G.R. No.

181806 March 12, 2014

WESLEYAN UNIVERSITY-PHILIPPINES, Petitioner,

vs.
WESLEYAN UNIVERSITY-PHILIPPINES FACULTY and STAFF ASSOCIATION, Respondent.

DECISION

DEL CASTILLO, J.:

A Collective Bargaining Agreement (CBA) is a contract entered into by an employer and a legitimate
labor organization concerning the terms and conditions of employment. 1 Like any other contract, it
has the force of law between the parties and, thus, should be complied with in good faith. 2 Unilateral
changes or suspensions in the implementation of the provisions of the CBA, therefore, cannot be
allowed without the consent of both parties.

This Petition for Review on Certiorari3 under Rule 45 of the Rules of Court assails the September 25,
2007 Decision4 and the February 5, 2008 Resolution5 of the Court of Appeals (CA) in CA-G.R. SP No.
97053.

Factual Antecedents

Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational institution duly

organized and existing under the laws of the Philippines.6 Respondent Wesleyan University-
Philippines Faculty and Staff Association, on the other hand, is a duly registered labor
organization7 acting as the sole and exclusive bargaining agent of all rank-and-file faculty and staff
employees of petitioner.8

In December 2003, the parties signed a 5-year CBA9 effective June 1, 2003 until May 31, 2008.10

On August 16, 2005, petitioner, through its President, Atty. Guillermo T. Maglaya (Atty. Maglaya),
issued a Memorandum11 providing guidelines on the implementation of vacation and sick leave
credits as well as vacation leave commutation. The pertinent portions of the Memorandum read:

1. VACATION AND SICK LEAVE CREDITS

Vacation and sick leave credits are not automatic. They have to be earned. Monthly, a
qualified employee earns an equivalent of 1.25 days credit each for VL and SL. Vacation
Leave and Sick Leave credits of 15 days become complete at the cut off date of May 31 of
each year. (Example, only a total of 5 days credit will be given to an employee for each of sick
leave [or] vacation leave, as of month end September, that is, 4 months from June to
September multiplied by 1.25 days). An employee, therefore, who takes VL or SL beyond his
leave credits as of date will have to file leave without pay for leaves beyond his credit.

2. VACATION LEAVE COMMUTATION

Only vacation leave is commuted or monetized to cash. Vacation leave commutation is

effected after the second year of continuous service of an employee. Hence, an employee who
started working June 1, 2005 will get his commutation on May 31, 2007 or thereabout. 12

On August 25, 2005, respondent’s President, Cynthia L. De Lara (De Lara) wrote a letter 13 to Atty.
Maglaya informing him that respondent is not amenable to the unilateral changes made by
petitioner.14 De Lara questioned the guidelines for being violative of existing practices and the
CBA,15 specifically Sections 1 and 2, Article XII of the CBA, to wit:

ARTICLE XII
VACATION LEAVE AND SICK LEAVE

SECTION 1. VACATION LEAVE - All regular and non-tenured rank-and-file faculty and staff who are
entitled to receive shall enjoy fifteen (15) days vacation leave with pay annually.

1.1 All unused vacation leave after the second year of service shall be converted into cash and be
paid to the entitled employee at the end of each school year to be given not later than August 30 of
each year.

SECTION 2. SICK LEAVE - All regular and non-tenured rank-and-file faculty and staff shall enjoy
fifteen (15) days sick leave with pay annually.16
On February 8, 2006, a Labor Management Committee (LMC) Meeting was held during which
petitioner advised respondent to file a grievance complaint on the implementation of the vacation and
sick leave policy.17 In the same meeting, petitioner announced its plan of implementing a one-
retirement policy,18 which was unacceptable to respondent.

Ruling of the Voluntary Arbitrator

Unable to settle their differences at the grievance level, the parties referred the matter to a Voluntary
Arbitrator. During the hearing, respondent submitted affidavits to prove that there is an established
practice of giving two retirement benefits, one from the Private Education Retirement Annuity
Association (PERAA) Plan and another from the CBA Retirement Plan. Sections 1, 2, 3 and 4 of
Article XVI of the CBA provide:

ARTICLE XVI
SEPARATION, DISABILITY AND RETIREMENT PAY

SECTION 1. ELIGIBILITY FOR MEMBERSHIP - Membership in the Plan shall be automatic for all
full-time, regular staff and tenured faculty of the University, except the University President.
Membership in the Plan shall commence on the first day of the month coincident with or next
following his statement of Regular/Tenured Employment Status.

SECTION 2. COMPULSORY RETIREMENT DATE - The compulsory retirement date of each

Member shall be as follows:

a. Faculty – The last day of the School Year, coincident with his attainment of age sixty (60)
with at least five (years) of unbroken, credited service.

b. Staff – Upon reaching the age of sixty (60) with at least five (5) years of unbroken, credited
service.

SECTION 3. OPTIONAL RETIREMENT DATE - A Member may opt for an optional retirement prior to
his compulsory retirement. His number of years of service in the University shall be the basis of
computing x x x his retirement benefits regardless of his chronological age.

SECTION 4. RETIREMENT BENEFIT - The retirement benefit shall be a sum equivalent to 100% of
the member’s final monthly salary for compulsory retirement.

For optional retirement, the vesting schedule shall be:

x x x x19

On November 2, 2006, the Voluntary Arbitrator rendered a Decision 20 declaring the one-retirement
policy and the Memorandum dated August 16, 2005 contrary to law. The dispositive portion of the
Decision reads:

WHEREFORE, the following award is hereby made:

1. The assailed University guidelines on the availment of vacation and sick leave credits and
vacation leave commutation are contrary to law. The University is consequently ordered to
reinstate the earlier scheme, practice or policy in effect before the issuance of the said
guidelines on August 16, 2005;

2. The "one retirement" policy is contrary to law and is hereby revoked and rescinded. The
University is ordered x x x to resume and proceed with the established practice of extending to
qualified employees retirement benefits under both the CBA and the PERAA Plan.

3. The other money claims are denied.21

Ruling of the Court of Appeals

Aggrieved, petitioner appealed the case to the CA via a Petition for Review under Rule 43 of the
Rules of Court.

On September 25, 2007, the CA rendered a Decision22 finding the rulings of the Voluntary Arbitrator
supported by substantial evidence. It also affirmed the nullification of the one-retirement policy and
the Memorandum dated August 16, 2005 on the ground that these unilaterally amended the CBA
without the consent of respondent.23 Thus:
WHEREFORE, the instant appeal is DISMISSED for lack of merit.

SO ORDERED.24

Petitioner moved for reconsideration but the same was denied by the CA in its February 5, 2008
Resolution.25

Issues

Hence, this recourse by petitioner raising the following issues:

a.

Whether x x x the [CA] committed grave and palpable error in sustaining the Voluntary Arbitrator’s
ruling that the Affidavits submitted by Respondent WU-PFSA are substantial evidence as defined by
the rules and jurisprudence that would substantiate that Petitioner WU-P has long been in the
practice of granting its employees two (2) sets of Retirement Benefits.

b.

Whether x x x the [CA] committed grave and palpable error in sustaining the Voluntary Arbitrator’s
ruling that a university practice of granting its employees two (2) sets of Retirement Benefits had
already been established as defined by the law and jurisprudence especially in light of the illegality
and lack of authority of such alleged grant.

c.

Whether x x x the [CA] committed grave and palpable error in sustaining the Voluntary Arbitrator’s
ruling that it is incumbent upon Petitioner WU-P to show proof that no Board Resolution was issued
granting two (2) sets of Retirement Benefits.

d.

Whether x x x the [CA] committed grave and palpable error in revoking the 16 August 2005
Memorandum of Petitioner WU-P for being contrary to extant policy.26

Petitioner’s Arguments

Petitioner argues that there is only one retirement plan as the CBA Retirement Plan and the PERAA
Plan are one and the same.27 It maintains that there is no established company practice or policy of
giving two retirement benefits to its employees.28 Assuming, without admitting, that two retirement
benefits were released,29 petitioner insists that these were done by mere oversight or mistake as
there is no Board Resolution authorizing their release.30 And since these benefits are unauthorized
and irregular, these cannot ripen into a company practice or policy. 31 As to the affidavits submitted by
respondent, petitioner claims that these are self-serving declarations,32 and thus, should not be given
weight and credence.33

In addition, petitioner claims that the Memorandum dated August 16, 2005, which provides for the
guidelines on the implementation of vacation and sick leave credits as well as vacation leave
commutation, is valid because it is in full accord with existing policy.34

Respondent’s Arguments

Respondent belies the claims of petitioner and asserts that there are two retirement plans as the
PERAA Retirement Plan, which has been implemented for more than 30 years, is different from the
CBA Retirement Plan.35 Respondent further avers that it has always been a practice of petitioner to
give two retirement benefits36 and that this practice was established by substantial evidence as found
by both the Voluntary Arbitrator and the CA.37

As to the Memorandum dated August 16, 2005, respondent asserts that it is arbitrary and contrary to
the CBA and existing practices as it added qualifications or limitations which were not agreed upon by
the parties.38

Our Ruling

The Petition is bereft of merit.

The Non-Diminution Rule found in Article 10039 of the Labor Code explicitly prohibits employers from
eliminating or reducing the benefits received by their employees. This rule, however, applies only if
the benefit is based on an express policy, a written contract, or has ripened into a practice. 40 To be
considered a practice, it must be consistently and deliberately made by the employer over a long
period of time.41

An exception to the rule is when "the practice is due to error in the construction or application of a
doubtful or difficult question of law."42 The error, however, must be corrected immediately after its
discovery;43 otherwise, the rule on Non-Diminution of Benefits would still apply.

The practice of giving two retirement

benefits to petitioner’s employees is
supported by substantial evidence.

In this case, respondent was able to present substantial evidence in the form of affidavits to support
its claim that there are two retirement plans. Based on the affidavits, petitioner has been giving two
retirement benefits as early as 1997.44 Petitioner, on the other hand, failed to present any evidence to
refute the veracity of these affidavits. Petitioner’s contention that these affidavits are self-serving
holds no water. The retired employees of petitioner have nothing to lose or gain in this case as they
have already received their retirement benefits. Thus, they have no reason to perjure themselves.
Obviously, the only reason they executed those affidavits is to bring out the truth. As we see it then,
their affidavits, corroborated by the affidavits of incumbent employees, are more than sufficient to
show that the granting of two retirement benefits to retiring employees had already ripened into a
consistent and deliberate practice.

Moreover, petitioner’s assertion that there is only one retirement plan as the CBA Retirement Plan
and the PERAA Plan are one and the same is not supported by any evidence. There is nothing in
Article XVI of the CBA to indicate or even suggest that the "Plan" referred to in the CBA is the PERAA
Plan. Besides, any doubt in the interpretation of the provisions of the CBA should be resolved in favor
of respondent. In fact, petitioner’s assertion is negated by the announcement it made during the LMC
Meeting on February 8, 2006 regarding its plan of implementing a "one-retirement plan." For if it were
true that petitioner was already implementing a one-retirement policy, there would have been no need
for such announcement. Equally damaging is the letter-memorandum45 dated May 11, 2006, entitled
"Suggestions on the defenses we can introduce to justify the abolition of double retirement policy,"
prepared by the petitioner’s legal counsel.

These circumstances, taken together, bolster the finding that the two-retirement policy is a
practice.1âwphi1 Thus, petitioner cannot, without the consent of respondent, eliminate the two-
retirement policy and implement a one-retirement policy as this would violate the rule on non-
diminution of benefits.

As a last ditch effort to abolish the two-retirement policy, petitioner contends that such practice is
illegal or unauthorized and that the benefits were erroneously given by the previous administration.
No evidence, however, was presented by petitioner to substantiate its allegations.

Considering the foregoing disquisition, we agree with the findings of the Voluntary Arbitrator, as
affirmed by the CA, that there is substantial evidence to prove that there is an existing practice of
giving two retirement benefits, one under the PERAA Plan and another under the CBA Retirement
Plan.

The Memorandum dated August 16,

2005 is contrary to the existing CBA.

Neither do we find any reason to disturb the findings of the CA that the Memorandum dated August
16, 2005 is contrary to the existing CBA.

Sections 1 and 2 of Article XII of the CBA provide that all covered employees are entitled to 15 days
sick leave and 15 days vacation leave with pay every year and that after the second year of service,
all unused vacation leave shall be converted to cash and paid to the employee at the end of each
school year, not later than August 30 of each year.

The Memorandum dated August 16, 2005, however, states that vacation and sick leave credits are
not automatic as leave credits would be earned on a month-to-month basis. This, in effect, limits the
available leave credits of an employee at the start of the school year. For example, for the first four
months of the school year or from June to September, an employee is only entitled to five days
vacation leave and five days sick leave.46 Considering that the Memorandum dated August 16, 2005
imposes a limitation not agreed upon by the parties nor stated in the CBA, we agree with the CA that
it must be struck down.

In closing, it may not be amiss to mention that when the provision of the CBA is clear, leaving no
doubt on the intention of the parties, the literal meaning of the stipulation shall govem.47

However, if there is doubt in its interpretation, it should be resolved in favor of labor, 48 as this is
mandated by no less than the Constitution.49

WHEREFORE, the Petition is hereby DENIED. The assailed September 25, 2007 Decision and the
February 5, 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 97053 are hereby
AFFIRMED.

SO ORDERED.
G.R. No. 176985 April 1, 2013

RICARDO E. VERGARA, JR., Petitioner,

vs.
COCA-COLA BOTTLERS PHILIPPINES, INC., Respondent.

DECISION

PERALTA, J.:

Before Us is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure assailing
the January 9, 2007 Decision1 and March 6, 2007 Resolution2 of the Court of Appeals (CA) in CA ..
G.R. SP No. 94622, which affirmed the January 31, 2006 Decision 3 and March 8, 2006 Resolution4 of
the National Labor Relations Commission (NLRC) modifying the September 30, 2003 Decision 5 of the
Labor Arbiter (LA) by deleting the sales management incentives in the computation of petitioner's
retirement benefits.

Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers Philippines,
Inc. from May 1968 until he retired on January 31, 2002 as a District Sales Supervisor (DSS) for Las
Piñas City, Metro Manila. As stipulated in respondent’s existing Retirement Plan Rules and
Regulations at the time, the Annual Performance Incentive Pay of RSMs, DSSs, and SSSs shall be
considered in the computation of retirement benefits, as follows: Basic Monthly Salary + Monthly
Average Performance Incentive (which is the total performance incentive earned during the year
immediately preceding ÷ 12 months) × No. of Years in Service.6

Claiming his entitlement to an additional Ph₱474,600.00 as Sales Management Incentives (SMI) 7 and
to the amount of Ph₱496,016.67 which respondent allegedly deducted illegally, representing the
unpaid accounts of two dealers within his jurisdiction, petitioner filed a complaint before the NLRC on
June 11, 2002 for the payment of his "Full Retirement Benefits, Merit Increase,
Commission/Incentives, Length of Service, Actual, Moral and Exemplary Damages, and Attorney’s
Fees."8

After a series of mandatory conference, both parties partially settled with regard the issue of merit
increase and length of service.9 Subsequently, they filed their respective Position Paper and Reply
thereto dealing on the two remaining issues of SMI entitlement and illegal deduction.

On September 30, 2003, the LA rendered a Decision10 in favor of petitioner, directing respondent to
reimburse the amount illegally deducted from petitioner’s retirement package and to integrate therein
his SMI privilege. Upon appeal of respondent, however, the NLRC modified the award and deleted
the payment of SMI.

Petitioner then moved to partially execute the reimbursement of illegal deduction, which the LA
granted despite respondent’s opposition.11 Later, without prejudice to the pendency of petitioner’s
petition for certiorari before the CA, the parties executed a Compromise Agreement 12 on October 4,
2006, whereby petitioner acknowledged full payment by respondent of the amount of Ph₱496,016.67
covering the amount illegally deducted.

The CA dismissed petitioner’s case on January 9, 2007 and denied his motion for reconsideration two
months thereafter. Hence, this present petition to resolve the singular issue of whether the SMI
should be included in the computation of petitioner’s retirement benefits on the ground of consistent
company practice. Petitioner insistently avers that many DSSs who retired without achieving the sales
and collection targets were given the average SMI in their retirement package.

We deny.

This case does not fall within any of the recognized exceptions to the rule that only questions of law
are proper in a petition for review on certiorari under Rule 45 of the Rules of Court. 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 us
when supported by substantial evidence.13 Certainly, it is not Our function to assess and evaluate the
evidence all over again, particularly where the findings of both the CA and the NLRC coincide.

In any event, even if this Court would evaluate petitioner's arguments on its supposed merits, We still
find no reason to disturb the CA ruling that affirmed the NLRC. The findings and conclusions of the
CA show that the evidence and the arguments of the parties had all been carefully considered and
passed upon. There are no relevant and compelling facts to justify a different resolution which the CA
failed to consider as well as no factual conflict between the CA and the NLRC decisions.
Generally, employees have a vested right over existing benefits voluntarily granted to them by their
employer.14Thus, any benefit and supplement being enjoyed by the employees cannot be reduced,
diminished, discontinued or eliminated by the employer.15 The principle of non-diminution of benefits
is actually founded on the Constitutional mandate to protect the rights of workers, to promote their
welfare, and to afford them full protection.16 In turn, said mandate is the basis of Article 4 of the Labor
Code which states that "all doubts in the implementation and interpretation of this Code, including its
implementing rules and regulations, shall be rendered in favor of labor." 17

There is diminution of benefits when the following requisites are present: (1) the grant or benefit is
founded on a policy or has ripened into a practice over a long period of time; (2) the practice is
consistent and deliberate; (3) the practice is not due to error in the construction or application of a
doubtful or difficult question of law; and (4) the diminution or discontinuance is done unilaterally by the
employer.18

To be considered as a regular company practice, the employee must prove by substantial evidence
that the giving of the benefit is done over a long period of time, and that it has been made consistently
and deliberately.19Jurisprudence has not laid down any hard-and-fast rule as to the length of time that
company practice should have been exercised in order to constitute voluntary employer
practice.20 The common denominator in previously decided cases appears to be the regularity and
deliberateness of the grant of benefits over a significant period of time.21 It requires an indubitable
showing that the employer agreed to continue giving the benefit knowing fully well that the employees
are not covered by any provision of the law or agreement requiring payment thereof. 22 In sum, the
benefit must be characterized by regularity, voluntary and deliberate intent of the employer to grant
the benefit over a considerable period of time.23

Upon review of the entire case records, We find no substantial evidence to prove that the grant of
SMI to all retired DSSs regardless of whether or not they qualify to the same had ripened into
company practice. Despite more than sufficient opportunity given him while his case was pending
before the NLRC, the CA, and even to this Court, petitioner utterly failed to adduce proof to establish
his allegation that SMI has been consistently, deliberately and voluntarily granted to all retired DSSs
without any qualification or conditions whatsoever. The only two pieces of evidence that he stubbornly
presented throughout the entirety of this case are the sworn statements of Renato C. Hidalgo
(Hidalgo) and Ramon V. Velazquez (Velasquez), former DSSs of respondent who retired in 2000 and
1998, respectively. They claimed that the SMI was included in their retirement package even if they
did not meet the sales and collection qualifiers.24 However, juxtaposing these with the evidence
presented by respondent would reveal the frailty of their statements.

The declarations of Hidalgo and Velazquez were sufficiently countered by respondent through the
affidavits executed by Norman R. Biola (Biola), Moises D. Escasura (Escasura), and Ma. Vanessa R.
Balles (Balles).25 Biola pointed out the various stop-gap measures undertaken by respondent
beginning 1999 in order to arrest the deterioration of its accounts receivables balance, two of which
relate to the policies on the grant of SMI and to the change in the management structure of
respondent upon its re-acquisition by San Miguel Corporation. Escasura represented that he has
personal knowledge of the circumstances behind the retirement of Hidalgo and Velazquez. He
attested that contrary to petitioner’s claim, Hidalgo was in fact qualified for the SMI. As for Velazquez,
Escasura asserted that even if he (Velazquez) did not qualify for the SMI, respondent’s General
Manager in its Calamba plant still granted his (Velazquez) request, along with other numerous
concessions, to achieve industrial peace in the plant which was then experiencing labor relations
problems. Lastly, Balles confirmed that petitioner failed to meet the trade receivable qualifiers of the
SMI. She also cited the cases of Ed Valencia (Valencia) and Emmanuel Gutierrez (Gutierrez), both
DSSs of respondent who retired on January 31, 2002 and December 30, 2002, respectively. She
noted that, unlike Valencia, Gutierrez also did not receive the SMI as part of his retirement pay, since
he failed to qualify under the policy guidelines. The verity of all these statements and representations
stands and holds true to Us, considering that petitioner did not present any iota of proof to debunk the
same.1âwphi1

Therefore, respondent's isolated act of including the SMI in the retirement package of Velazquez
could hardly be classified as a company practice that may be considered an enforceable obligation.
To repeat, the principle against diminution of benefits is applicable only if the grant or benefit is
founded on an express policy or has ripened into a practice over a long period of time which is
consistent and deliberate; it presupposes that a company practice, policy and tradition favorable to
the employees has been clearly established; and that the payments made by the company pursuant
to it have ripened into benefits enjoyed by them.26 Certainly, a practice or custom is, as a general
rule, not a source of a legally demandable or enforceable right. 27 Company practice, just like any
other fact, habits, customs, usage or patterns of conduct, must be proven by the offering party who
must allege and establish specific, repetitive conduct that might constitute evidence of habit or
company practice.28
To close, We rule that petitioner could have salvaged his case had he step up to disprove
respondent’s contention that he miserably failed to meet the collection qualifiers of the SMI.
Respondent argues that −

An examination of the Company’s aged trial balance reveals that petitioner did not meet the trade
receivable qualifier. On the contrary, the said trial balance reveals that petitioner had a large amount
of uncollected overdue accounts. For the year 2001, his percentage collection efficiency for current
issuance was at an average of 13.5% a month as against the required 70%. For the same,
petitioner’s collection efficiency was at an average of 60.25% per month for receivables aged 1-30
days, which is again, way below the required 90%. For receivables aged 31-60 days during said year,
petitioner’s collection efficiency was at an average of 56.17% per month, which is approximately half
of the required 100%. Worse, for receivables over 60 days old, petitioner’s average collection
efficiency per month was a reprehensively low 14.10% as against the required 100%. 29

The above data was repeatedly raised by respondent in its Rejoinder (To Complainant’s Reply)
before the LA,30Memorandum of Appeal31 and Opposition (To Complainant-Appellee’s Motion for
Reconsideration)32 before the NLRC, and Comment (On the Petition),33 Memorandum (For the
Private Respondent),34 and Comment (On the Motion for Reconsideration)35 before the CA. Instead
of frontally rebutting the data, petitioner treated them with deafening silence; thus, reasonably and
logically implying lack of evidence to support the contrary.

WHEREFORE, the petition is DENIED. The January 9, 2007 Decision and March 6, 2007 Resolution
of the Court of Appeals in CA-G.R. SP No. 94622, which affirmed the January 31, 2006 Decision and
March 8, 2006 Resolution of the NLRC deleting the LA's inclusion of sales management incentives in
the computation of petitioner's retirement benefits, is hereby AFFIRMED.

SO ORDERED.
G.R. No. L-57636 May 16, 1983

REYNALDO TIANGCO and VICTORIA TIANGCO, petitioners,

vs.
HON. VICENTE LEOGARDO, JR., as Deputy Minister of the Ministry of Labor and Employment,
AURELIO ILUSTRISIMO, ABRAHAM GILBUENA, ROGELIO CARABIO, JESUS GILBUENA,
PEPITO GILBUENA, DOMINADOR LASERNA, CLEMENTE VILLARUEL, RUSTOM OFQUERIA,
ERNESTO DIONG, GRACIANO DURANA, AGUEDO MARABE, SOLOMON CLARIN, ALCAFONE
ESGANA, JUAN CASTRO, ANTONIO GILBUENA, GREGORIO LAYLAY, DANIEL CABRERA,
ROBERTO BAYON-ON, ELIAS ESCARAN, ERNESTO BATOY, EDDIE BATOBALANOS, TOMAS
CAPALAR, JUAN GIHAPON, JOSE OFQUERIA, FRUTO GIHAPON, PEPITO BATOY, and
SERAFIO YADAWON, respondents.

Florencio Pineda for petitioners.

The Solicitor General for respondents.

CONCEPCION, JR., J.:

Petition for certiorari and prohibition, with preliminary injunction and/or restraining order, to annul and
set aside the order of the respondent Deputy Minister of Labor which modified and affirmed the order
of Director of the National Capitol Region of the Ministry of Labor directing the petitioners to pay the
private respondents their legal holiday pay, service incentive pay, and differentials in their emergency
cost of living allowances.

The petitioner, Reynaldo Tiangco, is a fishing operator who owns the Reynaldo Tiangco Fishing
Company and a fleet of fishing vessels engaged in deep-sea fishing which operates from Navotas,
Rizal. His business is capitalized at P2,000,000.00, 1 while the petitioner, Victoria Tiangco, is a fish
broker whose business is capitalized at P100,000.00.2

The private respondents, Aurelio Ilustrisimo, Pepito Gilbuena, Rogelio Carabio, Abraham Gilbuena,
Rustom Ofqueria, Ernesto Diong, Jesus Gilbuena, Clemente (Emerenciano) Villaruel, Dominador
Lacerna, and Graciano Durana, are batillos engaged by the petitioner Reynaldo Tiangco to unload
the fish catch from the vessels and take them to the Fish Stall of the petitioner Victoria Tiangco. The
private respondents, Eddie Batobalanos, Aguedo Marabe, Gregorio Laylay, Fruto Gihapon, Solomon
Clarin, Pepito Batoy, Jose Ofqueria, Daniel Cabrera, Juan Castro, Alcafone Esgana, Tomas Capalar,
Antonio Gilbuena, Ernesto Batoy, Serafio Yadawon, Juan Gihapon, Elias Escaran and Roberto
Bayon-on, were batillos engaged by Victoria Tiangco. 3 The work of these batillos were limited to
days of arrival of the fishing vessels and their working days in a month are comparatively few. Their
working hours average four (4) hours a day.

On April 8, 1980, the private respondents filed a complaint against the petitioners with the Ministry of
Labor and Employment for non-payment of their legal holiday pay and service incentive leave pay, as
well as underpayment of their emergency cost of living allowances which used to be paid in full
irrespective of their working days, but which were reduced effective February, 1980, in contravention
of Article 100 of the new Labor Code which prohibits the elimination or diminution of existing
benefits. 4

The petitioners denied the laborers' contention, claiming that the laborers were all given, in addition to
their regular daily wage, a daily extra pay in amounts ranging from 30 centavos to 10 pesos which are
sufficient to offset the laborers' claim for service incentive leave and legal holiday pay. As regards the
claim for emergency allowance differentials, the petitioners admitted that they discontinued their
practice of paying their employees a fixed monthly allowance, and effective February, 1980, they no
longer paid allowances for non-working days. They argued, however, that no law was violated as their
refusal to pay allowances for non-working days is in consonance with the principle of "no work, no
allowance"; and that they could not pay private respondents a fixed monthly allowance without risking
the viability of their business. 5

Resolving the case, the Director of the National Capitol Region of the Ministry of Labor and
Employment ruled that the daily extra pay given to private respondents was a ,'production incentive
benefit", separate and distinct from the service incentive leave pay and legal holiday pay, payment of
which cannot be used to offset a benefit provided by law, and ordered the petitioners to pay the
private respondents their service incentive leave pay and legal holiday pay. However, he denied the
laborers' claim for differentials in the emergency cost of living allowance for the reason that the
emergency cost of living allowance accrues only when the laborers actually work following the
principle of "no work, no pay," and private respondents are not entitled to a fixed monthly allowance
since they work on a part time basis which average only four (4) days a week. The private
respondents should not be paid their allowances during non-working days. 6

From this order, both parties appealed.

On May 22, 1981, the respondent Deputy Minister of Labor and Employment modified the order and
directed the petitioners to restore and pay the individual respondents their fixed monthly allowance
from March, 1980 and to pay them the amount of P58,860.00, as underpayment of their living
allowance from May, 1977 to February 21, 1980. 7

When their motion for the reconsideration of the above order was denied, the petitioners interposed
the present recourse.

