276 Phil.

673

NARVASA, J.:
From July 30, 1973, Zenaida Alonzo was employed as a ring
frame operator in the Pacific Mills, Inc. until September 30,
1982 when she was discharged by Management.
The record shows that in the early afternoon of September 22,
1982, Zenaida challenged Company Inspector Ernesto
Tamondong, to a fight, saying: "Putang Ina mo, lumabas ka,
tarantado, kalalaki mong tao, duwag ka '**. Ipagugulpi kita sa
labas at kaya kitang ipakaladkad dito sa loob ng compound
palabas ng gate sa mga kamag-anak ko." And suiting action to
the word, she thereupon boxed Tamondong in the stomach.
The motive for the assault was Zenaida's resentment at having
been reprimanded, together with other employees, two days
earlier by Tamondong for wasting time by engaging in idle
chatter.[1] Tamondong forthwith reported the incident to the
firm's Administrative Manager[2] as well as the Chairman of
Barangay Balombato, Quezon City.[3]
On September 30, 1982, Zenaida Alonzo was given a
Memorandum by the company's Executive Vice President &
General Manager terminating her employment as of October
1, 1982 on various grounds: poor work, habitual absences and
tardiness, wasting time, insubordination and gross disrespect.
The service of that memorandum of dismissal on her was not
preceded by any complaint, hearing or other formality. These
were apparently considered unnecessary by
Management[4] in view of the provision in the Company Rules
and Regulations (embodied in the Collective Bargaining
Agreement between the company and the union representing
the employees) that:
"Fighting or attempting to inflict harm to another employee,
will render (sic) the aggressor to outright dismissal."
It was only at the hearing of the complaint for illegal dismissal
(and non-payment of proportionate 13th month pay)
instituted by Zenaida on October 4, 1982 in the NCR
Arbitration Branch, that evidence was presented by the
company not only of the assault by Zenaida on her superior
but also of many other violations by her of company rules and
regulations, in an attempt to substantiate the validity of her
dismissal from work.
The Labor Arbiter found that Alonzo had indeed verbally
abused and struck her superior, Tamondong, and rejected her
contention that the assault was not punishable since it was
"not work-connected and was provoked/instigated by Ernesto
Tamondong."[5] The Arbiter also declared as "fully
established the previous infractions of complainant," these
being "a matter of record and not denied by complainant
(Zenaida)."
The Arbiter was of the view, however, that Alonzo was entitled
to relief, because (a) the penalty imposed was "harsh and
severe and not commensurate with the offense, * *
suspension of three (3) months * * (being) the proper, just and
reasonable penalty * *;" and because (b) the company had
failed "to investigate complainant before she was dismissed."
The Arbiter thus ordered Pacific Mills, Inc., Zenaida's
employer:
"* * to reinstate complainant without loss of seniority rights
and to pay her backwages from January 1, 1983 until fully
reinstated, the period from October 1, 1982 to December 31,
1982 complainant being under suspension without pay * * (as
well as) to pay complainant's 13th month pay in the amount of
THREE HUNDRED FIFTY-ONE PESOS ONLY (P351.00)."
Acting on the employer's appeal, the National Labor Relations
Commission rendered judgment on March 23, 1987,
sustaining the Labor Arbiter's findings. It however limited the
award of back wages to Zenaida only to three (3) years, in
accordance with this Court's judgment in Feati University
Faculty Club (PAFLU) vs. Feati University, 58 SCRA 396.[6]
Pacific Mills, Inc. has instituted in this Court the special civil
action of certiorari at bar praying for nullification of the
judgment of the NLRC for having been rendered with grave
abuse of discretion.
In the comment thereon,[7] required of him by the Court, the
Solicitor General opined that:
"* * both the Labor Arbiter and the NLRC apparently failed to
take into consideration the fact that Zenaida Alonzo was
dismissed not because of this isolated act (of assault against
her superior) but rather because of numerous and repeated
violations of company rules and regulations. It was only this
last incident which compelled Pacific Mills, Inc. to finally
terminate her services. It is the totality of the infractions
committed by the employee which should have been
considered in determining whether or not there is just cause
for her dismissal.
Zenaida Alonzo was caught several times leaving her place of
work to chat with her co-employees. This is reprehensible
conduct since, as ring frame operator, she must be at her post
during work hours to prevent the occurrence of incidents
which could damage the machine. The company inspector
precisely warned her against doing this. She had also been
repeatedly reprimanded for insubordination, habitual
tardiness, wasting time and not wearing the required company
uniform. In spite of these infractions the company bore with
her services and did not see fit to dismiss her. Her assault on
the company inspector was apparently the last straw which
compelled Pacific Mills, Inc. to terminate her services."
Accordingly, the Solicitor General recommended "payment of
separation pay equivalent to three (3) years backwages but
without reinstatement" and of "proportionate 13th month
pay."
For their part, the Chief Legal Officer of the NLRC,[8] and the
private respondent,[9] insist that since the dismissal of
Zenaida Alonzo was not preceded by any notice of the charges
and a hearing thereon, the judgment of the NLRC must be
sustained.
Decisive of this controversy is the judgment of the Court en
banc in Wenphil Corporation v. NLRC, promulgated on
February 8, 1989,[10] in which the following
policy pronouncements were made:
"The Court holds that the policy of ordering the reinstatement
to the service of an employee without loss of seniority and the
payment of his wages during the period of his separation until
his actual reinstatement but not exceeding three (3) years
without qualification or deduction, when it appears he was not
afforded due process, although his dismissal was found to be
for just and authorized cause in an appropriate proceeding in
the Ministry of Labor and Employment, should be re-
examined. It will be highly prejudicial to the interests of the
employer to impose on him the services of an employee who
has been shown to be guilty of the charges that warranted his
dismissal from employment. Indeed, it will demoralize the
rank and file if the undeserving, if not undesirable,
remains in the service.
Thus in the present case, where the private respondent, who
appears to be of violent temper, caused trouble during office
hours and even defied his superiors as they tried to pacify him,
should not be rewarded with reemployment and back wages.
It may encourage him to do even worse and will render a
mockery of the rules of discipline that employees are required
to observe. Under the circumstances, the dismissal of the
private respondent for just cause should be maintained. He
has no right to return to his former employer.
However, the petitioner (employer) must nevertheless be held
to account for failure to extend to private respondent his right
to an investigation before causing his dismissal. The rule is
explicit as above discussed. The dismissal of an employee
must be for just or authorized cause and after due process
(Section, 1, Rule XIV, Implementing Regulations of the Labor
Code). Petitioner committed an infraction of the second
requirement. Thus, it must be imposed a sanction for its
failure to give a formal notice and conduct an investigation as
required by law before dismissing * * (respondent) from
employment. Considering the circumstances of this case
petitioner must indemnify the private respondent the amount
of P1,000.00. The measure of this award depends on the facts
of each case and the gravity of the omission committed by the
employer."
The Court perceives no sufficient cause, it has indeed been
cited to none by the respondents, to decline to apply
the Wenphil doctrine to the case at bar.
While it is true that Pacific Mills, Inc. had not complied with
the requirements of due process prior to removing Zenaida
Alonzo from, employment, it is also true that subsequently, in
the proceedings before the Labor Arbiter in which Zenaida
Alonzo had of course taken active part, it had succeeded in
satisfactorily proving the commission by Zenaida of many
violations of company rules and regulations justifying
termination of her employment. Under the circumstances, it is
clear that, as the Solicitor General has pointed out, the
continuance in the service of the latter is patently inimical to
her employer's interests and that, citing San Miguel
Corporation v. NLRC,[11] the law, in protecting the rights of
the laborer authorizes neither oppression nor self-destruction
of the employer. And it was oppressive and unjust in the
premises to require reinstatement of the employee.
WHEREFORE, the petition is granted and the challenged
decision of the respondent Commission dated March 23, 1987
and that of the Labor Arbiter thereby affirmed, are
NULLIFIED AND SET ASIDE. However, the petitioner is
ordered to pay private respondent a proportionate part of the
13th month pay due her, amounting to P351.00 as well as to
indemnify her in the sum of P1,000.00. No costs.
SO ORDERED.
Cruz, Gancayco, Griño-Aquino, and Medialdea, JJ., concur.

G.R. No. L-5206 April 29, 1953

CALTEX (PHILIPPINES), INC., petitioner,

vs.
PHILIPPINE LABOR ORGANIZATIONS, CALTEX CHAPTER, respondent.

Ross, Selph, Carrascoso and Janda for petitioner.

Baltazar M. Villanueva for respondent.

BENGZON, J.:

In a controversy involving several demands made by the Philippine Labor

Organizations, Caltex Chapter, in February 1950, upon the domestic corporation
Caltex (Philippines) Inc., the Court of Industrial Relations required the said
corporation to pay its "eleven female prewar employees . . . the corresponding
one-year gratuity that it has extended to its prewar male employees". The order,
dated August 10, 1951 said, in part, as follows:
This is a request for one year gratuity to prewar female employees who were not
readmitted to the service of the respondent-company after the liberation, in the
same manner that the prewar male employees of the company presented on the
demand, it appears that there are 11 prewar female employees involved in this
request,

. . . . These female employees used to handle, before the war, machineries that
were functioning a little differently from the ones now in operation in the
respondent-company which are presently being handled by the male employees.
It is for the reason that they were not reinstated by the company after liberation.
Their reinstatement in the service respondent-company, however, is beside the
point. It is precisely for the fact that they were not reinstated that they were now
requesting for one year gratuity given to prewar male employees by the
respondent-company. There is no denial on the part of the respondent as to the
fact of its having given one year gratuity to the prewar male employees of the
company. In the face of this fact, the Court finds no reason why the female prewar
employees should be treated differently from the prewar male employees. Upon
the whole, it proceeds, in justice and equity, that the prewar female employees of
the respondent-company should be extended the same treatment as to the prewar
male employees.

Calling attention to the fact that the gratuity had been granted pursuant to a
stipulation approved by the same Court of Industrial Relations on August 9, 1949,
in these words,

(5) On the matter of backpay, the parties stipulated and agreed that the company
will give additional ex gratia rehabilitation allowance to its present employees and
laborers who were in its employ prior to the last war (in addition to what they have
received in the past) such that the total that each employee and laborer will
receive will be as much as the Shell Company of the Philippine Islands, Ltd., has
given to its present employees and laborers who were in its employ prior to the
last war. Any employee or laborer who has not been paid ex gratia allowance in
1947, but entitled thereto, will be paid the amount to him.

the corporation argued, in a move to reconsider, that the payment had been made
only to prewar male employees who were working for the company at the time the
gratuity was given — which was not exactly the situation of the aforesaid eleven
female employees.
With the denial of its motion to reconsider, the Caltex Company petitioned for this
review, which, in the existing circumstances, appears to be meritorious.

