17. Calamba v NLRC SECOND DIVISION [ G.R. No.

176484, November 25, 2008 ]

CALAMBA MEDICAL CENTER, INC., PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, RONALDO LANZANAS AND MERCEDITHA* LANZANAS, RESPONDENTS. DECISION

CARPIO MORALES, J.: The Calamba Medical Center (petitioner), a privately-owned hospital, engaged the services of medical doctors-spouses Ronaldo Lanzanas (Dr. Lanzanas) and Merceditha Lanzanas (Dr. Merceditha) in March 1992 and August 1995, respectively, as part of its team of resident physicians. Reporting at the hospital twice-a-week on twenty-four-hour shifts, respondents were paid a monthly "retainer" of P4,800.00 each.[1] It appears that resident physicians were also given a percentage share out of fees charged for out-patient treatments, operating room assistance and discharge billings, in addition to their fixed monthly retainer.[2] The work schedules of the members of the team of resident physicians were fixed by petitioner's medical director Dr. Raul Desipeda (Dr. Desipeda). And they were issued identification cards[3] by petitioner and were enrolled in the Social Security System (SSS).[4] Income taxes were withheld from them.[5] On March 7, 1998, Dr. Meluz Trinidad (Dr. Trinidad), also a resident physician at the hospital, inadvertently overheard a telephone conversation of respondent Dr. Lanzanas with a fellow employee, Diosdado Miscala, through an extension telephone line. Apparently, Dr. Lanzanas and Miscala were discussing the low "census" or admission of patients to the hospital.[6] Dr. Desipeda whose attention was called to the above-said telephone conversation issued to Dr. Lanzanas a Memorandum of March 7, 1998 reading: As a Licensed Resident Physician employed in Calamba Medical Center since several years ago, the hospital management has committed upon you utmost confidence in the performance of duties pursuant thereto. This is the reason why you were awarded the privilege to practice in the hospital and were entrusted hospital functions to serve the interest of both the hospital and our patients using your capability for independent judgment. Very recently though and unfortunately, you have committed acts inimical to the interest of the hospital, the details of which are contained in the hereto attached affidavit of witness. You are therefore given 24 hours to explain why no disciplinary action should be taken against you.

Pending investigation of your case, you are hereby placed under 30-days [sic] preventive suspension effective upon receipt hereof.[7] (Emphasis, italics and underscoring supplied) Inexplicably, petitioner did not give respondent Dr. Merceditha, who was not involved in the said incident, any work schedule after sending her husband Dr. Lanzanas the memorandum,[8] nor inform her the reason therefor, albeit she was later informed by the Human Resource Department (HRD) officer that that was part of petitioner's cost-cutting measures.[9] Responding to the memorandum, Dr. Lanzanas, by letter of March 9, 1998,[10] admitted that he spoke with Miscala over the phone but that their conversation was taken out of context by Dr. Trinidad. On March 14, 1998,[11] the rank-and-file employees union of petitioner went on strike due to unresolved grievances over terms and conditions of employment.[12] On March 20, 1998, Dr. Lanzanas filed a complaint for illegal suspension[13] before the National Labor Relations Commission (NLRC)-Regional Arbitration Board (RAB) IV. Dr. Merceditha subsequently filed a complaint for illegal dismissal.[14] In the meantime, then Sec. Cresenciano Trajano of the Department of Labor and Employment (DOLE) certified the labor dispute to the NLRC for compulsory arbitration and issued on April 21, 1998 return-to-work Order to the striking union officers and employees of petitioner pending resolution of the labor dispute.[15] In a memorandum[16] of April 22, 1998, Dr. Desipeda echoed the April 22, 1998 order of the Secretary of Labor directing all union officers and members to return-to-work "on or April 23, 1998, except those employees that were already terminated or are serving disciplinary actions." Dr. Desipeda thus ordered the officers and members of the union to "report for work as soon as possible" to the hospital's personnel officer and administrator for "work scheduling, assignments and/or re-assignments." Petitioner later sent Dr. Lanzanas a notice of termination which he received on April 25, 1998, indicating as grounds therefor his failure to report back to work despite the DOLE order and his supposed role in the striking union, thus: On April 23, 1998, you still did not report for work despite memorandum issued by the CMC Medical Director implementing the Labor Secretary's ORDER. The same is true on April 24, 1998 and April 25, 1998,--you still did not report for work [sic]. You are likewise aware that you were observed (re: signatories [sic] to the Saligang Batas of BMCMC-UWP) to be unlawfully participating as member in the rank-and-file union's concerted
2

activities despite knowledge that your position in the hospital is managerial in nature (Nurses, Orderlies, and staff of the Emergency Room carry out your orders using your independent judgment) which participation is expressly prohibited by the New Labor Code and which prohibition was sustained by the Med-Arbiter's ORDER dated February 24, 1998. (Emphasis and italics in the original; underscoring partly in the original and partly supplied) For these reasons as grounds for termination, you are hereby terminated for cause from employment effective today, April 25, 1998, without prejudice to further action for revocation of your license before the Philippine [sic] Regulations [sic] Commission.[17] (Emphasis and underscoring supplied) Dr. Lanzanas thus amended his original complaint to include illegal dismissal.[18] His and Dr. Merceditha's complaints were consolidated and docketed as NLRC CASE NO. RAB-IV-3-987998-L. By Decision[19] of March 23, 1999, Labor Arbiter Antonio R. Macam dismissed the spouses' complaints for want of jurisdiction upon a finding that there was no employer-employee relationship between the parties, the fourth requisite or the "control test" in the determination of an employment bond being absent. On appeal, the NLRC, by Decision[20] of May 3, 2002, reversed the Labor Arbiter's findings, disposing as follows: WHEREFORE, the assailed decision is set aside. The respondents are ordered to pay the complainants their full backwages; separation pay of one month salary for every year of service in lieu of reinstatement; moral damages of P500,000.00 each; exemplary damages of P250,000.00 each plus ten percent (10%) of the total award as attorney's fees. SO ORDERED.[21] Petitioner's motion for reconsideration having been denied, it brought the case to the Court of Appeals oncertiorari. The appellate court, by June 30, 2004 Decision,[22] initially granted petitioner's petition and set aside the NLRC ruling. However, upon a subsequent motion for reconsideration filed by respondents, it reinstated the NLRC decision in an Amended Decision[23] dated September 26, 2006 but tempered the award to each of the spouses of moral and exemplary damages to P100,000.00 and P50,000.00, respectively and omitted the award of attorney's fees. In finding the existence of an employer-employee relationship between the parties, the appellate court held: x x x. While it may be true that the respondents are given the discretion to decide on how to treat the petitioner's patients, the petitioner has not denied nor explained why its Medical
3

Director still has the direct supervision and control over the respondents. The fact is the petitioner's Medical Director still has to approve the schedule of duties of the respondents. The respondents stressed that the petitioner's Medical Director also issuesinstructions or orders to the respondents relating to the means and methods of performing their duties , i.e. admission of patients, manner of characterizing cases, treatment of cases, etc., and may even overrule, review or revise the decisions of the resident physicians. This was not controverted by the petitioner. The foregoing factors taken together are sufficient to constitute the fourth element, i.e. control test, hence, the existence of the employer-employee relationship. In denying that it had control over the respondents, the petitioner alleged that the respondents were free to put up their own clinics or to accept other retainership agreement with the other hospitals. But, the petitioner failed to substantiate the allegation with substantial evidence. (Emphasis and underscoring supplied)[24] The appellate court thus declared that respondents were illegally dismissed. x x x. The petitioner's ground for dismissing respondent Ronaldo Lanzanas was based on his alleged participation in union activities, specifically in joining the strike and failing to observe the return-to-work order issued by the Secretary of Labor. Yet, the petitioner did not adduce any piece of evidence to show that respondent Ronaldo indeed participated in the strike. x x x. In the case of respondent Merceditha Lanzanas, the petitioner's explanation that "her marriage to complainant Ronaldo has given rise to the presumption that her sympat[hies] are likewise with her husband" as a ground for her dismissal is unacceptable. Such is not one of the grounds to justify the termination of her employment.[25] (Underscoring supplied) The fallo of the appellate court's decision reads: WHEREFORE, the instant Motion for Reconsideration is GRANTED, and the Court's decision dated June 30, 2004, is SET ASIDE. In lieu thereof, a new judgment is entered, as follows: WHEREFORE, the petition is DISMISSED. The assailed decision dated May 3, 2002 and order dated September 24, 2002 of the NLRC in NLRC NCR CA No. 019823-99 are AFFIRMED with the MODIFICATION that the moral and exemplary damages are reduced to P100,000.00 each and P50,000.00 each, respectively. SO ORDERED.[26] (Emphasis and italics in the original; underscoring supplied) Preliminarily, the present petition calls for a determination of whether there exists an employer-employee relationship[27] between petitioner and the spouses-respondents. Denying the existence of such relationship, petitioner argues that the appellate court, as well as the NLRC, overlooked its twice-a-week reporting arrangement with respondents who are free to practice their profession elsewhere the rest of the week. And it invites attention to the uncontroverted allegation that respondents, aside from their monthly retainers, were entitled to one-half of all suturing, admitting, consultation, medico-legal and operating room assistance fees.[28] These circumstances, it stresses, are clear badges of the absence of any employment relationship between them.
4

This

Court

is

unimpressed.

