of the NLRC decision, claiming that based on the ruling in Castillo v.
NLRC,15 it is non sequitur that the CA should re-examine the factual findings of both the NLRC and the Labor Arbiter,
especially as in this case the NLRC's findings are allegedly supported by substantial evidence.

We do not agree.

There is no denying that it is within the NLRC's competence, as an appellate agency reviewing decisions of Labor
Arbiters, to disagree with and set aside the latter's findings. 16 But it stands to reason that the NLRC should state an
acceptable cause therefore, otherwise it would be a whimsical, capricious, oppressive, illogical, unreasonable exercise of
quasi-judicial prerogative, subject to invalidation by the extraordinary writ of certiorari.17 And when the factual findings
of the Labor Arbiter and the NLRC are diametrically opposed and this disparity of findings is called into question, there
is, necessarily, a re-examination of the factual findings to ascertain which opinion should be sustained.18 As ruled
in Asuncion v. NLRC,19

Although, it is a legal tenet that factual findings of administrative bodies are entitled to great weight and respect,
we are constrained to take a second look at the facts before us because of the diversity in the opinions of the
Labor Arbiter and the NLRC. A disharmony between the factual findings of the Labor Arbiter and those of the
NLRC opens the door to a review thereof by this Court.20

The CA, therefore, did not err in reviewing the records to determine which opinion was supported by substantial
evidence.

Moreover, it is explicit in Castillo v. NLRC21 that factual findings of administrative bodies like the NLRC are
affirmed only if they are supported by substantial evidence that is manifest in the decision and on the records. As
stated in Castillo:

[A]buse of discretion does not necessarily follow from a reversal by the NLRC of a decision of a Labor Arbiter.
Mere variance in evidentiary assessment between the NLRC and the Labor Arbiter does not automatically call for
a full review of the facts by this Court. The NLRC's decision, so long as it is not bereft of substantial support
from the records, deserves respect from this Court. As a rule, the original and exclusive jurisdiction to review a
decision or resolution of respondent NLRC in a petition for certiorari under Rule 65 of the Rules of Court does
not include a correction of its evaluation of the evidence but is confined to issues of jurisdiction or grave abuse of
discretion. Thus, the NLRC's factual findings, if supported by substantial evidence, are entitled to great respect
and even finality, unless petitioner is able to show that it simply and arbitrarily disregarded the evidence before it
 or had misappreciated the evidence to such an extent as to compel a contrary conclusion if such evidence had
been properly appreciated. (citations omitted)22

After careful review, we find that the reversal of the NLRC's decision was in order precisely because it was not supported
by substantial evidence.

1. Ownership by Josefa Po Lam

The Labor Arbiter ruled that as regards the claims of the employees, petitioner Josefa Po Lam is, in fact, the owner of
Mayon Hotel & Restaurant. Although the NLRC reversed this decision, the CA, on review, agreed with the Labor Arbiter
that notwithstanding the certificate of registration in the name of Pacita Po, it is Josefa Po Lam who is the
owner/proprietor of Mayon Hotel & Restaurant, and the proper respondent in the complaints filed by the employees. The
CA decision states in part:

[Despite] the existence of the Certificate of Registration in the name of Pacita Po, we cannot fault the labor
arbiter in ruling that Josefa Po Lam is the owner of the subject hotel and restaurant. There were conflicting
documents submitted by Josefa herself. She was ordered to submit additional documents to clearly establish
ownership of the hotel and restaurant, considering the testimonies given by the [respondents] and the non-
appearance and failure to submit her own position paper by Pacita Po. But Josefa did not comply with the
directive of the Labor Arbiter. The ruling of the Supreme Court in Metropolitan Bank and Trust Company v.
Court of Appeals applies to Josefa Po Lam which is stated in this wise:

When the evidence tends to prove a material fact which imposes a liability on a party, and he has it in his
power to produce evidence which from its very nature must overthrow the case made against him if it is
not founded on fact, and he refuses to produce such evidence, the presumption arises that the evidence[,]
if produced, would operate to his prejudice, and support the case of his adversary.

Furthermore, in ruling that Josefa Po Lam is the real owner of the hotel and restaurant, the labor arbiter relied also
on the testimonies of the witnesses, during the hearing of the instant case. When the conclusions of the labor
arbiter are sufficiently corroborated by evidence on record, the same should be respected by appellate tribunals,
since he is in a better position to assess and evaluate the credibility of the contending parties.23(citations omitted)

Petitioners insist that it was error for the Labor Arbiter and the CA to have ruled that petitioner Josefa Po Lam is the
owner of Mayon Hotel & Restaurant. They allege that the documents they submitted to the Labor Arbiter sufficiently and
clearly establish the fact of ownership by petitioner Pacita Po, and not her mother, petitioner Josefa Po Lam. They
contend that petitioner Josefa Po Lam's participation was limited to merely (a) being the overseer; (b) receiving the
month-to-month and/or year-to-year financial reports prepared and submitted by respondent Loveres; and (c) visitation of
the premises.24 They also put emphasis on the admission of the respondents in their position paper submitted to the Labor
Arbiter, identifying petitioner Josefa Po Lam as the manager, and Pacita Po as the owner. 25 This, they claim, is a judicial
admission and is binding on respondents. They protest the reliance the Labor Arbiter and the CA placed on their failure to
submit additional documents to clearly establish ownership of the hotel and restaurant, claiming that there was no need
for petitioner Josefa Po Lam to submit additional documents considering that the Certificate of Registration is the best
and primary evidence of ownership.

We disagree with petitioners. We have scrutinized the records and find the claim that petitioner Josefa Po Lam is merely
the overseer is not borne out by the evidence.

First. It is significant that only Josefa Po Lam appeared in the proceedings with the Labor Arbiter. Despite receipt of the
Labor Arbiter's notice and summons, other notices and Orders, petitioner Pacita Po failed to appear in any of the
proceedings with the Labor Arbiter in these cases, nor file her position paper.26 It was only on appeal with the NLRC that
Pacita Po signed the pleadings.27 The apathy shown by petitioner Pacita Po is contrary to human experience as one would
think that the owner of an establishment would naturally be concerned when all her employees file complaints against
her.

Second. The records of the case belie petitioner Josefa Po Lam's claim that she is merely an overseer. The findings of the
Labor Arbiter on this question were based on credible, competent and substantial evidence. We again quote the Joint
Decision on this matter:

Mayon Hotel and Restaurant is a [business name] of an enterprise. While [petitioner] Josefa Po Lam claims that it
is her daughter, Pacita Po, who owns the hotel and restaurant when the latter purchased the same from one
Palanos in 1981, Josefa failed to submit the document of sale from said Palanos to Pacita as allegedly the sale
was only verbal although the license to operate said hotel and restaurant is in the name of Pacita which, despite
our Order to Josefa to present the same, she failed to comply (p. 38, tsn. August 13, 1998). While several
documentary evidences were submitted by Josefa wherein Pacita was named therein as owner of the hotel and
restaurant (pp. 64, 65, 67 to 69; vol. I, rollo)[,] there were documentary evidences also that were submitted by
Josefa showing her ownership of said enterprise (pp. 468 to 469; vol. II, rollo). While Josefa explained her
participation and interest in the business as merely to help and assist her daughter as the hotel and restaurant was
near the former's store, the testimonies of [respondents] and Josefa as well as her demeanor during the trial in
these cases proves (sic) that Josefa Po Lam owns Mayon Hotel and Restaurant. [Respondents] testified that it was
Josefa who exercises all the acts and manifestation of ownership of the hotel and restaurant like transferring
 employees from the Greatwall Palace Restaurant which she and her husband Roy Po Lam previously owned; it is
Josefa to whom the employees submits (sic) reports, draws money for payment of payables and for marketing,
attending (sic) to Labor Inspectors during ocular inspections. Except for documents whereby Pacita Po appears as
the owner of Mayon Hotel and Restaurant, nothing in the record shows any circumstance or manifestation that
Pacita Po is the owner of Mayon Hotel and Restaurant. The least that can be said is that it is absurd for a person
to purchase a hotel and restaurant in the very heart of the City of Legazpi verbally. Assuming this to be true,
when [petitioners], particularly Josefa, was directed to submit evidence as to the ownership of Pacita of the hotel
and restaurant, considering the testimonies of [respondents], the former should [have] submitted the lease contract
between the owner of the building where Mayon Hotel and Restaurant was located at Rizal St., Legazpi City and
Pacita Po to clearly establish ownership by the latter of said enterprise. Josefa failed. We are not surprised why
some employers employ schemes to mislead Us in order to evade liabilities. We therefore consider and hold
Josefa Po Lam as the owner/proprietor of Mayon Hotel and Restaurant and the proper respondent in these cases.28

Petitioners' reliance on the rules of evidence, i.e., the certificate of registration being the best proof of ownership, is
misplaced. Notwithstanding the certificate of registration, doubts were cast as to the true nature of petitioner Josefa Po
Lam's involvement in the enterprise, and the Labor Arbiter had the authority to resolve this issue. It was therefore within
his jurisdiction to require the additional documents to ascertain who was the real owner of petitioner Mayon Hotel &
Restaurant.

Article 221 of the Labor Code is clear: technical rules are not binding, and the application of technical rules of procedure
may be relaxed in labor cases to serve the demand of substantial justice.29 The rule of evidence prevailing in court of law
or equity shall not be controlling in labor cases and it is the spirit and intention of the Labor Code that the Labor Arbiter
shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to
technicalities of law or procedure, all in the interest of due process. 30 Labor laws mandate the speedy administration of
justice, with least attention to technicalities but without sacrificing the fundamental requisites of due process.31

Similarly, the fact that the respondents' complaints contained no allegation that petitioner Josefa Po Lam is the owner is
of no moment. To apply the concept of judicial admissions to respondents who are but lowly employees - would be to
exact compliance with technicalities of law that is contrary to the demands of substantial justice. Moreover, the issue of
ownership was an issue that arose only during the course of the proceedings with the Labor Arbiter, as an incident of
determining respondents' claims, and was well within his jurisdiction.32

Petitioners were also not denied due process, as they were given sufficient opportunity to be heard on the issue of
ownership.33 The essence of due process in administrative proceedings is simply an opportunity to explain one's side or an
opportunity to seek reconsideration of the action or ruling complained of.34 And there is nothing in the records which
would suggest that petitioners had absolute lack of opportunity to be heard. 35 Obviously, the choice not to present
evidence was made by petitioners themselves.36

But more significantly, we sustain the Labor Arbiter and the CA because even when the case was on appeal with the
NLRC, nothing was submitted to negate the Labor Arbiter's finding that Pacita Po is not the real owner of the subject
hotel and restaurant. Indeed, no such evidence was submitted in the proceedings with the CA nor with this Court.
Considering that petitioners vehemently deny ownership by petitioner Josefa Po Lam, it is most telling that they continue
to withhold evidence which would shed more light on this issue. We therefore agree with the CA that the failure to submit
could only mean that if produced, it would have been adverse to petitioners' case.37

Thus, we find that there is substantial evidence to rule that petitioner Josefa Po Lam is the owner of petitioner Mayon
Hotel & Restaurant.

2. Illegal Dismissal: claim for separation pay

Of the sixteen employees, only the following filed a case for illegal dismissal: respondents Loveres, Llarena, Nicerio,
Macandog, Guades, Atractivo and 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 above-named
respondents were illegally dismissed, or entitled to separation or retirement pay. According to petitioners, even the Labor
Arbiter and the CA admit that when the illegal dismissal case was filed by respondents on April 1997, they had as yet no
cause of action. Petitioners therefore conclude that the filing by respondents of the illegal dismissal case was premature
and should have been dismissed outright by the Labor Arbiter.42 Petitioners also claim that since the validity of
respondents' dismissal is a factual question, it is not for the reviewing court to weigh the conflicting evidence.43
We do not agree. Whether respondents are still working for petitioners is a factual question. And the records are
unequivocal that since April 1997, when petitioner Mayon Hotel & Restaurant suspended its hotel operations and
transferred its restaurant operations in Elizondo Street, respondents Loveres, Macandog, Llarena, Guades and Nicerio
have not been permitted to work for petitioners. Respondent Alamares, on the other hand, was also laid-off when the
Elizondo Street operations closed, as were all the other respondents. Since then, respondents have not been permitted to
work nor recalled, even after the construction of the new premises at 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 Arbiter's
finding was based on conjecture.46 It was a serious error that the NLRC did not inquire as to the legality of the cessation
of employment. Article 286 of the Labor Code is clear there is termination of employment when an otherwise bona
fide suspension of work exceeds six (6) months.47 The cessation of employment for more than six months was patent and
the employer has the burden of proving that the termination was for a just or authorized cause. 48

Moreover, we are not impressed by any of petitioners' attempts to exculpate themselves from the charges. First, in the
proceedings with the Labor Arbiter, they claimed that it could not be illegal dismissal because the lay-off was merely
temporary (and due to the expiration of the lease contract over the old premises of the hotel). They specifically invoked
Article 286 of the Labor Code to argue that the claim for separation pay was premature and without legal and factual
basis.49 Then, because the Labor Arbiter had ruled that there was already illegal dismissal when the lay-off had exceeded
the six-month period provided for in Article 286, petitioners raise this novel argument, to wit:

It is the firm but respectful submission of petitioners that reliance on Article 286 of the Labor Code is misplaced,
considering that the reason why private respondents were out of work was not due to the fault of petitioners. The
failure of petitioners to reinstate the private respondents to their former positions should not likewise be
attributable to said petitioners as the private respondents did not submit any evidence to prove their alleged illegal
dismissal. The petitioners cannot discern why they should be made liable to the private respondents for their
failure to be reinstated considering that the fact that they were out of work was not due to the fault of petitioners
but due to circumstances beyond the control of petitioners, which are the termination and non-renewal of the
lease contract over the subject premises. Private respondents, however, argue in their Comment that petitioners
themselves sought the application of Article 286 of the Labor Code in their case in their Position Paper filed
before the Labor Arbiter. In refutation, petitioners humbly submit that even if they invoke Article 286 of the
Labor Code, still the fact remains, and this bears stress and emphasis, that the temporary suspension of the
operations of the establishment arising from the non-renewal of the lease contract did not result in the termination
of employment of private respondents and, therefore, the petitioners cannot be faulted if said private respondents
were out of work, and consequently, they are not entitled to their money claims against the petitioners.50

It is confounding how petitioners have fashioned their arguments. After having admitted, in effect, that respondents have
been laid-off since April 1997, they would have this Court excuse their refusal to reinstate respondents or grant them
separation pay because these same respondents purportedly have not proven the illegality of their dismissal.