We have held that prewar employees have no legal right to backpay, i.e., salary
during the war when they rendered no service to their employer. (Fitzsimmons vs.
Atlantic Gulf,1 47 Off. Gaz., 678.)

Thinking alone the same line we recently cited "the age-old rule governing the
relation between labor and capital or management and employee, "a fair day's
wage for a fair day's labor'." (J.P. Heilbronn Co. vs. National Labor Union,2G.R.
No. L-5121.)

Hence as a matter of principal, these prewar female employees have no right to

back pay. However, we must agree with the Court of Industrial Relations that if
prewar male employees are granted backpay gratuity, prewar female employees
should also be extended the same privilege, on grounds of equity, remembering
always the Government's constitutional duty to protect labor, especially women,
and the statutory injunction that in exercising its duties and powers "the Court shall
act according to justice and equity and the substantial merits of the case." (Sec.
20 Com. Act No. 103.)

It appears that Caltex (Phil.) Inc., distributed one year gratuities to its prewar male
employees who were working for it after liberation on July 16, 1949. The gratuity
was granted only to those prewar employees who were in the employ of Caltex,
Inc. on July 16, 1949. On equitable grounds, and in our opinion, that gratuity
should likewise be given to its prewar female employees who were working for
it on July 16, 1949. Now, it is obvious that as these female laborers were
admittedly not working for Caltex on July 16, 1949, they could not, invoking equity,
request the same privilege or gratuity.

The above conclusion might be modified, if as respondent's counsel argues, these

women workers "were refused reemployment by their employer when demand
therefor had been made after liberation."

Yet the record does not support such allegation of rejected for reemployment. The
Court of Industrial Relations merely declared that those ladies were not "reinstated
by the company after liberation." That statement is not necessarily a finding that
they desired reemployment but were turned down. They might not have taken
because the machineries were different, or because they chose not to report again
to work. The Court's dictum may not be interpreted as having adjudicated the
question of demand-and-refusal, because the issues were joined upon the
Chapter's "request that the one year gratuity given to prewar male employees
should also be given to prewar female employees," without reference to women
workers who had been refused reemployment. In other words, these women did
not plead for money on the ground that they had not been reinstated or had been
denied reemployment — rather belated claim it would be seem, the company
having reopened four years before (1946) — but only because the male
employees were given the gratuity. In this connection we would be the last to deny
them gratuity had the Caltex corporation awarded compensation to those male
prewar employees who had not been reinstated after the war.

In the settlement of industrial disputes it is proper and convenient for the court to
insist, in exercising its ample powers, that capital shall make no discrimination
between male and female laborers. But discrimination only exists when one is
denied privileges given to the other under identical or similar
conditions. Material conditions of course. And the condition as to actual
employment required by the company is undoubtedly material, the purpose of
gratuity being obviously to induce the company's workers to render better service
in return for such generosity, or simply to improve the finances and morale of its
helpers with consequent beneficial effects upon the corporate business
operations. In the instant controversy, the conditions were different: the male
beneficiaries were employees; whereas these female claimants were not.

WHEREFORE having previously ruled that the claim for backpay has no legal
foundation, and being shown no resultant unfairness, this Court is constrained
presently to disapprove the order directing payment to the herein named workers,
finding no justification for it, either in law or in equity. Needless to say, Courts are
not permitted to render judgments solely upon the basis of sympathies and
inclinations. Neither are they authorized, in the guise of affording protection to
labor, to distribute charities at the expense of natural or judicial persons, because
our constitutional government assures the latter against deprivation of their
property except in accordance with the statutes of supplementary equitable
principles.

The appealed order is set aside, without costs.

Feria, Pablo, Tuason, Montemayor, Reyes, Jugo, Bautista Angelo, and Labrador,
JJ., concur.
G.R. No. 46727 September 27, 1939

PAMBUSCO EMPLOYEES' UNION, INC., petitioner,

vs.
THE COURT OF INDUSTRIAL RELATIONS, composed to Honorables
Francisco Zulueta, Leopoldo Rovira, and Jose Generoso, and PAMPANGA
BUS COMPANY, INC., respondents.

Jose Alejandrino for petitioner.

Manuel Escudero for respondent court.
L.D. Lockwood for respondent Pampanga Bus Co., Inc.

LAUREL, J.:

This is a petition for a writ of certiorari to review the decision of the Court of
Industrial Relations promulgated on January 14, 1939, denying the demands of
the Pambusco Employees' Union, Inc.
The following are the pertinent facts which have given occasion to this industrial
dispute: On March 26, 1938, the Pambusco Employees' Union, Inc., addressed a
thirteen- point petition to the management of the Pampanga Bus Co. Upon the
failure of the company officials to act upon the petition, a strike was declared by
the workers on April 14, 1938. However, through the timely mediation of the
Department of Labor, a provisional agreement was reached, by virtue of which the
strike was called off, eight demands were granted, and the remaining five were
submitted to the Court of Industrial Relations for settlement. One of these
demands, in the language of the petitioner, is that the respondent Pampanga Bus
Co. "pay to all Company drivers affiliated with the Pambusco Employees' Union,
Inc., all the back overtime pay due them under the law." After trial on the disputed
demands, the Court of Industrial Relations decided inter alia that the claim for
back overtime pay could not be allowed.

The pertinent portion of the decision of the respondent Court of Industrial

Relations is as follows:

The evidence is clear that even before the final approval of Act No. 4242
amending Act No. 4123, the Eight Hour Labor Law, by extending the provisions of
the latter to other class of laborers including drivers of public service vehicles, a
petition was addressed by 44 drivers of the company to the Governor-General
asking him to veto the bill amending the law extending it to drivers for the reason
stated in their petition (Exhibit 5 and 5-a). About the 6th day of September, 1935,
a petition was again addressed by 97 drivers of the company to the Commissioner
of Labor requesting adjustment of working hours to permit them to retain their
present status with the company as nearly as possible under the law (Exhibits 4,
4-a, 4-b, 4-c, 4-d and 4-e). This petition was prepared after a meeting of the
employees was held and was drawn with the help of the manager of the
respondent about the last days of August, 1935. In September, 1937, about 347
employees of the different departments of the company again addresses a petition
to the Director of Labor expressing their satisfaction with the hours they work and
the pay they receive for their labor including the special bonuses and overtime pay
they receive for extra work, and asking, in view thereof, that the law be not applied
to them (Exhibits 6, 6-a to 6-g).

After the enactment of Act No. 4242 several transportation companies operating
motor buses filed with Commissioner of Labor petitions for a readjustment of the
hours of labor specified in section 1 of the Act on the basis of maintaining
the status quo as to the hours the drivers were required to be actually on duty in
order to enable them to make the prescribed hours daily that the exigencies of the
service required. The petitions were based on the impracticability of applying the
provisions of the law to drivers of public service vehicles without disrupting the
public service and causing pecuniary loss to both employers and employees alike,
and the resulting difficulties on the part of the drivers. The testimony of Atty.
Carlos Alvear on this point in uncontradicted. He testified that in 1935, he was
president of the Philippine Motor Association composed of bus operators
operating in the Philippines, of which the respondent is a member. Major Olson,
who was at the time the executive secretary of the association, and himself took
up the matter with the Secretary of the Interior and the Secretary of Labor after the
passage of the Act extending the operation of the Eight Labor Law to drivers. In
their conference with the Commissioner of Labor, they were told to take
advantage of the provisions of the law in which they may apply for the
readjustment of the working hours, and in conformity with that suggestion, the
executive secretary of the association filed a formal petition, Exhibit 10, on
September 5, 1935. When this was filed the Department of Labor further
suggested that the drivers of each company file and address a petition of similar
nature designating their representatives who will represent them in a conference
that the Commissioner of Labor may call for the purpose. With the filing of the
petition, the conferees were assured by the Under-Secretary of Labor that the
enforcement of the Eight Hour Labor Law in so far as the drivers were concerned,
will be held in abeyance until such time as the meeting or investigations are held.
It is not clear as to whether investigations and hearings were finally made but the
evidence indicates that the petition was never decided and the companies
continued its schedule of hours.

Sections 3 and 4 of Act No. 4123 read as follows:

"SEC. 3. The Commissioner of Labor, with the advice of two representatives of the
employers concerned, designated by the latter, and of two representatives of the
laborers concerned, designated by these, shall, at the request of an interested
party, decide in each case whether or not it is proper to increase or decrease the
number of hours of labor fixed in section one of this Act, either because the
organization or nature of the work require it, or because of lack or insufficiency of
competent laborers for certain work in a locality, or because the relieving of the
laborers must be done under certain conditions, or by reason of any other
exceptional circumstances or conditions of the work or industry concerned; but the
number of hours of labor shall in no case exceed twelve daily or seventy-two
weekly.
"SEC. 4. Employees or laborers desiring an increase or decrease of the number of
hours of labor shall address an application to this effect to the Commissioner of
Labor, stating their reasons. Upon receipt of an application of this kind, the
Commissioner of Labor shall call a meeting of the employers and laborers of the
establishment or industry concerned, for the designation of advisers as provided in
the preceding section hereof. The Commissioner of Labor or his authorized
representative, together with the advisers, shall make an investigation of the facts,
giving special attention, in the first place, to the human aspect, and in the second
place, to the economic aspect of the matter, and he may for this purpose
administer oaths, take affidavits examine witnesses and documents and
issue subpoenas and subpoenas duces tecum. The decision of the Commissioner
of Labor may be reconsidered by him at any time."

It seems clear that the petitions of both employers and employees for the non-
enforcement of the Eight Hour Labor Law were made in accordance with these
provisions of the law. Exhibit 9 of the respondent which is a communication
addressed by the Under-Secretary of Labor on September 6, 1935, to the A.L.
Ammen Transportation Company, Inc., defines the attitude taken by the
Department of Labor in connection with those petitions. It advises the company to
submit an application under sections 3 and 4 of Act No. 4123 above-quoted for an
increase of working hours of such laborers as may fall under the amendment and
that pending final solution of said application, the Department of Labor will not
make any attempt to enforce said amendment. As has already been stated it is not
clear whether final action or decision has been made on the applications with
respect to the drivers of the respondent; that it is undeniable fact that up to the
outbreak of the dispute, the law was not observed nor enforced in the company;
and that upon mutual agreement arrived at by the parties on April 14, 1938, the
company worked out a schedule beginning May 1, 1938, placing all its employees
under an eight-hour schedule.