Under the "control test," an employment relationship exists between a physician and a hospital if the hospital controls both the means and the details of the process by which the physician is to accomplish his task.[29] Where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and is compensated according to the result of his efforts and not the amount thereof, the element of control is absent.[30] As priorly stated, private respondents maintained specific work-schedules, as determined by petitioner through its medical director, which consisted of 24-hour shifts totaling forty-eight hours each week and which were strictly to be observed under pain of administrative sanctions. That petitioner exercised control over respondents gains light from the undisputed fact that in the emergency room, the operating room, or any department or ward for that matter, respondents' work is monitored through its nursing supervisors, charge nurses and orderlies. Without the approval or consent of petitioner or its medical director, no operations can be undertaken in those areas. For control test to apply, it is not essential for the employer to actually supervise the performance of duties of the employee, it being enough that it has the right to wield the power.[31] With respect to respondents' sharing in some hospital fees, this scheme does not sever the employment tie between them and petitioner as this merely mirrors additional form or another form of compensation or incentive similar to what commission-based employees receive as contemplated in Article 97 (f) of the Labor Code, thus: "Wage" paid to any employee shall mean the remuneration or earning, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. x x x (Emphasis and underscoring supplied), Respondents were in fact made subject to petitioner-hospital's Code of Ethics,[32] the provisions of which cover administrative and disciplinary measures on negligence of duties, personnel conduct and behavior, and offenses against persons, property and the hospital's interest.
5

More importantly, petitioner itself provided incontrovertible proof of the employment status of respondents, namely, the identification cards it issued them, the payslips[33] and BIR W-2 (now 2316) Forms which reflect their status as employees, and the classification as "salary" of their remuneration. Moreover, it enrolled respondents in the SSS and Medicare (Philhealth) program. It bears noting at this juncture that mandatory coverage under the SSS Law[34] is premised on the existence of an employer-employee relationship,[35] except in cases of compulsory coverage of the self-employed. It would be preposterous for an employer to report certain persons as employees and pay their SSS premiums as well as their wages if they are not its employees.[36] And if respondents were not petitioner's employees, how does it account for its issuance of the earlier-quoted March 7, 1998 memorandum explicitly stating that respondent is "employed" in it and of the subsequent termination letter indicating respondent Lanzanas' employment status. Finally, under Section 15, Rule X of Book III of the Implementing Rules of the Labor Code, an employer-employee relationship exists between the resident physicians and the training hospitals, unless there is a training agreement between them, and the training program is duly accredited or approved by the appropriate government agency. In respondents' case, they were not undergoing any specialization training. They were considered non-training general practitioners,[37] assigned at the emergency rooms and ward sections. Turning now to the issue of dismissal, the Court upholds the appellate court's conclusion that private respondents were illegally dismissed. Dr. Lanzanas was neither a managerial nor supervisory employee but part of the rank-and-file. This is the import of the Secretary of Labor's Resolution of May 22, 1998 in OS A-05-15-98 which reads: x x x x In the motion to dismiss it filed before the Med-Arbiter, the employer (CMC) alleged that 24 members of petitioner are supervisors, namely x x x Rolando Lanzonas [sic] x x x. A close scrutiny of the job descriptions of the alleged supervisors narrated by the employer only proves that except for the contention that these employees allegedly supervise, they do not however recommend any managerial action. At most, their job is merely routinary in nature and consequently, they cannot be considered supervisory employees. They are not therefore barred from membership in the union of rank[-]and[-]file, which the
6

petitioner [the union] is seeking to represent in the instant case.[38] (Emphasis and underscoring supplied) xxxx Admittedly, Dr. Lanzanas was a union member in the hospital, which is considered indispensable to the national interest. In labor disputes adversely affecting the continued operation of a hospital, Article 263(g) of the Labor Code provides: ART. 263. STRIKES, PICKETING, AND LOCKOUTS. x (g) x x x x x x x

x x x x. In labor disputes adversely affecting the continued operation of such hospitals, clinics or medical institutions, it shall be the duty of the striking union or locking-out employer to provide and maintain an effective skeletal workforce of medical and other health personnel, whose movement and services shall be unhampered and unrestricted, as are necessary to insure the proper and adequate protection of the life and health of its patients, most especially emergency cases, for the duration of the strike or lockout. In such cases, the Secretary of Labor and Employment is mandated to immediately assume, within twenty-four hours from knowledge of the occurrence of such strike or lockout, jurisdiction over the same or certify to the Commission for compulsory arbitration. For this purpose, the contending parties are strictly enjoined to comply with such orders, prohibitions and/or injunctions as are issued by the Secretary of Labor and Employment or the Commission, under pain of immediate disciplinary action, including dismissal or loss of employment status or payment by the locking-out employer of backwages, damages and other affirmative relief, even criminal prosecution against either or both of them. x x x x (Emphasis and underscoring supplied) An assumption or certification order of the DOLE Secretary automatically results in a returnto-work of all striking workers, whether a corresponding return-to-work order had been issued.[39] The DOLE Secretary in fact issued a return-to-work Order, failing to comply with which is punishable by dismissal or loss of employment status.[40] Participation in a strike and intransigence to a return-to-work order must, however, be duly proved in order to justify immediate dismissal in a "national interest" case. As the appellate court as well as the NLRC observed, however, there is nothing in the records that would bear out Dr. Lanzanas' actual participation in the strike. And the medical director's Memorandum[41] of April 22, 1998 contains nothing more than a general directive to all union officers and members to return-to-work. Mere membership in a labor union does not ipso
7

facto mean

participation

in

strike.

Dr. Lanzanas' claim that, after his 30-day preventive suspension ended on or before April 9, 1998, he was never given any work schedule[42] was not refuted by petitioner. Petitioner in fact never released any findings of its supposed investigation into Dr. Lanzanas' alleged "inimical acts." Petitioner thus failed to observe the two requirements,before dismissal can be effected notice and hearing which constitute essential elements of the statutory process; the first to apprise the employee of the particular acts or omissions for which his dismissal is sought, and the second to inform the employee of the employer's decision to dismiss him.[43] Nonobservance of these requirements runs afoul of the procedural mandate.[44] The termination notice sent to and received by Dr. Lanzanas on April 25, 1998 was the first and only time that he was apprised of the reason for his dismissal. He was not afforded, however, even the slightest opportunity to explain his side. His was a "termination upon receipt" situation. While he was priorly made to explain on his telephone conversation with Miscala,[45] he was not with respect to his supposed participation in the strike and failure to heed the return-to-work order. As for the case of Dr. Merceditha, her dismissal was worse, it having been effected without any just or authorized cause and without observance of due process. In fact, petitioner never proferred any valid cause for her dismissal except its view that "her marriage to [Dr. Lanzanas] has given rise to the presumption that her sympath[y] [is] with her husband; [and that when [Dr. Lanzanas] declared that he was going to boycott the scheduling of their workload by the medical doctor, he was presumed to be speaking for himself [and] for his wife Merceditha."[46] Petitioner's contention that Dr. Merceditha was a member of the union or was a participant in the strike remained just that. Its termination of her employment on the basis of her conjugal relationship is not analogous to any of the causes enumerated in Article 282[47] of the Labor Code. Mere suspicion or belief, no matter how strong, cannot substitute for factual findings carefully established through orderly procedure.[48] The Court even notes that after the proceedings at the NLRC, petitioner never even mentioned Dr. Merceditha's case. There is thus no gainsaying that her dismissal was both substantively and procedurally infirm. Adding insult to injury was the circulation by petitioner of a "watchlist" or "watch out list"[49] including therein the names of respondents. Consider the following portions of Dr. Merceditha's Memorandum of Appeal:
8

3. Moreover, to top it all, respondents have circulated a so called "Watch List" to other hospitals, one of which [was] procured from Foothills Hospital in Sto. Tomas, Batangas [that] contains her name. The object of the said list is precisely to harass Complainant and malign her good name and reputation. This is not only unprofessional, but runs smack of oppression as CMC is trying permanently deprived [sic] Complainant of her livelihood by ensuring that she is barred from practicing in other hospitals. 4. Other co-professionals and brothers in the profession are fully aware of these "watch out" lists and as such, her reputation was not only besmirched, but was damaged, and she suffered social humiliation as it is of public knowledge that she was dismissed from work. Complainant came from a reputable and respected family, her father being a retired full Colonel in the Army, Col. Romeo A. Vente, and her brothers and sisters are all professionals, her brothers, Arnold and Romeo Jr., being engineers. The Complainant has a family protection [sic] to protect. She likewise has a professional reputation to protect, being a licensed physician. Both her personal and professional reputation were damaged as a result of the unlawful acts of the respondents.[50] While petitioner does not deny the existence of such list, it pointed to the lack of any board action on its part to initiate such listing and to circulate the same, viz: 20.x x x. The alleged watchlist or "watch out list," as termed by complainants, were merely lists obtained by one Dr. Ernesto Naval of PAMANA Hospital. Said list was given by a stockholder of respondent who was at the same time a stockholder of PAMAN[A] Hospital. The giving of the list was not a Board action.[51] (Emphasis and underscoring supplied) The circulation of such list containing names of alleged union members intended to prevent employment of workers for union activities similarly constitutes unfair labor practice, thereby giving a right of action for damages by the employees prejudiced.[52] A word on the appellate court's deletion of the award of attorney's fees. There being no basis advanced in deleting it, as exemplary damages were correctly awarded,[53] the award of attorney's fees should be reinstated. WHEREFORE, the Decision of the Court of Appeals in CA-G.R. SP No. 75871 is AFFIRMED with MODIFICATION in that the award by the National Labor Relations Commission of 10% of the total judgment award as attorney's fees is reinstated. In all other aspects, the decision of the appellate court is affirmed. SO Quisumbing, (Chairperson), Tinga, Velasco, Jr., and Brion, JJ., concur.
9

ORDERED.