The petitioners claim that the respondent Deputy Minister of Labor and Employment acted in excess
of jurisdiction, or with grave abuse of discretion in ordering them to pay the private respondents a
fixed monthly allowance from March, 1980, despite the "no work, no pay," law; the private
respondents' consent to receive an allowance for days worked for, as stated in their appeal; and the
findings of the Director of the National Capitol Region that private respondents work for other
employers and are part-time employees of the petitioners.

Indeed, the record shows that the private respondents work for the petitioners on a part-time basis
and their work average only four (4) days a week. It is not also disputed that the private respondents
work for more than one employer so that the private respondents should be paid their living allowance
only for the days they actually worked in a week or month and all the employers of the employee shall
share proportionately in the payment of the allowance of the employee. Section 12 of the Rules and
Regulations implementing P.D. 525 which made mandatory the payment of emergency cost of living
allowances to workers in the private section, provides, as follows:

Section 12. Allowance on Daily Paid & Part — Time employees. — Employees who are
paid on a daily basis shall be paid their allowances for the number of days they actually
worked in a week or month, on the basis of the scales provided in Section 7 hereof.

In case of part-time employment, the allowances shall be paid in the amount

proportionate to the time worked by the employee, or higher. If employed by more than
one employer, all employers of such employee shall share proportionately in the
payment of the allowance of the employee.

Section 11 of the Rules implementing P.D. 1123, increasing the emergency allowance
under P.D. 525, also provides, as follows:

Section 11. Allowances of full-time and part-time employees. — Employees shall be

paid in full the monthly allowances on the basis of the scales provided in Section 3
hereof, regardless of the number of their regular working days, if they incur no absence
during the month. If they incur absences, the amounts corresponding to their absences
may be deducted from the monthly allowance.

In case of part-time employment, the allowance to be paid shall be proportionate to the

time worked by the employee. This requirement shall apply to any employee with more
than one employer.

However, the respondent Deputy Minister of Labor and Employment correctly ruled that since the
petitioners had been paying the private respondents a fixed monthly emergency allowance since
November, 1976 up to February, 1980, as a matter of practice and/or verbal agreement between the
petitioners and the private respondents, the discontinuance of the practice and/or agreement
unilaterally by the petitioners contravened the provisions of the Labor Code, particularly Article 100
thereof which prohibits the elimination or diminution of existing benefits.

Section 15 of the Rules on P.D. 525 and Section 16 of the Rules on P. D. 1123 also prohibits the
diminution of any benefit granted to the employees under existing laws, agreements, and voluntary
employer practice. Section 15 of the Rules on P.D. 525 provides, as follows:

Section 15. Relation to Agreement. — Nothing herein shall prevent the employer and
his employees from entering into any agreement with terms more favorable to the
employees than those provided therein, or be construed to sanction the diminution of
any benefit granted to the employees under existing laws, agreements, and voluntary
employer practice.
 Section 16 of the Rules on P.D. 1123 similarly prohibits diminution of benefits. It
provides, as follows:

Section 16. Relation to other agreements. — Nothing herein shall prevent employers
from granting allowances to their employees in excess of those provided under the
Decree and the Rules nor shall it be construed to countenance any reduction of benefits
already being enjoyed.

The petitioners further claim that the respondent Deputy Minister of Labor and Employment erred in
ordering them to pay the amount of P58,860.00 to the private respondents as underpayment of
respondents' allowances from May, 1977 to February 20, 1980. The petitioners contend that the
emergency cost of living allowances of the private respondents had been paid in full.

We find no merit in the contention. However, a revision of the amount due the private respondents is
in order for the reason that the respondent Deputy Minister of Labor and Employment failed to take
into consideration, in computing the amount due each worker, the fact that the private respondents
are employed by two different individuals whose businesses are divergent and capitalized at various
amounts, contrary to the provisions of P.D. 525 and subsequent amendatory decrees, wherein the
amount of the emergency cost of living allowance to be paid to a worker is made to depend upon the
capitalization of the business of his employer or its total assets, whichever is higher. Thus, Section 7
of the Rules and Regulations implementing P.D. 525 reads, as follows:

Section 7. Amount of Allowances. — Every covered employer shall give to each of his
employees who is receiving less than P600.00 a month not less than the following
allowances;

(a) P50.00 where the authorized capital stock or total assets, whichever is applicable
and higher, is 71 million or more;

(b) P30.00 where the authorized capital stock or total assets, whichever is applicable
and higher is at least P100,000.00 but less than P 1miilion and

(c) P15.00 where the authorized capital stock or total assets, whichever is applicable
and higher, is less than P100,000.00.

Nothing herein shall prevent employers from granting allowances to their employees
who will receive more than P600.00 a month, including the allowances. An employer,
however, may grant his employees an allowance which if added to their monthly salary,
will not yield to them more than P600.00 a month.

In this case, the private respondents admit that only ten (10) of them, namely: Aurelio Ilustrisimo,
Pepito Gilbuena, Rogelio Carabio, Abraham Gilbuena, Rustom Ofquiera, Ernesto Diong, Jesus
Gilbuena, Emerenciano Villaruel, Dominador Lacerna, and Graciano Durana, were employees of the
petitioner Reynaldo Tiangco, while the remaining seventeen (17) were employed by the petitioner
Victoria Tiangco. 8 Accordingly, the workers of the petitioner Victoria Tiangco, whose business as fish
broker is capitalized at P100,000.00, 9 should receive a lesser amount of allowance (P30.00) than
those workers employed by the petitioner Reynaldo Tiangco whose business, as a fishing operator
with a fleet of fishing vessels, is capitalized at more than P2,000,000.00, and are entitled to receive a
fixed monthly allowance of P50.00 a month, each.

After P.D. 525, the following amendatory decrees, directing the payment of additional allowances to
employees, were promulgated:

1. P.D. 1123. providing for an across-the-board increase of P60.00 a month effective

May 1, 1977;

2. P.D. 1614, which directed the payment of P60.00 monthly allowance effective April 1,
1979;

3. P.D. 1634, which provided for the payment of an additional P60.00 a month effective
September 1, 1979, and another P30.00 a month beginning January 1, 1980; and

4. P.D. 1678,which directed the payment of an additional P2.00 a day from February 21,
1980.

Hence, for the period from November, 1976 to April 30, 1977, the petitioner Victoria Tiangco should
pay her workers a fixed monthly allowance of P 30.00, while the workers of the petitioner Reynaldo
Tiangco were entitled to a fixed monthly allowance of P50.00, each. The record shows that during this
period, the petitioner Victoria Tiangco was paying her workers a monthly allowance of P30.00
each. 10 Accordingly, there was no underpayment for this period insofar as her batillos are concerned.
The petitioner Reynaldo Tiangco, however, paid his employees P30.00, instead of P50.00, as
mandated by law. 11 Therefore, there was an underpayment of P20.00 a month for each batillounder
his employ. For the 6-month period, he should pay his workers differentials in the amount of P120.00
each.

For the period from May, 1977 to March 1979, the workers of the petitioner Victoria Tiangco were
entitled to a fixed monthly allowance of P90.00 in view of the promulgation of P.D. 1123 which
granted an across-the-board increase of P60.00 a month in their allowances. For this period,
however, the said petitioner paid her workers only P60.00 a month, or a difference of P30.00 a
month. 12 There was, therefore, an underpayment of P690.00 for every batillounder her employ for the
23-month period.

With the addition of P60.00 across-the-board increase in their allowances, the workers of the
petitioner Reynaldo Tiangco were entitled to receive a fixed monthly allowance of P110.00. However,
the record shows that his workers were only paid P60.00 a month, 13 or a difference of P50.00 a
month. Consequently, each batillo hired by him should be paid a differential of P1,150.00 for the 23-
month period.

For the period from April, 1979 to August, 1979, the employees of the petitioner Victoria Tiangco were
entitled to a fixed monthly allowance of P150.00 while the workers employed by the petitioner
Reynaldo Tiangco were entitled to an allowance of P170.00, pursuant to P.D. 1614. The record
shows, however, that both petitioners paid their workers only P120.00 a month. 14 There was a
difference of P30.00 a month in the case of the petitioner Victoria Tiangco, and P50.00, a month, in
the case of the petitioner Reynaldo Tiangco. Hence, for this period, the petitioner Victoria Tiangco
should pay the amount of P150.00 to each batillo in her employ, while the petitioner Reynaldo
Tiangco should pay the amount of P250.00, as differentials in the cost of living allowances of the
workers under his employ.

Upon the promulgation of P.D. 1634, directing the payment of an additional P60.00 a month effective
September, 1979 and another P30.00 effective January 1, 1980, the workers of the petitioner Victoria
Tiangco were entitled to receive a fixed monthly allowance of P210.00 a month from September,
1979, and P340.00, a month beginning January, 1980. The workers of the petitioner Reynaldo
Tiangco, upon the other hand, were entitled to a monthly allowance of P230.00, effective September,
1979, and P260.00, a month beginning January, 1980. The record shows, however, that both
petitioners paid their workers the amounts of P180.00 a month for the months of September to
December, 1979, 15 and P210.00 a month for the months of January and February, 1980. 16 There
was underpayment, therefore, in the allowances of the workers of the petitioner Victoria Tiangco in
the amount of P30.00, a month, for the months of September, 1979 to February, 1980, or P180.00 for
each batillo in her employ. The private respondents hired by the petitioner Reynaldo Tiangco, upon
the other hand, are entitled to differentials in the amount of P50.00 a month for the same period, or
P300.00 each.

Then, beginning February, 21, 1980, the workers should be paid an additional P2.00, a day, pursuant
to P.D. 1678. The record shows that the petitioners had complied with this requirement. 17 The
petitioners, however, failed to pay the fixed monthly allowance of their workers which was P240.00, in
the case of the workers employed by the petitioner Victoria Tiangco, and P260.00, in the case of the
workers of the petitioner Reynaldo Tiangco. Thus, for the month of March, 1980, the petitioner
Victoria Tiangco paid her workers varying amounts, the lowest of which was P30.00, paid to Eddie
Batobalanos and Fruto Gihapon, and the highest of which was P210.00, paid to Juan Gihapon and
Roberto Bayonon. 18 Hence, there was underpayment in their emergency cost of living allowances.
But, since, the respondents employed by Victoria Tiangco are wining to accept P50.00 a month as
differentials for the months of March, 1980 to May, 1980, 19 the workers employed by her should be
paid P50.00, each, for the month of March, 1980, except Juan Gihapon and Roberto Bayon-on who
should be paid P30.00, each, for the said month, having received the amount of P210.00, each as
allowance for that month.

For the month of April, 1980, the workers of the petitioner, Victoria Tiangco, were paid varying
amounts ranging from P120.00 to P210.00. 20 Hence, there was also underpayment in their
allowances. Accordingly, they should be paid the amount of P50.00, each, except for Juan Gihapon,
Antonio Gilbuena, Juan Castro, and Aguedo Marabe, who should be paid P40.00, each, and
Solomon Clarin, Daniel Cabrera, and Gregorio Laylay who should be paid P30.00 each.
For the month of May, 1980, the petitioner Victoria Tiangco, paid her workers varying amounts less
that what was provided for by law. 21 Hence, they should be paid the amount of P50.00, each, for this
month.

The petitioner, Reynaldo Tiangco, also paid the employees varying amounts, ranging from P210.00 to
P250.00, as emergency cost of living allowance, for the month of March, 22, 1980. 22 Since they were
entitled to a fixed monthly allowance of P260.00, each, there was underpayment in their cost of living
allowances. Accordingly, the petitioner should pay the respondent Pepito Gilbuena the amount of
P50.00; the respondents Dominador Lacerna and Graciano Durano, the amount of P40.00, each; the
respondent Ernesto Diong, the amount of P30.00; the respondents Rustom Ofqueria and Aurelio
Ilustrisimo, the amount of P20.00, each; and the respondents Abraham Gilbuena, Jesus Gilbuena,
Rogelio Carabio, and Emerenciano Villaruel, the amount of P10.00 each.

For the month of April, 1980, the workers of the petitioner Reynaldo Tiangco, were not also paid their
emergency cost of living allowance in full. 23 Hence, the said petitioner should pay his workers the
amount of P30.00 each, except for Pepito Gilbuena, who should be paid the amount of P50.00, and
Rustom Ofqueria, Jesus Gilbuena, and Graciano Durano, who are entitled to only P40.00 each.

The petitioner, Reynaldo Tiangco did not also pay his workers their full cost of living allowance for the
month of May, 1980. The workers were paid varying amounts of P130.00 to P150.00, instead of
P260.00, as required by law. 24Hence, they should be paid the amunt of P50.00 each for the month of
May, 1980.

WHEREFORE, the petitioners Victoria Tiangco and Reynaldo Tiangco should be, as they are hereby,
ordered to PAY the private respondents the following amounts as differentials in their emergency cost
of living allowance:

Petitioner Victoria Tiangco:

1
. Eddie Pl,170.00
Batobalanos.............

2. Aguedo 1,160.00
Morabe.................

3. Gregorio 1,150.00
Laylay..................

4. Fruto 1,170.00
Gihapon.....................

5. Solomon Clarin 1,150.00

...................

6. Pepito 1,170.00
Batoy........................

7. Jose 1,170.00
Ofqueria.......................

8. Daniel 1,150.00
Cabrera.....................

9. Juan 1,160.00
Castro..........................

10. Alcafone 1,170.00

Esgana.................

11. Tomas Capalar 1,170.00

....................

12. Antonio 1,160.00

Gilbuena................

13. Ernesto 1,170.00

Batoy......................

14. Serapio 1,150.00

Yadawon................
 15. Juan 1,140.00
Gihapon.......................

16. Elias Escaran 1,150.00

......................

17. Roberto Bayon- 1,130.00

on..............

Petitioner Reynaldo Tiangco:

1
. Aurelio P
Ilustrisimo............ l,920.00

2. Pepito 1,970.00
Gilbuena.................

3. Rogelio 1,910.00
Carabio.................

4. Abraham 1,910.00
Gilbuena.............

5. Rustom 1,930.00
Ofqueria................

6. Ernesto 1,930.00
Diong....................

7. Jesus 1,920.00
Gilbuena...................

8. Emerenciano 1,910.00
Villaruel........

9. Dominador 1,940.00
Lacerna............

10. Graciano 1,950.00

Durano.................