In view of the foregoing fact, the court is the opinion that the drivers are not
entitled to the overtime pay demanded for the whole period the law was not
observed or enforced in the company. They are entitled to payment of wages for
hours worked in excess of the legal hours only beginning May 1, 1938.

On January 30, 1939, the petitioner filed a motion for reconsideration which was
denied by the Court of Industrial Relations, sitting in banc, with the following
observations:
We have reviewed carefully the evidence on record with regard to the claim for
back overtime pay we find that it amply supports the findings and conclusions set
forth in support of the motion for reconsideration are virtually a repetition of the
reasons advanced in the memorandum of the petitioner filed before the case was
decided and were already discussed and considered in the decision. The
evidence permits no other conclusion than that the employees were not coerced
not intimidated by the respondent on the repeated occasions they signed and
presented to the Department of Labor their petitions for non-enforcement of the
Eight Hour Labor Law. The employees were indubitably aware of certain
hardships the enforcement of the law at that time would bring to them and these
prompted their attitude of preferring the continuation of the schedule of hours
observed prior to the enactment of the legislation extending the benefits of the
Eight Hour Labor Law to drivers of motor vehicles in public utility enterprises.
Whatever pecuniary advantage they would have gained by the strict observance
of the law by the company should they be made to work more than eight hours a
day was apparently waived or given up by them in exchange of their personal
convenience and of the additional monthly pay the respondent gave to those
employees who were assigned to routes where the daily working hours exceeded
the maximum fixed by law. The evidence that the company paid additional salaries
not only to drivers but also to its conductors who were assigned to such routes
stands uncontradicted and no attempt even was made by the petitioner to deny it.
Without need of passing on the question as to whether the provisions of the law
are mandatory or not, in the light of the above facts and applying the rules of
equity invoked by the union, we are constrained to hold that the petitioners are not
rightly entitled to the payment sought.

In Kapisanan ng mga Manggagawa sa Pantranco vs. Pangasinan Transportation

Co. (39 Off. Gaz., 1217), we have held that, to be entitled to the benefits of section
5 of Act No. 4123, fulfillment of the mandate of the law is necessary, this being a
matter of public interest. Where both parties, as in this case, we have violated the
law, this court must decline to extend the strong arm of equity, as neither party is
entitled to its aid. This is especially true in view of the findings of fact made by the
Court of Industrial Relations which we should not disturb.

We are not, to be sure insensible to the argument that industrial disputes should
be decided with an eye on the welfare of the working class, who, in the inter-play
of economic forces, is said to find itself in the "end of the stick." In the case at bar,
however, we find no reason for disturbing the action taken by the respondent
Court of Industrial Relations, which is a special court enjoined to "act according to
justice and equity and substantial merits of the case, without regard to
technicalities or legal forms and shall not be bound by any technical rules of legal
evidence but may inform its mind in such manner as it may deem just and
equitable" (sec. 20, Commonwealth Act No. 103).

The petition is dismissed, without pronouncement regarding costs. So ordered.

Avanceña, C.J., Villa-Real, Imperial, Diaz, Concepcion, and Moran, JJ., concur.

G.R. No. 79255 January 20, 1992

UNION OF FILIPRO EMPLOYEES (UFE), petitioner,

vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and
NESTLÉ PHILIPPINES, INC. (formerly FILIPRO, INC.), respondents.

Jose C. Espinas for petitioner.

Siguion Reyna, Montecillo & Ongsiako for private respondent.

GUTIERREZ, JR., J.:

This labor dispute stems from the exclusion of sales personnel from the holiday
pay award and the change of the divisor in the computation of benefits from 251 to
261 days.

On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed
with the National Labor Relations Commission (NLRC) a petition for declaratory
relief seeking a ruling on its rights and obligations respecting claims of its monthly
paid employees for holiday pay in the light of the Court's decision in Chartered
Bank Employees Association v. Ople (138 SCRA 273 [1985]).

Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case
for voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary
arbitrator.

On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to:

pay its monthly paid employees holiday pay pursuant to Article 94 of the Code,
subject only to the exclusions and limitations specified in Article 82 and such other
legal restrictions as are provided for in the Code. (Rollo,
p. 31)

Filipro filed a motion for clarification seeking (1) the limitation of the award to three
years, (2) the exclusion of salesmen, sales representatives, truck drivers,
merchandisers and medical representatives (hereinafter referred to as sales
personnel) from the award of the holiday pay, and (3) deduction from the holiday
pay award of overpayment for overtime, night differential, vacation and sick leave
benefits due to the use of 251 divisor. (Rollo, pp. 138-145)

Petitioner UFE answered that the award should be made effective from the date of
effectivity of the Labor Code, that their sales personnel are not field personnel and
are therefore entitled to holiday pay, and that the use of 251 as divisor is an
established employee benefit which cannot be diminished.

On January 14, 1986, the respondent arbitrator issued an order declaring that the
effectivity of the holiday pay award shall retroact to November 1, 1974, the date of
effectivity of the Labor Code. He adjudged, however, that the company's sales
personnel are field personnel and, as such, are not entitled to holiday pay. He
likewise ruled that with the grant of 10 days' holiday pay, the divisor should be
changed from 251 to 261 and ordered the reimbursement of overpayment for
overtime, night differential, vacation and sick leave pay due to the use of 251 days
as divisor.

Both Nestle and UFE filed their respective motions for partial reconsideration.
Respondent Arbitrator treated the two motions as appeals and forwarded the case
to the NLRC which issued a resolution dated May 25, 1987 remanding the case to
the respondent arbitrator on the ground that it has no jurisdiction to review
decisions in voluntary arbitration cases pursuant to Article 263 of the Labor Code
as amended by Section 10, Batas Pambansa Blg. 130 and as implemented by
Section 5 of the rules implementing B.P. Blg. 130.

However, in a letter dated July 6, 1987, the respondent arbitrator refused to take
cognizance of the case reasoning that he had no more jurisdiction to continue as
arbitrator because he had resigned from service effective May 1, 1986.

Hence, this petition.

The petitioner union raises the following issues:

1) Whether or not Nestle's sales personnel are entitled to holiday pay; and

2) Whether or not, concomitant with the award of holiday pay, the divisor should
be changed from 251 to 261 days and whether or not the previous use of 251 as
divisor resulted in overpayment for overtime, night differential, vacation and sick
leave pay.

The petitioner insists that respondent's sales personnel are not field personnel
under Article 82 of the Labor Code. The respondent company controverts this
assertion.

Under Article 82, field personnel are not entitled to holiday pay. Said article
defines field personnel as "non-agritultural employees who regularly perform their
duties away from the principal place of business or branch office of the employer
and whose actual hours of work in the field cannot be determined with reasonable
certainty."

The controversy centers on the interpretation of the clause "whose actual hours of
work in the field cannot be determined with reasonable certainty."
It is undisputed that these sales personnel start their field work at 8:00 a.m. after
having reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m.
if they are Makati-based.

The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m.
comprises the sales personnel's working hours which can be determined with
reasonable certainty.

The Court does not agree. The law requires that the actual hours of work in the
field be reasonably ascertained. The company has no way of determining whether
or not these sales personnel, even if they report to the office before 8:00 a.m. prior
to field work and come back at 4:30 p.m, really spend the hours in between in
actual field work.

We concur with the following disquisition by the respondent arbitrator:

The requirement for the salesmen and other similarly situated employees to report
for work at the office at 8:00 a.m. and return at 4:00 or 4:30 p.m. is not within the
realm of work in the field as defined in the Code but an exercise of purely
management prerogative of providing administrative control over such personnel.
This does not in any manner provide a reasonable level of determination on the
actual field work of the employees which can be reasonably ascertained. The
theoretical analysis that salesmen and other similarly-situated workers regularly
report for work at 8:00 a.m. and return to their home station at 4:00 or 4:30 p.m.,
creating the assumption that their field work is supervised, is surface projection.
Actual field work begins after 8:00 a.m., when the sales personnel follow their field
itinerary, and ends immediately before 4:00 or 4:30 p.m. when they report back to
their office. The period between 8:00 a.m. and 4:00 or 4:30 p.m. comprises their
hours of work in the field, the extent or scope and result of which are subject to
their individual capacity and industry and which "cannot be determined with
reasonable certainty." This is the reason why effective supervision over field work
of salesmen and medical representatives, truck drivers and merchandisers is
practically a physical impossibility. Consequently, they are excluded from the ten
holidays with pay award. (Rollo, pp. 36-37)

Moreover, the requirement that "actual hours of work in the field cannot be
determined with reasonable certainty" must be read in conjunction with Rule IV,
Book III of the Implementing Rules which provides:
Rule IV Holidays with Pay

Sec. 1. Coverage — This rule shall apply to all employees except:

xxx xxx xxx

(e) Field personnel and other employees whose time and performance is
unsupervised by the employer . . . (Emphasis supplied)

While contending that such rule added another element not found in the law
(Rollo, p. 13), the petitioner nevertheless attempted to show that its affected
members are not covered by the abovementioned rule. The petitioner asserts that
the company's sales personnel are strictly supervised as shown by the SOD
(Supervisor of the Day) schedule and the company circular dated March 15, 1984
(Annexes 2 and 3, Rollo, pp. 53-55).

Contrary to the contention of the petitioner, the Court finds that the
aforementioned rule did not add another element to the Labor Code definition of
field personnel. The clause "whose time and performance is unsupervised by the
employer" did not amplify but merely interpreted and expounded the clause
"whose actual hours of work in the field cannot be determined with reasonable
certainty." The former clause is still within the scope and purview of Article 82
which defines field personnel. Hence, in deciding whether or not an employee's
actual working hours in the field can be determined with reasonable certainty,
query must be made as to whether or not such employee's time and performance
is constantly supervised by the employer.

The SOD schedule adverted to by the petitioner does not in the least signify that
these sales personnel's time and performance are supervised. The purpose of this
schedule is merely to ensure that the sales personnel are out of the office not later
than 8:00 a.m. and are back in the office not earlier than 4:00 p.m.

Likewise, the Court fails to see how the company can monitor the number of
actual hours spent in field work by an employee through the imposition of
sanctions on absenteeism contained in the company circular of March 15, 1984.

The petitioner claims that the fact that these sales personnel are given incentive
bonus every quarter based on their performance is proof that their actual hours of
work in the field can be determined with reasonable certainty.
The Court thinks otherwise.

The criteria for granting incentive bonus are: (1) attaining or exceeding sales
volume based on sales target; (2) good collection performance; (3) proper
compliance with good market hygiene; (4) good merchandising work; (5) minimal
market returns; and (6) proper truck maintenance. (Rollo, p. 190).