Petitioners' arguments reflect their lack of candor and the blatant attempt to use technicalities to muddle the issues and
defeat the lawful claims of their employees. First, petitioners admit that since April 1997, when hotel operations were
suspended due to the termination of the lease of the old premises, respondents Loveres, Macandog, Llarena, Nicerio and
Guades have not been permitted to work. Second, even after six months of what should have been just a temporary
lay-off, the same respondents were still not recalled to work. As a matter of fact, the Labor Arbiter even found that as of
the time when he rendered his Joint Decision on July 2000 or more than three (3) years after the supposed "temporary
lay-off," the employment of all of the respondents with petitioners had ceased, notwithstanding that the new premises
had been completed and the same operated as a hotel with bar and restaurant. This is clearly dismissal or the
permanent severance or complete separation of the worker from the service on the initiative of the employer regardless of
the reasons therefor.51

On this point, we note that the Labor Arbiter and the CA are in accord that at the time of the filing of the complaint,
respondents had no cause of action to file the case for illegal dismissal. According to the CA and the Labor Arbiter, the
lay-off of the respondents was merely temporary, pending construction of the new building at 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
employer-employee relationship was merely suspended, and therefore the claim for separation pay was premature and
without legal or factual basis.53 But they made no mention of any intent to recall these respondents to work upon
completion of the new premises. Third, the various pleadings on record show that petitioners held respondents,
particularly Loveres, as responsible for mismanagement of the establishment and for abuse of trust and confidence.
Petitioner Josefa Po Lam's affidavit on July 21, 1998, for example, squarely blamed respondents, specifically Loveres,
Bumalay and Camigla, for abusing her leniency and causing petitioner Mayon Hotel & Restaurant to sustain "continuous
losses until it is closed." She then asserts that respondents "are not entitled to separation pay for they were not terminated
and if ever the business ceased to operate it was because of losses." 54 Again, petitioners make the same allegation in their
memorandum on appeal with the NLRC, where they alleged that three (3) years prior to the expiration of the lease in
1997, the operation of the Hotel had been sustaining consistent losses, and these were solely attributed to respondents, but
most especially due to Loveres's mismanagement and abuse of petitioners' trust and confidence. 55 Even the petition filed
in this court made reference to the separation of the respondents due to "severe financial losses and reverses," again
imputing it to respondents' mismanagement.56 The vehemence of petitioners' accusation of mismanagement against
respondents, especially against Loveres, is inconsistent with the desire to recall them to work. Fourth, petitioners'
memorandum on appeal also averred that the case was filed "not because of the business being operated by them or that
they were supposedly not receiving benefits from the Labor Code which is true, but because of the fact that the source of
their livelihood, whether legal or immoral, was stopped on March 31, 1997, when the owner of the building
terminated the Lease Contract."57 Fifth, petitioners had inconsistencies in their pleadings (with the NLRC, CA and with
this Court) in referring to the closure,58 i.e., in the petition filed with this court, they assert that there is no illegal dismissal
because there was "only a temporary cessation or suspension of operations of the hotel and restaurant due to
circumstances beyond the control of petitioners, and that is, the non-renewal of the lease contract..."59 And yet, in the
same petition, they also assert that: (a) the separation of respondents was due to severe financial losses and reverses
leading to the closure of the business; and (b) petitioner Pacita Po had to close shop and was bankrupt and has no
liquidity to put up her own building to house Mayon Hotel & Restaurant.60 Sixth, and finally, the uncontroverted finding
of the Labor Arbiter that petitioners terminated all the other respondents, by not employing them when the Hotel and
Restaurant transferred to its new site on 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. 64

And even assuming that the closure was due to a reason beyond the control of the employer, it still has to accord its
employees some relief in the form of severance pay.65

While we recognize the right of the employer to terminate the services of an employee for a just or authorized cause, the
dismissal of employees must be made within the parameters of law and pursuant to the tenets of fair play. 66 And in
termination disputes, the burden of proof is always on the employer to prove that the dismissal was for a just or
authorized cause.67 Where there is no showing of a clear, valid and legal cause for termination of employment, the law
considers the case a matter of illegal dismissal.68

Under these circumstances, the award of damages was proper. As a rule, moral damages are recoverable where the
dismissal of the employee was attended by bad faith or fraud or constituted an act oppressive to labor, or was done in a
manner contrary to morals, good customs or public policy.69 We believe that the dismissal of the respondents was
attended with bad faith and meant to evade the lawful obligations imposed upon an employer.
To rule otherwise would lead to the anomaly of respondents being terminated from employment in 1997 as a matter of
fact, but without legal redress. This runs counter to notions of fair play, substantial justice and the constitutional mandate
that labor rights should be respected. If doubts exist between the evidence presented by the employer and the employee,
the scales of justice must be tilted in favor of the latter the employer must affirmatively show rationally adequate
evidence that the dismissal was for a justifiable cause.70 It is a time-honored rule that in controversies between a laborer
and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writing should be
resolved in the former's favor.71 The policy is to extend the doctrine to a greater number of employees who can avail of
the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and
protection of labor.72

We therefore reinstate the Labor Arbiter's decision with the following modifications:

(a) Separation pay for the illegal dismissal of respondents Loveres, Macandog and Llarena; (Santos Broola
cannot be granted separation pay as he made no such claim);

(b) Retirement pay for respondents Guades, Nicerio, and Alamares, who at the time of dismissal were entitled to
their retirement benefits pursuant to Article 287 of the Labor Code as amended;73 and

(c) Damages for respondents Loveres, Macandog, Llarena, Guades, Nicerio, Atractivo, and Broola.

3. Money claims

The CA held that contrary to the NLRC's ruling, petitioners had not discharged the burden of proving that the monetary
claims of the respondents have been paid.74 The CA thus reinstated the Labor Arbiter's grant of respondents' monetary
claims, including damages.

Petitioners assail this ruling by repeating their long and convoluted argument that as there was no illegal dismissal, then
respondents are not entitled to their monetary claims or separation pay and damages. Petitioners' arguments are not only
tiring, repetitive and unconvincing, but confusing and confused entitlement to labor standard benefits is a separate and
distinct concept from payment of separation pay arising from illegal dismissal, and are governed by different provisions
of the Labor Code.

We agree with the CA and the Labor Arbiter. Respondents have set out with particularity in their complaint, position
paper, affidavits and other documents the labor standard benefits they are entitled to, and which they alleged that
petitioners have failed to pay them. It was therefore petitioners' burden to prove that they have paid these money claims.
One who pleads payment has the burden of proving it, and even where the employees must allege nonpayment, the
general rule is that the burden rests on the defendant to prove nonpayment, rather than on the plaintiff to prove non
payment.75 This petitioners failed to do.