18. SIP THIRD DIVISION [ G.R. No. 192473, October 11, 2010 ]

S.I.P. FOOD HOUSE AND MR. AND MRS. ALEJANDRO PABLO, PETITIONERS, VS. RESTITUTO BATOLINA, ALMER CALUMPISAN, ARIES MALGAPO, ARMANDO MALGAPO, FLORDELIZA MATIAS, PERCIVAL MATIAS, ARWIN MIRANDA, LOPE MATIAS, RAMIL MATIAS, ALLAN STA. INES, RESPONDENTS.
BRION, J.:

DECISION

We resolve the present petition for review on certiorari[1] which seeks to nullify the decision[2] and resolution[3] of the Court of Appeals (CA), promulgated on November 27, 2009 and May 31, 2010, respectively, in CA-G.R. SP No. 101651.[4] The Antecedents The facts are laid out in the assailed CA Decision and are summarized below. The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the employees of the Government Service Insurance System (GSIS). Incidental to its purpose, GMPC wanted to operate a canteen in the new GSIS Building, but had no capability and expertise in this area. Thus, it engaged the services of the petitioner S.I.P. Food House (SIP), owned by the spouses Alejandro and Esther Pablo, as concessionaire. The respondents Restituto Batolina and nine (9) others (the respondents) worked as waiters and waitresses in the canteen. In February 2004, GMPC terminated SIP's "contract as GMPC concessionaire," because of GMPC's decision "to take direct investment in and management of the GMPC canteen;" SIP's continued refusal to heed GMPC's directives for service improvement; and the alleged interference of the Pablos' two sons with the operation of the canteen.[5] The termination of the concession contract caused the termination of the respondents' employment, prompting them to file a complaint for illegal dismissal, with money claims, against SIP and the spouses Pablo. The Compulsory Arbitration Proceedings The Parties' Positions

The respondents alleged before the labor arbiter that they were SIP employees, who were illegally dismissed sometime in February and March 2004. SIP did not implement Wage Order Nos. 5 to 11 for the years 1997 to 2004. They did not receive overtime pay although they worked from 6:30 in the morning until 5:30 in the afternoon, or other employee benefits such as service incentive leave, and maternity benefit (for their co-employee Flordeliza Matias). Their employee contributions were also not remitted to the Social Security System.
10

To avoid liability, SIP argued that it operated the canteen in behalf of GMPC since it had no authority by itself to do so. The respondents were not its employees, but GMPC's, as shown by their identification cards. It claimed that GMPC terminated its concession and prevented it from having access to the canteen premises as GSIS personnel locked the place; GMPC then operated the canteen on its own, absorbing the respondents for the purpose and assigning them to the same positions they held with SIP. It maintained that the respondents were not dismissed, but were merely prevented by GMPC from performing their functions. For this reason, SIP posited that the legal obligations that would arise under the circumstances have to be shouldered by GMPC. The Labor Arbiter's Decision

Labor Arbiter Francisco A. Robles rendered a Decision on June 30, 2005 dismissing the complaint for lack of merit.[6] He found that the respondents were GMPC's employees, and not SIP's, as there existed a labor-only contracting relationship between the two entities. The labor arbiter, however, opined that even if respondents were considered as SIP's employees, their dismissal would still not be illegal because the termination of its contract to operate the canteen came as a surprise and was against its will, rendering the canteen's closure involuntary. Arbiter Robles likewise denied the employees' money claims. He ruled that SIP is not liable for unpaid salaries because it had complied with the minimum statutory requirement and had extended better benefits than GMPC; although they were paid only P160.00 to PP220.00 daily, the employees were provided with free board and lodging seven (7) days a week. Neither were the respondents entitled to overtime pay as it was highly improbable that they regularly worked beyond eight (8) hours every day for a canteen that closes after 5:30 p.m. The respondents brought their case, on appeal, to the National Labor Relations Commission (NLRC). The NLRC Ruling

In its Decision of August 30, 2007,[7] the NLRC found that SIP was the respondents' employer, but it sustained the labor arbiter's ruling that the employees were not illegally dismissed as the termination of SIP's concession to operate the canteen constituted an authorized cause for the severance of employer-employee relations. Furthermore, the respondents' admission that they applied with GMPC when it terminated SIP's concession is an indication that they were employees of SIP and that they were terminating their employment relationship with it. As the labor arbiter did, the NLRC regarded the closure of SIP's canteen operations involuntary,
11

thus,

negating

the

employees'

entitlement

to

separation

pay.[8]

For failure of SIP to present proof of compliance with the law on the minimum wage, 13th month pay, and service incentive leave, the NLRC awarded the respondents a total of P952,865.53 in salary and 13th month pay differentials and service incentive leave pay.[9] The NLRC, however, denied the employees' claim for overtime pay, holding that the respondents failed to present evidence that they rendered two hours overtime work every day of their employment with SIP. SIP moved for, but failed to secure, a reconsideration of the NLRC decision. It then elevated the case to the CA through a petition for certiorari charging the NLRC with grave abuse of discretion in rendering the assailed decision. Essentially, SIP argued that the NLRC erred in declaring that it was the respondents' employer who is liable for their money claims despite its being a labor-only contractor of GMPC. The CA Decision In its Decision promulgated on November 27, 2009,[10] the CA granted the petition in part. While it affirmed the award, it found merit in SIP's objection to the NLRC computation and assumption that a month had twenty-six (26) working days, instead of twenty (20) working days. The CA recognized that in a government agency such as the GSIS, there are only 20 official business days in a month. It noted that the respondents presented no evidence that the employees worked even outside official business days and hours. It accordingly remanded the case for a recomputation of the award. Finding substantial evidence in the records supporting the NLRC conclusions, the CA brushed aside SIP's argument that it could not have been the employer of the respondents because it was a mere labor-only contractor of GMPC. It sustained the NLRC's findings that SIP was the respondents' employer. SIP moved for reconsideration, but the CA denied the motion on May 31, 2010. [11] Hence, the present petition. The Petition SIP seeks a reversal of the appellate court's ruling that it was the employer of the respondents, claiming that it was merely a labor-only contractor of GMPC. It insists that it could not be the respondents' employer as it was not allowed to operate a canteen in the GSIS building. It was the GMPC who had the authority to undertake the operation. GMPC only engaged SIP's services because GMPC had no capability or competence
12

in the area. SIP points out that GMPC assumed responsibility for its acts in operating the canteen; all businesses it transacted were under GMPC's name, as well as the business registration and other permits of the canteen, sales receipts and vouchers for food purchased from the canteen; the employees were issued individual ID cards by GMPC. In sum, SIP contends that its arrangement with GMPC was one of contractor/subcontractor governed by Article 106 of the Labor Code. Lastly, it submits that it was not registered with the Department of Labor and Employment as an independent contractor and, therefore, it is presumed to be a labor-only contractor. The Respondents' Comment Without being required by the Court, the respondents filed their comment to SIP's petition on August 3, 2010.[12] They question the propriety of the petition for review on certiorari raising only questions of fact and not of law as required by Rule 45 of the Rules of Court. This notwithstanding, they submit that the CA committed no error in upholding the NLRC's findings of facts which established that SIP was the real employer of Batolina and the other complainants. Thus, SIP was liable to them for their statutory benefits, although it was not made to answer for their lost employment due to the involuntary nature of the canteen's closure. The respondents pray that the petition be dismissed for lack of merit. The Court's Ruling We first resolve the alleged impropriety of the petition.[13] While it is the general rule that the Court may not review factual findings of the CA, we deem it proper to depart from the rule and examine the facts of the case in view of the conflicting factual findings of the labor arbiter, on one hand, and the NLRC and the CA, on the other.[14] We, therefore, hold the respondents' position on this point unmeritorious. We The now consider the merits of relationship the case. issue

employer-employee

We affirm the CA ruling that SIP was the respondents' employer. The NLRC decision, which the CA affirmed, states: Respondents have been the concessionaire of GMPC canteen for nine (9) years (Annex "A" of Complainants' Sur-Rejoinder...., Records, 302). During this period, complainants were employed at the said canteen (Sinumpaang Salaysay of complainants, Records, p. 156). On February 29, 2004, respondents' concession with GMPC was terminated (Annex "C" of
13