The above criteria indicate that these sales personnel are given incentive bonuses
precisely because of the difficulty in measuring their actual hours of field work.
These employees are evaluated by the result of their work and not by the actual
hours of field work which are hardly susceptible to determination.

In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613

[1963]), the Court had occasion to discuss the nature of the job of a salesman.
Citing the case of Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the
Court stated:

The reasons for excluding an outside salesman are fairly apparent. Such a
salesman, to a greater extent, works individually. There are no restrictions
respecting the time he shall work and he can earn as much or as little, within the
range of his ability, as his ambition dictates. In lieu of overtime he ordinarily
receives commissions as extra compensation. He works away from his employer's
place of business, is not subject to the personal supervision of his employer, and
his employer has no way of knowing the number of hours he works per day.

While in that case the issue was whether or not salesmen were entitled to
overtime pay, the same rationale for their exclusion as field personnel from holiday
pay benefits also applies.

The petitioner union also assails the respondent arbitrator's ruling that,
concomitant with the award of holiday pay, the divisor should be changed from
251 to 261 days to include the additional 10 holidays and the employees should
reimburse the amounts overpaid by Filipro due to the use of 251 days' divisor.

Arbitrator Vivar's rationale for his decision is as follows:

. . . The new doctrinal policy established which ordered payment of ten holidays
certainly adds to or accelerates the basis of conversion and computation by ten
days. With the inclusion of ten holidays as paid days, the divisor is no longer 251
but 261 or 262 if election day is counted. This is indeed an extremely difficult legal
question of interpretation which accounts for what is claimed as falling within the
concept of "solutio indebti."

When the claim of the Union for payment of ten holidays was granted, there was a
consequent need to abandon that 251 divisor. To maintain it would create an
impossible situation where the employees would benefit with additional ten days
with pay but would simultaneously enjoy higher benefits by discarding the same
ten days for purposes of computing overtime and night time services and
considering sick and vacation leave credits. Therefore, reimbursement of such
overpayment with the use of 251 as divisor arises concomitant with the award of
ten holidays with pay. (Rollo, p. 34)

The divisor assumes an important role in determining whether or not holiday pay
is already included in the monthly paid employee's salary and in the computation
of his daily rate. This is the thrust of our pronouncement in Chartered Bank
Employees Association v. Ople (supra). In that case, We held:

It is argued that even without the presumption found in the rules and in the policy
instruction, the company practice indicates that the monthly salaries of the
employees are so computed as to include the holiday pay provided by law. The
petitioner contends otherwise.

One strong argument in favor of the petitioner's stand is the fact that the Chartered
Bank, in computing overtime compensation for its employees, employs a "divisor"
of 251 days. The 251 working days divisor is the result of subtracting all
Saturdays, Sundays and the ten (10) legal holidays from the total number of
calendar days in a year. If the employees are already paid for all non-working
days, the divisor should be 365 and not 251.

In the petitioner's case, its computation of daily ratio since September 1, 1980, is
as follows:

monthly rate x 12 months

———————————

251 days
Following the criterion laid down in the Chartered Bank case, the use of 251 days'
divisor by respondent Filipro indicates that holiday pay is not yet included in the
employee's salary, otherwise the divisor should have been 261.

It must be stressed that the daily rate, assuming there are no intervening salary
increases, is a constant figure for the purpose of computing overtime and night
differential pay and commutation of sick and vacation leave credits. Necessarily,
the daily rate should also be the same basis for computing the 10 unpaid holidays.

The respondent arbitrator's order to change the divisor from 251 to 261 days
would result in a lower daily rate which is violative of the prohibition on non-
diminution of benefits found in Article 100 of the Labor Code. To maintain the
same daily rate if the divisor is adjusted to 261 days, then the dividend,
which represents the employee's annual salary, should correspondingly be
increased to incorporate the holiday pay. To illustrate, if prior to the grant of
holiday pay, the employee's annual salary is P25,100, then dividing such figure by
251 days, his daily rate is P100.00 After the payment of 10 days' holiday pay, his
annual salary already includes holiday pay and totals P26,100 (P25,100 + 1,000).
Dividing this by 261 days, the daily rate is still P100.00. There is thus no merit in
respondent Nestle's claim of overpayment of overtime and night differential pay
and sick and vacation leave benefits, the computation of which are all based on
the daily rate, since the daily rate is still the same before and after the grant of
holiday pay.

Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to

its use of 251 days as divisor must fail in light of the Labor Code mandate that "all
doubts in the implementation and interpretation of this Code, including its
implementing rules and regulations, shall be resolved in favor of labor." (Article 4).
Moreover, prior to September 1, 1980, when the company was on a 6-day working
schedule, the divisor used by the company was 303, indicating that the 10
holidays were likewise not paid. When Filipro shifted to a 5-day working schebule
on September 1, 1980, it had the chance to rectify its error, if ever there was one
but did not do so. It is now too late to allege payment by mistake.

Nestle also questions the voluntary arbitrator's ruling that holiday pay should be
computed from November 1, 1974. This ruling was not questioned by the
petitioner union as obviously said decision was favorable to it. Technically,
therefore, respondent Nestle should have filed a separate petition raising the issue
of effectivity of the holiday pay award. This Court has ruled that an appellee who is
not an appellant may assign errors in his brief where his purpose is to maintain the
judgment on other grounds, but he cannot seek modification or reversal of the
judgment or affirmative relief unless he has also appealed. (Franco v. Intermediate
Appellate Court, 178 SCRA 331 [1989], citing La Campana Food Products, Inc. v.
Philippine Commercial and Industrial Bank, 142 SCRA 394 [1986]). Nevertheless,
in order to fully settle the issues so that the execution of the Court's decision in
this case may not be needlessly delayed by another petition, the Court resolved to
take up the matter of effectivity of the holiday pay award raised by Nestle.

Nestle insists that the reckoning period for the application of the holiday pay award
is 1985 when the Chartered Bank decision, promulgated on August 28, 1985,
became final and executory, and not from the date of effectivity of the Labor Code.
Although the Court does not entirely agree with Nestle, we find its claim
meritorious.

In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132
SCRA 663 [1984], hereinafter referred to as the IBAA case, the Court declared
that Section 2, Rule IV, Book III of the implementing rules and Policy Instruction
No. 9, issued by the then Secretary of Labor on February 16, 1976 and April 23,
1976, respectively, and which excluded monthly paid employees from holiday pay
benefits, are null and void. The Court therein reasoned that, in the guise of
clarifying the Labor Code's provisions on holiday pay, the aforementioned
implementing rule and policy instruction amended them by enlarging the scope of
their exclusion. The Chartered Bank case reiterated the above ruling and added
the "divisor" test.

However, prior to their being declared null and void, the implementing rule and
policy instruction enjoyed the presumption of validity and hence, Nestle's non-
payment of the holiday benefit up to the promulgation of the IBAA case on
October 23, 1984 was in compliance with these presumably valid rule and policy
instruction.

In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the
Court discussed the effect to be given to a legislative or executive act
subsequently declared invalid:

xxx xxx xxx

. . . It does not admit of doubt that prior to the declaration of nullity such
challenged legislative or executive act must have been in force and had to be
complied with. This is so as until after the judiciary, in an appropriate case,
declares its invalidity, it is entitled to obedience and respect. Parties may have
acted under it and may have changed their positions. What could be more fitting
than that in a subsequent litigation regard be had to what has been done while
such legislative or executive act was in operation and presumed to be valid in all
respects. It is now accepted as a doctrine that prior to its being nullified, its
existence as a fact must be reckoned with. This is merely to reflect awareness that
precisely because the judiciary is the government organ which has the final say on
whether or not a legislative or executive measure is valid, a period of time may
have elapsed before it can exercise the power of judicial review that may lead to a
declaration of nullity. It would be to deprive the law of its quality of fairness and
justice then, if there be no recognition of what had transpired prior to such
adjudication.

In the language of an American Supreme Court decision: "The actual existence of

a statute, prior to such a determination of [unconstitutionality], is an operative fact
and may have consequences which cannot justly be ignored. The past cannot
always be erased by a new judicial declaration. The effect of the subsequent
ruling as to invalidity may have to be considered in various aspects, — with
respect to particular relations, individual and corporate, and particular conduct,
private and official." (Chicot County Drainage Dist. v. Baxter States Bank, 308 US
371, 374 [1940]). This language has been quoted with approval in a resolution
in Araneta v. Hill (93 Phil. 1002 [1952]) and the decision in Manila Motor Co.,
Inc. v. Flores (99 Phil. 738 [1956]). An even more recent instance is the opinion of
Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co. (21 SCRA
1095 [1967]. (At pp. 434-435)

The "operative fact" doctrine realizes that in declaring a law or rule null and void,
undue harshness and resulting unfairness must be avoided. It is now almost the
end of 1991. To require various companies to reach back to 1975 now and nullify
acts done in good faith is unduly harsh. 1984 is a fairer reckoning period under the
facts of this case.

Applying the aforementioned doctrine to the case at bar, it is not far-fetched that
Nestle, relying on the implicit validity of the implementing rule and policy
instruction before this Court nullified them, and thinking that it was not obliged to
give holiday pay benefits to its monthly paid employees, may have been moved to
grant other concessions to its employees, especially in the collective bargaining
agreement. This possibility is bolstered by the fact that respondent Nestle's
employees are among the highest paid in the industry. With this consideration, it
would be unfair to impose additional burdens on Nestle when the non-payment of
the holiday benefits up to 1984 was not in any way attributed to Nestle's fault.

The Court thereby resolves that the grant of holiday pay be effective, not from the
date of promulgation of the Chartered Bank case nor from the date of effectivity of
the Labor Code, but from October 23, 1984, the date of promulgation of the IBAA
case.

WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The

divisor to be used in computing holiday pay shall be 251 days. The holiday pay as
above directed shall be computed from October 23, 1984. In all other respects, the
order of the respondent arbitrator is hereby AFFIRMED.

SO ORDERED.
JPL MARKETING G.R. No. 151966
PROMOTIONS,
Petitioner, Present:

PUNO, J.,
Chairman,
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR.,
TINGA, and
COURT OF APPEALS, NATIONAL CHICO-NAZARIO, JJ.
LABOR RELATIONS COMMISSION,
NOEL GONZALES, RAMON ABESA
III and FAUSTINO ANINIPOT,
Respondents. Promulgated:

July 8, 2005

x-------------------------------------------------------------------
x

DECISION

Tinga, J.:
This is a petition for review of the Decision[1] of the
Court of Appeals in CA-G.R. SP No. 62631 dated 03
October 2001 and its Resolution[2] dated 25 January
2002 denying petitioners Motion for Reconsideration,
affirming the Resolution of the National Labor Relations
Commission (NLRC), Second Division, dated 27 July
2000, awarding separation pay, service incentive leave
pay, and 13th month pay to private respondents.

