Case Doctrines in Labor Standards

CASE DOCTRINES IN LABOR LAW REVIEW

LABOR STANDARDS

Prepared by: Glenn Rey Anino

Juris Doctor

University of Cebu

Bisig Manggagawa sa Tryco vs. National Labor Relations Commission, 569 SCRA 122 , October 15, 2008

Labor Law; Constructive Dismissals; Transfer of Employees; While the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives; The free will of management to conduct its own business affairs to achieve its purpose cannot be denied.—Tryco’s decision to transfer its production activities to San Rafael, Bulacan, regardless of whether it was made pursuant to the letter of the Bureau of Animal Industry, was within the scope of its inherent right to control and manage its enterprise effectively. While the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied.

Same; Same; Same; Management’s Prerogative; Management’s prerogative of transferring and reassigning employees from one area of operation to another in order to meet the requirements of the business is, therefore, generally not constitutive of constructive dismissal.—This prerogative extends to the management’s right to regulate, according to its own discretion and judgment, all aspects of employment, including the freedom to transfer and reassign employees according to the requirements of its business. Management’s prerogative of transferring and reassigning employees from one area of operation to another in order to meet the requirements of the business is, therefore, generally not constitutive of constructive dismissal. Thus, the consequent transfer of Tryco’s personnel, assigned to the Production Department was well within the scope of its management prerogative.

Same; Same; Same; Employer must show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee, nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits.—When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not involve a demotion in rank or diminution of salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal. However, the employer has the burden of proving that the transfer of an employee is for valid and legitimate grounds. The employer must show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits.

Same; Same; Same; Mere incidental inconvenience is not sufficient to warrant a claim of constructive dismissal.—In the instant case, the transfer orders do not entail a demotion in rank or diminution of salaries, benefits and other privileges of the petitioners. Petitioners, therefore, anchor their objection solely on the ground that it would cause them great inconvenience since they are all residents of Metro Manila and they would incur additional expenses to travel daily from Manila to Bulacan. The Court has previously declared that mere incidental inconvenience is not sufficient to warrant a claim of constructive dismissal. Objection to a transfer that is grounded solely upon the personal inconvenience or hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of transfer.

Same; Unfair Labor Practices; Collective Bargaining Agreement; Unfair labor practice refers to acts that violate the workers’ right to organize; Without that element, the acts, no matter how unfair, are not unfair labor practices.—There was no showing or any indication that the transfer orders were motivated by an intention to interfere with the petitioners’ right to organize. Unfair labor practice refers to acts that violate the workers’ right to organize. With the exception of Article 248(f) of the Labor Code of the Philippines, the prohibited acts are related to the workers’ right to self-organization and to the observance of a CBA. Without that element, the acts, no matter how unfair, are not unfair labor practices.

Linton Commercial Co., Inc. vs. Hellera, 535 SCRA 434 , October 10, 2007

Labor Law; Reduction of Working Hours; The validity of the reduction of working hours upheld in Philippine Graphic Arts, Inc. vs. NLRC, 166 SCRA 118 (1988); The Bureau of Working Conditions of the DOLE released a bulletin providing for in determining when an employer can validly reduce the regular number of working days.—In Philippine Graphic Arts, Inc. v. NLRC, 166 SCRA 118 (1988), the Court upheld for the validity of the reduction of working hours, taking into consideration the following: the arrangement was temporary, it was a more humane solution instead of a retrenchment of personnel, there was notice and consultations with the workers and supervisors, a consensus were reached on how to deal with deteriorating economic conditions and it was sufficiently proven that the company was suffering from losses. The Bureau of Working Conditions of the DOLE, moreover, released a bulletin providing for in determining when an employer can validly reduce the regular number of working days. The said bulletin states that a reduction of the number of regular working days is valid where the arrangement is resorted to by the employer to prevent serious losses due to causes beyond his control, such as when there is a substantial slump in the demand for his goods or services or when there is lack of raw materials.

Same; Same; Permitting reduction of work and pay at the slightest indication of losses would be contrary to the State’s policy to afford protection to labor and provide full employment.—A close examination of petitioners’ financial reports for 1997-1998 shows that, while the company suffered a loss of P3,645,422.00 in 1997, it retained a considerable amount of earnings and operating income. Clearly then, while Linton suffered from losses for that year, there remained enough earnings to sufficiently sustain its operations. In business, sustained operations in the black is the ideal but being in the red is a cruel reality. However, a year of financial losses would not warrant the immolation of the welfare of the employees, which in this case was done through a reduced workweek that resulted in an unsettling diminution of the periodic pay for a protracted period. Permitting reduction of work and pay at the slightest indication of losses would be contrary to the State’s policy to afford protection to labor and provide full employment.

Same; Management prerogative must be exercised in good faith and with due regard to the rights of labor.—Management has the prerogative to come up with measures to ensure profitability or loss minimization. However, such privilege is not absolute. Management prerogative must be exercised in good faith and with due regard to the rights of labor.

Perpetual Help Credit Cooperative, Inc. vs. Faburada, 366 SCRA 693 , October 08, 2001

Labor Law; Employer-Employee Relationship; Elements.—In determining the existence of an employer-employee relationship, the following elements are considered: (1) the selection and engagement of the worker or the power to hire; (2) the power to dismiss; (3) the payment of wages by whatever means; and (4) the power to control the worker’s conduct, with the latter assuming primacy in the overall consideration. No particular form of proof is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence may show the relationship.

Same; Same; Three Kinds of Employees; Words and Phrases; “Regular Employees, “Project Employees,” and “Casual Employees,” Explained.—Necessarily, this leads us to the issue of whether or not private respondents are regular employees. Article 280 of the Labor Code provides for three kinds of employees: (1) regular employees or those who have been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; (2) project employees or those whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season; and (3) casual employees or those who are neither regular nor project employees. The employees who are deemed regular are: (a) those who have been engaged to perform activities which are usually necessary or desirable in the usual trade or business of the employer; and (b) those casual employees who have rendered at least one (1) year of service, whether such service is continuous or broken, with respect to the activity in which they are employed. Undeniably, private respondents were rendering services necessary to the day-to-day operations of petitioner PHCCI. This fact alone qualified them as regular employees.

Same; Same; Same; One’s regularity of employment is not determined by the number of hours one works but by the nature and by the length of time one has been in that particular job.—All of them, except Harold D. Catipay, worked with petitioner for more than one (1) year: Benedicto Faburada, for one and a half (1 1/2) year; Sisinita Vilar, for two (2) years; and Imelda C. Tamayo, for two (2) years and two (2) months. That Benedicto Faburada worked only on a part-time basis, does not mean that he is not a regular employee. One’s regularity of employment is not determined by the number of hours one works but by the nature and by the length of time one has been in that particular job. Petitioner’s contention that private respondents are mere volunteer workers, not regular employees, must necessarily fail. Its invocation of San Jose City Electric Cooperative vs. Ministry of Labor and Employment (173 SCRA 697, 703 [1989]) is misplaced. The issue in this case is whether or not the employees-members of a cooperative can organize themselves for purposes of collective bargaining, not whether or not the members can be employees. Petitioner missed the point.

Same; Same; Security of Tenure; Due Process; Regular employees or workers are entitled to security of tenure and their services may be terminated only for a valid cause, with observance of due process; The valid causes are categorized into two groups—the just causes under Article 282 of the Labor Code and the authorized causes under Articles 283 and 284.—As regular employees or workers, private respondents are entitled to security of tenure. Thus, their services may be terminated only for a valid cause, with observance of due process. The valid causes are categorized into two groups: the just causes under Articles 282 of the Labor Code and the authorized causes under Articles 283 and 284 of the same Code. The just causes are: (1) serious misconduct or willful disobedience of lawful orders in connection with the employee’s work; (2) gross or habitual neglect of duties; (3) fraud or willful breach of trust; (4) commission of a crime or an offense against the person of the employer or his immediate family member or representative; and, analogous cases. The authorized causes are: (1) the installation of labor-saving devices; (2) redundancy; (3) retrenchment to prevent losses; and (4) closing or cessation of operations of the establishment or undertaking, unless the closing is for the purpose of circumventing the provisions of law. Article 284 provides that an employer would be authorized to terminate the services of an employee found to be suffering from any disease if the employee’s continued employment is prohibited by law or is prejudicial to his health or to the health of his fellow employees.