Respondents' Answer and Position Paper, Records, p. 77). When respondents were prevented from entering the premises as a result of the termination of their concession, they sent a protest letter dated April 14, 2004 to GMPC thru their counsel. Pertinent portion of the letter: We write this letter in behalf of our client Mr. & Mrs. Alejandro C. Pablo, the concessionaires who used to occupy and/or rent the area for a cafeteria/canteen at the 2nd Floor of the GSIS Building for the past several years. Last March 12, 2004, without any court writ or order, and with the aid of your armed agents, you physically barredour clients & their employees/helpers from entering the said premises and from performing their usual duties of serving the food requirements of GSIS personnel and others. Clearly, no less than respondents, thru their counsel, admitted that complainants herein were their employees. That complainants were employees of respondents is further bolstered by the fact that respondents do not deny that they were the ones who paid complainants salary. When complainants charged them of underpayment, respondents even interposed the defense of file (sic) board and lodging given to complainants. Furthermore, these IDs issued to complainants bear the signature of respondent Alejandro C. Pablo (Annexes "J", "K", "M" to "M-2" of complainant's Reply. . ., Records, pp. 285 to 290). Likewise, the memoranda issued to complainants regarding their absences without leave were signed by respondent Alejandro C. Pablo (Annexes A, C, E, & G, Ibid., Records, pp. 274, 276, 279, 282). All these pieces of evidence clearly show that respondents are the employer of complainants. (Rollo, pp. 87-88.) x x x x

The CA ruled out SIP's claim that it was a labor-only contractor or a mere agent of GMPC. We agree with the CA; SIP and its proprietors could not be considered as mere agents of GMPC because they exercised the essential elements of an employment relationship with the respondents such as hiring, payment of wages and the power of control, not to mention that SIP operated the canteen on its own account as it paid a fee for the use of the building and for the privilege of running the canteen. The fact that the respondents applied with GMPC in February 2004 when it terminated its contract with SIP, is another clear indication that the two entities were separate and distinct from each other. We thus see no reason to disturb the CA's findings. The respondents's money claims
14

We likewise affirm the CA ruling on the monetary award to Batolina and the other complainants. The free board and lodging SIP furnished the employees cannot operate as a set-off for the underpayment of their wages. We held in Mabeza v. National Labor Relations Commission[15] that the employer cannot simply deduct from the employee's wages the value of the board and lodging without satisfying the following requirements: (1) proof that such facilities are customarily furnished by the trade; (2) voluntary acceptance in writing by the employees of the deductible facilities; and (3) proof of the fair and reasonable value of the facilities charged. As the CA aptly noted, it is clear from the records that SIP failed to comply with these requirements. On the collateral issue of the proper computation of the monetary award, we also find the CA ruling to be in order. Indeed, in the absence of evidence that the employees worked for 26 days a month, no need exists to recompute the award for the respondents who were "explicitly claiming for their salaries and benefits for the services rendered from Monday to Friday or 5 days a week or a total of 20 days a month."[16] In light of the foregoing, we find no merit in the petition.

WHEREFORE, premises considered, we hereby DISMISS the petition for lack of merit. The assailed decision and resolution of the Court of Appeals in CA-G.R. SP No. 101651, are AFFIRMED. SO Carpio Morales, Bersamin, Villarama, Jr., and Sereno, JJ., concur. ORDERED.

15

19 letran calamba v nlrc THIRD DIVISION [ 567 Phil. 26, January 29, 2008 ]

LETRAN CALAMBA FACULTY and EMPLOYEES ASSOCIATION, Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and COLEGIO DE SAN JUAN DE LETRAN CALAMBA, INC., Respondents. DECISION

AUSTRIA-MARTINEZ, J.: Assailed in the present Petition for Review on Certiorari under Rule 45 of the Rules of Court is the Decision[1] of the Court of Appeals (CA) promulgated on May 14, 2002 in CA-G.R. SP No. 61552 dismissing the special civil action for certiorari filed before it; and the Resolution[2] dated November 28, 2002, denying petitioner's Motion for Reconsideration. The facts of the case are as follows:

On October 8, 1992, the Letran Calamba Faculty and Employees Association (petitioner) filed with Regional Arbitration Branch No. IV of the National Labor Relations Commission (NLRC) a Complaint[3] against Colegio de San Juan de Letran, Calamba, Inc. (respondent) for collection of various monetary claims due its members. Petitioner alleged in its Position Paper that: x x x x 2) [It] has filed this complaint in behalf of its members whose names and positions appear in the list hereto attached as Annex A. 3) In the computation of the thirteenth month pay of its academic personnel, respondent does not include as basis therefor their compensation for overloads. It only takes into account the pay the faculty members receive for their teaching loads not exceeding eighteen (18) units. The teaching overloads are rendered within eight (8) hours a day. 4) Respondent has not paid the wage increases required by Wage Order No. 5 to its employees who qualify thereunder. 5) Respondent has not followed the formula prescribed by DECS Memorandum Circular No. 2 dated March 10, 1989 in the computation of the compensation per unit of excess load or overload of faculty members. This has resulted in the diminution of the compensation of faculty members. 6) The salary increases due the non-academic personnel as a result of job grading has not been given. Job grading has been an annual practice of the school since 1980; the same is done for the purpose of increasing the salaries of non-academic personnel and as the counterpart of the ranking systems of faculty members.
16

7) Respondent has not paid to its employees the balances of seventy (70%) percent of the tuition fee increases for the years 1990, 1991 and 1992. 8) Respondent has not also paid its employees the holiday pay for the ten (10) regular holidays as provided for in Article 94 of the Labor Code. 9) Respondent has refused without justifiable reasons and despite repeated demands to pay its obligations mentioned in paragraphs 3 to 7 hereof. x x x x[4] The complaint

was

docketed

as

NLRC

Case

No.

RAB-IV-10-4560-92-L.

On January 29, 1993, respondent filed its Position Paper denying all the allegations of petitioner. On March 10, 1993, petitioner filed its Reply.

Prior to the filing of the above-mentioned complaint, petitioner filed a separate complaint against the respondent for money claims with Regional Office No. IV of the Department of Labor and Employment (DOLE). On the other hand, pending resolution of NLRC Case No. RAB-IV-10-4560-92-L, respondent filed with Regional Arbitration Branch No. IV of the NLRC a petition to declare as illegal a strike staged by petitioner in January 1994. Subsequently, these three cases were consolidated. The case for money claims originally filed by petitioner with the DOLE was later docketed as NLRC Case No. RAB-IV-11-4624-92-L, while the petition to declare the subject strike illegal filed by respondent was docketed as NLRC Case No. RAB-IV-3-6555-94-L. On September 28, 1998, the Labor Arbiter (LA) handling the consolidated cases rendered a Decision with the following dispositive portion: WHEREFORE, premises considered, judgment is hereby rendered, as follows: 1. The money claims cases (RAB-IV-10-4560-92-L and RAB-IV-11-4624-92-L) are hereby dismissed for lack of merit; 2. The petition to declare strike illegal (NLRC Case No. RAB-IV-3-6555-94-L) is hereby dismissed, but the officers of the Union, particularly its President, Mr. Edmundo F.
17

Marifosque, Sr., are hereby reprimanded and sternly warned that future conduct similar to what was displayed in this case will warrant a more severe sanction from this Office. SO ORDERED.[5] Both parties appealed to the NLRC. On July 28, 1999, the NLRC promulgated its Decision[6] dismissing both appeals. Petitioner filed a Motion for Reconsideration[7] but the same was denied by the NLRC in its Resolution[8] dated June 21, 2000. Petitioner then filed a special civil action for certiorari with the CA assailing the abovementioned NLRC Decision and Resolution. On May 14, 2002, the CA rendered the presently assailed judgment dismissing the petition. Petitioner filed a Motion for Reconsideration but the CA denied it in its Resolution promulgated on November 28, 2002. Hence, herein petition for review based on the following assignment of errors: I THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE FACTUAL FINDINGS OF THE NATIONAL LABOR RELATIONS COMMISSION CANNOT BE REVIEWED IN CERTIORARI PROCEEDINGS. II THE COURT OF APPEALS GRAVELY ERRED IN REFUSING TO RULE SQUARELY ON THE ISSUE OF WHETHER OR NOT THE PAY OF FACULTY MEMBERS FOR TEACHING OVERLOADS SHOULD BE INCLUDED AS BASIS IN THE COMPUTATION OF THEIR THIRTEENTH MONTH PAY. III THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION IS SUPPORTED BY SUBSTANTIAL EVIDENCE AND IN NOT GRANTING PETITIONER'S MONETARY CLAIMS.[9] Citing Agustilo v. Court of Appeals,[10] petitioner contends that in a special civil action for certiorari brought before the CA, the appellate court can review the factual findings and the legal conclusions of the NLRC. As to the inclusion of the overloads of respondent's faculty members in the computation of
18