JPL Marketing and Promotions (hereinafter referred to

as JPL) is a domestic corporation engaged in the
business of recruitment and placement of workers. On
the other hand, private respondents Noel Gonzales,
Ramon Abesa III and Faustino Aninipot were employed
by JPL as merchandisers on separate dates and
assigned at different establishments in Naga City and
Daet, Camarines Norte as attendants to the display of
California Marketing Corporation (CMC), one of
petitioners clients.

On 13 August 1996, JPL notified private respondents

that CMC would stop its direct merchandising activity
in the Bicol Region, Isabela, and Cagayan Valley
effective 15 August 1996.[3] They were advised to wait
for further notice as they would be transferred to other
clients. However, on 17 October 1996,[4] private
respondents Abesa and Gonzales filed before the
National Labor Relations Commission Regional
Arbitration Branch (NLRC) Sub V complaints for illegal
dismissal, praying for separation pay, 13th month pay,
service incentive leave pay and payment for moral
damages.[5] Aninipot filed a similar case thereafter.

After the submission of pertinent pleadings by all of the

parties and after some clarificatory hearings, the
complaints were consolidated and submitted for
resolution. Executive Labor Arbiter Gelacio L. Rivera,
Jr. dismissed the complaints for lack of merit.[6] The
Labor Arbiter found that Gonzales and Abesa applied
with and were employed by the store where they were
originally assigned by JPL even before the lapse of the
six (6)-month period given by law to JPL to provide
private respondents a new assignment. Thus, they may
be considered to have unilaterally severed their relation
with JPL, and cannot charge JPL with illegal
dismissal.[7] The Labor Arbiter held that it was
incumbent upon private respondents to wait until they
were reassigned by JPL, and if after six months they
were not reassigned, they can file an action for
separation pay but not for illegal dismissal.[8] The claims
for 13th month pay and service incentive leave pay was
also denied since private respondents were paid way
above the applicable minimum wage during their
employment.[9]
Private respondents appealed to the NLRC. In
its Resolution,[10] the Second Division of the NLRC
agreed with the Labor Arbiters finding that when private
respondents filed their complaints, the six-month period
had not yet expired, and that CMCs decision to stop its
operations in the areas was beyond the control of JPL,
thus, they were not illegally dismissed. However, it
found that despite JPLs effort to look for clients to
which private respondents may be reassigned it was
unable to do so, and hence they are entitled to
separation pay.[11] Setting aside the Labor Arbiters
decision, the NLRC ordered the payment of:
1. Separation pay, based on their last salary rate and counted from
the first day of their employment with the respondent JPL up to the
finality of this judgment;

2. Service Incentive Leave pay, and 13th month pay, computed as in

No.1 hereof.[12]

Aggrieved, JPL filed a petition for certiorari under Rule

65 of the Rules of Court with the Court of Appeals,
imputing grave abuse of discretion on the part of the
NLRC. It claimed that private respondents are not by
law entitled to separation pay, service incentive leave
pay and 13th month pay.

The Court of Appeals dismissed the petition and

affirmed in toto the NLRC resolution. While conceding
that there was no illegal dismissal, it justified the award
of separation pay on the grounds of equity and social
justice.[13]The Court of Appeals rejected JPLs argument
that the difference in the amounts of private
respondents salaries and the minimum wage in the
region should be considered as payment for their
service incentive leave and 13thmonth
pay.[14] Notwithstanding the absence of a contractual
agreement on the grant of 13th month pay, compliance
with the same is mandatory under the law. Moreover,
JPL failed to show that it was exempt from paying
service incentive leave pay. JPL filed a motion for
reconsideration of the said resolution, but the same was
denied on 25 January 2002.[15]

In the instant petition for review, JPL claims that the

Court of Appeals committed reversible error in
rendering the assailed Decision and Resolution.[16] The
instant case does not fall under any of the instances
where separation pay is due, to wit: installation of
labor-saving devices, redundancy, retrenchment or
closing or cessation of business operation,[17] or disease
of an employee whose continued employment is
prejudicial to him or co-employees,[18] or illegal
dismissal of an employee but reinstatement is no longer
feasible.[19] Meanwhile, an employee who voluntarily
resigns is not entitled to separation unless stipulated in
the employment contract, or the collective bargaining
agreement, or is sanctioned by established practice or
policy of the employer.[20] It argues that private
respondents good record and length of service, as well
as the social justice precept, are not enough to warrant
the award of separation pay. Gonzales and Aninipot
were employed by JPL for more than four (4) years,
while Abesa rendered his services for more than two (2)
years, hence, JPL claims that such short period could
not have shown their worth to JPL so as to reward them
with payment of separation pay.[21]

In addition, even assuming arguendo that private

respondents are entitled to the benefits awarded, the
computation thereof should only be from their first day
of employment with JPL up to 15 August 1996, the date
of termination of CMCs contract, and not up to the
finality of the 27 July 2000 resolution of the
NLRC.[22] To compute separation pay, 13th month pay,
and service incentive leave pay up to 27 July 2000
would negate the findings of both the Court of Appeals
and the NLRC that private respondents were not
unlawfully terminated.[23]Additionally, it would be
erroneous to compute service incentive leave pay from
the first day of their employment up to the finality of the
NLRC resolution since an employee has to render at
least one (1) year of service before he is entitled to the
same. Thus, service incentive leave pay should be
counted from the second year of service.[24]
On the other hand, private respondents maintain that
they are entitled to the benefits being claimed as per the
ruling of this Court in Serrano v. NLRC, et al.[25] They
claim that their dismissal, while not illegal, was tainted
with bad faith.[26] They allege that they were deprived of
due process because the notice of termination was sent
to them only two (2) days before the actual
termination.[27] Likewise, the most that JPL offered to
them by way of settlement was the payment of
separation pay of seven (7) days for every year of
service.[28]

Replying to private respondents allegations, JPL

disagrees that the notice it sent to them was a notice of
actual termination. The said memo merely notified them
of the end of merchandising for CMC, and that they will
be transferred to other clients.[29] Moreover, JPL is not
bound to observe the thirty (30)-day notice rule as there
was no dismissal to speak of. JPL counters that it was
private respondents who acted in bad faith when they
sought employment with another establishment,
without even the courtesy of informing JPL that they
were leaving for good, much less tender their
resignation.[30] In addition, the offer of seven (7) days per
year of service as separation pay was merely an act of
magnanimity on its part, even if private respondents are
not entitled to a single centavo of separation pay.[31]
The case thus presents two major issues, to wit:
whether or not private respondents are entitled to
separation pay, 13th month pay and service incentive
leave pay, and granting that they are so entitled, what
should be the reckoning point for computing said
awards.

Under Arts. 283 and 284 of the Labor Code, separation

pay is authorized only in cases of dismissals due to any
of these reasons: (a) installation of labor saving devices;
(b) redundancy; (c) retrenchment; (d) cessation of the
employer's business; and (e) when the employee is
suffering from a disease and his continued employment
is prohibited by law or is prejudicial to his health and to
the health of his co-employees. However, separation pay
shall be allowed as a measure of social justice in those
cases where the employee is validly dismissed for
causes other than serious misconduct or those
reflecting on his moral character, but only when he was
illegally dismissed.[32] In addition, Sec. 4(b), Rule I, Book
VI of the Implementing Rules to Implement the Labor
Code provides for the payment of separation pay to an
employee entitled to reinstatement but the
establishment where he is to be reinstated has closed or
has ceased operations or his present position no longer
exists at the time of reinstatement for reasons not
attributable to the employer.
The common denominator of the instances where
payment of separation pay is warranted is that the
employee was dismissed by the employer.[33] In the
instant case, there was no dismissal to speak of. Private
respondents were simply not dismissed at all, whether
legally or illegally. What they received from JPL was not
a notice of termination of employment, but a memo
informing them of the termination of CMCs contract
with JPL. More importantly, they were advised that they
were to be reassigned. At that time, there was no
severance of employment to speak of.

Furthermore, Art. 286 of the Labor Code allows the

bona fide suspension of the operation of a business or
undertaking for a period not exceeding six (6) months,
wherein an employee/employees are placed on the so-
called floating status. When that floating status of an
employee lasts for more than six months, he may be
considered to have been illegally dismissed from the
service. Thus, he is entitled to the corresponding
benefits for his separation, and this would apply to
suspension either of the entire business or of a specific
component thereof.[34]

As clearly borne out by the records of this case, private

respondents sought employment from other
establishments even before the expiration of the six (6)-
month period provided by law. As they admitted in their
comment, all three of them applied for and were
employed by another establishment after they received
the notice from JPL.[35] JPL did not terminate their
employment; they themselves severed their relations
with JPL. Thus, they are not entitled to separation pay.

The Court is not inclined in this case to award

separation pay even on the ground of compassionate
justice. The Court of Appeals relied on the
cases[36] wherein the Court awarded separation pay to
legally dismissed employees on the grounds of equity
and social consideration. Said cases involved employees
who were actually dismissed by their employers,
whether for cause or not. Clearly, the principle applies
only when the employee is dismissed by the employer,
which is not the case in this instance. In seeking and
obtaining employment elsewhere, private respondents
effectively terminated their employment with JPL.

In addition, the doctrine enunciated in the case

of Serrano[37] cited by private respondents has already
been abandoned by our ruling in Agabon v. National
Labor Relations Commission.[38] There we ruled that an
employer is liable to pay indemnity in the form of
nominal damages to a dismissed employee if, in
effecting such dismissal, the employer failed to comply
with the requirements of due process. However, private
respondents are not entitled to the payment of damages
considering that there was no violation of due process
in this case. JPLs memo dated 13 August 1996 to
private respondents is not a notice of termination, but a
mere note informing private respondents of the
termination of CMCs contract and their re-assignment
to other clients. The thirty (30)-day notice rule does not
apply.

Nonetheless, JPL cannot escape the payment of

13th month pay and service incentive leave pay to
private respondents. Said benefits are mandated by law
and should be given to employees as a matter of right.