With this modification, the judgment appealed from is AFFIRMED in all other respects. With costs
against the petitioners.

SO ORDERED.

G.R. No. 74156 June 29, 1988

GLOBE MACKAY CABLE AND RADIO CORPORATION, FREDERICK WHITE and JESUS
SANTIAGO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, FFW-GLOBE MACKAY EMPLOYEES UNION
and EDA CONCEPCION, respondents.

Castillo, Laman, Tan & Pantaleon for petitioners.

Edwin D. Dellaban for private respondents.

MELENCIO-HERRERA, J.:

A special civil action for certiorari with a prayer for a Temporary Restraining Order to enjoin
respondents from enforcing the Decision of 10 March 1986 of the National Labor Relations
Commission (NLRC), in NCR Case No. 1-168-85 entitled "FFW-Globe Mackay Employees Union, et
al., vs. Globe Mackay Cable & Radio Corporation, et al.," the dispositive portion of which reads:
 WHEREFORE, premises considered, the appealed Decision is as it is hereby SET
ASIDE and another one issued:

1. Declaring respondents-appellees (petitioners herein) guilty of illegal deductions of

cost-of-living allowance;

2. Ordering respondents-appellees to pay complainants-appellants their back

allowances reckoned from the time of illegal deduction; and

3. Ordering respondents-appellees from further illegally deducting the allowances of

complainants-appellants.

SO ORDERED.

Presiding Commissioner of the NLRC, Diego P. Atienza, concurred in the result, while Commissioner
Cleto T. Villaltuya dissented and voted to affirm in toto the Labor Arbiter's Decision.

On 19 May 1986, we issued the Temporary Restraining Order enjoining respondents from enforcing
the assailed Decision. On 2 September 1987, we gave due course to the petition and required the
submittal of memoranda, by the parties, which has been complied with.

The facts follow:

Wage Order No. 6, which took effect on 30 October 1984, increased the cost-of-living allowance of
non-agricultural workers in the private sector. Petitioner corporation complied with the said Wage
Order by paying its monthly-paid employees the mandated P3.00 per day COLA. However, in
computing said COLA, Petitioner Corporation multiplied the P 3.00 daily COLA by 22 days, which is
the number of working days in the company.

Respondent Union disagreed with the computation of the monthly COLA claiming that the daily COLA
rate of P3.00 should be multiplied by 30 days to arrive at the monthly COLA rate. The union alleged
furthermore that prior to the effectivity of Wage Order No. 6, Petitioner Corporation had been
computing and paying the monthly COLA on the basis of thirty (30) days per month and that this
constituted an employer practice, which should not be unilaterally withdrawn.

After several grievance proceedings proved futile, the Union filed a complaint against Petitioner
Corporation, its President, F. White, and Vice-President, J. Santiago, for illegal deduction,
underpayment, unpaid allowances, and violation of Wage Order No. 6. Petitioners White and
Santiago were sought to be held personally liable for the money claims thus demanded.

Labor Arbiter Adelaido F. Martinez sustained the position of Petitioner Corporation by holding that
since the individual petitioners acted in their corporate capacity they should not have been impleaded;
and that the monthly COLA should be computed on the basis of twenty two (22) days, since the
evidence showed that there are only 22 paid days in a month for monthly-paid employees in the
company. His reasoning, inter alia, was as follows:

To compel the respondent company to use 30 days in a month to compute the

allowance and retain 22 days for vacation and sick leave, overtime pay and other
benefits is inconsistent and palpably unjust. If 30 days is used as divisor, then it must be
used for the computation of all benefits, not just the allowance. But this is not fair to
complainants, not to mention that it will contravene the provision of the parties' CBA.

On appeal, the NLRC reversed the Labor Arbiter, as heretofore stated, and held that Petitioner
Corporation was guilty of illegal deductions, upon the following considerations: (1) that the P3.00 daily
COLA under Wage Order No. 6 should be paid and computed on the basis of thirty (30) days instead
of twenty-two (22) days since workers paid on a monthly basis are entitled to COLA on Saturdays,
Sundays and legal holidays "even if unworked;" (2) that the full allowance enjoyed by Petitioner
Corporation's monthly-paid employees before the CBA executed between the parties in 1982
constituted voluntary employer practice, which cannot be unilaterally withdrawn; and (3) that
petitioners White and Santiago were properly impleaded as respondents in the case below.

Hence, this Petition, anchored on the charge of grave abuse of discretion by the NLRC.

We are constrained to reverse the reversal.

Section 5 of the Rules Implementing Wage Orders Nos. 2, 3, 5 and 6 uniformly read as follows:
 Section 5. Allowance for Unworked Days.

All covered employees shall be entitled to their daily living allowance during the days
that they are paid their basic wage, even if unworked. (Emphasis supplied)

The primordial consideration, therefore, for entitlement to COLA is that basic wage is being paid. In
other words, the payment of COLA is mandated only for the days that the employees are paid their
basic wage, even if said days are unworked. So that, on the days that employees are not paid their
basic wage, the payment of COLA is not mandated. As held in University of Pangasinan Faculty
Union vs. University of Pangasinan, L-63122, February 20, 1984, 127 SCRA 691):

... it is evident that the intention of the law is to grant ECOLA upon the payment of basic
wages. Hence, we have the principle of 'No Pay, No ECOLA.

Applied to monthly-paid employees if their monthly salary covers all the days in a month, they are
deemed paid their basic wages for all those days and they should be entitled to their COLA on those
days "even if unworked," as the NLRC had opined. Peculiar to this case, however, is the
circumstance that pursuant to the Collective Bargaining Agreement (CBA) between Petitioner
Corporation and Respondent Union, the monthly basic pay is computed on the basis of five (5) days a
week, or twenty two (22) days a month. Thus, the pertinent provisions of that Agreement read:

Art. XV(a)—Eight net working hours shall constitute the regular work day for five days.

Art. XV(b)—Forty net hours of work, 5 working days, shall constitute the regular work
week.

Art. XVI, Sec. 1(b)—All overtime worked in excess of eight net hours daily or in excess
of 5 days weekly shall be computed on hourly basis at the rate of time and one half.

The Labor Arbiter also found that in determining the hourly rate of monthly paid employees for
purposes of computing overtime pay, the monthly wage is divided by the number of actual work days
in a month and then, by eight (8) working hours. If a monthly-paid employee renders overtime work,
he is paid his basic salary rate plus one-half thereof. For example, after examining the specimen
payroll of employee Jesus L. Santos, the Labor Arbiter found:

the employee Jesus L. Santos, who worked on Saturday and Sunday was paid base
pay plus 50% premium. This is over and above his monthly basic pay as supported by
the fact that base pay was paid. If the 6th and 7th days of the week are deemed paid
even if unworked and included in the monthly salary, Santos should not have been paid
his base pay for Saturday and Sunday but should have received only the 50% overtime
premium.

Similarly, the specimen payrolls of employees, Dennis Dungon and Rene Sanvictores, showed that in
computing the vacation and sick leaves of the employees, Petitioner Corporation consistently used
twenty-two (22) days.

Under the peculiar circumstances obtaining, therefore, where the company observes a 5-day work
week, it will have to be held that the COLA should be computed on the basis of twenty two (22) days,
which is the period during which the monthly-paid employees of Petitioner Corporation receive their
basic wage. The CBA is the law between the parties and, if not acceptable, can be the subject of
future re-negotiation.

2) Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in 1982 and
in compliance with Wage Orders Nos. 1 (26 March 1981) to 5 (11 June 1984), should not be
construed as constitutive of voluntary employer practice, which cannot now be unilaterally withdrawn
by petitioner. To be considered as such, it should have been practiced over a long period of time, and
must be shown to have been consistent and deliberate. Adequate proof is wanting in this respect.
The test of long practice has been enunciated thus:

... Respondent Company agreed to continue giving holiday pay knowing fully well that
said employees are not covered by the law requiring payment of holiday pay.' (Oceanic
Pharmacal Employees Union [FFW] vs. Inciong, L-50568, November 7, 1979, 94 SCRA
270). (Emphasis ours)

Moreover, before Wage Order No. 4, there was lack of administrative guidelines for the
implementation of the Wage Orders. It was only when the Rules Implementing Wage Order No. 4
were issued on 21 May 1984 that a formula for the conversion of the daily allowance to its monthly
equivalent was laid down, thus:

Section 3. Application of Section 2--

xxx xxx xxx

(a) Monthly rates for non-agricultural workers covered Under PDs 1614, 1634, 1678 and
1713:

xxx xxx xxx

(3) For workers who do not work and are not considered paid on Saturdays and
Sundays:

P60 + P90 + P60 + (P2.00 x 262) divided by 12 = P 253.70 (Emphasis ours)

As the Labor Arbiter had analyzed said formula:

Under the aforecited formula/guideline, issued for the first time, when applied to a
company like respondent which observes a 5-day work week (or where 2 days in a
week, not necessarily Saturday and Sunday, are not considered paid), the monthly
equivalent of a daily allowance is arrived at by multiplying the daily allowance by 262
divided by 12. This formula results in the equivalent of 21.8 days in a month.

Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous
application of the law. Payment may be said to have been made by reason of a mistake in the
construction or application of a "doubtful or difficult question of law." (Article 2155, 1 in relation to
Article 2154 2 of the Civil Code). Since it is a past error that is being corrected, no vested right may be
said to have arisen nor any diminution of benefit under Article 100 of the Labor Code 3 may be said to
have resulted by virtue of the correction.

With the conclusions thus reached, there is no further need to discuss the liability of the officers of
Petitioner Corporation.

WHEREFORE, certiorari is granted, the Decision of the National Labor Relations Commission, dated
10 March 1986, is SET ASIDE, and the Decision of the Labor Arbiter, dated 9 May 1985, is hereby
REINSTATED. The Temporary Restraining Order heretofore issued is hereby made permanent.

SO ORDERED.

Yap, C.J., Paras, and Sarmiento, JJ., concur.

Padilla, J., took no part.

G.R. No. 121004 January 28, 1998

ROMEO LAGATIC, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, CITYLAND DEVELOPMENT CORPORATION,
STEPHEN ROXAS, JESUS GO, GRACE LIUSON, and ANDREW LIUSON, respondents.

ROMERO, J.:

Petitioner seeks, in this petition for certiorari under Rule 65, the reversal of the resolution of the
National Labor Relations Commission dated May 12, 1995, affirming the February 17, 1994, decision
of Labor Arbiter Ricardo C. Nora finding that petitioner had been validly dismissed by private
respondent Cityland Development Corporation (hereafter referred to as Cityland) and that petitioner
was not entitled to separation pay, premium pay and overtime pay.

The facts of the case are as follows:

Petitioner Romeo Lagatic was employed in May 1986 by Cityland, first as a probationary sales agent,
and later on as a marketing specialist. He was tasked with soliciting sales for the company, with the
corresponding duties of accepting call-ins, referrals, and making client calls and cold calls. Cold calls
refer to the practice of prospecting for clients through the telephone directory. Cityland, believing that
the same is an effective and cost-efficient method of finding clients, requires all its marketing
specialists to make cold calls. The number of cold calls depends on the sales generated by each:
more sales mean less cold calls. Likewise, in order to assess cold calls made by the sales staff, as
well as to determine the results thereof, Cityland requires the submission of daily progress reports on
the same.

On October 22, 1991, Cityland issued a written reprimand to petitioner for his failure to submit cold
call reports for September 10, October 1 and 10, 1991. This notwithstanding, petitioner again failed to
submit cold call reports for September 2, 5, 8, 10, 11, 12, 15, 17, 18, 19, 20, 22, and 28, as well as for
October 6, 8, 9, 10, 12, 13 and 14, 1992. Petitioner was required to explain his inaction, with a
warning that further non-compliance would result in his termination from the company. In a reply
dated October 18, 1992, petitioner claimed that the same was an honest omission brought about by
his concentration on other aspects of his job. Cityland found said excuse inadequate and, on
November 9, 1992, suspended him for three days, with a similar warning.

Notwithstanding the aforesaid suspension and warning, petitioner again failed to submit cold call
reports for February 5, 6, 8, 10 and 12, 1993. He was verbally reminded to submit the same and was
even given up to February 17, 1993 to do so. Instead of complying with said directive, petitioner, on
February 16, 1993, wrote a note, "TO HELL WITH COLD CALLS! WHO CARES?" and exhibited the
same to his co-employees. To worsen matters, he left the same lying on his desk where everyone
could see it.

On February 23, 1993, petitioner received a memorandum requiring him to explain why Cityland
should not make good its previous warning for his failure to submit cold call reports, as well as for
issuing the written statement aforementioned. On February 24, 1993, he sent a letter-reply alleging
that his failure to submit cold call reports should trot be deemed as gross insubordination. He denied
any knowledge of the damaging statement, "TO HELL WITH COLD CALLS!"

Finding petitioner guilty of gross insubordination, Cityland served a notice of dismissal upon him on
February 26, 1993. Aggrieved by such dismissal, petitioner filed a complaint against Cityland for
illegal dismissal, illegal deduction, underpayment, overtime and rest day pay, damages and attorney's
fees. The labor arbiter dismissed the petition for lack of merit. On appeal, the same was affirmed by
the NLRC; hence the present recourse.

Petitioner raises the following issues:

1. WHETHER OR NOT RESPONDENT NLRC GRAVELY ABUSED ITS

DISCRETION 1N NOT FINDING THAT PETITIONER WAS ILLEGALLY
DISMISSED;

2. WHETHER OR NOT RESPONDENT NLRC GRAVELY ABUSED ITS

DISCRETION IN RULING THAT PETITIONER IS NOT ENTITLED TO
SALARY DIFFERENTIALS, BACKWAGES, SEPARATION PAY,
 OVERTIME PAY, REST DAY PAY, UNPAID COMMISSIONS, MORAL
AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES.

The petition lacks merit.