their 13th-month pay, petitioner argues that under the Revised Guidelines on the Implementation of the 13th-Month Pay Law, promulgated by the Secretary of Labor on November 16, 1987, the basic pay of an employee includes remunerations or earnings paid by his employer for services rendered, and that excluded therefrom are the cash equivalents of unused vacation and sick leave credits, overtime, premium, night differential, holiday pay and cost-of-living allowances. Petitioner claims that since the pay for excess loads or overloads does not fall under any of the enumerated exclusions and considering that the said overloads are being performed within the normal working period of eight hours a day, it only follows that the overloads should be included in the computation of the faculty members' 13th-month pay. To support its argument, petitioner cites the opinion of the Bureau of Working Conditions of the DOLE that payment of teaching overload performed within eight hours of work a day shall be considered in the computation of the 13th-month pay.[11] Petitioner further contends that DOLE-DECS-CHED-TESDA Order No. 02, Series of 1996 (DOLE Order) which was relied upon by the LA and the NLRC in their respective Decisions cannot be applied to the instant case because the DOLE Order was issued long after the commencement of petitioner's complaints for monetary claims; that the prevailing rule at the time of the commencement of petitioner's complaints was to include compensations for overloads in determining a faculty member's 13th-month pay; that to give retroactive application to the DOLE Order issued in 1996 is to deprive workers of benefits which have become vested and is a clear violation of the constitutional mandate on protection of labor; and that, in any case, all doubts in the implementation and interpretation of labor laws, including implementing rules and regulations, should be resolved in favor of labor. Lastly, petitioner avers that the CA, in concluding that the NLRC Decision was supported by substantial evidence, failed to specify what constituted said evidence. Thus, petitioner asserts that the CA acted arbitrarily in affirming the Decision of the NLRC. In its Comment, respondent contends that the ruling in Agustilo is an exception rather than the general rule; that the general rule is that in a petition for certiorari, judicial review by this Court or by the CA in labor cases does not go so far as to evaluate the sufficiency of the evidence upon which the proper labor officer or office based his or its determination but is limited only to issues of jurisdiction or grave abuse of discretion amounting to lack of jurisdiction; that before a party may ask that the CA or this Court review the factual findings of the NLRC, there must first be a convincing argument that the NLRC acted in a capricious, whimsical, arbitrary or despotic manner; and that in its petition for certiorari filed with the CA, herein petitioner failed to prove that the NLRC acted without or in excess of jurisdiction or with grave abuse of discretion.
19

Respondent argues that Agustilo is not applicable to the present case because in the former case, the findings of fact of the LA and the NLRC are at variance with each other; while in the present case, the findings of fact and conclusions of law of the LA and the NLRC are the same. Respondent also avers that in a special civil action for certiorari, the discretionary power to review factual findings of the NLRC rests upon the CA; and that absent any findings by the CA of the need to resolve any unclear or ambiguous factual findings of the NLRC, the grant of the writ of certiorari is not warranted. Further, respondent contends that even granting that the factual findings of the CA, NLRC and the LA may be reviewed in the present case, petitioner failed to present valid arguments to warrant the reversal of the assailed decision. Respondent avers that the DOLE Order is an administrative regulation which interprets the 13th-Month Pay Law (P.D. No. 851) and, as such, it is mandatory for the LA to apply the same to the present case. Moreover, respondent contends that the Legal Services Office of the DOLE issued an opinion dated March 4, 1992,[12] that remunerations for teaching in excess of the regular load, which includes overload pay for work performed within an eight-hour work day, may not be included as part of the basic salary in the computation of the 13th-month pay unless this has been included by company practice or policy; that petitioner intentionally omitted any reference to the above-mentioned opinion of the Legal Services Office of the DOLE because it is fatal to its cause; and that the DOLE Order is an affirmation of the opinion rendered by the said Office of the DOLE. Furthermore, respondent claims that, contrary to the asseveration of petitioner, prior to the issuance of the DOLE Order, the prevailing rule is to exclude excess teaching load, which is akin to overtime, in the computation of a teacher's basic salary and, ultimately, in the computation of his 13th-month pay. As to respondent's alleged non-payment of petitioner's consolidated money claims, respondent contends that the findings of the LA regarding these matters, which were affirmed by the NLRC and the CA, have clear and convincing factual and legal bases to stand on. The Courts Ruling The Court finds the petition bereft of merit.
20

As to the first and third assigned errors, petitioner would have this Court review the factual findings of the LA as affirmed by the NLRC and the CA, to wit. With respect to the alleged non-payment of benefits under Wage Order No. 5, this Office is convinced that after the lapse of the one-year period of exemption from compliance with Wage Order No. 5 (Exhibit 1-B), which exemption was granted by then Labor Minister Blas Ople, the School settled its obligations to its employees, conformably with the agreement reached during the management-employees meeting of June 26, 1985 (Exhibits 4-B up to 4D, also Exhibit 6-x-1). The Union has presented no evidence that the settlement reached during the June 26, 1985 meeting was the result of coercion. Indeed, what is significant is that the agreement of June 26, 1985 was signed by Mr. Porferio Ferrer, then Faculty President and an officer of the complaining Union. Moreover, the samples from the payroll journal of the School, identified and offered in evidence in these cases (Exhibits 1-C and 1-D), shows that the School paid its employees the benefits under Wage Order No. 5 (and even Wage Order No. 6) beginning June 16, 1985. Under the circumstances, therefore, the claim of the Union on this point must likewise fail. The claim of the Union for salary differentials due to the improper computation of compensation per unit of excess load cannot hold water for the simple reason that during the Schoolyears in point there were no classes from June 1-14 and October 17-31. This fact was not refuted by the Union. Since extra load should be paid only when actually performed by the employees, no salary differentials are due the Union members. The non-academic members of the Union cannot legally insist on wage increases due to Job Grading. From the records it appears that Job Grading is a system adopted by the School by which positions are classified and evaluated according to the prescribed qualifications therefor. It is akin to a merit system whereby salary increases are made dependent upon the classification, evaluation and grading of the position held by an employee. The system of Job Grading was initiated by the School in Schoolyear 1989-1990. In 1992, just before the first of the two money claims was filed, a new Job Grading process was initiated by the School. Under the circumstances obtaining, it cannot be argued that there were repeated grants of salary increases due to Job Grading to warrant the conclusion that some benefit was granted in favor of the non-academic personnel that could no longer be eliminated or banished under Article 100 of the Labor Code. Since the Job Grading exercises of the School were neither consistent nor for a considerable period of time, the monetary claims attendant to an increase in job grade are non-existent.
21

The claim of the Union that its members were not given their full share in the tuition fee increases for the Schoolyears 1989-1990, 1990-1991 and 1991-1992 is belied by the evidence presented by the School which consists of the unrefuted testimony of its Accounting Coordinator, Ms. Rosario Manlapaz, and the reports extrapolated from the journals and general ledgers of the School (Exhibits 2, 2-A up to 2-G). The evidence indubitably shows that in Schoolyear 1989-1990, the School incurred a deficit of P445,942.25, while in Schoolyears 1990-1991 and 1991-1992, the School paid out, 91% and 77%, respectively, of the increments in the tuition fees collected. As regards the issue of non-payment of holiday pay, the individual pay records of the School's employees, a sample of which was identified and explained by Ms. Rosario Manlapaz (Exhibit 3), shows that said School employees are paid for all days worked in the year. Stated differently, the factor used in computing the salaries of the employees is 365, which indicates that their regular monthly salary includes payment of wages during all legal holidays.[13] This Court held in Odango v. National Labor Relations Commission[14] that: The appellate courts jurisdiction to review a decision of the NLRC in a petition for certiorari is confined to issues of jurisdiction or grave abuse of discretion. An extraordinary remedy, a petition for certiorari is available only and restrictively in truly exceptional cases. The sole office of the writ of certiorari is the correction of errors of jurisdiction including the commission of grave abuse of discretion amounting to lack or excess of jurisdiction. It does not include correction of the NLRCs evaluation of the evidence or of its factual findings. Such findings are generally accorded not only respect but also finality. A party assailing such findings bears the burden of showing that the tribunal acted capriciously and whimsically or in total disregard of evidence material to the controversy, in order that the extraordinary writ of certiorari will lie.[15] In the instant case, the Court finds no error in the ruling of the CA that since nowhere in the petition is there any acceptable demonstration that the LA or the NLRC acted either with grave abuse of discretion or without or in excess of its jurisdiction, the appellate court has no reason to look into the correctness of the evaluation of evidence which supports the labor tribunals' findings of fact. Settled is the rule that the findings of the LA, when affirmed by the NLRC and the CA, are binding on the Supreme Court, unless patently erroneous.[16] It is not the function of the Supreme Court to analyze or weigh all over again the evidence already considered in the proceedings below.[17] In a petition for review on certiorari, this Courts jurisdiction is limited to reviewing errors of law in the absence of any showing that the factual findings complained of are devoid of support in the records or are glaringly erroneous. [18] Firm is the doctrine that this Court is not a trier of facts, and this applies with greater force in labor cases.[19] Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only great
22