Same; Same; Same; Same; Procedural due process requires that the employer serve the employees to be dismissed two (2) written notices before the termination of their employment is effected: (a) the first, to apprise them of the particular acts or omissions for which their dismissal is sought; and (b) the second, to inform them of the decision of the employer that they are being dismissed.—Procedural due process requires that the employer serve the employees to be dismissed two (2) written notices before the termination of their employment is effected: (a) the first, to apprise them of the particular acts or omissions for which their dismissal is sought; and (b) the second, to inform them of the decision of the employer that they are being dismissed. In this case, only one notice was served upon private respondents by petitioner. It was in the form of a Memorandum signed by the Manager of the Cooperative dated January 2, 1990 terminating their services effective December 29, 1989. Clearly, petitioner, failed to comply with the twin requisites of a valid notice.

Same; Cooperatives; Jurisdiction; Presidential Decree (P.D.) 175 does not provide for a grievance machinery where a dispute or claim may first be submitted.—Petitioner contends that the labor arbiter has no jurisdiction to take cognizance of the complaint of private respondents considering that they failed to submit their dispute to the grievance machinery as required by P.D. 175 (strengthening the Cooperative Movement) and its implementing rules and regulations under LOI 23. Likewise, the Cooperative Development Authority did not issue a Certificate of Non-Resolution pursuant to Section 8 of R.A. 6939 or the Cooperative Development Authority Law. As aptly stated by the Solicitor General in his comment, P.D. 175 does not provide for a grievance machinery where a dispute or claim may first be submitted. LOI 23 refers to instructions to the Secretary of Public Works and Communications to implement immediately the recommendation of the Postmaster General for the dismissal of some employees of the Bureau of Post. Obviously, this LOI has no relevance to the instant case.

Same; Same; Same; Disputes about payment of Wages, overtime pay, rest day and termination of employment are within the original and exclusive jurisdiction of the Labor Arbiter.—There is no evidence that private respondents are members of petitioner PHCCI and even if they are, the dispute is about payment of wages, overtime pay, rest day and termination of employment. Under Art. 217 of the Labor Code, these disputes are within the original and exclusive jurisdiction of the Labor Arbiter.

Honda Phils., Inc. vs. Samahan ng Malayang Manggagawa sa Honda, 460 SCRA 186 , June 15, 2005

Labor Law; Collective Bargaining Agreements; Definition; Where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is mandated by the express policy of the law.—A collective bargaining agreement refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is mandated by the express policy of the law.

Same; National Labor Relations Commission; Factual Findings; Appeals; Factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdiction, are generally accorded not only respect but even finality.—We uphold the rulings of the arbitrator and the Court of Appeals. Factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdiction, are generally accorded not only respect but even finality, and bind us when supported by substantial evidence. It is not our function to assess and evaluate the evidence all over again, particularly where the findings of both the arbiter and the Court of Appeals coincide.

Same; Benefits; 13th Month Pay; Basic Salary; Excluded from the computation of “basic salary” payments for sick, vacation and maternity leaves, night differentials, regular holiday pay and premiums for work done on rest days and special holidays.—For employees receiving regular wage, we have interpreted “basic salary” to mean, not the amount actually received by an employee, but 1/12 of their standard monthly wage multiplied by their length of service within a given calendar year. Thus, we exclude from the computation of “basic salary” payments for sick, vacation and maternity leaves, night differentials, regular holiday pay and premiums for work done on rest days and special holidays.

Same; Same; Same; Same; 13th month pay primarily given to alleviate the plight of workers and to help them cope with the exorbitant increases in the cost of living.—The foregoing interpretation of law and jurisprudence is more in keeping with the underlying principle for the grant of this benefit. It is primarily given to alleviate the plight of workers and to help them cope with the exorbitant increases in the cost of living. To allow the pro-ration of the 13th month pay in this case is to undermine the wisdom behind the law and the mandate that the workingman’s welfare should be the primordial and paramount consideration. What is more, the factual milieu of this case is such that to rule otherwise inevitably results to dissuasion, if not a deterrent, for workers from the free exercise of their constitutional rights to self-organization and to strike in accordance with law.

Mayon Hotel & Restaurant vs. Adana, 458 SCRA 609 , May 16, 2005

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

Same; Same; Same; Administrative Law; Factual findings of administrative bodies like the NLRC are affirmed only if they are supported by substantial evidence that is manifest in the decision and on the records.—It is explicit in Castillo v. NLRC that factual findings of administrative bodies like the NLRC are affirmed only if they are supported by substantial evidence that is manifest in the decision and on the records. As stated in Castillo: [A]buse of discretion does not necessarily follow from a reversal by the NLRC of a decision of a Labor Arbiter. Mere variance in evidentiary assessment between the NLRC and the Labor Arbiter does not automatically call for a full review of the facts by this Court. The NLRC’s decision, so long as it is not bereft of substantial support from the records, deserves respect from this Court. As a rule, the original and exclusive jurisdiction to review a decision or resolution of respondent NLRC in a petition for certiorari under Rule 65 of the Rules of Court does not include a correction of its evaluation of the evidence but is confined to issues of jurisdiction or grave abuse of discretion. Thus, the NLRC’s factual findings, if supported by substantial evidence, are entitled to great respect and even finality, unless petitioner is able to show that it simply and arbitrarily disregarded the evidence before it or had misappreciated the evidence to such an extent as to compel a contrary conclusion if such evidence had been properly appreciated.

Same; Administrative Law; Evidence; Procedural Rules and Technicalities; Article 221 of the Labor Code is clear—technical rules are not binding, and the application of technical rules of procedure may be relaxed in labor cases to serve the demand of substantial justice.—Petitioners’ reliance on the rules of evidence, i.e., the certificate of registration being the best proof of ownership, is misplaced. Notwithstanding the certificate of registration, doubts were cast as to the true nature of petitioner Josefa Po Lam’s involvement in the enterprise, and the Labor Arbiter had the authority to resolve this issue. It was therefore within his jurisdiction to require the additional documents to ascertain who was the real owner of petitioner Mayon Hotel & Restaurant. Article 221 of the Labor Code is clear: technical rules are not binding, and the application of technical rules of procedure may be relaxed in labor cases to serve the demand of substantial justice. The rule of evidence prevailing in court of law or equity shall not be controlling in labor cases and it is the spirit and intention of the Labor Code that the Labor Arbiter shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process. Labor laws mandate the speedy administration of justice, with least attention to technicalities but without sacrificing the fundamental requisites of due process.

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

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

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

Same; Dismissals; Article 286 of the Labor Code is clear—there is termination of employment when an otherwise bona fide suspension of work exceeds six (6) months.—The above factual finding of the Labor Arbiter was never refuted by petitioners in their appeal with the NLRC. It confounds us, therefore, how the NLRC could have so cavalierly treated this uncontroverted factual finding by ruling that respondents have not introduced any evidence to show that they were illegally dismissed, and that the Labor Arbiter’s finding was based on conjecture. It was a serious error that the NLRC did not inquire as to the legality of the cessation of employment. Article 286 of the Labor Code is clear—there is termination of employment when an otherwise bona fide suspension of work exceeds six (6) months. The cessation of employment for more than six months was patent and the employer has the burden of proving that the termination was for a just or authorized cause.

Same; Same; Serious business losses do not excuse the employer from complying with the clearance or report required under Art. 283 of the Labor Code and its implementing rules before terminating the employment of its workers; The requirement of law mandating the giving of notices was intended not only to enable the employees to look for another employment and therefore ease the impact of the loss of their jobs and the corresponding income, but more importantly, to give the Department of Labor and Employment (DOLE) the opportunity to ascertain the verity of the alleged authorized cause of termination.—We are not impressed by petitioners’ claim that severe business losses justified their failure to reinstate respondents. The evidence to prove this fact is inconclusive. But more important, serious business losses do not excuse the employer from complying with the clearance or report required under Article 283 of the Labor Code and its implementing rules before terminating the employment of its workers. In the absence of justifying circumstances, the failure of petitioners to observe the procedural requirements set out under Article 284, taints their actuations with bad faith, especially since they claimed that they have been experiencing losses in the three years before 1997. To say the least, if it were true that the lay-off was temporary but then serious business losses prevented the reinstatement of respondents, then petitioners should have complied with the requirements of written notice. The requirement of law mandating the giving of notices was intended not only to enable the employees to look for another employment and therefore ease the impact of the loss of their jobs and the corresponding income, but more importantly, to give the Department of Labor and Employment (DOLE) the opportunity to ascertain the verity of the alleged authorized cause of termination.