To constitute a valid dismissal from employment, two requisites must be met, namely: (1) the
employee must be afforded due process, and (2) the dismissal must be for a valid cause. 1 In the
case at bar, petitioner contends that his termination was illegal on both substantive and
procedural aspects. It is his submission that the failure to submit a few cold calls does not
qualify as willful disobedience, as, in his experience, cold calls are one of the least effective
means of soliciting sales. He thus asserts that a couple of cold call reports need not be
accorded such tremendous significance as to warrant his dismissal for failure to submit them
on time.

These arguments are specious. Petitioner loses sight of the fact that "(e)xcept as provided for,
or limited by, special laws, an employer is free to regulate, according to his discretion and
judgment, all aspects of employment."2 Employers may, thus, make reasonable rules and
regulations for the government of their employees, and when employees, with knowledge of
an established rule, enter the service, the rule becomes a part of the contract of
employment.3 It is also generally recognized that company policies and regulations, unless
shown to be grossly oppressive or contrary to law, are generally valid and binding on the
parties and must be complied with.4 "Corollarily, an employee may be validly dismissed for
violation of a reasonable company rule or regulation adopted for the conduct of the company
business. An employer cannot rationally be expected to retain the employment of a person
whose . . . lack of regard for his employer's rules . . . has so plainly and completely been
bared."5 Petitioner's continued infraction of company policy requiring cold call reports, as
evidenced by the 28 instances of non-submission of aforesaid reports, justifies his dismissal.
He cannot be allowed to arrogate unto himself the privilege of setting company policy on the
effectivity of solicitation methods. To do so would be to sanction oppression and the self-
destruction of the employer.

Moreover, petitioner made it worse for himself when he wrote the statement, "TO HELL WITH
COLD CALLS! WHO CARES?" When required to explain, he merely denied ally knowledge of
the same. Cityland, on the other hand, submitted the affidavits of his co-employees attesting
to his authorship of the same. Petitioner's only defense is denial. The rule, however, is that
denial, if unsubstantiated by clear and convincing evidence, is negative and self-serving
evidence which has no weight in law.6 More telling, petitioner, while making much capital out
of his lack of opportunity to confront the affiants, never, in all of his pleadings, categorically
denied writing the same. He only denied knowledge of the allegation that he issued such a
statement.

Based on the foregoing, we find petitioner guilty of willful disobedience. Willful disobedience
requires the concurrence of at least two requisites: the employee's assailed conduct must
have been willful or intentional, the willfulness being characterized by a wrongful and
perverse attitude; and the order violated must have been reasonable, lawful, made known to
the employee and must pertain to the duties which he had been engaged to discharge. 7

Petitioner's failure to comply with Cityland's policy of requiring cold call reports is clearly
willful, given the 28 instances of his failure to do so, despite a previous reprimand and
suspension. More than that, his written statement shows his open defiance and disobedience
to lawful rules and regulations of the company. Likewise, said company policy of requiring
cold calls and the concomitant reports thereon is clearly reasonable and lawful, sufficiently
known to petitioner, and in connection with the duties which he had been engaged to
discharge. There is, thus, just cause for his dismissal.

On the procedural aspect, petitioner claims that he was denied due process. Well settled is
the dictum that the twin requirements of notice and hearing constitute the elements of due
process in the dismissal of employees. Thus, the employer must furnish the employee with
two written notices before the termination of employment can be effected. The first apprises
the employee of the particular acts or omissions for which his dismissal is sought; the second
informs him of the employer's decision to dismiss him.8

In the case at bar, petitioner was notified of the charges against him in a memorandum dated
February 19, 1993, which he received on February 23, 1993. He submitted a letter-reply thereto
on February 24, 1993, wherein he asked that his failure to submit cold call reports be not
interpreted as gross insubordination.9 He was given notice of his termination on February 26,
1993. This chronology of events clearly show that petitioner was served with the required
written notices.

Nonetheless, petitioner contends that he has not been given the benefit of an effective
hearing. He alleges that he was not adequately informed of the results of the investigation
conducted by the company, nor was he able to confront the affiants who attested to his
writing the statement, "TO HELL WITH COLD CALLS!" While we have held that in dismissing
employees, the employee must be afforded ample opportunity to be heard, "ample
opportunity" connoting every kind of assistance that management must afford the employee
to enable him to prepare adequately for his defense, 10 it is also true that the requirement of a
hearing is complied with as long as there was an opportunity to be heard, and not necessarily
that an actual hearing be conducted.11 Petitioner had an opportunity to be heard as he
submitted a letter-reply to the charge. He, however, adduced no other evidence on his behalf.
In fact, he admitted his failure to submit cold call reports, praying that the same be not
considered as gross insubordination. As held by this Court in Bernardo vs. NLRC,12 there is
no necessity for a formal hearing where an employee admits responsibility for an alleged
misconduct. As to the written statement, "TO HELL WITH COLD CALLS!," petitioner merely
denied knowledge of the same. He failed to submit controverting evidence thereon although
the memorandum of February 19, 1993, clearly charged that he had shown said statement to
several sales personnel. Denials are weak forms of defenses, particularly when they are not
substantiated by clear and convincing evidence. Given the foregoing, we hold that petitioner's
constitutional right to due process has not been violated.

As regards the second issue, petitioner contends that he is entitled to amounts illegally
deducted from his commissions, to unpaid overtime, rest day and holiday premiums, to moral
and exemplary damages, as well as attorney's fees and costs.

Petitioner anchors his claim for illegal deductions of commissions on Cityland's formula for
determining commissions, viz:

COMMISSIONS = Credits Earned (CE) less CUMULATIVE NEGATIVE

(CN) less AMOUNTS RECEIVED (AR)

= (CE - CN) - AR where CE = Monthly Sales Volume x

Commission Rate (CR)
AR = Monthly Compensation/.75
CR = 4.5%

Under said formula, an increase in salary would entail an increase in AR, thus diminishing the
amount of commissions that petitioner would receive. Petitioner construes the same as
violative of the non-diminution of benefits clause embodied in the wage orders applicable to
petitioner. Inasmuch as Cityland has paid petitioner commissions based on a higher AR each
time there has been a wage increase, the difference between the original AR and the
subsequent ARs have been viewed by petitioner as illegal deductions, to wit:

Wage Date of Amount Corresponding Duration Total

Order Effectivity of Increase in Up To
Increase Quota (AR) 2/26/93

RA 6640 1/1/88 P265.75 P 353.33 X 62 mos. P 2 1,906.46

RA 6727 7/1/89 780.75 1,040.00 X 44 mos. 45,760.00

NCR 01 11/1/90 785.75 1,046.67 X 28 mos. 29,306.76

NCR 01- Grand Total P

A 96,973.2213

Petitioner even goes as far as to claim that with the use of Cityland's formula, he is indebted
to the company in the amount of P1,410.00, illustrated as follows:

Petitioner' s Basic Salary = P 4,230.00

= 4,230.00/.75

A.R. = 5,640.00
 Petitioner's Basic Salary — AR = P 1,410.00

While it is true that an increase in salary would cause an increase in AR, with the same being
deducted from credits earned, thus lessening his commissions, the fact remains that
petitioner still receives his basic salary without deductions. Petitioner's argument that he is
indebted to respondent by P1,410.00 is fallacious as his basic salary remains the same and he
continues to receive the same, regardless of his collections. The failure to attain a CE
equivalent to the AR of P5,640.00 only means that the difference would be credited to his CN
for the next month. Clearly, the purpose of the same is to encourage sales personnel to
accelerate their sales in order for them to earn commissions.

Additionally, there is no law which requires employers to pay commissions, and when they do
so, as stated in the letter-opinion of the Department of Labor and Employment dated February
19, 1993, "there is no law which prescribes a method for computing commissions. The
determination of the amount of commissions is the result of collective bargaining
negotiations, individual employment contracts or established employer practice." 14 Since the
formula for the computation of commissions was presented to and accepted by petitioner,
such prescribed formula is in order. As to the allegation that said formula diminishes the
benefits being received by petitioner whenever there is a wage increase, it must be noted that
his commissions are not meant to be in a fixed amount. In fact, there was no assurance that
he would receive any commission at all. Non-diminution of benefits, as applied here, merely
means that the company may not remove theprivilege of sales personnel to earn a
commission, not that they are entitled to a fixed amount thereof.

With respect to petitioner's claims for overtime pay, rest day pay and holiday premiums,
Cityland maintains that Saturday and Sunday call-ins were voluntary activities on the part of
sales personnel who wanted to realize more sales and thereby earn more commissions. It is
their contention that sales personnel were clamoring for the "privilege" to attend Saturday and
Sunday call-ins, as well as to entertain walk-in clients at project sites during weekends, that
Cityland had to stagger the schedule of sales employees to give everyone a chance to do so.
But simultaneously, Cityland claims that the same were optional because call-ins and walk-ins
were not scheduled every weekend. If there really were a clamor on the part of sales staff to
"voluntarily" work on weekends, so much so that Cityland needed to schedule them, how
come no call-ins or walk-ins were scheduled on some weekends?

In addition to the above, the labor arbiter and the NLRC sanctioned respondent's practice of
offsetting rest day or holiday work with equivalent time on regular workdays on the ground
that the same is authorized by Department Order 21, Series of 1990. As correctly pointed out
by petitioner, said D.O. was misapplied in this case. The D.O. involves the shortening of the
workweek from six days to five days but with prolonged hours on those five days. Under this
scheme, non-payment of overtime premiums was allowed in exchange for longer weekends
for employees. In the instant case, petitioner's workweek was never compressed. Instead, he
claims payment for work over and above his normal 5 1/2 days of work in a week. Applying by
analogy the principle that overtime cannot be offset by undertime, to allow off-setting would
prejudice the worker. He would be deprived of the additional pay for the rest day work he has
rendered and which is utilized to offset his equivalent time off on regular workdays. To allow
Cityland to do so would be to circumvent the law on payment of premiums for rest day and
holiday work.

Notwithstanding the foregoing discussion, petitioner failed to show his entitlement to

overtime and rest day pay due, to the lack of sufficient evidence as to the number of days and
hours when he rendered overtime and rest day work. Entitlement to overtime pay must first be
established by proof that said overtime work was actually performed, before an employee may
avail of said benefit. 15 To support his allegations, petitioner submitted in evidence minutes of
meetings wherein he was assigned to work on weekends and holidays at Cityland's housing
projects. Suffice it to say that said minutes do not prove that petitioner actually worked on
said dates. It is a basic rule in evidence that each party must prove his affirmative
allegations. 16 This petitioner failed to do. He explains his failure to submit more concrete
evidence as being due to the decision rendered by the labor arbiter without resolving his
motion for the production and inspection of documents in the control of Cityland. Petitioner
conveniently forgets that on January 27, 1994, he agreed to submit the case for decision
based on the records available to the labor arbiter. This amounted to an abandonment of
above-said motion, which was then pending resolution.

Lastly, with the finding that petitioner's dismissal was for a just and valid cause, his claims for
moral and exemplary damages, as well as attorney's fees, must fail.
WHEREFORE, premises considered, the assailed Resolution is AFFIRMED and this petition is
hereby DISMISSED for lack of merit. Costs against petitioner.

SO ORDERED.
G.R. No. 167760 March 7, 2007

MANILA JOCKEY CLUB EMPLOYEES LABOR UNION-PTGWO, Petitioner,

vs.
MANILA JOCKEY CLUB, INC., Respondent.

DECISION

GARCIA, J.:

Challenged in this petition for review under Rule 45 of the Rules of Court is the decision 1 dated
December 17, 2004 of the Court of Appeals (CA), as reiterated in its resolution2 of April 4, 2005,
dismissing the petition for review of herein petitioner in CA-G.R. SP No. 69240, entitled Manila
Jockey Club Employees Labor Union- PTGWO v. Manila Jockey Club, Inc.

The facts:

Petitioner Manila Jockey Club Employees Labor Union-PTGWO and respondent Manila Jockey Club,
Inc., a corporation with a legislative franchise to conduct, operate and maintain horse races, entered
into a Collective Bargaining Agreement (CBA) effective January 1, 1996 to December 31, 2000. The
CBA governed the economic rights and obligations of respondent’s regular monthly paid rank-and-file
employees.3 In the CBA, the parties agreed to a 7-hour work schedule from 9:00 a.m. to 12:00 noon
and from 1:00 p.m. to 5:00 p.m. on a work week of Monday to Saturday, as contained under Section
1, Article IV,4 of the same CBA, to wit:

Section 1. Both parties to this Agreement agree to observe the seven-hour work schedule herewith
scheduled to be from 9:00 a.m. to 12:00 noon and 1:00 p.m. to 5 p.m. on work week of Monday to
Saturday. All work performed in excess of seven (7) hours work schedule and on days not included
within the work week shall be considered overtime and paid as such. Except those monthly
compensation which includes work performed during Saturday, Sunday, and Holiday when races are
held at the Club.

xxx xxx xxx

Accordingly, overtime on an ordinary working day shall be remunerated in an amount equivalent to

the worker's regular basic wage plus twenty five percent (25%) thereof. Where the employee is
permitted or suffered to work on legally mandated holidays or on his designated rest day which is not
a legally mandated holiday, thirty percent (30%) shall be added to his basic wage for a seven hour
work; while work rendered in excess of seven hours on legally mandated holidays and rest days not
falling within the aforestated categories day shall be additionally compensated for the overtime work
equivalent to his rate for the first seven hours on a legally mandated holiday or rest day plus thirty
percent (30%) thereof.

The CBA likewise reserved in respondent certain management prerogatives, including the
determination of the work schedule, as provided under Section 2, Article XI:

Section 2. The COMPANY shall have exclusive control in the management of the offices and
direction of the employees. This shall include, but shall not be limited to, the right to plan, direct and
control office operations, to hire, assign and transfer employees from one job to another or from one
department to another; to promote, demote, discipline, suspend, discharge or terminate employees
for proper cause and/or in accordance with law, to relieve employees from duty because of lack of
work or for other legitimate reasons; or to introduce new or improved methods or facilities; or to
change existing methods or facilities to change the schedules of work; and to make and enforce rules
and regulations to carry out the functions of management, provided, however, that the COMPANY will
not use these rights for the purpose of discrimination against any employee because of his
membership in the UNION. Provided, further, that the prerogatives provided for under this Section
shall be subject to, and in accordance with pertinent directives, proclamations and their implementing
rules and regulations.