respect but even finality.[20] They are binding upon this Court unless there is a showing of grave abuse of discretion or where it is clearly shown that they were arrived at arbitrarily or in utter disregard of the evidence on record.[21] We find none of these exceptions in the present case. In petitions for review on certiorari like the instant case, the Court invariably sustains the unanimous factual findings of the LA, the NLRC and the CA, specially when such findings are supported by substantial evidence and there is no cogent basis to reverse the same, as in this case.[22] The second assigned error properly raises a question of law as it involves the determination of whether or not a teacher's overload pay should be considered in the computation of his or her 13th-month pay. In resolving this issue, the Court is confronted with conflicting interpretations by different government agencies. On one hand is the opinion of the Bureau of Working Conditions of the DOLE dated December 9, 1991, February 28, 1992 and November 19, 1992 to the effect that if overload is performed within a teacher's normal eight-hour work per day, the remuneration that the teacher will get from the additional teaching load will form part of the basic wage.[23] This opinion is affirmed by the Explanatory Bulletin on the Inclusion of Teachers' Overload Pay in the 13th-Month Pay Determination issued by the DOLE on December 3, 1993 under then Acting DOLE Secretary Cresenciano B. Trajano. Pertinent portions of the said Bulletin read as follows: 1. Basis of the 13th-month pay computation The Revised Implementing Guidelines of the 13th-Month Pay Law (P.D. 851, as amended) provides that an employee shall be entitled to not less than 1/12 of the total basic salary earned within a calendar year for the purpose of computing such entitlement. The basic wage of an employee shall include: x x x all remunerations or earnings paid by his employer for services rendered but do not include allowances or monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances. However, these salary-related benefits should be included as part of thebasic salary in the computation of the 13th month pay if by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees. Basic wage is defined by the Implementing Rules of RA 6727 as follows:
23

Basic Wage means all remuneration or earnings paid by an employer to a worker for services rendered onnormal working days and hours but does not include cost of living allowances, 13th-month pay or other monetary benefits which are not considered as part of or integrated into the regular salary of the workers xxx. The foregoing definition was based on Article 83 of the Labor Code which provides that the normal hours of work of any employee shall not exceed eight (8) hours a day. This means that the basic salary of an employee for the purpose of computing the 13th-month pay shall include all remunerations or earnings paid by an employer for services rendered during normal working hours. 2. Overload work/pay Overload on the other hand means the load in excess of the normal load of private school teachers as prescribed by the Department of Education, Culture and Sports (DECS) or the policies, rules and standards of particular private schools. In recognition of the peculiarities of the teaching profession, existing DECS and School Policies and Regulations for different levels of instructions prescribe a regular teaching load, the total actual teaching or classroom hours of which a teacher can generally perform in less than eight (8) hours per working day. This is because teaching may also require the teacher to do additional work such as handling an advisory class, preparation of lesson plans and teaching aids, evaluation of students and other related activities. Where, however a teacher is engaged to undertake actual additional teaching work after completing his/her regular teaching load, such additional work is generally referred to as overload. In short, additional work in excess of the regular teaching load is overload work. Regular teaching load and overload work, if any, may constitute a teacher's working day. Where a teacher is required to perform such overload within the eight (8) hours normal working day, such overload compensation shall be considered part of the basic pay for the purpose of computing the teacher's 13th-month pay. Overload work is sometimes misunderstood as synonymous to overtime work as this term is used and understood in the Labor Code. These two terms are not the same because overtime work is work rendered in excess of normal working hours of eight in a day (Art. 87, Labor Code). Considering that overload work may be performed either within or outside eight hours in a day, overload work may or may not be overtime work. 3. Concluding Statement In the light of the foregoing discussions, it is the position of this Department that all basic salary/wage representing payments earned for actual work performed during or within the eight hours in a day, including payments for overload work within eight hours, form part of basic wage and therefore are to be included in the computation of 13th-month pay mandated by PD 851, as amended.[24] (Underscoring supplied)
24

On the other hand, the Legal Services Department of the DOLE holds in its opinion of March 4, 1992 that remunerations for teaching in excess of the regular load shall be excluded in the computation of the 13th-month pay unless, by school policy, the same are considered as part of the basic salary of the qualified teachers.[25] This opinion is later affirmed by the DOLE Order, pertinent portions of which are quoted below: xxxx 2. In accordance with Article 83 of the Labor Code of the Philippines, as amended, the normal hours of work of school academic personnel shall not exceed eight (8) hours a day. Any work done in addition to the eight (8) hours daily work shall constitute overtime work. 3. The normal hours of work of teaching or academic personnel shall be based on their normal or regular teaching loads. Such normal or regular teaching loads shall be in accordance with the policies, rules and standards prescribed by the Department of Education, Culture and Sports, the Commission on Higher Education and the Technical Education and Skills Development Authority. Any teaching load in excess of the normal or regular teaching load shall be considered as overload. Overload partakes of the nature of temporary extra assignment and compensation therefore shall be considered as an overload honorarium if performed within the 8-hour work period and does not form part of the regular or basic pay. Overload performed beyond the eight-hour daily work is overtime work.[26] (Emphasis supplied) It was the above-quoted DOLE Order which was used by the LA as basis for ruling against herein petitioner. The petitioners claim that the DOLE Order should not be made to apply to the present case because said Order was issued only in 1996, approximately four years after the present case was initiated before the Regional Arbitration Branch of the NLRC, is not without basis. The general rule is that administrative rulings and circulars shall not be given retroactive effect.[27] Nevertheless, it is a settled rule that when an administrative or executive agency renders an opinion or issues a statement of policy, it merely interprets a pre-existing law and the administrative interpretation is at best advisory for it is the courts that finally determine what the law means.[28] In the present case, while the DOLE Order may not be applicable, the Court finds that overload pay should be excluded from the computation of the 13th-month pay of petitioner's members. In resolving the issue of the inclusion or exclusion of overload pay in the computation of a teacher's 13th-month pay, it is decisive to determine what basic salary includes and excludes.
25

In this respect, the Court's disquisition in San Miguel Corporation v. Inciong[29] is instructive, to wit: Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as the basis in the determination of his 13th month pay. Any compensations or remunerations which are deemed not part of the basic pay is excluded as basis in the computation of the mandatory bonus. Under the Rules and Regulations Implementing Presidential Decree 851, the following compensations are deemed not part of the basic salary: a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of Instruction No. 174; b) Profit sharing payments;

c) All allowances and monetary benefits which are not considered or integrated as part of the regular basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975. Under a later set of Supplementary Rules and Regulations Implementing Presidential Decree 851 issued by the then Labor Secretary Blas Ople, overtime pay, earnings and other remunerations are excluded as part of the basic salary and in the computation of the 13thmonth pay. The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of Instruction No. 174 and profit sharing payments indicate the intention to strip basic salary of other payments which are properly considered as fringe benefits. Likewise, the catch-all exclusionary phrase all allowances and monetary benefits which are not considered or integrated as part of the basic salary shows also the intention to strip basic salary of any and all additions which may be in the form of allowances or fringe benefits. Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree 851 is even more emphatic in declaring that earnings and other remunerations which are not part of the basic salary shall not be included in the computation of the 13th-month pay. While doubt may have been created by the prior Rules and Regulations Implementing Presidential Decree 851 which defines basic salary to include all remunerations or earnings paid by an employer to an employee, this cloud is dissipated in the later and more controlling Supplementary Rules and Regulations which categorically, exclude from the
26

definition of basic salary earnings and other remunerations paid by employer to an employee. A cursory perusal of the two sets of Rules indicates that what has hitherto been the subject of a broad inclusion is now a subject of broad exclusion. The Supplementary Rules and Regulations cure the seeming tendency of the former rules to include all remunerations and earnings within the definition of basic salary. The all-embracing phrase earnings and other remunerations which are deemed not part of the basic salary includes within its meaning payments for sick, vacation, or maternity leaves, premium for works performed on rest days and special holidays, pay for regular holidays and night differentials. As such they are deemed not part of the basic salary and shall not be considered in the computation of the 13th-month pay. If they were not so excluded, it is hard to find any earnings and other remunerations expressly excluded in the computation of the 13th-month pay. Then the exclusionary provision would prove to be idle and with no purpose. This conclusion finds strong support under the Labor Code of the Philippines. To cite a few provisions: Art. 87 Overtime work. Work may be performed beyond eight (8) hours a day provided that the employee is paid for the overtime work, additional compensation equivalent to his regular wage plus at least twenty-five (25%) percent thereof. It is clear that overtime pay is an additional compensation other than and added to the regular wage or basic salary, for reason of which such is categorically excluded from the definition of basic salary under the Supplementary Rules and Regulations Implementing Presidential Decree 851. In Article 93 of the same Code, paragraph

c.) work performed on any special holiday shall be paid an additional compensation of at least thirty percent (30%) of the regular wage of the employee. It is likewise clear that premium for special holiday which is at least 30% of the regular wage is an additional compensation other than and added to the regular wage or basic salary. For similar reason it shall not be considered in the computation of the 13th -month pay.[30] In the same manner that payment for overtime work and work performed during special holidays is considered as additional compensation apart and distinct from an employee's regular wage or basic salary, an overload pay, owing to its very nature and definition, may not be considered as part of a teacher's regular or basic salary, because it is being paid for additional work performed in excess of the regular teaching load.
27