We also agree with the Labor Arbiter and the CA that the documents petitioners submitted, i.e., affidavits executed by
some of respondents during an ocular inspection conducted by an inspector of the DOLE; notices of inspection result and
Facility Evaluation Orders issued by DOLE, are not sufficient to prove payment.76 Despite repeated orders from the Labor
Arbiter,77 petitioners failed to submit the pertinent employee files, payrolls, records, remittances and other similar
documents which would show that respondents rendered work entitling them to payment for overtime work, night shift
differential, premium pay for work on holidays and rest day, and payment of these as well as the COLA and the SILP
documents which are not in respondents' possession but in the custody and absolute control of petitioners.78 By choosing
not to fully and completely disclose information and present the necessary documents to prove payment of labor standard
benefits due to respondents, petitioners failed to discharge the burden of proof.79 Indeed, petitioners' failure to submit the
necessary documents which as employers are in their possession, inspite of orders to do so, gives rise to the presumption
that their presentation is prejudicial to its cause.80 As aptly quoted by the CA:

[W]hen the evidence tends to prove a material fact which imposes a liability on a party, and he has it in his power
to produce evidence which from its very nature must overthrow the case made against him if it is not founded on
fact, and he refuses to produce such evidence, the presumption arises that the evidence, if produced, would
operate to his prejudice, and support the case of his adversary.81

Petitioners next claim that the cost of the food and snacks provided to respondents as facilities should have been included
in reckoning the payment of respondents' wages. They state that although on the surface respondents appeared to receive
minimal wages, petitioners had granted respondents other benefits which are considered part and parcel of their wages
and are allowed under existing laws.82 They claim that these benefits make up for whatever inadequacies there may be in
compensation.83 Specifically, they invoked Sections 5 and 6, Rule VII-A, which allow the deduction of facilities provided
by the employer through an appropriate Facility Evaluation Order issued by the Regional Director of the
DOLE.84 Petitioners also aver that they give five (5) percent of the gross income each month as incentives. As proof of
compliance of payment of minimum wages, petitioners submitted the Notice of Inspection Results issued in 1995 and
1997 by the DOLE Regional Office.85

The cost of meals and snacks purportedly provided to respondents cannot be deducted as part of respondents' minimum
wage. As stated in the Labor Arbiter's decision:86
 While [petitioners] submitted Facility Evaluation Orders (pp. 468, 469; vol. II, rollo) issued by the DOLE
Regional Office whereby the cost of meals given by [petitioners] to [respondents] were specified for purposes of
considering the same as part of their wages, We cannot consider the cost of meals in the Orders as applicable to
[respondents]. [Respondents] were not interviewed by the DOLE as to the quality and quantity of food appearing
in the applications of [petitioners] for facility evaluation prior to its approval to determine whether or not
[respondents] were indeed given such kind and quantity of food. Also, there was no evidence that the quality and
quantity of food in the Orders were voluntarily accepted by [respondents]. On the contrary; while some [of the
respondents] admitted that they were given meals and merienda, the quality of food serve[d] to them were not
what were provided for in the Orders and that it was only when they filed these cases that they came to know
about said Facility Evaluation Orders (pp. 100; 379[,] vol. II, rollo; p. 40, tsn[,] June 19, 1998). [Petitioner]
Josefa herself, who applied for evaluation of the facility (food) given to [respondents], testified that she did not
inform [respondents] concerning said Facility Evaluation Orders (p. 34, tsn[,] August 13, 1998).

Even granting that meals and snacks were provided and indeed constituted facilities, such facilities could not be deducted
without compliance with certain legal requirements. As stated in Mabeza v. NLRC,87 the employer simply cannot deduct
the value from the employee's wages without satisfying the following: (a) proof that such facilities are customarily
furnished by the trade; (b) the provision of deductible facilities is voluntarily accepted in writing by the employee; and (c)
the facilities are charged at fair and reasonable value. The records are clear that petitioners failed to comply with these
requirements. There was no proof of respondents' written authorization. Indeed, the Labor Arbiter found that while the
respondents admitted that they were given meals and merienda, the quality of food served to them was not what was
provided for in the Facility Evaluation Orders and it was only when they filed the cases that they came to know of this
supposed Facility Evaluation Orders.88 Petitioner Josefa Po Lam herself admitted that she did not inform the respondents
of the facilities she had applied for.89

Considering the failure to comply with the above-mentioned legal requirements, the Labor Arbiter therefore erred when
he ruled that the cost of the meals actually provided to respondents should be deducted as part of their salaries, on the
ground that respondents have availed themselves of the food given by petitioners. 90 The law is clear that mere availment
is not sufficient to allow deductions from employees' wages.

More important, we note the uncontroverted testimony of respondents on record that they were required to eat in the hotel
and restaurant so that they will not go home and there is no interruption in the services of Mayon Hotel & Restaurant. As
ruled in Mabeza, food or snacks or other convenience provided by the employers are deemed as supplements if they are
granted for the convenience of the employer. The criterion in making a distinction between a supplement and a facility
does not so much lie in the kind (food, lodging) but the purpose.91 Considering, therefore, that hotel workers are required
to work different shifts and are expected to be available at various odd hours, their ready availability is a necessary matter
in the operations of a small hotel, such as petitioners' business. 92 The deduction of the cost of meals from respondents'
wages, therefore, should be removed.

We also do not agree with petitioners that the five (5) percent of the gross income of the establishment can be considered
as part of the respondents' wages. We quote with approval the Labor Arbiter on this matter, to wit:

While complainants, who were employed in the hotel, receive[d] various amounts as profit share, the same cannot
be considered as part of their wages in determining their claims for violation of labor standard benefits. Although
called profit share[,] such is in the nature of share from service charges charged by the hotel. This is more
explained by [respondents] when they testified that what they received are not fixed amounts and the same are
paid not on a monthly basis (pp. 55, 93, 94, 103, 104; vol. II, rollo). Also, [petitioners] failed to submit evidence
that the amounts received by [respondents] as profit share are to be considered part of their wages and had been
agreed by them prior to their employment. Further, how can the amounts receive[d] by [respondents] be
considered as profit share when the same [are] based on the gross receipt of the hotel[?] No profit can as yet be
determined out of the gross receipt of an enterprise. Profits are realized after expenses are deducted from the
gross income.

On the issue of the proper minimum wage applicable to respondents, we sustain the Labor Arbiter. We note that
petitioners themselves have admitted that the establishment employs "more or less sixteen (16) employees,"93therefore
they are estopped from claiming that the applicable minimum wage should be for service establishments employing 15
employees or less.

As for petitioners repeated invocation of serious business losses, suffice to say that this is not a defense to payment of
labor standard benefits. The employer cannot exempt himself from liability to pay minimum wages because of poor
financial condition of the company. The payment of minimum wages is not dependent on the employer's ability to pay. 94

Thus, we reinstate the award of monetary claims granted by the Labor Arbiter.

4. Conclusion

There is no denying that the actuations of petitioners in this case have been reprehensible. They have terminated the
respondents' employment in an underhanded manner, and have used and abused the quasi-judicial and judicial processes
to resist payment of their employees' rightful claims, thereby protracting this case and causing the unnecessary clogging
of dockets of the Court. They have also forced respondents to unnecessary hardship and financial expense. Indeed, the
circumstances of this case would have called for exemplary damages, as the dismissal was effected in a wanton,
oppressive or malevolent manner,95 and public policy requires that these acts must be suppressed and discouraged.96

Nevertheless, we cannot agree with the Labor Arbiter in granting exemplary damages of P10,000.00 each to all
respondents. While it is true that other forms of damages under the Civil Code may be awarded to illegally dismissed
employees,97 any award of moral damages by the Labor Arbiter cannot be based on the Labor Code but should be
grounded on the Civil Code.98 And the law is clear that exemplary damages can only be awarded if plaintiff shows proof
that he is entitled to moral, temperate or compensatory damages.99

As only respondents Loveres, Guades, Macandog, Llarena, Nicerio, Atractivo and Broola specifically claimed damages
from petitioners, then only they are entitled to exemplary damages.sjgs1

Finally, we rule that attorney's fees in the amount to P10,000.00 should be granted to each respondent. It is settled that in
actions for recovery of wages or where an employee was forced to litigate and incur expenses to protect his rights and
interest, he is entitled to an award of attorney's fees.100 This case undoubtedly falls within this rule.