On April 3, 1999, respondent issued an inter-office memorandum declaring that, effective April 20,
1999, the hours of work of regular monthly-paid employees shall be from 1:00 p.m. to 8:00 p.m. when
horse races are held, that is, every Tuesday and Thursday. The memorandum, however, maintained
the 9:00 a.m. to 5:00 p.m. schedule for non-race days.

On October 12, 1999, petitioner and respondent entered into an Amended and Supplemental CBA
retaining Section 1 of Article IV and Section 2 of Article XI, supra, and clarified that any conflict arising
therefrom shall be referred to a voluntary arbitrator for resolution.
Subsequently, before a panel of voluntary arbitrators of the National Conciliation and Mediation Board
(NCMB), petitioner questioned the above office memorandum as violative of the prohibition against
non-diminution of wages and benefits guaranteed under Section 1, Article IV, of the CBA which
specified the work schedule of respondent's employees to be from 9:00 a.m. to 5:00 p.m. Petitioner
claimed that as a result of the memorandum, the employees are precluded from rendering their usual
overtime work from 5:00 p.m. to 9:00 p.m.

The NCMB’s panel of voluntary arbitrators, in a decision dated October 18, 2001, upheld
respondent's prerogative to change the work schedule of regular monthly-paid employees under
Section 2, Article XI, of the CBA. Petitioner moved for reconsideration but the panel denied the
motion.

Dissatisfied, petitioner then appealed the panel’s decision to the CA in CA-G.R. SP No. 69240. In the
herein assailed decision of December 17, 2004, the CA upheld that of the panel and denied
petitioner’s subsequent motion for reconsideration via its equally challenged resolution of April 4,
2005.

Hence, petitioner’s present recourse, raising the following issues:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT

RESPONDENT MJCI DID NOT RELINQUISH PART OF ITS MANAGEMENT PREROGATIVE
WHEN IT STIPULATED A WORK SCHEDULE IN THE CBA.

II

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT

RESPONDENT MJCI DID NOT VIOLATE THE NON-DIMINUTION PROVISION CONTAINED IN
ARTICLE 100 OF THE LABOR CODE.

We DENY.

Respondent, as employer, cites the change in the program of horse races as reason for the
adjustment of the employees’ work schedule. It rationalizes that when the CBA was signed, the horse
races started at 10:00 a.m. When the races were moved to 2:00 p.m., there was no other choice for
management but to change the employees' work schedule as there was no work to be done in the
morning. Evidently, the adjustment in the work schedule of the employees is justified.

We are not unmindful that every business enterprise endeavors to increase profits. As it is, the Court
will not interfere with the business judgment of an employer in the exercise of its prerogative to devise
means to improve its operation, provided that it does not violate the law, CBAs, and the general
principles of justice and fair play. We have thus held that management is free to regulate, according
to its own discretion and judgment, all aspects of employment, including hiring, work assignments,
working methods, time, place and manner of work, processes to be followed, supervision of workers,
working regulations, transfer of employees, work supervision, layoff of workers and discipline,
dismissal, and recall of workers.5

While it is true that Section 1, Article IV of the CBA provides for a 7-hour work schedule from 9:00
a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. from Mondays to Saturdays, Section 2, Article XI,
however, expressly reserves on respondent the prerogative to change existing methods or facilities to
change the schedules of work. As aptly ruled by the CA:

x x x. Such exact language lends no other meaning but that while respondent may have allowed the
initial determination of the work schedule to be done through collective bargaining, it expressly
retained the prerogative to change it.

Moreover, it cannot be said that in agreeing to Section 1 of Article IV, respondent already waived that
customary prerogative of management to set the work schedule. Had that been the intention, Section
2 of Article XI would not have made any reference at all to the retention by respondent of that
prerogative. The CBA would have instead expressly prohibited respondent from exercising it. x x x As
it were, however, the CBA expressly recognized in respondent the prerogative to change the work
schedule. This effectively rules out any notion of waiver on the part of respondent of its prerogative to
change the work schedule.

The same provision of the CBA also grants respondent the prerogative to relieve employees from
duty because of lack of work. Petitioner’s argument, therefore, that the change in work schedule
violates Article 100 of the Labor Code because it resulted in the diminution of the benefit enjoyed by
regular monthly-paid employees of rendering overtime work with pay, is untenable. Section 1, Article
IV, of the CBA does not guarantee overtime work for all the employees but merely provides that "all
work performed in excess of seven (7) hours work schedule and on days not included within the work
week shall be considered overtime and paid as such.".5

While it is true that Section 1, Article IV of the CBA provides for a 7-hour work schedule from 9:00
a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. from Mondays to Saturdays, Section 2, Article XI,
however, expressly reserves on respondent the prerogative to change existing methods or facilities to
change the schedules of work. As aptly ruled by the CA:

x x x. Such exact language lends no other meaning but that while respondent may have allowed the
initial determination of the work schedule to be done through collective bargaining, it expressly
retained the prerogative to change it.

Moreover, it cannot be said that in agreeing to Section 1 of Article IV, respondent already waived that
customary prerogative of management to set the work schedule. Had that been the intention, Section
2 of Article XI would not have made any reference at all to the retention by respondent of that
prerogative. The CBA would have instead expressly prohibited respondent from exercising it. x x x As
it were, however, the CBA expressly recognized in respondent the prerogative to change the work
schedule. This effectively rules out any notion of waiver on the part of respondent of its prerogative to
change the work schedule.

The same provision of the CBA also grants respondent the prerogative to relieve employees from
duty because of lack of work. Petitioner’s argument, therefore, that the change in work schedule
violates Article 100 of the Labor Code because it resulted in the diminution of the benefit enjoyed by
regular monthly-paid employees of rendering overtime work with pay, is untenable. Section 1, Article
IV, of the CBA does not guarantee overtime work for all the employees but merely provides that "all
work performed in excess of seven (7) hours work schedule and on days not included within the work
week shall be considered overtime and paid as such."

Respondent was not obliged to allow all its employees to render overtime work everyday for the
whole year, but only those employees whose services were needed after their regular working hours
and only upon the instructions of management. The overtime pay was not given to each employee
consistently, deliberately and unconditionally, but as a compensation for additional services rendered.
Thus, overtime pay does not fall within the definition of benefits under Article 100 of the Labor Code
on prohibition against elimination or diminution of benefits.

While the Constitution is committed to the policy of social justice and the protection of the working
class, it should not be presumed that every labor dispute will be automatically decided in favor of
labor. The partiality for labor has not in any way diminished our belief that justice in every case is for
the deserving, to be dispensed in the light of the established facts and the applicable law and
doctrine.6

WHEREFORE, the instant petition is DENIED and the assailed decision and resolution of the CA are
AFFIRMED.

Costs against petitioner.

SO ORDERED.
AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES UNION, petitioner, vs. AMERICAN
WIRE AND CABLE CO., INC. and THE COURT OF APPEALS, respondents.

DECISION
CHICO-NAZARIO, J.:

Before Us is a special civil action for certiorari, assailing the Decision[1] of the Special Eighth
Division of the Court of Appeals dated 06 March 2002. Said Decision upheld the Decision [2] and
Order[3] of Voluntary Arbitrator Angel A. Ancheta of the National Conciliation and Mediation Board
(NCMB) dated 25 September 2001 and 05 November 2001, respectively, which declared the private
respondent herein not guilty of violating Article 100 of the Labor Code, as amended. Assailed
likewise, is the Resolution[4] of the Court of Appeals dated 12 July 2002, which denied the motion for
reconsideration of the petitioner, for lack of merit.

THE FACTS

The facts of this case are quite simple and not in dispute.
American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and
cables. There are two unions in this company, the American Wire and Cable Monthly-Rated
Employees Union (Monthly-Rated Union) and the American Wire and Cable Daily-Rated Employees
Union (Daily-Rated Union).
On 16 February 2001, an original action was filed before the NCMB of the Department of Labor
and Employment (DOLE) by the two unions for voluntary arbitration. They alleged that the private
respondent, without valid cause, suddenly and unilaterally withdrew and denied certain benefits and
entitlements which they have long enjoyed. These are the following:

a. Service Award;

b. 35% premium pay of an employees basic pay for the work rendered during Holy Monday,
Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29;

c. Christmas Party; and

d. Promotional Increase.

A promotional increase was asked by the petitioner for fifteen (15) of its members who were given
or assigned new job classifications. According to petitioner, the new job classifications were in the
nature of a promotion, necessitating the grant of an increase in the salaries of the said 15 members.
On 21 June 2001, a Submission Agreement was filed by the parties before the Office for
Voluntary Arbitration. Assigned as Voluntary Arbitrator was Angel A. Ancheta.
On 04 July 2001, the parties simultaneously filed their respective position papers with the Office
of the Voluntary Arbitrator, NCMB, and DOLE.
On 25 September 2001, a Decision[5] was rendered by Voluntary Arbitrator Angel A. Ancheta in
favor of the private respondent. The dispositive portion of the said Decision is quoted hereunder:

WHEREFORE, with all the foregoing considerations, it is hereby declared that the Company is not
guilty of violating Article 100 of the Labor Code, as amended, or specifically for withdrawing the
service award, Christmas party and 35% premium for work rendered during Holy Week and
Christmas season and for not granting any promotional increase to the alleged fifteen (15) Daily-
Rated Union Members in the absence of a promotion. The Company however, is directed to grant the
service award to deserving employees in amounts and extent at its discretion, in consultation with the
Unions on grounds of equity and fairness.[6]

A motion for reconsideration was filed by both unions[7] where they alleged that the Voluntary
Arbitrator manifestly erred in finding that the company did not violate Article 100 of the Labor Code,
as amended, when it unilaterally withdrew the subject benefits, and when no promotional increase
was granted to the affected employees.
On 05 November 2001, an Order[8] was issued by Voluntary Arbitrator Angel A. Ancheta. Part of
the Order is quoted hereunder:
Considering that the issues raised in the instant case were meticulously evaluated and length[i]ly
discussed and explained based on the pleadings and documentary evidenc[e] adduced by the
contending parties, we find no cogent reason to change, modify, or disturb said decision.

WHEREFORE, let the instant MOTION[S] FOR RECONSIDERATION be, as they are hereby, denied
for lack of merit. Our decision dated 25 September 2001 is affirmed en toto.[9]

An appeal under Rule 43 of the 1997 Rules on Civil Procedure was made by the Daily-Rated
Union before the Court of Appeals[10] and docketed as CA-G.R. SP No. 68182. The petitioner averred
that Voluntary Arbitrator Angel A. Ancheta erred in finding that the company did not violate Article 100
of the Labor Code, as amended, when the subject benefits were unilaterally withdrawn. Further, they
assert, the Voluntary Arbitrator erred in adopting the companys unaudited Revenues and Profitability
Analysis for the years 1996-2000 in justifying the latters withdrawal of the questioned benefits.[11]
On 06 March 2002, a Decision in favor of herein respondent company was promulgated by the
Special Eighth Division of the Court of Appeals in CA-G.R. SP No. 68182. The decretal portion of the
decision reads:

WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE and
accordingly DISMISSED, for lack of merit. The Decision of Voluntary Arbitrator Angel A. Ancheta
dated September 25, 2001 and his Order dated November 5, 2001 in VA Case No. AAA-10-6-4-2001
are hereby AFFIRMED and UPHELD.[12]

A motion for reconsideration[13] was filed by the petitioner, contending that the Court of Appeals
misappreciated the facts of the case, and that it committed serious error when it ruled that the
unaudited financial statement bears no importance in the instant case.
The Court of Appeals denied the motion in its Resolution dated 12 July 2002 [14] because it did not
present any new matter which had not been considered in arriving at the decision. The dispositive
portion of the Resolution states:

WHEREFORE, the motion for reconsideration is hereby DENIED for lack of merit.[15]

Dissatisfied with the court a quos ruling, petitioner instituted the instant special civil action
for certiorari,[16] citing grave abuse of discretion amounting to lack of jurisdiction.

ASSIGNMENT OF ERRORS

The petitioner assigns as errors the following:

I

THE COURT OF APPEALS ERRED IN HOLDING THAT THE COMPANY DID NOT VIOLATE
ARTICLE 100 OF THE LABOR CODE, AS AMENDED, WHEN IT UNILATERALLY WITHDREW THE
BENEFITS OF THE MEMBERS OF PETITIONER UNION, TO WIT: 1) 35% PREMIUM PAY; 2)
CHRISTMAS PARTY AND ITS INCIDENTAL BENEFITS; AND 3) SERVICE AWARD, WHICH IN
TRUTH AND IN FACT SAID BENEFITS/ENTITLEMENTS HAVE BEEN GIVEN THEM SINCE TIME
IMMEMORIAL, AS A MATTER OF LONG ESTABLISHED COMPANY PRACTICE, WITH THE
FURTHER FACT THAT THE SAME NOT BEING DEPENDENT ON PROFITS.

II

THE COURT OF APPEALS ERRED WHEN IT JUST ACCEPTED HOOK, LINE AND SINKER, THE
RESPONDENT COMPANYS SELF SERVING AND UNAUDITED REVENUES AND PROFITABILITY
ANALYSIS FOR THE YEARS 1996-2000 WHICH THEY SUBMITTED TO FALSELY JUSTIFY THEIR
UNLAWFUL ACT OF UNILATERALLY AND SUDDENLY WITHDRAWING OR DENYING FROM
THE PETITIONER THE SUBJECT BENEFITS/ENTITLEMENTS.

III

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE YEARLY SERVICE AWARD IS
NOT DEPENDENT ON PROFIT BUT ON SERVICE AND THUS, CANNOT BE UNILATERALLY
WITHDRAWN BY RESPONDENT COMPANY.

ISSUE
 Synthesized, the solitary issue that must be addressed by this Court is whether or not private
respondent is guilty of violating Article 100 of the Labor Code, as amended, when the
benefits/entitlements given to the members of petitioner union were withdrawn.