The peculiarity of an overload lies in the fact that it may be performed within the normal eight-hour working day. This is the only reason why the DOLE, in its explanatory bulletin, finds it proper to include a teacher's overload pay in the determination of his or her 13th-month pay. However, the DOLE loses sight of the fact that even if it is performed within the normal eighthour working day, an overload is still an additional or extra teaching work which is performed after the regular teaching load has been completed. Hence, any pay given as compensation for such additional work should be considered as extra and not deemed as part of the regular or basic salary. Moreover, petitioner failed to refute private respondent's contention that excess teaching load is paid by the hour, while the regular teaching load is being paid on a monthly basis; and that the assignment of overload is subject to the availability of teaching loads. This only goes to show that overload pay is not integrated with a teacher's basic salary for his or her regular teaching load. In addition, overload varies from one semester to another, as it is dependent upon the availability of extra teaching loads. As such, it is not legally feasible to consider payments for such overload as part of a teacher's regular or basic salary. Verily, overload pay may not be included as basis for determining a teacher's 13th-month pay. WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals areAFFIRMED. SO Ynares-Santiago, (Chairperson), Corona, Nachura, and Reyes, JJ., concur. ORDERED.

28

20. RB SECOND DIVISION [ 568 Phil. 585, February 13, 2008 ]

R.B. MICHAEL PRESS and ANNALENE REYES ESCOBIA, Petitioners, vs. NICASIO C. GALIT, Respondent. DECISION

VELASCO JR., J.: The Case Year in, year out, a copious number of illegal dismissal cases reach the Court of Appeals (CA) and eventually end up with this Court. This petition for review under Rule 45 registered by petitioners R.B. Michael Press and Annalene Reyes Escobia against their former machine operator, respondent Nicasio C. Galit, is among them. It assails the November 14, 2001 Decision of the CA in CA-G.R. SP No. 62959, finding the dismissal of respondent illegal. Likewise challenged is the May 7, 2002 Resolution denying reconsideration. The Facts On May 1, 1997, respondent was employed by petitioner R.B. Michael Press as an offset machine operator, whose work schedule was from 8:00 a.m. to 5:00 p.m., Mondays to Saturdays, and he was paid PhP 230 a day. During his employment, Galit was tardy for a total of 190 times, totaling to 6,117 minutes, and was absent without leave for a total of nine and a half days. On February 22, 1999, respondent was ordered to render overtime service in order to comply with a job order deadline, but he refused to do so. The following day, February 23, 1999, respondent reported for work but petitioner Escobia told him not to work, and to return later in the afternoon for a hearing. When he returned, a copy of an Office Memorandum was served on him, as follows: To : Mr. Nicasio Galit From Re : : WARNING FOR ANNALENE DISMISSAL; REYES-ESCOBIA NOTICE OF HEARING

This warning for dismissal is being issued for the following offenses: (1) habitual and excessive (2) committing acts of discourtesy, disrespect in addressing

tardiness superiors
29

(3)

failure

to

work

overtime

after

having

been

instructed

to

do

so

(4) Insubordination - willfully disobeying, defying or disregarding company authority The offenses youve committed are just causes for termination of employment as provided by the Labor Code. You were given verbal warnings before, but there had been no improvement on your conduct. Further investigation of this matter is required, therefore, you are summoned to a hearing at 4:00 p.m. today. The hearing wills determine your employment status with this company. (SGD) ANNALENE REYES-ESCOBIA Manager[1] On February 24, 1999, respondent was terminated from employment. The employer, through petitioner Escobia, gave him his two-day salary and a termination letter, which reads: February 24, 1999 Dear Mr. Nicasio Galit,

I am sorry to inform you that your employment with this company has been terminated effective today, February 24, 1999. This decision was not made without a thorough and complete investigation. You were given an office memo dated February 23, 1999 warning you of a possible dismissal. You were given a chance to defend yourself on a hearing that was held in the afternoon of the said date. During the hearing, Mrs. Rebecca Velasquez and Mr. Dennis Reyes, were present in their capacity as Production Manager and Supervisor, respectively. Your admission to your offenses against the company and the testimonies from Mrs. Velasquez and Mr. Reyes justified your dismissal from this company, Please contact Ms. Marly Buita to discuss 13th-Month Pay disbursements.

Cordially, (SGD) Mrs. Annalene Reyes-Escobia[2] Respondent subsequently filed a complaint for illegal dismissal and money claims before the National Labor Relations Commission (NLRC) Regional Arbitration Branch No. IV, which was
30

docketed as NLRC Case No. RAB IV-2-10806-99-C. On October 29, 1999, the labor arbiter rendered a Decision, WHEREFORE, premises considered, there being a finding that complainant was illegally dismissed, respondent RB MICHAEL PRESS/Annalene Reyes-Escobia is hereby ordered to reinstate complainant to his former position without loss of seniority rights and other benefits, and be paid his full backwages computed from the time he was illegally dismissed up to the time of his actual reimbursement. All other claims are DISMISSED for lack of evidence.

SO ORDERED.[3] On January 3, 2000, petitioners elevated the case to the NLRC and their appeal was docketed as NLRC NCR CA No. 022433-00. In the April 28, 2000 Decision, the NLRC dismissed the appeal for lack of merit. Not satisfied with the ruling of the NLRC, petitioners filed a Petition for Certiorari with the CA. On November 14, 2001, the CA rendered its judgment affirming with modification the NLRCs Decision, thus: WHEREFORE, the petition is DISMISSED for lack of merit. The Decision of public respondent is accordingly modified in that the basis of the computation of the backwages, 13th month pay and incentive pay should be respondents daily wage of P230.00; however, backwages should be computed from February 22, 1999 up to the finality of this decision, plus the 13th month and service incentive leave pay.[4] The CA found that it was not the tardiness and absences committed by respondent, but his refusal to render overtime work on February 22, 1999 which caused the termination of his employment. It ruled that the time frame in which respondent was afforded procedural due process is dubitable; he could not have been afforded ample opportunity to explain his side and to adduce evidence on his behalf. It further ruled that the basis for computing his backwages should be his daily salary at the time of his dismissal which was PhP 230, and that his backwages should be computed from the time of his dismissal up to the finality of the CAs decision. On December 3, 2001, petitioners asked for reconsideration[5] but was denied in the CAs May 7, 2002 Resolution. Persistent, petitioners instituted the instant petition raising numerous issues which can be summarized, as follows: first, whether there was just cause to terminate the employment of respondent, and whether due process was observed in the dismissal process; and second, whether respondent is entitled to backwages and other benefits despite his refusal to be reinstated.
31

The Courts Ruling It is well settled that findings of fact of quasi-judicial agencies, like the NLRC, are accorded not only respect but even finality if the findings are supported by substantial evidence. This is especially so when such findings of the labor arbiter were affirmed by the CA. [6] However, this is not an iron-clad rule. Though the findings of fact by the labor arbiter may have been affirmed and adopted by the NLRC and the CA as in this case, it cannot divest the Court of its authority to review the findings of fact of the lower courts or quasi-judicial agencies when it sees that justice has not been served, more so when the lower courts or quasi-judicial agencies findings are contrary to the evidence on record or fail to appreciate relevant and substantial evidence presented before it.[7] Petitioners aver that Galit was dismissed due to the following offenses: (1) habitual and excessive tardiness; (2) commission of discourteous acts and disrespectful conduct when addressing superiors; (3) failure to render overtime work despite instruction to do so; and (4) insubordination, that is, willful disobedience of, defiance to, or disregard of company authority.[8] The foregoing charges may be condensed into: (1) tardiness constituting neglect of duty; (2) serious misconduct; and (3) insubordination or willful disobedience. Respondents tardiness cannot be considered condoned by petitioners

Habitual tardiness is a form of neglect of duty. Lack of initiative, diligence, and discipline to come to work on time everyday exhibit the employees deportment towards work. Habitual and excessive tardiness is inimical to the general productivity and business of the employer. This is especially true when the tardiness and/or absenteeism occurred frequently and repeatedly within an extensive period of time. In resolving the issue on tardiness, the labor arbiter ruled that petitioners cannot use respondents habitual tardiness and unauthorized absences to justify his dismissal since they had already deducted the corresponding amounts from his salary. Furthermore, the labor arbiter explained that since respondent was not subjected to any admonition or penalty for tardiness, petitioners then had condoned the offense or that the infraction is not serious enough to merit any penalty. The CA then supported the labor arbiters ruling by ratiocinating that petitioners cannot draw on respondents habitual tardiness in order to dismiss him since there is no evidence which shows that he had been warned or reprimanded for his excessive and habitual tardiness. We find the ruling incorrect.