Presidential Decree No. 851, as amended, requires an

employer to pay its rank and file employees a
13th month pay not later than 24 December of every
year. However, employers not paying their employees a
13th month pay or its equivalent are not covered by said
law.[39] The term its equivalent was defined by the laws
implementing guidelines as including Christmas bonus,
mid-year bonus, cash bonuses and other payment
amounting to not less than 1/12 of the basic salary but
shall not include cash and stock dividends, cost-of-
living-allowances and all other allowances regularly
enjoyed by the employee, as well as non-monetary
benefits.[40]
On the other hand, service incentive leave, as provided
in Art. 95 of the Labor Code, is a yearly leave benefit of
five (5) days with pay, enjoyed by an employee who has
rendered at least one year of service. Unless specifically
excepted, all establishments are required to grant
service incentive leave to their employees. The term at
least one year of service shall mean service within
twelve (12) months, whether continuous or broken
reckoned from the date the employee started
working.[41] The Court has held in several instances that
service incentive leave is clearly demandable after one
year of service.[42]

Admittedly, private respondents were not given their

13th month pay and service incentive leave pay while
they were under the employ of JPL. Instead, JPL
provided salaries which were over and above the
minimum wage. The Court rules that the difference
between the minimum wage and the actual salary
received by private respondents cannot be deemed as
their 13th month pay and service incentive leave pay as
such difference is not equivalent to or of the same
import as the said benefits contemplated by law. Thus,
as properly held by the Court of Appeals and by the
NLRC, private respondents are entitled to the
13th month pay and service incentive leave pay.
However, the Court disagrees with the Court of Appeals
ruling that the 13th month pay and service incentive
leave pay should be computed from the start of
employment up to the finality of the NLRC resolution.
While computation for the 13th month pay should
properly begin from the first day of employment, the
service incentive leave pay should start a year after
commencement of service, for it is only then that the
employee is entitled to said benefit. On the other hand,
the computation for both benefits should only be up to
15 August 1996, or the last day that private
respondents worked for JPL. To extend the period to the
date of finality of the NLRC resolution would negate the
absence of illegal dismissal, or to be more precise, the
want of dismissal in this case. Besides, it would be
unfair to require JPL to pay private respondents the
said benefits beyond 15 August 1996 when they did not
render any service to JPL beyond that date. These
benefits are given by law on the basis of the service
actually rendered by the employee, and in the particular
case of the service incentive leave, is granted as a
motivation for the employee to stay longer with the
employer. There is no cause for granting said incentive
to one who has already terminated his relationship with
the employer.

The law in protecting the rights of the employees

authorizes neither oppression nor self-destruction of the
employer. It should be made clear that when the law
tilts the scale of justice in favor of labor, it is but
recognition of the inherent economic inequality between
labor and management. The intent is to balance the
scale of justice; to put the two parties on relatively equal
positions. There may be cases where the circumstances
warrant favoring labor over the interests of management
but never should the scale be so tilted if the result is an
injustice to the employer. Justitia nemini neganda
est (Justice is to be denied to none).[43]

WHEREFORE, the petition is GRANTED IN PART.

The Decision and Resolution of the Court of Appeals in
CA-G.R. SP No. 62631 are hereby MODIFIED. The
award of separation pay is deleted. Petitioner is ordered
to pay private respondents their 13th month pay
commencing from the date of employment up to 15
August 1996, as well as service incentive leave pay from
the second year of employment up to 15 August 1996.
No pronouncement as to costs.

SO ORDERED.
G.R. No. 157202 March 28, 2007

PHILIPPINE LONG DISTANCE and TELEPHONE COMPANY, INC., Petitioner,

vs.
AMPARO BALBASTRO and NATIONAL LABOR RELATIONS
COMMISSION, Respondents.

DECISION
AUSTRIA-MARTINEZ, J.:

Before us is a Petition for Review on Certiorari filed by Philippine Long Distance

and Telephone Company, Inc. (petitioner) seeking to annul the Decision1 dated
July 31, 2002 and the Resolution2 dated February 7, 2003 of the Court of Appeals
(CA) in CA-G.R. SP No. 51060.

Amparo Balbastro (private respondent) was employed by petitioner in 1978 as its

telephone operator until her questioned dismissal from employment on October 5,
1989. She was dismissed by petitioner for her absences without authorized leave
due to unconfirmed sick leave on June 28 to July 14, 1989, which constituted her
third offense3 punishable by dismissal under petitioner’s rules and regulations.4

On October 28, 1991, private respondent filed a Complaint5 with the Labor Arbiter
against petitioner and its President, Antonio Cojuangco, for illegal dismissal, non-
payment of salary wage, premium pay for rest day, 13th month pay, and
damages. In her position paper, she alleged that she was dismissed on the
ground of unconfirmed sick leave despite her presentation of medical certificates
from her attending physicians which were not considered by petitioner’s medical
doctors; and that she has four minor children and it was not her intention to
habitually absent herself without reason considering that her loss of job which was
based only on opinions of petitioner’s doctors had caused her great deprivation
and moral suffering. She prayed for reinstatement, backwages, and damages.

Petitioner filed its position paper with Motion to Dismiss6 alleging that private
respondent’s habitual and unjustified absences was a just and valid cause for her
termination under its rules and regulations; and that her record of unauthorized
absences for 1989 showed the following:

First unauthorized absences, from March 19 to 29, 1989. Private respondent

absented herself from work for nine days excluding rest days on March 23 to 24,
1989 without notice to petitioner. She gave marital problem as the reason for her
absence. She was penalized with 18 days suspension for violating petitioner’s
rules and regulations regarding absences.

Second unauthorized absences, from June 11 to 13, 1989. Private respondent

called in sick from Tanauan, Batangas on June 5 that she was suffering from
gastroenteritis. She absented herself from June 5 to 13, 1989. On June 14, 1989,
she presented herself to petitioner’s doctor, Dr. Melissa Musngi and submitted a
medical certificate where it was stated that she was under treatment from June 5
to 8, 1989 of gastroenteritis. Dr. Musngi confirmed private respondent’s sick leave
from June 5 to 10, 1989 but did not confirm her absences from June 11 to 13,
1989 because her medical certificate covered only the period from June 5 to 8,
1989. Furthermore, petitioner reasons out that if she really had such illness,
certain normal logical medical procedures should have been taken, such as stool
examinations and hospitalization; and she bore no post-illness manifestations of
gastroenteritis. Private respondent’s unconfirmed leave of absence was
considered by petitioner unauthorized due to her patent abuse of sick leave
privileges and treated it as her second offense and was penalized with 15 days
suspension.

Third unauthorized absences, from June 28 to July 14, 1989. On June 25, 1989,
private respondent made a sick call that she had sore eyes and absented herself
from June 25 to July 14, 1989. On July 3, 1989, she was outvisited at her given
address in Makati but was not found home. On July 15, 1989, she reported for
work and presented herself to the clinic for confirmation. She had her medical
certificate issued by her attending physician showing that she had been under his
professional treatment from June 25 to July 12, 1989 for systemic viral infection.
Petitioner’s doctor, Dr. Benito Dungo, confirmed her sick leave from June 25 to 27,
1989 but did not confirm as to the rest of the dates when she was absent from
work. When asked to explain, private respondent said that she had a viral infection
during the said period; and that she was in Tanauan, Batangas during the said
dates so she was not found in Makati when outvisited. Petitioner’s doctor did not
confirm her leave of absence from June 28 to July 14, 1989 on the ground that
such illness did not warrant a very long time of rest; certain laboratory
examinations should have been conducted by her attending physician; and there
was patent abuse of her sick leave privileges.

While private respondent’s third leave of absence was being deliberated upon,
she absented herself from August 6 to 12, 1989. She called in sick on August 6,
1989 informing her supervisor that she had a fever. The medical certificate issued
by her attending physician showed that she was under treatment from August 7 to
10, 1989 for influenza. Petitioner’s doctor, Dr. Eduardo Co, confirmed private
respondent’s leave of absence from August 6 to 8, 1989 but did not confirm the
rest because her absences from August 9 to 12, 1989 were not covered by a
medical certificate; her illness did not warrant prolonged absence; and it was
medically impossible for her to contract the same illness which she contracted the
previous month since it is a medical fact that there is no such thing as an
immediately recurrent viral infection.

In view of her repeated absences without authorized leave for the third time,
petitioner terminated private respondent’s service effective October 5, 1989.

The Labor Arbiter conducted a hearing where private respondent testified on her
behalf, while petitioner presented the three medical doctors who did not confirm
portions of private respondent’s leave of absence, and its Employee Relations and
Service Department Manager.

On May 30, 1994, the Labor Arbiter issued its Decision,7 the dispositive portion of
which reads:

WHEREFORE, all the foregoing premises being considered, judgment is hereby

rendered ordering the respondent Philippine Long Distance [and] Telephone Co.
to reinstate the complainant to her former position as telephone operator with all
the rights, privileges and benefits appertaining thereto, including seniority, plus
backwages equivalent to one (1) year salary in the sum of ₱78,000.00
(₱6,500.00/mo. x 12 mos.).

SO ORDRED.8

The Labor Arbiter held that private respondent’s first incident of absence from
March 19 to 29, 1989 were unauthorized but not as to the other succeeding
absences. It found that private respondent, on her first day of absence, called in
sick and when she reported for work, she went to petitioner’s clinic for check-up
and submitted her medical certificates, thus she complied with the standard
requirements on matters of sick leave; that petitioner’s doctors did not confirm
some portions of private respondent’s leave of absence based merely on their
medical opinions; that such justification was not warranted under Department
Order No. ADM-79-02 wherein absences due to illness were considered
unauthorized and without pay when the attending doctor’s signature is forged,
there is alteration as to the date and contents of the medical certificate, the
certificate is false as to the facts alleged therein, the doctor issuing the medical
certificate is not qualified to attend to the illness, there are falsities and
misrepresentations, and when there is patent abuse of sick leave privileges; and
that these circumstances were not proven in this case.
The Labor Arbiter gave more credence to the doctor who actually attended to
private respondent rather than to the medical opinion of petitioner’s doctors. It
concluded that petitioner’s doctors should have coordinated with private
respondent’s attending physicians to settle any doubts as to the medical
certificates.

Petitioner filed its appeal with the National Labor Relations Commission
(NLRC).9 On January 19, 1996, the NLRC issued a

Resolution10 affirming the decision of the Labor Arbiter.

The NLRC found that company practice allows leave of absence due to sickness if
supported by a medical certificate issued by the attending physician; that a
difference in opinion by the Medical Director from that of the attending physician
should not prejudice private respondent since the Medical Director can consider
absences unauthorized only in cases of forgery and patent abuse of sick leave
privileges which were not proven in this case; that if the Medical Director
entertained doubts as to the medical certificate, he should have asked the
attending physician to submit himself for cross-examination and then present an
independent physician for an expert opinion on the matter.