THE COURTS RULING

Before we address the sole issue presented in the instant case, it is best to first discuss a matter
which was raised by the private respondent in its Comment. The private respondent contends that
this case should have been dismissed outright because of petitioners error in the mode of appeal.
According to it, the petitioner should have elevated the instant case to this Court through a petition for
review on certiorari under Rule 45, and not through a special civil action for certiorari under Rule 65,
of the 1997 Rules on Civil Procedure.[17]
Assuming arguendo that the mode of appeal taken by the petitioner is improper, there is no
question that the Supreme Court has the discretion to dismiss it if it is defective. However, sound
policy dictates that it is far better to dispose the case on the merits, rather than on technicality. [18]
The Supreme Court may brush aside the procedural barrier and take cognizance of the petition
as it raises an issue of paramount importance. The Court shall resolve the solitary issue on the merits
for future guidance of the bench and bar.[19]
With that out of the way, we shall now resolve whether or not the respondent company is guilty of
violating Article 100 of the Labor Code, as amended.
Article 100 of the Labor Code provides:

ART. 100. PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS. Nothing in this

Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits
being enjoyed at the time of promulgation of this Code.

The petitioner submits that the withdrawal of the private respondent of the 35% premium pay for
selected days during the Holy Week and Christmas season, the holding of the Christmas Party and
its incidental benefits, and the giving of service awards violated Article 100 of the Labor Code. The
grant of these benefits was a customary practice that can no longer be unilaterally withdrawn by
private respondent without the tacit consent of the petitioner. The benefits in question were given by
the respondent to the petitioner consistently, deliberately, and unconditionally since time immemorial.
The benefits/entitlements were not given to petitioner due to an error in interpretation, or a
construction of a difficult question of law, but simply, the grant has been a practice over a long period
of time. As such, it cannot be withdrawn from the petitioner at respondents whim and caprice, and
without the consent of the former. The benefits given by the respondent cannot be considered as a
bonus as they are not founded on profit. Even assuming that it can be treated as a bonus, the grant of
the same, by reason of its long and regular concession, may be regarded as part of regular
compensation.[20]
With respect to the fifteen (15) employees who are members of petitioner union that were given
new job classifications, it asserts that a promotional increase in their salaries was in order. Salary
adjustment is a must due to their promotion.[21]
On respondent companys Revenues and Profitability Analysis for the years 1996-2000, the
petitioner insists that since the former was unaudited, it should not have justified the companys
sudden withdrawal of the benefits/entitlements. The normal and/or legal method for establishing profit
and loss of a company is through a financial statement audited by an independent auditor. [22]
The petitioner cites our ruling in the case of Saballa v. NLRC,[23] where we held that financial
statements audited by independent auditors constitute the normal method of proof of the profit and
loss performance of the company. Our ruling in the case of Bogo-Medellin Sugarcane Planters
Association, Inc., et al. v. NLRC, et al.[24] was likewise invoked. In this case, we held:

The Court has previously ruled that financial statements audited by independent external auditors
constitute the normal method of proof of the profit and loss performance of a company.

On the matter of the withdrawal of the service award, the petitioner argues that it is the
employees length of service which is taken as a factor in the grant of this benefit, and not whether the
company acquired profit or not.[25]
In answer to all these, the respondent corporation avers that the grant of all subject benefits has
not ripened into practice that the employees concerned can claim a demandable right over them. The
grant of these benefits was conditional based upon the financial performance of the company and
that conditions/circumstances that existed before have indeed substantially changed thereby
justifying the discontinuance of said grants. The companys financial performance was affected by the
recent political turmoil and instability that led the entire nation to a bleeding economy. Hence, it only
necessarily follows that the companys financial situation at present is already very much different
from where it was three or four years ago.[26]
On the subject of the unaudited financial statement presented by the private respondent, the
latter contends that the cases cited by the petitioner indeed uniformly ruled that financial statements
audited by independent external auditors constitute the normal method of proof of the profit and loss
performance of a company. However, these cases do not require that the only legal method to
ascertain profit and loss is through an audited financial statement. The cases only provide that an
audited financial statement is the normal method.[27]
The respondent company likewise asseverates that the 15 members of petitioner union were not
actually promoted. There was only a realignment of positions.[28]
From the foregoing contentions, it appears that for the Court to resolve the issue presented, it is
critical that a determination must be first made on whether the benefits/entitlements are in the nature
of a bonus or not, and assuming they are so, whether they are demandable and enforceable
obligations.
In the case of Producers Bank of the Philippines v. NLRC[29] we have characterized what a bonus
is, viz:

A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed
to the success of the employers business and made possible the realization of profits. It is an act of
generosity granted by an enlightened employer to spur the employee to greater efforts for the
success of the business and realization of bigger profits. The granting of a bonus is a management
prerogative, something given in addition to what is ordinarily received by or strictly due the recipient.
Thus, a bonus is not a demandable and enforceable obligation, except when it is made part of the
wage, salary or compensation of the employee.

Based on the foregoing pronouncement, it is obvious that the benefits/entitlements subjects of the
instant case are all bonuses which were given by the private respondent out of its generosity and
munificence. The additional 35% premium pay for work done during selected days of the Holy Week
and Christmas season, the holding of Christmas parties with raffle, and the cash incentives given
together with the service awards are all in excess of what the law requires each employer to give its
employees. Since they are above what is strictly due to the members of petitioner-union, the granting
of the same was a management prerogative, which, whenever management sees necessary, may be
withdrawn, unless they have been made a part of the wage or salary or compensation of the
employees.
The consequential question therefore that needs to be settled is if the subject
benefits/entitlements, which are bonuses, are demandable or not. Stated another way, can these
bonuses be considered part of the wage or salary or compensation making them enforceable
obligations?
The Court does not believe so.
For a bonus to be enforceable, it must have been promised by the employer and expressly
agreed upon by the parties,[30] or it must have had a fixed amount[31] and had been a long and regular
practice on the part of the employer.[32]
The benefits/entitlements in question were never subjects of any express agreement between the
parties. They were never incorporated in the Collective Bargaining Agreement (CBA). As observed by
the Voluntary Arbitrator, the records reveal that these benefits/entitlements have not been subjects of
any express agreement between the union and the company, and have not yet been incorporated in
the CBA. In fact, the petitioner has not denied having made proposals with the private respondent for
the service award and the additional 35% premium pay to be made part of the CBA.[33]
The Christmas parties and its incidental benefits, and the giving of cash incentive together with
the service award cannot be said to have fixed amounts. What is clear from the records is that over
the years, there had been a downtrend in the amount given as service award.[34] There was also a
downtrend with respect to the holding of the Christmas parties in the sense that its location changed
from paid venues to one which was free of charge,[35] evidently to cut costs. Also, the grant of these
two aforementioned bonuses cannot be considered to have been the private respondents long and
regular practice. To be considered a regular practice, the giving of the bonus should have been done
over a long period of time, and must be shown to have been consistent and deliberate. [36] The
downtrend in the grant of these two bonuses over the years demonstrates that there is nothing
consistent about it. Further, as held by the Court of Appeals:
Anent the Christmas party and raffle of prizes, We agree with the Voluntary Arbitrator that the same
was merely sponsored by the respondent corporation out of generosity and that the same is
dependent on the financial performance of the company for a particular year [37]

The additional 35% premium pay for work rendered during selected days of the Holy Week and
Christmas season cannot be held to have ripened into a company practice that the petitioner herein
have a right to demand. Aside from the general averment of the petitioner that this benefit had been
granted by the private respondent since time immemorial, there had been no evidence adduced that it
had been a regular practice. As propitiously observed by the Court of Appeals:

. . . [N]otwithstanding that the subject 35% premium pay was deliberately given and the same was in
excess of that provided by the law, the same however did not ripen into a company practice on
account of the fact that it was only granted for two (2) years and with the express reservation from
respondent corporations owner that it cannot continue to rant the same in view of the companys
current financial situation.[38]

To hold that an employer should be forced to distribute bonuses which it granted out of kindness
is to penalize him for his past generosity.[39]
Having thus ruled that the additional 35% premium pay for work rendered during selected days of
the Holy Week and Christmas season, the holding of Christmas parties with its incidental benefits,
and the grant of cash incentive together with the service award are all bonuses which are neither
demandable nor enforceable obligations of the private respondent, it is not necessary anymore to
delve into the Revenues and Profitability Analysis for the years 1996-2000 submitted by the private
respondent.
On the alleged promotion of 15 members of the petitioner union that should warrant an increase
in their salaries, the factual finding of the Voluntary Arbitrator is revealing, viz:

Considering that the Union was unable to adduce proof that a promotion indeed occur[ed] with
respect to the 15 employees, the Daily Rated Unions claim for promotional increase likewise fall[s]
there being no promotion established under the records at hand.[40]

WHEREFORE, in view of all the foregoing, the assailed Decision and Resolution of the Court of
Appeals dated 06 March 2002 and 12 July 2002, respectively, which affirmed and upheld the decision
of the Voluntary Arbitrator, are hereby AFFIRMED. No pronouncement as to 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
ZUÑIGA and DANILO CAÑETE, Respondents.

DECISION

MENDOZA, J.:

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 Cañete and Edgardo Zuñiga (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 Cañete (Cañete for brevity), and Edgardo Zuñiga (Zuñiga 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, Zuñiga, Cañete 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, Zuñiga and Cañete 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,
Zuñiga and Cañete’s employment was terminated. For this project, Zuñiga and Cañete 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. Zuñiga and Cañete 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 Lagon’s 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 attorney’s 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. NLRC14and 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 Court’s function to assess and evaluate the evidence
16
all over again, particularly where the findings of both the Labor tribunals and the CA concur.

As a general rule, on payment of wages, a party who alleges payment as a defense has the burden of
proving it.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 employee’s
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. 179652 March 6, 2012

PEOPLE'S BROADCASTING SERVICE (BOMBO RADYO PHILS., INC.), Petitioner,

vs.
THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, THE REGIONAL
DIRECTOR, DOLE REGION VII, and JANDELEON JUEZAN, Respondents.

RESOLUTION

VELASCO, JR., J.:

In a Petition for Certiorari under Rule 65, petitioner People’s Broadcasting Service, Inc. (Bombo
Radyo Phils., Inc.) questioned the Decision and Resolution of the Court of Appeals (CA) dated
October 26, 2006 and June 26, 2007, respectively, in C.A. G.R. CEB-SP No. 00855.

Private respondent Jandeleon Juezan filed a complaint against petitioner with the Department of
Labor and Employment (DOLE) Regional Office No. VII, Cebu City, for illegal deduction, nonpayment
of service incentive leave, 13th month pay, premium pay for holiday and rest day and illegal
diminution of benefits, delayed payment of wages and noncoverage of SSS, PAG-IBIG and
Philhealth.1 After the conduct of summary investigations, and after the parties submitted their position
papers, the DOLE Regional Director found that private respondent was an employee of petitioner,
and was entitled to his money claims.2 Petitioner sought reconsideration of the Director’s Order, but
failed. The Acting DOLE Secretary dismissed petitioner’s appeal on the ground that petitioner
submitted a Deed of Assignment of Bank Deposit instead of posting a cash or surety bond. When the
matter was brought before the CA, where petitioner claimed that it had been denied due process, it
was held that petitioner was accorded due process as it had been given the opportunity to be heard,
and that the DOLE Secretary had jurisdiction over the matter, as the jurisdictional limitation imposed
by Article 129 of the Labor Code on the power of the DOLE Secretary under Art. 128(b) of the Code
had been repealed by Republic Act No. (RA) 7730.3

In the Decision of this Court, the CA Decision was reversed and set aside, and the complaint against
petitioner was dismissed. The dispositive portion of the Decision reads as follows:

WHEREFORE, the petition is GRANTED. The Decision dated 26 October 2006 and the Resolution
dated 26 June 2007 of the Court of Appeals in C.A. G.R. CEB-SP No. 00855
are REVERSED and SET ASIDE. The Order of the then Acting Secretary of the Department of Labor
and Employment dated 27 January 2005 denying petitioner’s appeal, and the Orders of the Director,
DOLE Regional Office No. VII, dated 24 May 2004 and 27 February 2004, respectively,
are ANNULLED. The complaint against petitioner is DISMISSED.4

The Court found that there was no employer-employee relationship between petitioner and private
respondent. It was held that while the DOLE may make a determination of the existence of an
employer-employee relationship, this function could not be co-extensive with the visitorial and
enforcement power provided in Art. 128(b) of the Labor Code, as amended by RA 7730. The National
Labor Relations Commission (NLRC) was held to be the primary agency in determining the existence
of an employer-employee relationship. This was the interpretation of the Court of the clause "in cases
where the relationship of employer-employee still exists" in Art. 128(b).5

From this Decision, the Public Attorney’s Office (PAO) filed a Motion for Clarification of Decision (with
Leave of Court). The PAO sought to clarify as to when the visitorial and enforcement power of the
DOLE be not considered as co-extensive with the power to determine the existence of an employer-
employee relationship.6 In its Comment,7the DOLE sought clarification as well, as to the extent of its
visitorial and enforcement power under the Labor Code, as amended.

The Court treated the Motion for Clarification as a second motion for reconsideration, granting said
motion and reinstating the petition.8 It is apparent that there is a need to delineate the jurisdiction of
the DOLE Secretary vis-à-vis that of the NLRC.

Under Art. 129 of the Labor Code, the power of the DOLE and its duly authorized hearing officers to
hear and decide any matter involving the recovery of wages and other monetary claims and benefits
was qualified by the proviso that the complaint not include a claim for reinstatement, or that the
aggregate money claims not exceed PhP 5,000. RA 7730, or an Act Further Strengthening the
Visitorial and Enforcement Powers of the Secretary of Labor, did away with the PhP 5,000 limitation,
allowing the DOLE Secretary to exercise its visitorial and enforcement power for claims beyond PhP
5,000. The only qualification to this expanded power of the DOLE was only that there still be an
existing employer-employee relationship.
It is conceded that if there is no employer-employee relationship, whether it has been terminated or it
has not existed from the start, the DOLE has no jurisdiction. Under Art. 128(b) of the Labor Code, as
amended by RA 7730, the first sentence reads, "Notwithstanding the provisions of Articles 129 and
217 of this Code to the contrary, and in cases where the relationship of employer-employee still
exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the
power to issue compliance orders to give effect to the labor standards provisions of this Code and
other labor legislation based on the findings of labor employment and enforcement officers or
industrial safety engineers made in the course of inspection." It is clear and beyond debate that an
employer-employee relationship must exist for the exercise of the visitorial and enforcement power of
the DOLE. The question now arises, may the DOLE make a determination of whether or not an
employer-employee relationship exists, and if so, to what extent?