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

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

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

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

Same; Same; Same; Presumptions; Failure of an employer to submit necessary documents which are in its possession, in spite of orders to do so, gives rise to the presumption that their presentation is prejudicial to its cause.—We also agree with the Labor Arbiter and the CA that the documents petitioners submitted, i.e., affidavits executed by some of respondents during an ocular inspection conducted by an inspector of the DOLE; notices of inspection result and Facility Evaluation Orders issued by DOLE, are not sufficient to prove payment. Despite repeated orders from the Labor Arbiter, petitioners failed to submit the pertinent employee files, payrolls, records, remittances and other similar documents which would show that respondents rendered work entitling them to payment for overtime work, night shift differential, premium pay for work on holidays and rest day, and payment of these as well as the COLA and the SILP—documents which are not in respondents’ possession but in the custody and absolute control of petitioners. By choosing not to fully and completely disclose information and present the necessary documents to prove payment of labor standard benefits due to respondents, petitioners failed to discharge the burden of proof. Indeed, petitioners’ failure to submit the necessary documents which as employers are in their possession, in spite of orders to do so, gives rise to the presumption that their presentation is prejudicial to its cause. As aptly quoted by the CA: [W]hen the evidence tends to prove a material fact which imposes a liability on a party, and he has it in his power to produce evidence which from its very nature must overthrow the case made against him if it is not founded on fact, and he refuses to produce such evidence, the presumption arises that the evidence, if produced, would operate to his prejudice, and support the case of his adversary.

Same; Same; Cost of Facilities; Meals and Snacks; Before an employer may deduct the value of facilities from the employee’s wages, it must first satisfy the following—(a) proof that such facilities are customarily furnished by the trade, (b) the provision of deductible facilities is voluntarily accepted in writing by the employee, and, (c) the facilities are charged at fair and reasonable value—the law is clear that mere availment is not sufficient to allow deductions from employees’ wages.—Even granting that meals and snacks were provided and indeed constituted facilities, such facilities could not be deducted without compliance with certain legal requirements. As stated in Mabeza v. NLRC, the employer simply cannot deduct the value from the employee’s wages without satisfying the following: (a) proof that such facilities are customarily furnished by the trade; (b) the provision of deductible facilities is voluntarily accepted in writing by the employee; and (c) the facilities are charged at fair and reasonable value. The records are clear that petitioners failed to comply with these requirements. There was no proof of respondents’ written authorization. Indeed, the Labor Arbiter found that while the respondents admitted that they were given meals and merienda, the quality of food served to them was not what was provided for in the Facility Evaluation Orders and it was only when they filed the cases that they came to know of this supposed Facility Evaluation Orders. Petitioner Josefa Po Lam herself admitted that she did not inform the respondents of the facilities she had applied for. Considering the failure to comply with the above-mentioned legal requirements, the Labor Arbiter therefore erred when he ruled that the cost of the meals actually provided to respondents should be deducted as part of their salaries, on the ground that respondents have availed themselves of the food given by petitioners. The law is clear that mere availment is not sufficient to allow deductions from employees’ wages.

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

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

Same; Damages; While it is true that other forms of damages under the Civil Code may be awarded to illegally dismissed employees, any award of moral damages by the Labor Arbiter cannot be based on the Labor Code but should be grounded on the Civil Code.—There is no denying that the actuations of petitioners in this case have been reprehensible. They have terminated the respondents’ employment in an underhanded manner, and have used and abused the quasi-judicial and judicial processes to resist payment of their employees’ rightful claims, thereby protracting this case and causing the unnecessary clogging of dockets of the Court. They have also forced respondents to unnecessary hardship and financial expense. Indeed, the circumstances of this case would have called for exemplary damages, as the dismissal was effected in a wanton, oppressive or malevolent manner, and public policy requires that these acts must be suppressed and discouraged. Nevertheless, we cannot agree with the Labor Arbiter in granting exemplary damages of P10,000.00 each to all respondents. While it is true that other forms of damages under the Civil Code may be awarded to illegally dismissed employees, any award of moral damages by the Labor Arbiter cannot be based on the Labor Code but should be grounded on the Civil Code. And the law is clear that exemplary damages can only be awarded if plaintiff shows proof that he is entitled to moral, temperate or compensatory damages. As only respondents Loveres, Guades, Macandog, Llarena, Nicerio, Atractivo and Broñola specifically claimed damages from petitioners, then only they are entitled to exemplary damages.

Same; Same; Attorney’s Fees; In actions for recovery of wages or where an employee was forced to litigate and incur expenses to protect his rights and interest, he is entitled to an award of attorney’s fees.—We rule that attorney’s fees in the amount to P10,000.00 should be granted to each respondent. It is settled that in actions for recovery of wages or where an employee was forced to litigate and incur expenses to protect his rights and interest, he is entitled to an award of attorney’s fees. This case undoubtedly falls within this rule. [Mayon Hotel & Restaurant vs. Adana, 458 SCRA 609(2005)]

Aklan Electric Cooperative, Incorporated vs. NLRC, 323 SCRA 258 , January 25, 2000

Labor Law; Administrative Law; Evidence; Factual findings of administrative agencies are not infallible and will be set aside when they fail the test of arbitrariness; Where the findings of the National Labor Relations Commission contradict those of the labor arbiter, the Supreme Court, in the exercise of its equity jurisdiction, may look into the records of the case and reexamine the questioned findings.—At the outset, we reiterate the rule that in certiorari proceedings under evidence upon which the labor arbiter and public respondent NLRC based their resolutions. Our query is limited to the determination of whether or not public respondent NLRC acted without or in excess of its jurisdiction or with grave abuse of discretion in rendering the assailed resolutions. While administrative findings of fact are accorded great respect, and even finality when supported by substantial evidence, nevertheless, when it can be shown that administrative bodies grossly misappreciated evidence of such nature as to compel a contrary conclusion, this court had not hesitated to reverse their factual findings. Factual findings of administrative agencies are not infallible and will be set aside when they fail the test of arbitrariness. Moreover, where the findings of NLRC contradict those of the labor arbiter, this Court, in the exercise of its equity jurisdiction, may look into the records of the case and reexamine the questioned findings.

Same; Same; Same; Words and Phrases; Substantial evidence is that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.—We do not agree with the finding that private respondents had rendered services from June 16, 1992 to March 18, 1993 so as to entitle them to payment of wages. Public respondent based its conclusion on the following: (a) the letter dated April 7, 1993 of Pedrito L. Leyson, Office Manager of AKELCO addressed to AKELCO's General Manager, Atty. Leovigildo T. Mationg, requesting for the payment of private respondents' unpaid wages from June 16, 1992 to March 18, 1993; (b) the memorandum of said Atty. Mationg dated 14 April 1993, in answer to the letter request of Pedrito Leyson where Atty. Mationg made an assurance that he will recommend such request; (c) the private respondents' own computation of their unpaid wages. We find that the foregoing does not constitute substantial evidence to support the conclusion that private respondents are entitled to the payment of wages from June 16, 1992 to March 18, 1993. Substantial evidence is that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. These evidences relied upon by public respondent did not establish the fact that private respondents actually rendered services in the Kalibo office during the stated period.

Same; Transfer of Offices; It is not for employees to declare that the management’s act of temporarily transferring its office is an illegal act.—Their excuse is that the transfer to Kalibo was illegal but we agree with the Labor Arbiter that it was not for private respondents to declare the management’s act of temporarily transferring the AKELCO office to Kalibo as an illegal act. There is no allegation nor proof that the transfer was made in bad faith or with malice.

Same; Money Claims; The long inaction of employees to file their claim for unpaid wages cast doubts as to 'the veracity of their claim.—Private respondents were dismissed by petitioner effective January 31, 1992 and were accepted back by petitioner, as an act of compassion, subject to the condition of “no work, no pay” effective March 1993 which explains why private respondents were allowed to draw their salaries again. Notably, the letter-request of Mr. Leyson for the payment of backwages and other fringe benefits in behalf of private respondents was made only in April 1993, after a Board Resolution accepting them back to work out of compassion and humanitarian reason. It took private respondents about ten months before they requested for the payment of their backwages, and the long inaction of private respondents to file their claim for unpaid wages cast doubts as to the veracity of their claim.