IN VIEW WHEREOF, the petition is hereby DENIED. The Decision of January 17, 2003 of the Court of Appeals in
CA-G.R. SP No. 68642 upholding the Joint Decision of July 14, 2000 of the Labor Arbiter in RAB V Case Nos. 04-
00079-97 and 04-00080-97 is AFFIRMED, with the following MODIFICATIONS:

(1) Granting separation pay of one-half (1/2) month for every year of service to respondents Loveres, Macandog
and Llarena;

(2) Granting retirement pay for respondents Guades, Nicerio, and Alamares;

(3) Removing the deductions for food facility from the amounts due to all respondents;

(4) Awarding moral damages of P20,000.00 each for respondents Loveres, Macandog, Llarena, Guades, Nicerio,
Atractivo, and 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 attorney's fees of P10,000.00 each to all respondents.

The case is REMANDED to the Labor Arbiter for the RECOMPUTATION of the total monetary benefits awarded and
due to the employees concerned in accordance with the decision. The Labor Arbiter is ORDERED to submit his
compliance thereon within thirty (30) days from notice of this decision, with copies furnished to the parties.

SO ORDERED.
 G.R. No. 118506 April 18, 1997
NORMA MABEZA, petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION, PETER NG/HOTEL SUPREME, respondents.

This petition seeking the nullification of a resolution of public respondent National Labor Relations Commission dated
April 28, 1994 vividly illustrates why courts should be ever vigilant in the preservation of the constitutionally enshrined
rights of the working class. Without the protection accorded by our laws and the tempering of courts, the natural and
historical inclination of capital to ride roughshod over the rights of labor would run unabated.

The facts of the case at bar, culled from the conflicting versions of petitioner and private respondent, are illustrative.

Petitioner Norma Mabeza contends that around the first week of May, 1991, she and her co-employees at the Hotel
Supreme in Baguio City were asked by the hotel's management to sign an instrument attesting to the latter's compliance
with minimum wage and other labor standard provisions of law. 1 The instrument provides: 2

JOINT AFFIDAVIT

We, SYLVIA IGANA, HERMINIGILDO AQUINO, EVELYN OGOY, MACARIA JUGUETA, ADELAIDA
NONOG, NORMA MABEZA, JONATHAN PICART and JOSE DIZON, all of legal ages (sic), Filipinos and
residents of Baguio City, under oath, depose and say:

1. That we are employees of Mr. Peter L. Ng of his Hotel Supreme situated at No. 416 Magsaysay Ave., Baguio City.
2. That the said Hotel is separately operated from the Ivy's Grill and Restaurant;
3. That we are all (8) employees in the hotel and assigned in each respective shifts;
4. That we have no complaints against the management of the Hotel Supreme as we are paid accordingly and
that we are treated well.
5. That we are executing this affidavit voluntarily without any force or intimidation and for the purpose of
informing the authorities concerned and to dispute the alleged report of the Labor Inspector of the Department
of Labor and Employment conducted on the said establishment on February 2, 1991.

IN WITNESS WHEREOF, we have hereunto set our hands this 7th day of May, 1991 at Baguio City,
Philippines.

(Sgd.) (Sgd.) (Sgd.)

SYLVIA IGAMA HERMINIGILDO AQUINO EVELYN OGOY

(Sgd.) (Sgd.) (Sgd.)

MACARIA JUGUETA ADELAIDA NONOG NORMA MABEZA.

(Sgd.) (Sgd.)
JONATHAN PICART JOSE DIZON

SUBSCRIBED AND SWORN to before me this 7th day of May, 1991, at Baguio City, Philippines.
Asst. City Prosecutor

Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to swear to the veracity and contents of the
affidavit as instructed by management. The affidavit was nevertheless submitted on the same day to the Regional Office
of the Department of Labor and Employment in Baguio City.

As gleaned from the affidavit, the same was drawn by management for the sole purpose of refuting findings of the Labor Inspector of
DOLE (in an inspection of respondent's establishment on February 2, 1991) apparently adverse to the private respondent. 3

After she refused to proceed to the City Prosecutor's Office on the same day the affidavit was submitted to the
Cordillera Regional Office of DOLE petitioner avers that she was ordered by the hotel management to turn over the
keys to her living quarters and to remove her belongings from the hotel
premises. 4 According to her, respondent strongly chided her for refusing to proceed to the City Prosecutor's Office to
attest to the affidavit. 5 She thereafter reluctantly filed a leave of absence from her job which was denied by management.
When she attempted to return to work on May 10, 1991, the hotel's cashier, Margarita Choy, informed her that she should
not report to work and, instead, continue with her unofficial leave of absence. Consequently, on May 13, 1991, three days
after her attempt to return to work, petitioner filed a complaint for illegal dismissal before the Arbitration Branch of the
National Labor Relations Commission CAR Baguio City. In addition to her complaint for illegal dismissal, she alleged
underpayment of wages, non-payment of holiday pay, service incentive leave pay, 13th month pay, night differential and
other benefits. The complaint was docketed as NLRC Case No. RAB-CAR-05-0198-91 and assigned to Labor Arbiter
Felipe P. Pati.

Responding to the allegations made in support of petitioner's complaint for illegal dismissal, private respondent Peter Ng
alleged before Labor Arbiter Pati that petitioner "surreptitiously left (her job) without notice to the management" 6 and
that she actually abandoned her work. He maintained that there was no basis for the money claims for underpayment and
other benefits as these were paid in the form of facilities to petitioner and the hotel's other employee. 7 Pointing to the
Affidavit of May 7, 1991, the private respondent asserted that his employees actually have no problems with
management. In a supplemental answer submitted eleven (11) months after the original complaint for illegal dismissal
was filed, private respondent raised a new ground, loss of confidence, which was supported by a criminal complaint for
Qualified Theft he filed before the prosecutor's office of the City of Baguio against petitioner on July 4, 1991. 8

On May 14, 1993, Labor Arbiter Pati rendered a decision dismissing petitioner's complaint on the ground of loss of
confidence. His disquisitions in support of his conclusion read as follows:

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 10 affirming the Labor Arbiter's decision. The resolution substantially incorporated the findings of the
Labor Arbiter. 11 Unsatisfied, petitioner instituted the instant special civil action for certiorari under Rule 65 of the Rules
of Court on the following grounds: 12

1. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED A
PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN ITS FAILURE TO
CONSIDER THAT THE ALLEGED LOSS OF CONFIDENCE IS A FALSE CAUSE AND AN AFTERTHOUGHT ON THE
PART OF THE RESPONDENT-EMPLOYER TO JUSTIFY, ALBEIT ILLEGALLY, THE DISMISSAL OF THE
COMPLAINANT FROM HER EMPLOYMENT;

2. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED A
PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN ADOPTING THE RULING
OF THE LABOR ARBITER THAT THERE WAS NO UNDERPAYMENT OF WAGES AND BENEFITS ON THE BASIS
OF EXHIBIT "8" (AN UNDATED SUMMARY OF COMPUTATION PREPARED BY ALLEGEDLY BY RESPONDENT'S
EXTERNAL ACCOUNTANT) WHICH IS TOTALLY INADMISSIBLE AS AN EVIDENCE TO PROVE PAYMENT OF
WAGES AND BENEFITS;

3. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED A
PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN FAILING TO CONSIDER
THE EVIDENCE ADDUCED BEFORE THE LABOR ARBITER AS CONSTITUTING UNFAIR LABOR PRACTICE
COMMITTED BY THE RESPONDENT.

The Solicitor General, in a Manifestation in lieu of Comment dated August 8, 1995 rejects private respondent's principal
claims and defenses and urges this Court to set aside the public respondent's assailed resolution. 13

We agree.