The first portion of the question must be answered in the affirmative.

The prior decision of this Court in the present case accepts such answer, but places a limitation upon
the power of the DOLE, that is, the determination of the existence of an employer-employee
relationship cannot be co-extensive with the visitorial and enforcement power of the DOLE. But even
in conceding the power of the DOLE to determine the existence of an employer-employee
relationship, the Court held that the determination of the existence of an employer-employee
relationship is still primarily within the power of the NLRC, that any finding by the DOLE is merely
preliminary.

This conclusion must be revisited.

No limitation in the law was placed upon the power of the DOLE to determine the existence of an
employer-employee relationship. No procedure was laid down where the DOLE would only make a
preliminary finding, that the power was primarily held by the NLRC. The law did not say that the
DOLE would first seek the NLRC’s determination of the existence of an employer-employee
relationship, or that should the existence of the employer-employee relationship be disputed, the
DOLE would refer the matter to the NLRC. The DOLE must have the power to determine whether or
not an employer-employee relationship exists, and from there to decide whether or not to issue
compliance orders in accordance with Art. 128(b) of the Labor Code, as amended by RA 7730.

The DOLE, in determining the existence of an employer-employee relationship, has a ready set of
guidelines to follow, the same guide the courts themselves use. The elements to determine the
existence of an employment relationship are: (1) the selection and engagement of the employee; (2)
the payment of wages; (3) the power of dismissal; (4) the employer’s power to control the employee’s
conduct.9 The use of this test is not solely limited to the NLRC. The DOLE Secretary, or his or her
representatives, can utilize the same test, even in the course of inspection, making use of the same
evidence that would have been presented before the NLRC.

The determination of the existence of an employer-employee relationship by the DOLE must be

respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would
be rendered nugatory if the alleged employer could, by the simple expedient of disputing the
employer-employee relationship, force the referral of the matter to the NLRC. The Court issued the
declaration that at least a prima facie showing of the absence of an employer-employee relationship
be made to oust the DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that
evidence, and it is the DOLE that will weigh it, to see if the same does successfully refute the
existence of an employer-employee relationship.

If the DOLE makes a finding that there is an existing employer-employee relationship, it takes
cognizance of the matter, to the exclusion of the NLRC. The DOLE would have no jurisdiction only if
the employer-employee relationship has already been terminated, or it appears, upon review, that no
employer-employee relationship existed in the first place.

The Court, in limiting the power of the DOLE, gave the rationale that such limitation would eliminate
the prospect of competing conclusions between the DOLE and the NLRC. The prospect of competing
conclusions could just as well have been eliminated by according respect to the DOLE findings, to the
exclusion of the NLRC, and this We believe is the more prudent course of action to take.

This is not to say that the determination by the DOLE is beyond question or review.1avvphi1 Suffice it
to say, there are judicial remedies such as a petition for certiorari under Rule 65 that may be availed
of, should a party wish to dispute the findings of the DOLE.

It must also be remembered that the power of the DOLE to determine the existence of an employer-
employee relationship need not necessarily result in an affirmative finding. The DOLE may well make
the determination that no employer-employee relationship exists, thus divesting itself of jurisdiction
over the case. It must not be precluded from being able to reach its own conclusions, not by the
parties, and certainly not by this Court.

Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to make
a determination as to the existence of an employer-employee relationship in the exercise of its
visitorial and enforcement power, subject to judicial review, not review by the NLRC.

There is a view that despite Art. 128(b) of the Labor Code, as amended by RA 7730, there is still a
threshold amount set by Arts. 129 and 217 of the Labor Code when money claims are involved, i.e.,
that if it is for PhP 5,000 and below, the jurisdiction is with the regional director of the DOLE, under
Art. 129, and if the amount involved exceeds PhP 5,000, the jurisdiction is with the labor arbiter,
under Art. 217. The view states that despite the wording of Art. 128(b), this would only apply in the
course of regular inspections undertaken by the DOLE, as differentiated from cases under Arts. 129
and 217, which originate from complaints. There are several cases, however, where the Court has
ruled that Art. 128(b) has been amended to expand the powers of the DOLE Secretary and his duly
authorized representatives by RA 7730. In these cases, the Court resolved that the DOLE had the
jurisdiction, despite the amount of the money claims involved. Furthermore, in these cases, the
inspection held by the DOLE regional director was prompted specifically by a complaint. Therefore,
the initiation of a case through a complaint does not divest the DOLE Secretary or his duly authorized
representative of jurisdiction under Art. 128(b).

To recapitulate, if a complaint is brought before the DOLE to give effect to the labor standards
provisions of the Labor Code or other labor legislation, and there is a finding by the DOLE that there
is an existing employer-employee relationship, the DOLE exercises jurisdiction to the exclusion of the
NLRC. If the DOLE finds that there is no employer-employee relationship, the jurisdiction is properly
with the NLRC. If a complaint is filed with the DOLE, and it is accompanied by a claim for
reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code,
which provides that the Labor Arbiter has original and exclusive jurisdiction over those cases
involving wages, rates of pay, hours of work, and other terms and conditions of employment, if
accompanied by a claim for reinstatement. If a complaint is filed with the NLRC, and there is still an
existing employer-employee relationship, the jurisdiction is properly with the DOLE. The findings of
the DOLE, however, may still be questioned through a petition for certiorari under Rule 65 of the
Rules of Court.

In the present case, the finding of the DOLE Regional Director that there was an employer-employee
relationship has been subjected to review by this Court, with the finding being that there was no
employer-employee relationship between petitioner and private respondent, based on the evidence
presented. Private respondent presented self-serving allegations as well as self-defeating
evidence.10 The findings of the Regional Director were not based on substantial evidence, and private
respondent failed to prove the existence of an employer-employee relationship. The DOLE had no
jurisdiction over the case, as there was no employer-employee relationship present. Thus, the
dismissal of the complaint against petitioner is proper.

WHEREFORE, the Decision of this Court in G.R. No. 179652 is hereby AFFIRMED, with the
MODIFICATION that in the exercise of the DOLE’s visitorial and enforcement power, the Labor
Secretary or the latter’s authorized representative shall have the power to determine the existence of
an employer-employee relationship, to the exclusion of the NLRC.

SO ORDERED.

PRESBITERO J. VELASCO, JR.

Associate Justice

WE CONCUR:

CONCURRING OPINION
(in the Result)

BRION, J.:

I concur in the result in affirming with modification the Court’s Decision of May 8, 2009. This Decision
originally dismissed respondent Jandeleon Juezan’s money claims against the petitioner People’s
Broadcasting Service (Bombo Radyo Phils., Inc.). The present Resolution still affirms the ruling in
favor of the petitioner, but more importantly to me, it recognizes the validity of the Department of
Labor and Employment’s (DOLE’s) plenary power under Article 128(b) of the Labor Code, as
amended by Republic Act No. 7730, including its power to determine the existence of employer-
employee relationship in the exercise of its Article 128(b) powers.

Background

The case arose when the DOLE Regional Office No. VII conducted an inspection of Bombo Radyo’s
premises in response to Juezan’s money claims against the broadcasting company, resulting in an
order for Bombo Radyo to rectify/restitute the labor standards violations discovered during the
inspection. Bombo Radyo failed to make any rectification or restitution, prompting the DOLE to
conduct a summary investigation. Bombo Radyo reiterated its position, made during the inspection,
that Juezan was not its employee. Both parties submitted evidence to support their respective
positions.

DOLE Director Rodolfo M. Sabulao found Juezan to be an employee of Bombo Radyo.

Consequently, Director Sabulao ordered Bombo Radyo to pay Juezan ₱203,726.30 representing his
demanded money claims. Bombo Radyo moved for reconsideration and submitted additional
evidence, but Director Sabulao denied the motion. Bombo Radyo then appealed to the DOLE
Secretary, insisting that Juezan was not its employee as he was a drama talent hired on a per drama
basis. The Acting DOLE Secretary dismissed the appeal for non-perfection due to Bombo Radyo’s
failure to put a cash or surety bond, as required by Article 128(b) of the Labor Code.

Bombo Radyo went to the Court of Appeals (CA) through a petition for certiorari under Rule 65 of the
Rules of Court. The CA dismissed the petition for lack of merit. Bombo Radyo then sought relief from
this Court, likewise through a Rule 65 petition, contending that the CA committed grave abuse of
discretion in dismissing the petition. It justified its recourse to a petition for certiorari instead of a Rule
45 appeal by claiming that there was no appeal or any plain and adequate remedy available to it in
the ordinary course of law.

On May 8, 2009, the Court’s Second Division rendered a Decision reversing the CA rulings and
dismissing Juezan’s complaint. It reviewed the evidence and found that there was no employer-
employee relationship between Juezan and Bombo Radyo. The Court overruled the CA’s recognition
of the DOLE’s power to determine the existence of employer-employee relationship in a labor
standards case under Article 128(b) of the Labor Code. It stressed that the power to determine the
existence of employer-employee relationship is primarily lodged with the National Labor Relations
Commission (NLRC) based on the clause "in cases where the relationship of employer-employee still
exists" in Article 128(b).

The Dissent

The May 8, 2009 Court Decision was not unanimous. I wrote a Dissent and was joined by Justice
Conchita Carpio Morales. I took strong exception to the Court’s Decision for:

1. taking cognizance of Bombo Radyo’s Rule 65 petition for certiorari despite the fact that a
Rule 45 appeal (petition for review on certiorari) was available to the company and would have
been the proper recourse since errors of law against the CA were raised;

2. allowing a Deed of Assignment of Bank Deposits as a substitute for a cash or surety bond in
perfecting an appeal to the Labor Secretary, in violation of Article 128(b) of the Labor Code
which requires only a cash or surety bond;

3. re-examining the evidence and finding that there was no employer-employee relationship
between Juezan and Bombo Radyo, thereby reversing the DOLE Regional Director’s findings
which had already lapsed into finality in view of the non-perfection of the appeal;

4. holding that while the Regional Director and the DOLE Secretary may preliminarily
determine the existence of an employer-employee relationship in a labor standards case, they
can be divested of jurisdiction over the issue by a mere prima facie showing of an absence of
an employer-employee relationship.

The Public Attorney’s Office (PAO) moved, with leave of court, to clarify the Decision on the question
of when the visitorial and enforcement power of the DOLE can be considered co-extensive or not co-
extensive with the power to determine the existence of an employer-employee relationship. The
DOLE, in its Comment, also sought to clarify the extent of its visitorial and enforcement power under
the Labor Code.

The Court, treating the Motion for Clarification as a Second Motion for Reconsideration, granted the
motion and reinstated the petition.1
 The Court’s Ruling

In a reversal of position, the present Resolution now recognizes that the determination of the
existence of an employer-employee relationship by the DOLE, in the exercise of its visitorial and
enforcement power under Article 128(b) of the Labor Code, is entitled to full respect and must be fully
supported. It categorically states:

No limitation in the law was placed upon the power of the DOLE to determine the existence of an
employer-employee relationship. No procedure was laid down where the DOLE would only make a
preliminary finding, that the power was primarily held by the NLRC. The law did not say that the
DOLE would first seek the NLRC’s determination of the existence of an employer-employee
relationship, or that should the existence of the employer-employee relationship be disputed, the
DOLE would refer the matter to the NLRC. The DOLE must have the power to determine whether or
not an employer-employee relationship exists, and from there to decide whether or not to issue
compliance orders in accordance with Art. 128(b) of the Labor Code, as amended by RA 7730.2

The determination of the existence of an employer-employee relationship by the DOLE must be

respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would
be rendered nugatory if the alleged employer could, by the simple expedient of disputing the
employer-employee relationship, force the referral of the matter to the NLRC. The Court issued the
declaration that at least a prima facie showing of the absence of an employer-employee relationship
be made to oust the DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that
evidence, and it is the DOLE that will weigh it, to see if the same does successfully refute the
existence of an employer-employee relationship.3

This is not to say that the determination by the DOLE is beyond question or review. Suffice it to say,
there are judicial remedies such as a petition for certiorari under Rule 65 that may be availed of,
should a party wish to dispute the findings of the DOLE.4 (underscoring ours)

In short, the Court now recognizes that the DOLE has the full power to determine the existence of an
employer-employee relationship in cases brought to it under Article 128(b) of the Labor Code. This
power is parallel and not subordinate to that of the NLRC.

Our present ruling on the authority of the DOLE with respect to Article 128(b) of the Labor Code is, to
my mind, a very positive development that cannot but benefit our working masses, the vast majority
of whom "are not organized and, therefore, outside the protective mantle of collective bargaining." 5

It should be welcome to the DOLE, too, as it will greatly boost its visitorial and enforcement power,
and serve as an invaluable tool in its quest to ensure that workers enjoy minimum terms and
conditions of employment. The DOLE’s labor inspection program can now proceed without being
sidetracked by unscrupulous employers who could, as the Resolution acknowledges, render nugatory
the "expanded visitorial and enforcement power of the DOLE granted by RA 7730 xxxx by the simple
expedient of disputing the employer-employee relationship [and] force the referral of the matter to the
NLRC."6

But our Resolution does not fully go the DOLE’s way. The Court, at the same time, confirms its
previous finding that no employer-employee relationship exists between Juezan and Bombo Radyo
based on the evidence presented,7and that a Deed of Assignment of Bank Deposits can be a
substitute for a cash or surety bond in perfecting an appeal to the Labor Secretary.

I continue to entertain strong reservations against the validity of these rulings, particularly the ruling
on the Court’s acceptance of a Deed of Assignment of Bank Deposits to perfect an appeal to the
Labor Secretary; this mode directly contravenes the express terms of Article 128(b) of the Labor
Code which requires only a cash or surety bond. I do hope that the Court will consider this ruling an
isolated one applicable only to the strict facts obtaining in the present case as this is a step backward
in the DOLE’s bid for an orderly and efficient delivery of labor justice.

In light of these reservations, I cannot fully concur with the present Resolution and must only "concur
in the result."