Same; Same; “No Work, No Pay” Principle; The age-old rule governing the relation between labor and capital, or management and employee of a “fair day's wage for a fair day's labor” remains as the basic factor in determining employees’ wages.—The age-old rule governing the relation between labor and capital, or management and employee of a “fair day’s wage for a fair day’s labor”—remains as the basic factor in determining employees’ wages. If there is no work performed by the employee there can be no wage or pay unless, of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed, or otherwise illegally prevented from working, a situation which we find is not present in the instant case. It would neither be fair nor just to allow private respondents to recover something they have not earned and could not have earned because they did not render services at the Kalibo office during the stated period.

Same; Same; Evidence; A labor tribunal errs in merely relying on the computations of compensable services submitted by the employees—there must be competent proof, such as time cards or office records to show that they actually rendered compensable service during the stated period to entitle them to wages.—We hold that public respondent erred in merely relying on the computations of compensable services submitted by private respondents. There must be competent proof such as time cards or office records to show that they actually rendered compensable service during the stated period to entitle them to wages. It has been established that the petitioner's business office was transferred to Kalibo and all its equip-ments, records and facilities were transferred thereat and that it conducted its official business in Kalibo during the period in question. It was incumbent upon private respondents to prove that they indeed rendered services for petitioner, which they failed to do. It is a basic rule in evidence that each party must prove his affirmative allegation. Since the burden of evidence lies with the party who asserts the affirmative allegation, the plaintiff or complainant has to prove his affirmative allegations in the complaint and the defendant or the respondent has to prove the affirmative allegation in his affirmative defenses and counterclaim.

Galvadores vs. Trajano, 144 SCRA 138, September 15, 1986

1. LABOR AND SOCIAL LEGISLATION, LABOR CODE; RIGHTS AND CONDITIONS OF MEMBERSHIP; CHECK-OFF MAY NOT BE AFFECTED WITHOUT INDIVIDUAL WRITTEN AUTHORIZATION. — The provisions of Arts. 222(b) and 240 (c) of the Labor Code and Section 13, Rule VIII of the Omnibus Rules Implementing the Labor Code are clear. No check-offs from any amounts due employees may be effected without individual written authorizations duly signed by the employees specifically stating the amount, purpose and beneficiary of the deduction. The required individual authorizations in this case are wanting. Infact, petitioner employees are vigorously objecting. The question asked in the plebiscite, besides not being explicit, assumed that there was no dispute relative to attorney’s fees, down by law. Article 222(b) does not except a CBA, later placed under compulsory arbitration, from the ambit of its prohibition. The cardinal principle should be borne in mind that employees are protected by law from unwarranted practices that diminish their compensation without their knowledge and consent. (Pacific Banking Corp. v. Clave, 128 SCRA 112 [1984])

2. ID.; ID.; ID.; BENEFITS FORMING PART OF THE COLLECTIVE BARGAINING AGREEMENT; NOT THE "MANDATORY ACTIVITY" CONTEMPLATED IN THE CODE. — Contrary to respondent Union’s and Counsel’s stand, the benefits awarded to PLDT employees still formed part of the collective bargaining negotiations although placed already under compulsory arbitration. This is not the "mandatory activity" under the Code which dispenses with individual written authorizations for check-offs, notwithstanding its "compulsory" nature.

Davao Fruits Corporation vs. Associated Labor Unions, 225 SCRA 562 , August 24, 1993

Labor Law; Benefits; Basic salary does not merely exclude the benefits expressly mentioned but all payments which may be in the form of fringe benefits or allowances; Overtime pay earnings and other remunerations shall be excluded in computing the thirteenth month pay.—Clearly, the term “basic salary” includes all remunerations or earnings paid by the employer to the employee, but excludes cost-of-living allowances, profit-sharing payments, and all allowances and monetary benefits which have not been considered as part of the basic salary of the employee as of December 16, 1975. The exclusion of cost-of-living allowances and profit sharing payments shows the intention to strip “basic salary” of payments which are otherwise considered as “fringe” benefits. This intention is emphasized in the catch all phrase “all allowances and monetary benefits which are not considered or integrated as part of the basic salary.” Basic salary, therefore does not merely exclude the benefits expressly mentioned but all payments which may be in the form of “fringe” benefits or allowances (San Miguel Corporation v. Inciong, supra, at 143-144). In fact, the Supplementary Rules and Regulations Implementing P.D. No. 851 are very emphatic in declaring that overtime pay, earnings and other remunerations shall be excluded in computing the thirteenth month pay.

Same; Same; Same; Payment for sick, vacation and maternity leaves, premium for work done on rest days and special holidays as well as pay for regular holidays are likewise excluded in computing the basic salary for the purpose of determining the thirteenth month pay.—In other words, whatever compensation an employee receives for an eight-hour work daily or the daily wage rate is the basic salary. Any compensation or remuneration other than the daily wage rate is excluded. It follows therefore, that payments for sick, vacation and maternity leaves, premium for work done on rest days and special holidays, as well as pay for regular holidays, are likewise excluded in computing the basic salary for the purpose of determining the thirteenth month pay.

Same; Same; Any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer.—A company practice favorable to the employees had indeed been established and the payments made pursuant thereto, ripened into benefits enjoyed by them. And any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer, by virtue of Section 10 of the Rules and Regulations Implementing P.D. No. 851, and Article 100 of the Labor Code of the Philippines, which prohibit the diminution or elimination by the employer of the employees’ existing benefits.

Sevilla Trading Company vs. Semana, 428 SCRA 239 , April 28, 2004

Remedial Law; Certiorari; The special civil action of certiorari under Rule 65 is not, and cannot be a substitute for an appeal, where the latter remedy is available.—It is elementary that the special civil action of certiorari under Rule 65 is not, and cannot be a substitute for an appeal, where the latter remedy is available, as it was in this case. Petitioner Sevilla Trading failed to file an appeal within the fifteen-day reglementary period from its notice of the adverse decision of A.V.A. Semana. It received a copy of the decision of A.V.A. Semana on December 20, 2000, and should have filed its appeal under Rule 43 of the 1997 Rules of Civil Procedure on or before January 4, 2001. Instead, petitioner filed on January 19, 2001 a “Manifestation and Motion for Time to File Petition for Certiorari,” and on February 19, 2001, it filed a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure. Clearly, petitioner Sevilla Trading had a remedy of appeal but failed to use it.

Same; Same; Meaning of Grave Abuse of Discretion.—“Grave abuse of discretion” has been interpreted to mean “such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, in other words where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.” [Sevilla Trading Company vs. Semana, 428 SCRA 239(2004)]

Tiangco vs. Leogardo, Jr., 122 SCRA 267, May 16, 1983

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

Same; Unilateral discontinuance or diminution by the employer of the practice of giving a fixed allowance to its employees since November, 1976 is prohibited by P.D. 525 & Sec 16 of the Rules on P.D. 1123.—However, the respondent Deputy Minister of Labor and Employment correctly ruled that since the petitioners had been paying the private respondents a fixed monthly emergency allowance since November, 1976 up to February, 1980, as a matter of practice and/or verbal agreement between the petitioners and the private respondents, the discontinuance of the practice and/or agreement unilaterally by the petitioners contravened the provisions of the Labor Code, particularly Article 100 thereof which prohibits the elimination or diminution of existing benefits.

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

Same; In computing the COLA the Deputy Minister of Labor should have taken into consideration that respondent employees are employed by different individuals with varying capitalization.—However, a revision of the amount due the private respondents is in order for the reason that the respondent Deputy Minister of Labor and Employment failed to take into consideration, in computing the amount due each worker, the fact that the private respondents are employed by two different individuals whose businesses are divergent and capitalized at various amounts, contrary to the provisions of P.D. 525 and subsequent amendatory decrees, wherein the amount of the emergency cost of living allowance to be paid to a worker is made to depend upon the capitalization of the business of his employer or its total assets, whichever is higher.

Same; Emergency COLAS were provided for in various Presidential Decrees which employers like petitioners are required to comply.—After P.D. 525, the following amendatory decrees, directing the payment of additional allowances to employees, were promulgated: (1) P.D. 1123, providing for an across-the-board increase of P60.00 a month effective May 1, 1977; (2) P.D. 1614, which directed the payment of P60.00 monthly allowance effective April 1, 1979; (3) P.D. 1634, which provided for the payment of an additional P60.00 a month effective September 1, 1979, and another P30.00 a month beginning January 1, 1980; and (4) P.D. 1678, which directed the payment of an additional P2.00 a day from February 21, 1980.