Petitioner’s Motion for Reconsideration was denied in a Resolution11 dated March

14, 1996.

Undaunted, petitioner filed with us a Petition for Certiorari with prayer for the
issuance of a Temporary Restraining Order (TRO). A TRO was issued to enjoin
the enforcement of the NLRC Resolution until further orders.12

In a Resolution dated December 7, 1998,13 we referred the petition to

the CA in accordance with the St. Martin Funeral Home v. National Labor
Relations Commission14 ruling.

On July 31, 2002, the CA issued its assailed Decision which dismissed the petition
and affirmed the NLRC Decision. The CA held that as long as the medical
certificate presented did not fall under any of the infirmities set forth in petitioner’s
rules and regulations, the unconfirmed leave should be treated merely as absence
without leave and was not subject to disciplinary action; that petitioner may not
rely on the previous absences of respondents in 1978 and 1982 to show abuse of
sick leave privileges because petitioner had acknowledged that respondent had
already been penalized with suspension, and those absences were committed
beyond the three-year period mentioned in their rules and regulations; that in its
desire to clothe private respondent’s dismissal with a semblance of legality,
petitioner points to private respondent’s fourth unauthorized leave of absence
committed in August 1989 while the third unauthorized leave of absence was
being deliberated upon; and that the notice of dismissal referred only to her third
unauthorized leave, thus she could not be faulted for an infraction for which she
was not charged.

Petitioner’s Motion for Reconsideration was denied in a Resolution dated February

7, 2003.

Hence, petitioner filed the instant Petition for Review on Certiorari alleging the
following grounds:

WITH ALL DUE RESPECT, THE HONORABLE COURT FAILED TO CONSIDER

THAT THE PETITION HEREIN DOES NOT MERELY INQUIRE UPON THE
RELATIVE WEIGHT OF THE EVIDENCE PRESENTED BY THE PARTIES, BUT
IS ANCHORED ON MANIFESTLY ERRONEOUS CONCLUSIONS ON THE
PART OF THE NLRC ARISING FROM GROSS MISAPPREHENSION OF THE
FACTS OBTAINING IN THE CASE. AMONG OTHERS, IT WAS GRAVE ERROR
TO CONCLUDE THAT THERE WAS NO PATENT ABUSE OF THE SICK LEAVE
PRIVILEGE ON THE PART OF THE PRIVATE RESPONDENT BECAUSE THE
MEDICAL CERTIFICATES SHE PRESENTED WERE NOT FALSE, FORGED,
OR ALTERED TOTALLY DISREGARDING THE FACT THAT "ABUSE OF SICK
LEAVE PRIVILEGE" IS A CAUSE SEPARATELY ENUMERATED UNDER THE
RULES AS A GROUND FOR DISCIPLINARY ACTION.

II

WITH ALL DUE RESPECT, THE HONORABLE COURT FAILED TO CONSIDER

THAT THE CONCLUSIONS OF THE NLRC ARE BEREFT OF ANY LEGAL OR
FACTUAL BASES AS THERE WERE LEGALLY NO MEDICAL CERTIFICATES
TO SPEAK OF, AND THE EXISTENCE THEREOF ARE PURE AND SIMPLE
HEARSAY, HENCE COULD NOT BE VALIDLY RELIED UPON OR INVOKED BY
THE PRIVATE RESPONDENT TO SUPPORT HER DEFENSE EVEN
SUPPOSING TECHNICAL RULES ON EVIDENCE COULD BE RELAXED IN
LABOR PROCEEDINGS. 15

Petitioner argues that the NLRC’s conclusions that private respondent had not
committed a patent abuse of sick leave privileges and that her dismissal was
illegal are utterly without any factual or legal basis; that the NLRC’s conclusion
that the dismissal was illegal was merely based: (1) on the evidence of private
respondent; (2) on medical certificates which are clearly hearsay and of no
probative value whatsoever; and (3) on medical certificates which, even supposing
could be considered, simply failed to cover the period of the leave requested and
set forth implausible diagnoses.

Petitioner claims that the CA as well as the NLRC failed to resolve the issue of
whether or not the medical certificate should be given any credence at all; that it
had presented four witnesses which included their three medical doctors who
were subjected to cross-examinations, and yet credence was given to private
respondent’s hearsay evidence consisting merely of a medical certificate by the
latter’s attending physician who was not even presented to testify; that since the
content of the medical certificate had been rebutted and refuted by petitioner’s
witnesses, the burden of evidence is shifted to private respondent to show that the
medical certificate she submitted was competent, proper, and sound which she
failed to do.

Petitioner further claims that the CA erred in not finding that private respondent
committed a patent abuse of sick leave privileges which does not arise solely from
forgery or alteration of the medical certificate, but on the fact that an employee
had frequently and incorrigibly absented herself and then applied for sick leave
with absolute impunity armed with medical certificates which not only failed to
cover the entire length of the leave but also with implausible diagnoses; that
excluding private respondent’s unauthorized absences in 1989, she had
accumulated 93 days of sick leave from January to July 1989 and 115 days of sick
leave in 1988, thus, how can the conclusion be drawn that there was no patent
abuse of sick leave privileges; and that her unauthorized absence for which she
was terminated all occurred in 1989, thus, the CA erred in saying that petitioner
may not rely on the previous absences of respondent in 1978 and 1982 to justify
private respondent’s dismissal.

We find the petition meritorious. Private respondent was validly dismissed by

petitioner. It must be borne in mind that the basic principle in termination cases is
that the burden of proof rests upon the employer to show that the dismissal is for
just and valid cause and failure to do so would necessarily mean that the
dismissal was not justified and, therefore, was illegal.16 For dismissal to be valid,
the evidence must be substantial and not arbitrary and must be founded on clearly
established facts.17 We find that petitioner had discharged this burden.

Under petitioner’s Department Order No. ADM-79-02, for the absence due to an
alleged illness to be considered unauthorized, without pay, and subject to
disciplinary action, it must be shown that the medical certificate is forged, altered
as to the date and contents, false as to the facts stated therein, issued by a doctor
not qualified to attend to the patient’s illness, and there is patent abuse of sick
leave privileges. The penalty for three offenses of unauthorized absences
committed within the three-year period is dismissal.

Private respondent’s unconfirmed absences from June 28 to July 14, 1989 is the
crucial period in this particular case.

The Labor Arbiter and the NLRC found that private respondent was illegally
dismissed by petitioner. Such finding was affirmed by the CA. They all concluded
that the medical certificate which private respondent presented did not fall under
the circumstances enumerated in Department Order No. ADM-79-02, and there
was no patent abuse of sick leave privileges, thus, there was no basis for
petitioner’s doctors not to confirm her sick leave and consider the same
unauthorized.

The jurisdiction of this Court in a petition for review on certiorari is limited to

reviewing only errors of law, not of fact, unless the factual findings being assailed
are not supported by evidence on record or the impugned judgment is based on a
misapprehension of facts.18 We find that those exceptions are present in the
instant case.

We find that petitioner had sufficiently established that private respondent

committed a patent abuse of her sick leave privileges which is one of the grounds
listed in Department Order No. ADM-79-02 for disciplinary action.

Private respondent was absent on June 25, 1989 and the reason given was sore
eyes. She was then absent from June 25 to July 14, 1989. When she reported for
work on July 15, 1989, she went to petitioner’s doctor, Dr. Benito Dungo, for
confirmation of her leave of absence and presented a medical certificate19 from
her attending physician, Dr. Manuel C. Damian of Tanauan Batangas, who
certified that she had been under his professional care from June 25 to July 12,
1989 for systemic viral disease.

Dr. Dungo confirmed private respondent’s leave of absence from June 25 to 27,
1989 only and did not confirm her leave from June 28 to July 14, 1989 for the
following reasons: (a) systemic viral disease indicated in the medical certificate
does not warrant such a very long time of rest and recuperation; (b) if she really
had an infection, the logical recourse is for the attending physician to conduct a
chest x-ray and blood examination to determine the cause of the prolonged fever,
but such was not made; (c) if she was really ill for such a long time, she would
have already been confined in a hospital for treatment as petitioner has standing
agreements with various hospitals to provide immediate medical assistance free of
charge; (d) she displayed no residue of symptoms of flu, thus casting doubt on the
veracity of her claim; (e) she called in sick on June 25, 1989 that she was
suffering from sore eyes but her medical certificate made no mention of such
condition; and (f) her medical records reveal a pattern of abuse of sick leave
privileges.20

Private respondent’s reason for her absence on June 25, 1989 was sore eyes,
however the medical certificate that she presented for her prolonged absence
from June 25 to July 14, 1989 was systemic viral disease and as correctly
observed by Dr. Dungo, sore eyes was never mentioned therein.

Moreover, in the medical progress note21 of Dr. Damian dated October 10, 1989
attached to private respondent’s position paper submitted before the Labor
Arbiter, it was shown that private respondent was seen by Dr. Damian on June 25,
1989 at 9:00 a.m. and her temperature was 40 degrees and she was complaining
of severe headache and body pain. It would appear that there was a discrepancy
between the reason given when she called in sick on June 25, 1989 and her
complaints when she consulted Dr. Damian on the same day. In fact, when private
respondent was asked on cross-examination why sore eyes was never mentioned
in her medical certificate, all that she could say was "the diagnosis was systemic
viral disease, sama-sama na lahat".22

The medical certificate issued by Dr. Damian showed that private respondent was
under his professional care from June 25 to July 12, 1989. However, the medical
progress note dated October 10, 1989 of the same doctor showed that private
respondent consulted him only on June 25, 27, and 29, 1989. It was never
mentioned that Dr. Damian had seen private respondent after June 29, 1989.
Thus, there was even a discrepancy between the medical certificate dated July
13, 1989 and the medical progress note as to the time frame that private
respondent was seen by Dr. Damian. The medical certificate did not cover private
respondent’s absences from July 13 to 14, 1989 and she only reported for work on
July 15, 1989.

It bears stressing that from the time private respondent called in sick on June 25,
1989 due to sore eyes, she never called up petitioner again until she reported for
work on July 15, 1989. She never went to petitioner’s doctors for them to verify her
sickness.

Private respondent had committed the first two offenses of unauthorized absences
in the same year. First, she did not report for work from March 19 to 29, 1989
without notice to petitioner, thus her absence was treated as unauthorized and
considered her first offense for which she was penalized with suspension. Second,
she again did not report for work from June 5 to 13, 1989 and when she reported
for work and presented her medical certificate, it covered the period from June 5
to 8, 1989 only but she did not report for work until June 14, 1989. Petitioner’s
doctor did not confirm her absences from June 11 to 13, 1989, thus, the same was
considered unauthorized and her second offense for which she was penalized
again with suspension. These two unauthorized absences together with her third
unauthorized absences committed from June 28 to July 14, 1989 are sufficient
bases for petitioner’s finding that private respondent patently abused her sick
leave privileges.