The mere fact that the numerous infractions of respondent have not been immediately
32

subjected to sanctions cannot be interpreted as condonation of the offenses or waiver of the company to enforce company rules. A waiver is a voluntary and intentional relinquishment or abandonment of a known legal right or privilege.[9] It has been ruled that a waiver to be valid and effective must be couched in clear and unequivocal terms which leave no doubt as to the intention of a party to give up a right or benefit which legally pertains to him.[10] Hence, the management prerogative to discipline employees and impose punishment is a legal right which cannot, as a general rule, be impliedly waived. In Cando v. NLRC,[11] the employee did not report for work for almost five months when he was charged for absenteeism. The employee claimed that such absences due to his handling of union matters were condoned. The Court held that the employee did not adduce proof to show condonation coupled with the fact that the company eventually instituted the administrative complaint relating to his company violations. Thus it is incumbent upon the employee to adduce substantial evidence to demonstrate condonation or waiver on the part of management to forego the exercise of its right to impose sanctions for breach of company rules. In the case at bar, respondent did not adduce any evidence to show waiver or condonation on the part of petitioners. Thus the finding of the CA that petitioners cannot use the previous absences and tardiness because respondent was not subjected to any penalty is bereft of legal basis. In the case of Filipio v. The Honorable Minister Blas F. Ople,[12] the Court, quoting then Labor Minister Ople, ruled that past infractions for which the employee has suffered the corresponding penalty for each violation cannot be used as a justification for the employees dismissal for that would penalize him twice for the same offense. At most, it was explained, these collective infractions could be used as supporting justification to a subsequent similar offense. In contrast, the petitioners in the case at bar did not impose any punishment for the numerous absences and tardiness of respondent. Thus, said infractions can be used collectively by petitioners as a ground for dismissal. The CA however reasoned out that for respondents absences, deductions from his salary were made and hence to allow petitioners to use said absences as ground for dismissal would amount to double jeopardy. This postulation is incorrect.

Respondent is admittedly a daily wage earner and hence is paid based on such arrangement. For said daily paid workers, the principle of a days pay for a days work is squarely applicable. Hence it cannot be construed in any wise that such nonpayment of the daily wage on the days he was absent constitutes a penalty.
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Insubordination

or

willful

disobedience

While the CA is correct that the charge of serious misconduct was not substantiated, the charge of insubordination however is meritorious. For willful disobedience to be a valid cause for dismissal, these two elements must concur: (1) the employees assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) 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.[13] In the present case, there is no question that petitioners order for respondent to render overtime service to meet a production deadline complies with the second requisite. Art. 89 of the Labor Code empowers the employer to legally compel his employees to perform overtime work against their will to prevent serious loss or damage: Art. 89. EMERGENCY OVERTIME WORK Any employee may be required by the employer to perform overtime work in any of the following cases: x x x x

(c) When there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the employer or some other cause of similar nature; xxxx In the present case, petitioners business is a printing press whose production schedule is sometimes flexible and varying. It is only reasonable that workers are sometimes asked to render overtime work in order to meet production deadlines. Dennis Reyes, in his Affidavit dated May 3, 1999, stated that in the morning of February 22, 1999, he approached and asked respondent to render overtime work so as to meet a production deadline on a printing job order, but respondent refused to do so for no apparent reason. Respondent, on the other hand, claims that the reason why he refused to render overtime work was because he was not feeling well that day. The issue now is, whether respondents refusal or failure to render overtime work was willful; that is, whether such refusal or failure was characterized by a wrongful and perverse attitude. In Lakpue Drug Inc. v. Belga, willfulness was described as characterized by a wrongful and
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perverse mental attitude rendering the employees act inconsistent with proper subordination.[14] The fact that respondent refused to provide overtime work despite his knowledge that there is a production deadline that needs to be met, and that without him, the offset machine operator, no further printing can be had, shows his wrongful and perverse mental attitude; thus, there is willfulness. Respondents excuse that he was not feeling well that day is unbelievable and obviously an afterthought. He failed to present any evidence other than his own assertion that he was sick. Also, if it was true that he was then not feeling well, he would have taken the day off, or had gone home earlier, on the contrary, he stayed and continued to work all day, and even tried to go to work the next day, thus belying his excuse, which is, at most, a self-serving statement. After a re-examination of the facts, we rule that respondent unjustifiably refused to render overtime work despite a valid order to do so. The totality of his offenses against petitioner R.B. Michael Press shows that he was a difficult employee. His refusal to render overtime work was the final straw that broke the camels back, and, with his gross and habitual tardiness and absences, would merit dismissal from service. Due process: twin notice and hearing requirement

On the issue of due process, petitioners claim that they had afforded respondent due process. Petitioners maintain that they had observed due process when they gave respondent two notices and that they had even scheduled a hearing where he could have had explained his side and defended himself. We are not persuaded.

We held in Agabon v. NLRC: Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation.[15] Under the twin notice requirement, the employees must be given two (2) notices before his employment could be terminated: (1) a first notice to apprise the employees of their fault, and (2) a second notice to communicate to the employees that their employment is being terminated. Not to be taken lightly of course is the hearing or opportunity for the employee to
35

defend

himself

personally

or

by

counsel

of

his

choice.

In King of Kings Transport v. Mamac,[16] we had the occasion to further elucidate on the procedure relating to the twin notice and hearing requirement, thus: (1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. Reasonable opportunity under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees. (2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the management. During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement. (3) After determining that termination of employment is justified, the employers shall serve the employees awritten notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment. In addition, if the continued employment poses a serious and imminent threat to the life or property of the employers or of other employees like theft or physical injuries, and there is a need for preventive suspension,[17]the employers can immediately suspend the erring employees for a period of not more than 30 days. Notwithstanding the suspension, the employers are tasked to comply with the twin notice requirement under the law. The preventive suspension cannot replace the required notices.[18] Thus, there is still a need to comply with the twin notice requirement and the requisite hearing or conference to ensure that the employees are afforded due process even though they may have been caught in flagrante or when the evidence of the commission of the offense is strong.
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On the surface, it would seem that petitioners observed due process (twin notice and hearing requirement): On February 23, 1999 petitioner notified respondent of the hearing to be conducted later that day. On the same day before the hearing, respondent was furnished a copy of an office memorandum which contained a list of his offenses, and a notice of a scheduled hearing in the afternoon of the same day. The next day, February 24, 1999, he was notified that his employment with petitioner R.B. Michael Press had been terminated. A scrutiny of the disciplinary process undertaken by petitioners leads us to conclude that they only paid lip service to the due process requirements. The undue haste in effecting respondents termination shows that the termination process was a mere simulationthe required notices were given, a hearing was even scheduled and held, but respondent was not really given a real opportunity to defend himself; and it seems that petitioners had already decided to dismiss respondent from service, even before the first notice had been given. Anent the written notice of charges and hearing, it is plain to see that there was merely a general description of the claimed offenses of respondent. The hearing was immediately set in the afternoon of February 23, 1999the day respondent received the first notice. Therefore, he was not given any opportunity at all to consult a union official or lawyer, and, worse, to prepare for his defense. Regarding the February 23, 1999 afternoon hearing, it can be inferred that respondent, without any lawyer or friend to counsel him, was not given any chance at all to adduce evidence in his defense. At most, he was asked if he did not agree to render overtime work on February 22, 1999 and if he was late for work for 197 days. He was never given any real opportunity to justify his inability to perform work on those days. This is the only explanation why petitioners assert that respondent admitted all the charges. In the February 24, 1999 notice of dismissal, petitioners simply justified respondents dismissal by citing his admission of the offenses charged. It did not specify the details surrounding the offenses and the specific company rule or Labor Code provision upon which the dismissal was grounded. In view of the infirmities in the proceedings, we conclude that termination of respondent was railroaded in serious breach of his right to due process. And as a consequence of the violation of his statutory right to due process and following Agabon, petitioners are liable jointly and solidarily to pay nominal damages to the respondent in the amount of PhP 30,000. [19]
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WHEREFORE, premises considered, the November 14, 2001 CA Decision in CA-G.R. SP No. 62959, the April 28, 2000 Decision of the NLRC in NLRC NCR CA No. 022433-00, and the October 29, 1999 Decision of the Labor Arbiter in NLRC Case No. RAB IV-2-10806-99-C are hereby REVERSED and SET ASIDE. The Court declares respondents dismissal from employment VALID and LEGAL. Petitioners are, however, ordered jointly and solidarily to pay respondent nominal damages in the amount of PhP 30,000 for violation of respondents right to due process. No SO Quisumbing, (Chairperson), Carpio, Carpio-Morales, and Tinga, JJ., concur. costs. ORDERED.

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