Globe Mackay Cable and Radio Corp. vs. NLRC, 163 SCRA 71, June 29, 1988

Labor Laws; COLA; For entitlement for COLA is that basic wage is being paid.—Section 5 of the Rules Implementing Wage Orders Nos. 2, 3, 5 and 6 uniformly read as follows: "Section 5. Allowance for Unworked Days. "All covered employees shall be entitled to their daily living allowance during the days that they are paid their basic wage, even ifunworked" The primordial consideration, therefore, for entitlement to COLA is that basic wage is being paid. In other words, the payment of COLA is mandated only for the days that the employees are paid their basic wage, even if said days are unworked. So that, on the days that employees are not paid their basic wage, the payment of COLA is not mandated. As held in University of Pangasinan Faculty Union vs. University of Pangasinan, L-63122, February 20,1984,127 SCRA 691): "x x x it iS evident that the intention of the law is to grant ECOLA upon the payment of basic wages. Hence, we have the principle of 'No Pay, No ECOLA/ "

Same; Same; Same; Monthly paid employees whose monthly salary covers all the days in a month are deemed paid their basic wages and should be entitled to their COLA on those days "even if unworked"; CBAprovides that basicpay is computed on the basis of5 days a week; Case at bar.—Applied to monthly-paid employees if their monthly salary covers all the days in a month, they are deemed paid their basic wages for all those days and they should be entitled to their COLA on those days "even if unworked," as the NLRC had opined. Peculiar to this case, however, is the circumstance that pursuant to the Collective Bargaining Agreement (CBA) between Petitioner Corporation and Respondent Union, the monthly basic pay is computed on the basis of five (5) days a week, or twenty two (22) days a month. Thus, the pertinent provisions of that Agreement read: "Art. XV(a)—Eight net working hours shall constitute the regular work day for five days." "Art. XV(b)—Forty net hours of work, 5 working days, all constitute the regular work week." "Art. XVI, Sec. l(b)—All overtime worked in excess of eight net hours daily or in excess of 5 days weekly shall be computed on hourly basis at the rate of time and one haif."

Same; Same; Same; Computation of overtime pay of monthly paid employees.—The Labor Arbiter also found that in determining the hourly rate of monthly paid employees for purposes of computing overtime pay, the monthly wage is divided by the number of actual work days in a month and then, by eight (8) working hours. If a monthly-paid employee renders overtime work, he is paid his basic salary rate plus one-half thereof. For example, after examining the specimen payroll of employee Jesus L. Santos, the Labor Arbiter found: "the employee Jesus L. Santos, who worked on Saturday and Sunday was paid base pay plus 50% premium. This is over and above his monthly basic pay as supported by the fact that base pay was paid. If the 6th and 7th days of the week are deemed paid even if unworkd and included in the monthly salary. Santos should not have been paid his base pay for Saturday and Sunday but should have received only the 50% overtime premium."

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

Same; Same; Same; Formula for conversion ofdaily allowance to its monthly equivalent.—Moreover, before Wage Order No. 4, there was lack of administrative guidelines for the implementation of the Wage Orders. It was only when the Rules Implementing Wage Order No. 4 were issued on 21 May 1984 that a formula for the conversion of the daily allowance to its monthly equivalent was laid down, thus: "Section 3. Application of Section 2—"xxx xxx (a) Monthly rates for non-agricultural workers covered under PDs 1614, 1634, 1678 and 1713: xxx xxx (3) For workers who do not work and are not considered paid on Saturdays and Sundays: P60 + P90 + P60 + (P2.00 x 262) dividedby!2 = P253.7(X"

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

Hinatuan Mining Corporation vs. NLRC, 268 SCRA 622 , February 21, 1997

Labor Law; Benefits; The rule is that an employee who voluntarily resigns from employment is not entitled to separation pay, except when it is stipulated in the employment contract or CBA, or it is sanctioned by established employer practice or policy.—It is well to note that there is no provision in the Labor Code which grants separation pay to voluntarily resigning employees. Separation pay may be awarded only in cases when the termination of employment is due to: (a) installation of labor saving devices, (b) redundancy, (c) retrenchment, (d) closing or cessation of business operations, (e) disease of an employee and his continued employment is prejudicial to himself or his co-employees, or (f) when an employee is illegally dismissed but reinstatement is no longer feasible. In fact, the rule is that an employee who voluntarily resigns from employment is not entitled to separation pay, except when it is stipulated in the employment contract or CBA, or it is sanctioned by established employer practice or policy.

Same; Same; It has been shown beyond doubt that in the case at bar there is an established employer practice of awarding separation pay to resigning employees.—In the case at bar, it has been shown beyond doubt that there is an established employer practice of awarding separation pay to resigning employees. Private respondent is similarly situated as Alcantara who was also a managerial employee of petitioner company and a non-union member when he voluntarily resigned from the service. Alcantara was awarded separation pay by the Labor Arbiter (which decision was affirmed by the NLRC) after finding that the previous resigning officers of petitioner company (namely, Administrative Officer Colonel Acuba, Asst. Mine Accountant Mr. Garrido, and Resident Mine Manager Engr. Rogelio Bayutas) were given separation pay. As correctly ruled by the NLRC, to hold that private respondent is not entitled to separation pay would unduly discriminate against her.

Prubankers Association vs. Prudential Bank & Trust Company, 302 SCRA 74 , January 25, 1999

Labor Law; Forum-Shopping; A violation of the rule on forum-shopping shall constitute contempt of court and shall be a cause for the summary dismissal of both petitions, without prejudice to the taking of appropriate action against the counsel or party concerned.— The rule on forum-shopping was first included in Section 17 of the Interim Rules and Guidelines issued by this Court on January 11, 1983, which imposed a sanction in this wise: “A violation of the rule shall constitute contempt of court and shall be a cause for the summary dismissal of both petitions, without prejudice to the taking of appropriate action against the counsel or party concerned.” Thereafter, the Court restated the rule in Revised Circular No. 28-91 and Administrative Circular No. 04-94. Ultimately, the rule was embodied in the 1997 amendments to the Rules of Court.

Same; Same; Forum-shopping exists where the elements of litis pendentia are present, and where a final judgment in one case will amount to res judicata in the other.—As explained by this Court in First Philippine International Bank v. Court of Appeals, forum-shopping exists where the elements of litis pendentia are present, and where a final judgment in one case will amount to res judicata in the other. Thus, there is forum-shopping when, between an action pending before this Court and another one, there exist: “a) identity of parties, or at least such parties as represent the same interests in both actions, b) identity of rights asserted and relief prayed for, the relief being founded on the same facts, and c) the identity of the two preceding particulars is such that any judgment rendered in the other action, will, regardless of which party is successful, amount to res judicata in the action under consideration; said requisites also constitutive of the requisites for auter action pendant or lis pendens.”

Same; Same; Consequence of forum-shopping.—Another case elucidates the consequence of forum-shopping: “[W]here a litigant sues the same party against whom another action or actions for the alleged violation of the same right and the enforcement of the same relief is/are still pending, the defense of litis pendentia in one case is a bar to the others; and, a final judgment in one would constitute res judicata and thus would cause the dismissal of the rest.”

Same; Same; Where forum-shopping is deemed to exist, the summary dismissal of both actions is warranted.—First, there is identity of parties. Both cases are between the Bank and the Association acting on behalf of all its members. Second, although the respective issues and reliefs prayed for in the two cases are stated differently, both actions boil down to one single issue: the validity of the Bank’s regionalization of its wage structure based on RA 6727. Even if the voluntary arbitration case calls for striking down the Bank’s regionalized hiring scheme while the instant petition calls for the correction of the alleged wage distortion caused by the regional implementation of Wage Order No. VII-03, the ultimate relief prayed for in both cases is the maintenance of the Bank’s national wage structure. Hence, the final disposition of one would constitute res judicata in the other. Thus, forum-shopping is deemed to exist and, on this basis, the summary dismissal of both actions is indeed warranted.

Same; Wage Distortion; Where a significant change occurs at the lowest level of positions in terms of basic wage without a corresponding change in the other level in the hierarchy of positions, negating as a result thereof the distinction between one level of position from the next higher level, and resulting in a parity between the lowest level and the next higher level or rank, between new entrants and old hires, there exists a wage distortion.—Elaborating on this statutory definition, this Court ruled: “Wage distortion presupposes a classification of positions and ranking of these positions at various levels. One visualizes a hierarchy of positions with corresponding ranks basically in terms of wages and other emoluments. Where a significant change occurs at the lowest level of positions in terms of basic wage without a corresponding change in the other level in the hierarchy of positions, negating as a result thereof the distinction between one level of position from the next higher level, and resulting in a parity between the lowest level and the next higher level or rank, between new entrants and old hires, there exists a wage distortion.