Previous infractions may be used as justification for an employee’s dismissal from

work in connection with a subsequent similar offense.23 Moreover, it is in
petitioner’s rules and regulations that the same offense committed within the
three-year period merits the penalty of dismissal. The CA’s finding that petitioner
may not rely on the previous absences of private respondent in 1978 and 1982 to
show abuse of sick leave privileges has no basis since private respondent was
dismissed for committing her three unauthorized absences all in 1989.

It had also been established by Dr. Dungo’s testimony that private respondent’s
medical record showed that she did not go to the clinic for consultation as she
would only present a medical certificate and get a clearance for her sick
leave;24 that the same medical record showed her absences in 1989 as follows: (1)
From April 27 to May 4 due to urinary tract infection and she submitted a medical
certificate;25 (2) From May 5 to 14 due to back pain;26 (3) From May 20 to 21 due
to migraine;27 (4) June 5 to 13 due to gastroenteritis (penalized as her second
offense); (5) June 15 to 24 due to conjunctivitis and submitted a medical
certificate;28 and (6) June 25 to July 14, 1989 due to systemic viral disease with
medical certificate (her third offense penalized with dismissal). Private respondent
had incurred a total absence of 85 days from January to October 1989; 29 and 115
days in 1988.30 It had also been established that petitioner’s doctors confirmed
most of her sick leave out of compassion31 and that her medical records showed
that there were several warnings given her regarding her unconfirmed sick leave.32

As petitioner stated in its pleadings, it is a telecommunication service company

which provides the country with various telecommunication services and facilities.
Its operations are a vital part to many transactions all over the country and abroad,
and private respondent was one of its telephone operators who used to connect
all these calls. Thus, her patent abuse of her sick leave privileges is detrimental to
petitioner’s business.

While it is true that compassion and human consideration should guide the
disposition of cases involving termination of employment since it affects one's
source or means of livelihood, it should not be overlooked that the benefits
accorded to labor do not include compelling an employer to retain the services of
an employee who has been shown to be a gross liability to the employer. The law
in protecting the rights of the employees authorizes neither oppression nor self-
destruction of the employer.33 It should be made clear that when the law tilts the
scale of justice in favor of labor, it is but a recognition of the inherent economic
inequality between labor and management. The intent is to balance the scale of
justice; to put the two parties on relatively equal positions. There may be cases
where the circumstances warrant favoring labor over the interests of management
but never should the scale be so tilted if the result is an injustice to the
employer. Justitia nemini neganda est (Justice is to be denied to none).34

WHEREFORE, the instant petition is GRANTED. The Decision dated July 31,
2002 and the Resolution dated February 7, 2003 of the Court of Appeals in CA-
G.R. SP No. 51060 are hereby REVERSED and SET ASIDE. The complaint of
Amparo Balbastro is DISMISSED.

No costs.

SO ORDERED.
SONZA vs. ABS-CBN Case Digest

JOSE SONZA vs. ABS-CBN BROADCASTING CORPORATION

G.R. No. 138051
June 10, 2004

Facts: In May 1994, ABS-CBN signed an agreement with the Mel and Jay
Management and Development Corporation (MJMDC). ABS-CBN was represented
by its corporate officers while MJMDC was represented by Sonza, as President and
general manager, and Tiangco as its EVP and treasurer. Referred to in the
agreement as agent, MJMDC agreed to provide Sonza’s services exclusively to ABS-
CBN as talent for radio and television. ABS-CBN agreed to pay Sonza a monthly
talent fee of P310, 000 for the first year and P317, 000 for the second and third year.

On April 1996, Sonza wrote a letter to ABS-CBN where he irrevocably resigned in

view of the recent events concerning his program and career. After the said letter,
Sonza filed with the Department of Labor and Employment a complaint alleging that
ABS-CBN did not pay his salaries, separation pay, service incentive pay,13th month
pay, signing bonus, travel allowance and amounts under the Employees Stock Option
Plan (ESOP). ABS-CBN contended that no employee-employer relationship existed
between the parties. However, ABS-CBN continued to remit Sonza’s monthly talent
fees but opened another account for the same purpose.

The Labor Arbiter dismissed the complaint and found that there is no employee-
employer relationship. NLRC affirmed the decision of the Labor Arbiter. CA also
affirmed the decision of NLRC.

Issue: Whether or not there was employer-employee relationship between the

parties.
Ruling: Case law has consistently held that the elements of an employee-employer
relationship are selection and engagement of the employee, the payment of wages,
the power of dismissal and the employer’s power to control the employee on the
means and methods by which the work is accomplished. The last element, the so-
called "control test", is the most important element.

Sonza’s services to co-host its television and radio programs are because of his
peculiar talents, skills and celebrity status. Independent contractors often present
themselves to possess unique skills, expertise or talent to distinguish them from
ordinary employees. The specific selection and hiring of SONZA, because of his
unique skills, talent and celebrity status not possessed by ordinary employees, is a
circumstance indicative, but not conclusive, of an independent contractual
relationship. All the talent fees and benefits paid to SONZA were the result of
negotiations that led to the Agreement. For violation of any provision of the
Agreement, either party may terminate their relationship. Applying the control test to
the present case, we find that SONZA is not an employee but an independent
contractor.

The control test is the most important test our courts apply in distinguishing an
employee from an independent contractor. This test is based on the extent of control
the hirer exercises over a worker. The greater the supervision and control the hirer
exercises, the more likely the worker is deemed an employee. The converse holds
true as well – the less control the hirer exercises, the more likely the worker is
considered an independent contractor. To perform his work, SONZA only needed his
skills and talent. How SONZA delivered his lines, appeared on television, and
sounded on radio were outside ABS-CBN’s control. ABS-CBN did not instruct
SONZA how to perform his job. ABS-CBN merely reserved the right to modify the
program format and airtime schedule "for more effective programming." ABS-CBN’s
sole concern was the quality of the shows and their standing in the ratings.

Clearly, ABS-CBN did not exercise control over the means and methods of
performance of Sonza’s work. A radio broadcast specialist who works under minimal
supervision is an independent contractor. Sonza’s work as television and radio
program host required special skills and talent, which SONZA admittedly possesses.
ABS-CBN claims that there exists a prevailing practice in the broadcast and
entertainment industries to treat talents like Sonza as independent contractors. The
right of labor to security of tenure as guaranteed in the Constitution arises only if
there is an employer-employee relationship under labor laws. Individuals with special
skills, expertise or talent enjoy the freedom to offer their services as independent
contractors. The right to life and livelihood guarantees this freedom to contract as
independent contractors. The right of labor to security of tenure cannot operate to
deprive an individual, possessed with special skills, expertise and talent, of his right
to contract as an independent contractor.

ABANTE vs LAMADRID BEARING & PARTS CO. Case Digest

EMPERMACO B. ABANTE, JR., petitioner, vs. LAMADRID BEARING & PARTS
CORP. and JOSE LAMADRID, President, respondents.
[G.R. No. 159890 May 28, 2004]

FACTS: Petitioner was a salesman of respondent company earning a commission of

3% of the total paid up sales covering the whole area of Mindanao. Aside from
selling, he was also tasked with collection. Respondent corporation through its
president, often required Abante to report to a particular area and occasionally
required him to go to Manila to attend conferences.

Later on, bad blood ensued between the parties due to some bad accounts that
Lamadrid forced petitioner to cover. Later petitioner found out that respondent had
informed his customers not to deal with petitioner since it no longer recognized him
as a commission salesman. Petitioner filed a complaint for illegal dismissal with
money claims against respondent company and its president, Jose Lamadrid.

By way of defense, respondents countered that petitioner was not its employee but a
freelance salesman on commission basis.

ISSUE: Whether or not petitioner, as a commission salesman, is an employee of

respondent corporation.

HELD: To determine the existence of an employee-employer relationship, we apply

the four fold test: 1) the manner of selection and engagement; (2) the payment of
wages; (3) the presence or absence of the power of dismissal; and (4) the presence
or absence of the power of control.

Applying the aforementioned test, an employer-employee relationship is notably

absent in this case. It is true that he was paid in commission yet no quota was
imposed therefore a dismal performance would not warrant a ground for dismissal.
There was no specific office hours he was required to observe. He was not
designated to conduct services at a particular area or time. He pursued his selling
without interference or supervision from the company. The company did not prescribe
the manner of selling merchandise. While he was sometimes required to report to
Manila, these were only intended to guide him. Moreover, petitioner was free to offer
his services to other companies.

Art. 280 is not a crucial factor because it only determines two kinds of employees. It
doen;t apply where there is no employer-employee relationship. While the term
commission under Article 96 of the LC was construed as being included in the term
“wage”, there is no categorical pronouncement that the payment of commission is
conclusive proof of the existence of an employee-employer relationship.

The decision of the CA is affirmed.

Jo vs. NLRC, G.R. No. 121605, February 2,

2000; 324 SCRA 437
Posted by Pius Morados on November 10, 2011

(Labor Standards – Existence of employer-employee relationship)

Facts: Private respondent working as a barber on piece-rate basis was designated by

petitioners as caretaker of their barbershop. Private respondent’s duties as caretaker, in addition
to his being a barber, were: 1) to report to the owners of the barbershop whenever the
aircondition units malfunction and/or whenever water or electric power supply was interrupted;
2) to call the laundry woman to wash dirty linen; 3) to recommend applicants for interview and
hiring; 4) to attend to other needs of the shop. For this additional job, he was given an
honorarium equivalent to1/3 of the net income of the shop.

Private respondent left his job voluntarily because of his misunderstanding with his co-worker
and demanded separation pay and other monetary benefits. Petitioner’s contends that
respondent was not their employee but their “partner in trade” whose compensation was based
on a sharing arrangement per haircut or shaving job done.

Issue: Whether or not there exist an employer-employee relationship.

Held: Yes. In determining the existence of an employer-employee relationship, the following

elements are considered: 1) selection and engagement of worker; 2) power of dismissal; 3) the
payment of wages; and 4) the power to control the worker’s conduct, with the latter assuming
primacy in the overall consideration. The power of control refers to the existence of the power
and not necessarily to the actual exercise thereof. It is not essential for the employer to actually
supervise the performance of duties of the employee; it is enough that the employer has the
right to wield that power.