It is settled that in termination cases the employer bears the burden of proof to show that the dismissal is for just cause,
the failure of which would mean that the dismissal is not justified and the employee is entitled to reinstatement. 14

In the case at bar, the private respondent initially claimed that petitioner abandoned her job when she failed to return to
work on May 8, 1991. Additionally, in order to strengthen his contention that there existed sufficient cause for the
termination of petitioner, he belatedly included a complaint for loss of confidence, supporting this with charges that
petitioner had stolen a blanket, a bedsheet and two towels from the hotel. 15 Appended to his last complaint was a suit for
qualified theft filed with the Baguio City prosecutor's office.

From the evidence on record, it is crystal clear that the circumstances upon which private respondent anchored his claim
that petitioner "abandoned" her job were not enough to constitute just cause to sanction the termination of her services
under Article 283 of the Labor Code. For abandonment to arise, there must be concurrence of two things: 1) lack of
intention to work; 16 and 2) the presence of overt acts signifying the employee's intention not to work. 17

In the instant case, respondent does not dispute the fact that petitioner tried to file a leave of absence when she learned
that the hotel management was displeased with her refusal to attest to the affidavit. The fact that she made this attempt
clearly indicates not an intention to abandon but an intention to return to work after the period of her leave of absence,
had it been granted, shall have expired.

Furthermore, while absence from work for a prolonged period may suggest abandonment in certain instances, mere
absence of one or two days would not be enough to sustain such a claim. The overt act (absence) ought
to unerringly point to the fact that the employee has no intention to return to work, 18 which is patently not the case here.
In fact, several days after she had been advised to take an informal leave, petitioner tried to resume working with the
hotel, to no avail. It was only after she had been repeatedly rebuffed that she filed a case for illegal dismissal. These acts
militate against the private respondent's claim that petitioner abandoned her job. As the Solicitor General in his
manifestation observed:

Petitioner's absence on that day should not be construed as abandonment of her job. She did not report because the
cashier told her not to report anymore, and that private respondent Ng did not want to see her in the hotel premises.
But two days later or on the 10th of May, after realizing that she had to clarify her employment status, she again
reported for work. However, she was prevented from working by private respondents. 19

We now come to the second cause raised by private respondent to support his contention that petitioner was validly
dismissed from her job.

Loss of confidence as a just cause for dismissal was never intended to provide employers with a blank check for
terminating their employees. Such a vague, all-encompassing pretext as loss of confidence, if unqualifiedly given the seal
of approval by this Court, could readily reduce to barren form the words of the constitutional guarantee of security of
tenure. Having this in mind, loss of confidence should ideally apply only to cases involving employees occupying
positions of trust and confidence or to those situations where the employee is routinely charged with the care and custody
of the employer's money or property. To the first class belong managerial employees, i.e., those vested with the powers or
prerogatives to lay down management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees or effectively recommend such managerial actions; and to the second class belong cashiers,
auditors, property custodians, etc., or those who, in the normal and routine exercise of their functions, regularly handle
significant amounts of money or property. Evidently, an ordinary chambermaid who has to sign out for linen and other
hotel property from the property custodian each day and who has to account for each and every towel or bedsheet utilized
by the hotel's guests at the end of her shift would not fall under any of these two classes of employees for which loss of
confidence, if ably supported by evidence, would normally apply. Illustrating this distinction, this Court in Marina Port
Services, Inc. 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 janitor, he has access to this property. He too, is charged with its care
and protection.

Notably, however, and like the janitor again, he is entrusted only with the physical task of protecting that property.
The employer's trust and confidence in him is limited to that ministerial function. He is not entrusted, in the Labor
Arbiter's words, with the duties of safekeeping and safeguarding company policies, management instructions, and
company secrets such as operation devices. He is not privy to these confidential matters, which are shared only in the
higher echelons of management. It is the persons on such levels who, because they discharge these sensitive duties,
may be considered holding positions of trust and confidence. The security guard does not belong in such category. 21

More importantly, we have repeatedly held that loss of confidence should not be simulated in order to justify what would
otherwise be, under the provisions of law, an illegal dismissal. "It should not be used as a subterfuge for causes which are
illegal, improper and unjustified. It must be genuine, not a mere afterthought to justify an earlier action taken in bad
faith." 22

In the case at bar, the suspicious delay in private respondent's filing of qualified theft charges against petitioner long after
the latter exposed the hotel's scheme (to avoid its obligations as employer under the Labor Code) by her act of filing
illegal dismissal charges against the private respondent would hardly warrant serious consideration of loss of confidence
as a valid ground for dismissal. Notably, the Solicitor General has himself taken a position opposite the public respondent
and has observed that:

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" 24 which distinctly makes it an unfair labor practice
"to dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give
testimony" 25 under the Labor Code. For in not giving positive testimony in favor of her employer, petitioner had reserved
not only her right to dispute the claim and proffer evidence in support thereof but also to work for better terms and
conditions of employment.

For refusing to cooperate with the private respondent's scheme, petitioner was obviously held up as an example to all of
the hotel's employees, that they could only cause trouble to management at great personal inconvenience. Implicit in the
act of petitioner's termination and the subsequent filing of charges against her was the warning that they would not only
be deprived of their means of livelihood, but also possibly, their personal liberty.

This Court does not normally overturn findings and conclusions of quasi-judicial agencies when the same are ably
supported by the evidence on record. However, where such conclusions are based on a misperception of facts or where
they patently fly in the face of reason and logic, we will not hesitate to set aside those conclusions. Going into the issue of
petitioner's money claims, we find one more salient reason in this case to set things right: the labor arbiter's evaluation of
the money claims in this case incredibly ignores existing law and jurisprudence on the matter. Its blatant one-sidedness
simply raises the suspicion that something more than the facts, the law and jurisprudence may have influenced the
decision at the level of the Arbiter.

Labor Arbiter Pati accepted hook, line and sinker the private respondent's bare claim that the reason the monetary benefits
received by petitioner between 1981 to 1987 were less than minimum wage was because petitioner did not factor in the
meals, lodging, electric consumption and water she received during the period in her computations. 26Granting that meals
and lodging were provided and indeed constituted facilities, such facilities could not be deducted without the employer
complying first with certain legal requirements. Without satisfying these requirements, the employer simply cannot
deduct the value from the employee's ages. First, proof must be shown that such facilities are customarily furnished by the
trade. Second, the provision of deductible facilities must be voluntarily accepted in writing by the employee. Finally,
facilities must be charged at fair and reasonable value. 27

These requirements were not met in the instant case. Private respondent "failed to present any company policy or
guideline to show that the meal and lodging . . . (are) part of the salary;" 28 he failed to provide proof of the employee's
written authorization; and, he failed to show how he arrived at the valuations. 29

Curiously, in the case at bench, the only valuations relied upon by the labor arbiter in his decision were figures furnished
by the private respondent's own accountant, without corroborative evidence. On the pretext that records prior to the July
16, 1990 earthquake were lost or destroyed, respondent failed to produce payroll records, receipts and other relevant
documents, where he could have, as has been pointed out in the Solicitor General's manifestation, "secured certified
copies thereof from the nearest regional office of the Department of Labor, the SSS or the BIR." 30

More significantly, the food and lodging, or the electricity and water consumed by the petitioner were not facilities but
supplements. A benefit or privilege granted to an employee for the convenience of the employer is not a facility. The
criterion in making a distinction between the two not so much lies in the kind (food, lodging) but the
purpose. 31Considering, therefore, that hotel workers are required to work different shifts and are expected to be available
at various odd hours, their ready availability is a necessary matter in the operations of a small hotel, such as the private
respondent's hotel.