Same; Same; The concept of wage distortion assumes an existing grouping or classification of employees which establishes distinctions among such employees on some relevant or legitimate basis.— The concept of wage distortion assumes an existing grouping or classification of employees which establishes distinctions among such employees on some relevant or legitimate basis. This classification is reflected in a differing wage rate for each of the existing classes of employees.”

Same; Same; Elements.—Wage distortion involves four elements: 1. An existing hierarchy of positions with corresponding salary rates; 2. A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one; 3. The elimination of the distinction between the two levels; 4. The existence of the distortion in the same region of the country.

Same; Same; Where the hierarchy of positions based on skills, length of service and other logical bases of differentiation was preserved, it cannot be said that there was a wage distortion.—In the present case, it is clear that no wage distortion resulted when respondent implemented the subject Wage Orders in the covered branches. In the said branches, there was an increase in the salary rates of all pay classes. Furthermore, the hierarchy of positions based on skills, length of service and other logical bases of differentiation was preserved. In other words, the quantitative difference in compensation between different pay classes remained the same in all branches in the affected region. Put differently, the distinction between Pay Class 1 and Pay Class 2, for example, was not eliminated as a result of the implementation of the two Wage Orders in the said region. Hence, it cannot be said that there was a wage distortion.

Same; Same; A disparity in wages between employees holding similar positions but in different regions does not constitute wage distortion as contemplated by law.—A wage parity between employees in different rungs is not at issue here, but a wage disparity between employees in the same rung but located in different regions of the country. Contrary to petitioner’s postulation, a disparity in wages between employees holding similar positions but in different regions does not constitute wage distortion as contemplated by law. As previously enunciated, it is the hierarchy of positions and the disparity of their corresponding wages and other emoluments that are sought to be preserved by the concept of wage distortion. Put differently, a wage distortion arises when a wage order engenders wage parity between employees in different rungs of the organizational ladder of the same establishment. It bears emphasis that wage distortion involves a parity in the salary rates of different pay classes which, as a result, eliminates the distinction between the different ranks in the same region.

Same; Same; Constitutional Law; It is the policy of the State to rationalize the fixing of minimum wages and to promote productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers and their families.—Petitioner’s claim of wage distortion must also be denied for one other reason. The difference in wages between employees in the same pay scale in different regions is not the mischief sought to be banished by the law. In fact, Republic Act No. 6727 (the Wage Rationalization Act), recognizes “existing regional disparities in the cost of living.” Section 2 of said law provides: “SEC. 2. It is hereby declared the policy of the State to rationalize the fixing of minimum wages and to promote productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers and their families; to guarantee the rights of labor to its just share in the fruits of production; to enhance employment generation in the countryside through industry dispersal; and to allow business and industry reasonable returns on investment, expansion and growth.

Same; Same; Republic Act 6727; RA 6727 mandates that wages in every region must be set by the particular wage board of that region, based on the prevailing situation.—Petitioner also avers that the implementation of the Wage Order in only one region violates the equal-pay-for-equal-work principle. This is not correct. At the risk of being repetitive, we stress that RA 6727 mandates that wages in every region must be set by the particular wage board of that region, based on the prevailing situation therein. Necessarily, the wages in different regions will not be uniform. Thus, under RA 6727, the minimum wage in Region 1 may be different from that in Region 13, because the socioeconomic conditions in the two regions are different.

Same; Same; Same; The minimum wage rates of workers working in branches or agencies of establishments in or outside the National Capital Region shall be those applicable in the place where they are sanctioned.—Section 13 provides that the “minimum wage rates of workers working in branches or agencies of establishments in or outside the National Capital Region shall be those applicable in the place where they are sanctioned.” The last part of the sentence was omitted by petitioner in its argument. Given the entire phrase, it is clear that the statutory provision does not support petitioner’s view that “establishment” includes all branches and offices in different regions.

Same; Establishment; Words and Phrases; “Establishment” refers to an economic unit which engages in one or predominantly one kind of economic activity with a single fixed location.—Further negating petitioner’s theory is NWPC Guideline No. 1 (S. 1992) entitled “Revised Guidelines on Exemption From Compliance With the Prescribed Wage/Cost of Living Allowance Increases Granted by the Regional Tripartite Wages and Productivity Board,” which states that “establishment” “refers to an economic unit which engages in one or predominantly one kind of economic activity with a single fixed location.”

Metropolitan Bank & Trust Company Employees Union-ALU-TUCP vs. National Labor Relations Commission, 226 SCRA 268 , September 10, 1993

Labor Law; National Labor Relations Commission; Wages; The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain employees is a question of fact the determination of which is the statutory function of the NLRC.—The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain employees, we agree, is, by and large, a question of fact the determination of which is the statutory function of the NLRC. Judicial review of labor cases, we may add, does not go beyond the evaluation of the sufficiency of the evidence upon which the labor officials’ findings rest. As such, factual findings of the NLRC are generally accorded not only respect but also finality provided that its decisions are supported by substantial evidence and devoid of any taint of unfairness or arbitrariness. When, however, the members of the same labor tribunal are not in accord on those aspects of a case, as in this case, this Court is well cautioned not to be as so conscious in passing upon the sufficiency of the evidence, let alone the conclusions derived therefrom.

Same; Same; Same; Same; In mandating an adjustment, the law did not require that there be an elimination or total abrogation of quantitative wage or salary differences, a severe contraction thereof is enough.—The definition of “wage distortion,” aforequoted, shows that such distortion can so exist when, as a result of an increase in the prescribed wage rate, an “elimination or severe contraction of intentional quantitative differences in wage or salary rates” would occur “between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation.” In mandating an adjustment, the law did not require that there be an elimination or total abrogation of quantitative wage or salary differences; a severe contraction thereof is enough. As has been aptly observed by Presiding Commissioner Edna Bonto-Perez in her dissenting opinion, the contraction between personnel groupings comes close to eighty-three (83%), which cannot, by any stretch of imagination, be considered less than severe.

Same; Same; Same; Same; Same; The Solicitor General has correctly emphasized that the intention of the parties, whether the benefits under a collective bargaining agreement should be equated with those granted by law or not unless there are compelling reasons otherwise must prevail and be given effect.—The “intentional quantitative differences” in wage among employees of the bank has been set by the CBA to about P900 per month as of 01 January 1989. It is intentional as it has been arrived at through the collective bargaining process to which the parties are thereby concluded. The Solicitor General, in recommending the grant of due course to the petition, has correctly emphasized that the intention of the parties, whether the benefits under a collective bargaining agreement should be equated with those granted by law or not, unless there are compelling reasons otherwise, must prevail and be given effect.

Bankard Employees Union-Workers Alliance Trade Unions vs. National Labor Relations Commission, 423 SCRA 148 , February 17, 2004

Labor Law; Definition of the term “Wage Distortion.”–Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT, amending, among others, Article 124 of the Labor Code) on June 9, 1989, the term “wage distortion” was explicitly defined as: . . . a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation.

Same; Same; Elements of Wage Distortion.–Prubankers Association v. Prudential Bank and Trust Company laid down the four elements of wage distortion, to wit: (1.) An existing hierarchy of positions with corresponding salary rates; (2) A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one; (3) The elimination of the distinction between the two levels; and (4) The existence of the distortion in the same region of the country.

Same; Same; In a problem dealing with “wage distortion,” the basic assumption is that there exists a grouping or classification of employees that establishes distinctions among them on some relevant or legitimate bases.–Normally, a company has a wage structure or method of determining the wages of its employees. In a problem dealing with “wage distortion,” the basic assumption is that there exists a grouping or classification of employees that establishes distinctions among them on some relevant or legitimate bases.

Same; Same; For purposes of determining the existence of wage distortion, employees cannot create their own independent classification and use it as a basis to demand an across-the-board increase in salary.– Moreover, for purposes of determining the existence of wage distortion, employees cannot create their own independent classification and use it as a basis to demand an across-the-board increase in salary.

Same; Same; The formulation of a wage structure through the classification of employees is a matter of management judgment and discretion.–As National Federation of Labor v. NLRC, et al. teaches, the formulation of a wage structure through the classification of employees is a matter of management judgment and discretion.

Same; Same; Mere factual existence of wage distortion does not ipso facto result to an obligation to rectify it, absent a law or other source of obligation which requires its rectification.–The mere factual existence of wage distortion does not, however, ipso facto result to an obligation to rectify it, absent a law or other source of obligation which requires its rectification. Unlike in Metro Transit then where there existed a “company practice,” no such management practice is herein alleged to obligate Bankard to provide an across-the-board increase to all its regular employees.

Cainta Catholic School vs. Cainta Catholic School Employees Union (CCSEU), 489 SCRA 468 , May 04, 2006

Appeals; Only questions of law are entertained by the Supreme Court through a petition for review on certiorari, except when the factual findings of the NLRC and the Court of Appeals are contradictory.—Only questions of law are entertained by this Court through a petition for review on certiorari. There are, however, well-recognized exceptions such as in this case when the factual findings of the NLRC and the Court of Appeals are contradictory. A re-evaluation of the records of this case is necessary for its proper resolution.

Labor Law; Retirement; Retirement is a different specie of termination of employment from dismissal for just or authorized causes under Articles 282 and 283 of the Labor Code; While in all three cases, the employee to be terminated may be unwilling to part from service, there are eminently higher standards to be met by the employer validly exercising the prerogative to dismiss for just or authorized causes.—Pursuant to the existing CBA, the School has the option to retire an employee upon reaching the age limit of sixty (60) or after having rendered at least twenty (20) years of service to the School, the last three (3) years of which must be continuous. Retirement is a different specie of termination of employment from dismissal for just or authorized causes under Articles 282 and 283 of the Labor Code. While in all three cases, the employee to be terminated may be unwilling to part from service, there are eminently higher standards to be met by the employer validly exercising the prerogative to dismiss for just or authorized causes. In those two instances, it is indispensable that the employer establish the existence of just or authorized causes for dismissal as spelled out in the Labor Code. Retirement, on the other hand, is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter after reaching a certain age agrees and/or consents to sever his employment with the former. 

Same; Same; Collective Bargaining Agreements; By their acceptance of the Collective Bargaining Agreement (CBA), the Union and its members are obliged to abide by the commitments and limitations they had agreed to cede to management; A Collective Bargaining Agreement (CBA), as a labor contract, is not merely contractual in nature but impressed with public interest—if the retirement provisions in the Collective Bargaining Agreement (CBA) run contrary to law, public morals, or public policy, such provisions may very well be voided.—By their acceptance of the CBA, the Union and its members are obliged to abide by the commitments and limitations they had agreed to cede to management. The questioned retirement provisions cannot be deemed as an imposition foisted on the Union, which very well had the right to have refused to agree to allowing management to retire employees with at least 20 years of service. It should not be taken to mean that retirement provisions agreed upon in the CBA are absolutely beyond the ambit of judicial review and nullification. A CBA, as a labor contract, is not merely contractual in nature but impressed with public interest. If the retirement provisions in the CBA run contrary to law, public morals, or public policy, such provisions may very well be voided. Certainly, a CBA provision or employment contract that would allow management to subvert security of tenure and allow it to unilaterally “retire” employees after one month of service cannot be upheld. Neither will the Court sustain a retirement clause that entitles the retiring employee to benefits less than what is guaranteed under Article 287 of the Labor Code, pursuant to the provision’s express proviso thereto in the provision.

Same; Same; Same; Under Article 287 of the Labor Code, a Collective Bargaining Agreement (CBA) may validly accord management the prerogative to optionally retire an employee under the terms and conditions mutually agreed upon by management and the bargaining union, even if such agreement allows for retirement at an age lower than the optional retirement age or the compulsory retirement age; Under ordinary contemplation, a Collective Bargaining Agreement (CBA) provision entitling an employee to retire after 20 years of service and accordingly collect retirement benefits is “reward for services rendered since it enables an employee to reap the fruits of his labor—particularly retirement benefits, whether lump-sum or otherwise—at an earlier age, when said employee, in presumably better physical and mental condition, can enjoy them better and longer.”—Yet the CBA in the case at bar contains no such infirmities which must be provision in this case and those we affirmed in Pantranco and Progressive. Twenty years is a more than ideal length of service an employee can render to one employer. Under ordinary contemplation, a CBA provision entitling an employee to retire after 20 years of service and accordingly collect retirement benefits is “reward for services rendered since it enables an employee to reap the fruits of his labor—particularly retirement benefits, whether lump-sum or otherwise—at an earlier age, when said employee, in presumably better physical and mental condition, can enjoy them better and longer.” We affirm the continued validity of Pantranco and its kindred cases, and thus reiterate that under Article 287 of the Labor Code, a CBA may validly accord management the prerogative to optionally retire an employee under the terms and conditions mutually agreed upon by management and the bargaining union, even if such agreement allows for retirement at an age lower than the optional retirement age or the compulsory retirement age. The Court of Appeals gravely erred in refusing to consider this case from the perspective of Pantranco, or from the settled doctrine enunciated therein.

Same; Same; Same; Management Prerogatives; There is perhaps a greater imperative to recognize the management prerogative on retirement than the prerogative to dismiss employees for just or authorized causes; There is a greater subjectivity, not to mention factual dispute, attached to the concepts of just or authorized cause than retirement which normally contemplates merely the attainment of a certain age or a certain number of years in the service.—The law and this Court frowns upon unfair labor practices by management, including so-called union-busting. Such illegal practices will not be sustained by the Court, even if guised under ostensibly legal premises. But with respect to an active unionized employee who claims having lost his/her job for union activities, there are different considerations presented if the termination is justified under just or authorized cause under the Labor Code; and if separation from service is effected through the exercise of a duly accorded management prerogative to retire an employee. There is perhaps a greater imperative to recognize the management prerogative on retirement than the prerogative to dismiss employees for just or authorized causes. For one, there is a greater subjectivity, not to mention factual dispute, attached to the concepts of just or authorized cause than retirement which normally contemplates merely the attainment of a certain age or a certain number of years in the service. It would be easier for management desirous to eliminate pesky union members to abuse the prerogative of termination for such purpose since the determination of just or authorized cause is rarely a simplistic question, but involves facts highly prone to dispute and subjective interpretation.

Same; Same; Same; Same; The exercise by management of its retirement prerogative is less susceptible to dubitability as to the question whether an employee could be validly retired—the only factual matter to consider then is whether the employee concerned had attained the requisite age or number of years in service.—The exercise by management of its retirement prerogative is less susceptible to dubitability as to the question whether an employee could be validly retired. The only factual matter to consider then is whether the employee concerned had attained the requisite age or number of years in service pursuant to the CBA or employment agreement, or if none, pursuant to Article 287 of the Labor Code. In fact, the question of the amount of retirement benefits is more likely to be questioned than the retirement itself. Evidently, it more clearly emerges in the case of retirement that management would anyway have the right to retire an employee, no matter the degree of involvement of said employee in union activities.

Same; Same; Same; Same; Our law’s protection of the right to organize labor does not translate into perpetual job security for union leaders by reason of their leadership role alone; The exercise by the employer of a valid and duly established prerogative to retire an employee does not constitute unfair labor practice.—There is another point that militates against the Union. A ruling in its favor is tantamount to a concession that a validly drawn management prerogative to retire its employees can be judicially interfered on a showing that the employee in question is highly valuable to the union. Such a rule would be a source of mischief, even if narrowly carved out by the Court, for it would imply that an active union member or officer may be, by reason of his/her importance to the union, somehow exempted from the normal standards of retirement applicable to the other, perhaps less vital members of the union. Indeed, our law’s protection of the right to organize labor does not translate into perpetual job security for union leaders by reason of their leadership role alone. Should we entertain such a notion, the detriment is ultimately to the union itself, promoting as it would a stagnating entrenched leadership. We can thus can comfortably uphold the principle, as reiterated in Philippine Airlines, that the exercise by the employer of a valid and duly established prerogative to retire an employee does not constitute unfair labor practice.

Same; Words and Phrases; Managerial Employees; A managerial employee is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively recommend such managerial actions; A Dean of Student Affairs exercises managerial functions.—Article 212(m) of the Labor Code defines a managerial employee as “one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively recommend such managerial actions.” The functions of the Dean of Student Affairs, as occupied by Llagas, are enumerated in the Faculty Manual. The salient portions are hereby enumerated: a. Manages the High School Department with the Registrar and Guidance Counselors (acting as a COLLEGIAL BODY) in the absence of the Director or Principal. b. Enforces the school rules and regulations governing students to maintain discipline. x x x x g. Plans with the Guidance Counselors student leadership training programs to encourage dynamic and responsible leadership among the students and submits the same for the approval of the Principal/Director. x x x x i. Studies proposals on extracurricular or co-curricular activities and projects proposed by teachers and students and recommends to the Principal/Director the necessary approval. j. Implements and supervises activities and projects approved by the Principal/Director so that the activities and projects follow faithfully the conditions set forth by the Principal/Director in the approval. k. Assists in the planning, supervising and evaluating of programs of co-curricular activities in line with the philosophy and objectives of the School for the total development of the students. l. Recommends to the Principal policies and rules to serve as guides to effective implementation of the student activity program. x x x x It is fairly obvious from a perusal of the list that the Dean of Student Affairs exercises managerial functions, thereby classifying Llagas as a managerial employee.