It is therefore evident that petitioner is entitled to the payment of the deficiency in her wages equivalent to the fullwage
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 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.

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.

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.

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 circumstance 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.

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;

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

5) P1,000.00.

ORDERED
 G.R. No. L-12444 February 28, 1963
STATES MARINE CORPORATION and ROYAL LINE, INC., petitioners, vs.
CEBU SEAMEN'S ASSOCIATION, INC., respondent.

Petitioners States Marine Corporation and Royal Line, Inc. were engaged in the business of marine coastwise
transportation, employing therein several steamships of Philippine registry. They had a collective bargaining contract with
the respondent Cebu Seamen's Association, Inc. On September 12, 1952, the respondent union filed with the Court of
Industrial Relations (CIR), a petition (Case No. 740-V) against the States Marine Corporation, later amended on May 4,
1953, by including as party respondent, the petitioner Royal Line, Inc. The Union alleged that the officers and men
working on board the petitioners' vessels have not been paid their sick leave, vacation leave and overtime pay; that the
petitioners threatened or coerced them to accept a reduction of salaries, observed by other shipowners; that after the
Minimum Wage Law had taken effect, the petitioners required their employees on board their vessels, to pay the sum of
P.40 for every meal, while the masters and officers were not required to pay their meals and that because Captain Carlos
Asensi had refused to yield to the general reduction of salaries, the petitioners dismissed said captain who now claims for
reinstatement and the payment of back wages from December 25, 1952, at the rate of P540.00, monthly.

The petitioners' shipping companies, answering, averred that very much below 30 of the men and officers in their employ
were members of the respondent union; that the work on board a vessel is one of comparative ease; that petitioners have
suffered financial losses in the operation of their vessels and that there is no law which provides for the payment of sick
leave or vacation leave to employees or workers of private firms; that as regards the claim for overtime pay, the
petitioners have always observed the provisions of Comm. Act No. 444, (Eight-Hour Labor Law), notwithstanding the
fact that it does not apply to those who provide means of transportation; that the shipowners and operators in Cebu were
paying the salaries of their officers and men, depending upon the margin of profits they could realize and other factors or
circumstances of the business; that in enacting Rep. Act No. 602 (Minimum Wage Law), the Congress had in mind that
the amount of P.40 per meal, furnished the employees should be deducted from the daily wages; that Captain Asensi was
not dismissed for alleged union activities, but with the expiration of the terms of the contract between said officer and the
petitioners, his services were terminated.

A decision was rendered on February 21, 1957 in favor of the respondent union. The motion for reconsideration thereof, having
been denied, the companies filed the present writ of certiorari, to resolve legal question involved. Always bearing in mind the
deep-rooted principle that the factual findings of the Court of Industrial Relations should not be disturbed, if supported by
substantial evidence, the different issues are taken up, in the order they are raised in the brief for the petitioners.

1. First assignment of error. The respondent court erred in holding that it had jurisdiction over case No. 740-V,
notwithstanding the fact that those who had dispute with the petitioners, were less than thirty (30) in number.

The CIR made a finding that at the time of the filing of the petition in case No. 740-V, respondent Union had
more than thirty members actually working with the companies, and the court declared itself with jurisdiction to
take cognizance of the case. Against this order, the herein petitioners did not file a motion for reconsideration or
a petition for certiorari. The finding of fact made by the CIR became final and conclusive, which We are not
now authorized to alter or modify. It is axiomatic that once the CIR had acquired jurisdiction over a case, it
continues to have that jurisdiction, until the case is terminated (Manila Hotel Emp. Association v. Manila Hotel
Company, et al., 40 O.G. No. 6, p. 3027). It was abundantly shown that there were 56 members who signed
Exhibits A, A-I to A-8, and that 103 members of the Union are listed in Exhibits B, B-1 to B-35, F, F-1 and K-2
to K-3. So that at the time of the filing of the petition, the respondent union had a total membership of 159,
working with the herein petitioners, who were presumed interested in or would be benefited by the outcome of
the case (NAMARCO v. CIR, L-17804, Jan. 1963). Annex D, (Order of the CIR, dated March 8, 1954),
likewise belies the contention of herein petitioner in this regard. The fact that only 7 claimed for overtime pay
and only 7 witnesses testified, does not warrant the conclusion that the employees who had some dispute with
the present petitioners were less than 30. The ruling of the CIR, with respect to the question of jurisdiction is,
therefore, correct.

2. Second assignment of error. The CIR erred in holding, that inasmuch as in the shipping articles, the herein
petitioners have bound themselves to supply the crew with provisions and with such "daily subsistence as shall be
mutually agreed upon" between the master and the crew, no deductions for meals could be made by the aforesaid
petitioners from their wages or salaries.

3. Third assignment of error. The CIR erred in holding that inasmuch as with regard to meals furnished to crew
members of a vessel, section 3(f) of Act No. 602 is the general rule, which section 19 thereof is the exception, the
cost of said meals may not be legally deducted from the wages or salaries of the aforesaid crew members by the
herein petitioners.

4. Fourth assignment of error. The CIR erred in declaring that the deduction for costs of meals from the wages or
salaries after August 4, 1951, is illegal and same should be reimbursed to the employee concerned, in spite of said
section 3, par. (f) of Act No. 602.

It was shown by substantial evidence, that since the beginning of the operation of the petitioner's business, all the crew of
their vessels have been signing "shipping articles" in which are stated opposite their names, the salaries or wages they
would receive. All seamen, whether members of the crew or deck officers or engineers, have been furnished free meals by
the ship owners or operators. All the shipping articles signed by the master and the crew members, contained, among
others, a stipulation, that "in consideration of which services to be duly performed, the said master hereby agrees to pay to
the said crew, as wages, the sums against their names respectively expressed in the contract; and to supply them with
provisions as provided herein ..." (Sec. 8, par. [b], shipping articles), and during the duration of the contract "the master of
the vessel will provide each member of the crew such daily subsistence as shall be mutually agreed daily upon between
said master and crew; or, in lieu of such subsistence the crew may reserve the right to demand at the time of execution of
these articles that adequate daily rations be furnished each member of the crew." (Sec. 8, par. [e], shipping articles). It is,
therefore, apparent that, aside from the payment of the respective salaries or wages, set opposite the names of the crew
members, the petitioners bound themselves to supply the crew with ship's provisions, daily subsistence or daily rations,
which include food.

This was the situation before August 4, 1951, when the Minimum Wage Law became effective. After this date, however,
the companies began deducting the cost of meals from the wages or salaries of crew members; but no such deductions
were made from the salaries of the deck officers and engineers in all the boats of the petitioners. Under the existing laws,
therefore, the query converges on the legality of such deductions. While the petitioners herein contend that the deductions
are legal and should not be reimbursed to the respondent union, the latter, however, claims that same are illegal and
reimbursement should be made.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this
Honorable Court, without prejudice to the parties adducing other evidence to prove their case not covered by this
stipulation of facts. 1wph1.t

We hold that such deductions are not authorized. In the coastwise business of transportation of passengers and freight, the
men who compose the complement of a vessel are provided with free meals by the shipowners, operators or agents,
because they hold on to their work and duties, regardless of "the stress and strain concomitant of a bad weather,
unmindful of the dangers that lurk ahead in the midst of the high seas."

Section 3, par. f, of the Minimum Wage Law, (R.A. No. 602), provides as follows

(f) Until and unless investigations by the Secretary of Labor on his initiative or on petition of any interested party
result in a different determination of the fair and reasonable value, the furnishing of meals shall be valued at not
more than thirty centavos per meal for agricultural employees and not more than forty centavos for any other
employees covered by this Act, and the furnishing of housing shall be valued at not more than twenty centavos
daily for agricultural workers and not more than forty centavos daily for other employees covered by this Act.

Petitioners maintain, in view of the above provisions, that in fixing the minimum wage of employees, Congress took into
account the meals furnished by employers and that in fixing the rate of forty centavos per meal, the lawmakers had in
mind that the latter amount should be deducted from the daily wage, otherwise, no rate for meals should have been
provided.

However, section 19, same law, states

SEC. 19. Relations to other labor laws and practices. Nothing in this Act shall deprive an employee of the
right to seek fair wages, shorter working hours and better working conditions nor justify an employer in violating
any other labor law applicable to his employees, in reducing the wage now paid to any of his employees in excess
of the minimum wage established under this Act, or in reducing supplements furnished on the date of enactment.

At first blush, it would appear that there exists a contradiction between the provisions of section 3(f) and section 19 of
Rep. Act No. 602; but from a careful examination of the same, it is evident that Section 3(f) constitutes the general rule,
while section 19 is the exception. In other words, if there are no supplements given, within the meaning and
contemplation of section 19, but merely facilities, section 3(f) governs. There is no conflict; the two provisions could, as
they should be harmonized. And even if there is such a conflict, the respondent CIR should resolve the same in favor of
the safety and decent living laborers (Art. 1702, new Civil Code)..

It is argued that the food or meals given to the deck officers, marine engineers and unlicensed crew members in question,
were mere "facilities" which should be deducted from wages, and not "supplements" which, according to said section 19,
should not be deducted from such wages, because it is provided therein: "Nothing in this Act shall deprive an employee of
the right to such fair wage ... or in reducing supplements furnished on the date of enactment." In the case of Atok-Big
Wedge Assn. v. Atok-Big Wedge Co., L-7349, July 19, 1955; 51 O.G. 3432, the two terms are defined as follows

"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 criterion is not so much with the kind of the benefit or item (food, lodging, bonus or sick leave) given, but its
purpose. Considering, therefore, as definitely found by the respondent court that the meals were freely given to crew
members prior to August 4, 1951, while they were on the high seas "not as part of their wages but as a necessary matter in
the maintenance of the health and efficiency of the crew personnel during the voyage", the deductions therein made for
the meals given after August 4, 1951, should be returned to them, and the operator of the coastwise vessels affected
should continue giving the same benefit..

In the case of Cebu Autobus Company v. United Cebu Autobus Employees Assn., L-9742, Oct. 27, 1955, the company
used to pay to its drivers and conductors, who were assigned outside of the City limits, aside from their regular salary, a
certain percentage of their daily wage, as allowance for food. Upon the effectivity of the Minimum Wage Law, however,
that privilege was stopped by the company. The order CIR to the company to continue granting this privilege, was upheld
by this Court.

The shipping companies argue that the furnishing of meals to the crew before the effectivity of Rep. Act No. 602, is of no
moment, because such circumstance was already taken into consideration by Congress, when it stated that "wage"
includes the fair and reasonable value of boards customarily furnished by the employer to the employees. If We are to
follow the theory of the herein petitioners, then a crew member, who used to receive a monthly wage of P100.00, before
August 4, 1951, with no deduction for meals, after said date, would receive only P86.00 monthly (after deducting the cost
of his meals at P.40 per meal), which would be very much less than the P122.00 monthly minimum wage, fixed in
accordance with the Minimum Wage Law. Instead of benefiting him, the law will adversely affect said crew member.
Such interpretation does not conform with the avowed intention of Congress in enacting the said law.

One should not overlook a fact fully established, that only unlicensed crew members were made to pay for their meals or
food, while the deck officers and marine engineers receiving higher pay and provided with better victuals, were not. This
pictures in no uncertain terms, a great and unjust discrimination obtaining in the present case (Pambujan Sur United Mine
Workers v. CIR, et al., L-7177, May 31, 1955).

Fifth, Sixth and Seventh assignments of error. The CIR erred in holding that Severino Pepito, a boatsman, had rendered
overtime work, notwithstanding the provisions of section 1, of C.A. No. 444; in basing its finding ofthe alleged overtime,
on the uncorroborated testimony of said Severino Pepito; and in ordering the herein petitioners to pay him. Severino
Pepito was found by the CIR to have worked overtime and had not been paid for such services. Severino Pepito
categorically stated that he worked during the late hours of the evening and during the early hours of the day when the
boat docks and unloads. Aside from the above, he did other jobs such as removing rusts and cleaning the vessel, which
overtime work totalled to 6 hours a day, and of which he has not been paid as yet. This statement was not rebutted by the
petitioners. Nobody working with him on the same boat "M/V Adriana" contrawise. The testimonies of boatswains of
other vessels(M/V Iruna and M/V Princesa), are incompetent and unreliable. And considering the established fact that the
work of Severino Pepito was continuous, and during the time he was not working, he could not leave and could not
completely rest, because of the place and nature of his work, the provisions of sec. 1, of Comm. Act No. 444, which states
"When the work is not continuous, the time during which the laborer is not working and can leave his working place and
can rest completely shall not be counted", find no application in his case.

8. Eighth assignment of error. The CIR erred in ordering petitioners to reinstate Capt. Carlos Asensi to his former
position, considering the fact that said officer had been employed since January 9, 1953, as captain of a vessel belonging
to another shipping firm in the City of Cebu.

The CIR held

Finding that the claims of Captain Carlos Asensi for back salaries from the time of his alleged lay-off on March 20,
1952, is not supported by the evidence on record, the same is hereby dismissed. Considering, however, that Captain
Asensi had been laid-off for a long time and that his failure to report for work is not sufficient cause for his absolute
dismissal, respondents are hereby ordered to reinstate him to his former job without back salary but under the same
terms and conditions of employment existing prior to his lay-off, without loss of seniority and other benefits already
acquired by him prior to March 20, 1952. This Court is empowered to reduce the punishment meted out to an erring
employee (Standard Vacuum Oil Co., Inc. v. Katipunan Labor Union, G.R. No. L-9666, Jan. 30, 1957). This step
taken is in consonance with section 12 of Comm. Act 103, as amended." (p. 16, Decision, Annex 'G').

The ruling is in conformity with the evidence, law and equity.

Ninth and Tenth assignments of error. The CIR erred in denying a duly verified motion for new trial, and in overruling
petitioner's motion for reconsideration.

The motion for new trial, supported by an affidavit, states that the movants have a good and valid defense and the same is
based on three orders of the WAS (Wage Administration Service), dated November 6, 1956. It is alleged that they would
inevitably affect the defense of the petitioners. The motion for new trial is without merit. Having the said wage Orders in
their possession, while the case was pending decision, it was not explained why the proper move was not taken to
introduce them before the decision was promulgated. The said wage orders, dealing as they do, with the evaluation of
meals and facilities, are irrelevant to the present issue, it having been found and held that the meals or food in question
are not facilities but supplements. The original petition in the CIR having been filed on Sept. 12, 1952, the WAS could
have intervened in the manner provided by law to express its views on the matter. At any rate, the admission of the three
wage orders have not altered the decision reached in this case.

IN VIEW HEREOF, the petition is dismissed, with costs against the petitioners.