Same; Same; Supervisory Employees; Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment.—Supervisory employees, as defined in Article 212(m) are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. In the same vein, a reading of the above functions leads us to conclude that Javier was a supervisory employee. Verily, Javier made recommendations as to what actions to take in hiring, termination, disciplinary actions, and management policies, among others.

Jaculbe vs. Silliman University, 518 SCRA 445 , March 16, 2007

Labor Law; Retirement; Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after reaching a certain age agrees to sever his or her employment with the former.—Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after reaching a certain age agrees to sever his or her employment with the former. In Pantranco North Express, Inc. v. NLRC, 252 SCRA 237 (1996), to which both the CA and respondent refer, the imposition of a retirement age below the compulsory age of 65 was deemed acceptable because this was part of the CBA between the employer and the employees. The consent of the employees, as represented by their bargaining unit, to be retired even before the statutory retirement age of 65 was laid out clearly in black and white and was therefore in accord with Article 287.

Same; Same; Neither the Court of Appeals nor the respondent cited any agreement, collective or otherwise, to justify the latter’s imposition of the early retirement age in the retirement plan, opting instead to harp on petitioner’s alleged voluntary contributions to the plan, which was simply untrue.—In this case, neither the CA nor the respondent cited any agreement, collective or otherwise, to justify the latter’s imposition of the early retirement age in its retirement plan, opting instead to harp on petitioner’s alleged “voluntary” contributions to the plan, which was simply untrue. The truth was that petitioner had no choice but to participate in the plan, given that the only way she could refrain from doing so was to resign or lose her job. It is axiomatic that employer and employee do not stand on equal footing, a situation which often causes an employee to act out of need instead of any genuine acquiescence to the employer. This was clearly just such an instance.

Padillo vs. Rural Bank of Nabunturan, Inc., 689 SCRA 53 , January 21, 2013

Labor Law; Termination of Employment; Disease; Article 297 of the Labor Code contemplates a situation where the employer, and not the employee, initiates the termination of employment on the ground of the latter’s disease or sickness.—As held in Villaruel vs. Yeo Han Guan, 650 SCRA 64 (2011), a precedent which the CA correctly applied, Article 297 of the Labor Code contemplates a situation where the employer, and not the employee, initiates the termination of employment on the ground of the latter’s disease or sickness, viz.: A plain reading of the [Article 297 of the Labor Code] clearly presupposes that it is the employer who terminates the services of the employee found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees. It does not contemplate a situation where it is the employee who severs his or her employment ties. This is precisely the reason why Section 8, Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code, directs that an employer shall not terminate the services of the employee unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment.

Same; Managerial Employees; Confidential Employees; Types of Employees That Are Prohibited to Self-Organize.—In this case, it cannot be said that Padillo belonged to the same class of employees prohibited to self-organize which, at present, consist of: (1) managerial employees; and (2) confidential employees who assist persons who formulate, determine, and effectuate management policies in the field of labor relations. Therefore, absent this equitable peculiarity, termination pay on the ground of disease under Article 297 of the Labor Code and the Court’s ruling in Abaquin should not be applied.

Same; Retirement; In the absence of any applicable agreement, an employee must (1) retire when he is at least sixty (60) years of age and (2) serve at least (5) years in the company to entitle him/her to a retirement benefit of at least one-half (1/2) month salary for every year of service, with a fraction of at least six (6) months being considered as one whole year.—Simply stated, in the absence of any applicable agreement, an employee must (1) retire when he is at least sixty (60) years of age and (2) serve at least (5) years in the company to entitle him/her to a retirement benefit of at least one-half (1/2) month salary for every year of service, with a fraction of at least six (6) months being considered as one whole year. Notably, these age and tenure requirements are cumulative and non-compliance with one negates the employee’s entitlement to the retirement benefits under Article 300 of the Labor Code altogether. In this case, it is undisputed that there exists no retirement plan, collective bargaining agreement or any other equivalent contract between the parties which set out the terms and condition for the retirement of employees, with the sole exception of the Philam Life Plan which premiums had already been paid by the Bank.

Same; Company Practice; Words and Phrases; To be considered a company practice, the giving of the benefits should have been done over a long period of time, and must be shown to have been consistent and deliberate.—Neither was it proven that there exists an established company policy of giving early retirement packages to the Bank’s aging employees. In the case of Metropolitan Bank and Trust Company v. National Labor Relations Commission, 589 SCRA 376 (2009), it has been pronounced that to be considered a company practice, the giving of the benefits should have been done over a long period of time, and must be shown to have been consistent and deliberate. In this relation, petitioners’ bare allegation of the solitary case of Lusan cannot—assuming such fact to be true—sufficiently establish that the Bank’s grant of an early retirement package to her (Lusan) evolved into an established company practice precisely because of the palpable lack of the element of consistency. As such, petitioners’ reliance on the Lusan incident cannot bolster their claim.

Civil Law; Damages; Abuse of Rights; Damages may be recoverable due to an abuse of right under Article 21 in conjunction with Article 19 of the Civil Code of the Philippines, the following elements must, however, obtain: (1) there is a legal right or duty; (2) exercised in bad faith; and (3) for the sole intent of prejudicing or injuring another.—While the Court mindfully notes that damages may be recoverable due to an abuse of right under Article 21 in conjunction with Article 19 of the Civil Code of the Philippines, the following elements must, however, obtain: (1) there is a legal right or duty; (2) exercised in bad faith; and (3) for the sole intent of prejudicing or injuring another. Records reveal that none of these elements exists in the case at bar and thus, no damages on account of abuse of right may he recovered.

Same; Labor Law; Bad Faith; It is axiomatic that bad faith can never be presumed—it must be proved by clear and convincing evidence.—Neither can the grant of an early retirement package to Lusan show that Padillo was unfairly discriminated upon. Records show that the same was merely an isolated incident and petitioners have failed to show that any bad faith or motive attended such disparate treatment between Lusan and Padillo. Irrefragably also, there is no showing that other Bank employees were accorded the same benefits as that of Lusan which thereby dilutes the soundness of petitioners’ imputation of discrimination and bad faith. Verily, it is axiomatic that held faith can never be presumed—it must be proved by clear and convincing evidence. This petitioners were unable to prove in the case at bar.

Razon, Jr. vs. National Labor Relations Commission, 185 SCRA 44 , May 07, 1990

Labor Law; Retirement; Management discretion may not be exercised arbitrarily or capriciously especially with regards to the implementation of the retirement plan.—It must be stressed that the words “upon the discretion of management” are not synonymous with absolute or unlimited discretion. In other words, management discretion may not be exercised arbitrarily or capriciously especially with regards to the implementation of the retirement plan. We believe that upon acceptance of employment, a contractual relationship was established giving private respondent an enforceable vested interest in the retirement fund. Verily, the retirement scheme became an integral part of his employment package and the benefits to be derived therefrom constituted as it were a continuing consideration for services rendered, as well as an effective inducement for remaining with the firm.

Same; Same; Same; Private respondent has already acquired a vested right to the retirement fund.—Having rendered twenty years of service with Metroport Services, Inc., it can be said that private respondent has already acquired a vested right to the retirement fund, a right which can only be withheld upon a clear showing of good and compelling reasons.

Same; Same; Same; Fact that private respondent sought employment elsewhere should not hinder him from claiming his retirement benefits.—The fact that private respondent sought employment elsewhere should not hinder him from claiming his retirement benefits. It is an inexorable fact that at 65 years, he reached the mandatory age for retirement and, therefore, qualified to retire. We have here an ironic situation where instead of enjoying the fruits of his retirement, private respondent was forced to seek reemployment for his survival. Surely, private respondent does not deserve such a pathetic end to his long and faithful service with petitioners.

Cipriano vs. San Miguel Corporation, 24 SCRA 703, August 21, 1968

Termination Pay Law; Effect of agreement affecting employee's retirement, upon the provisions of the Termination Pay Laiv; Case at bar.—In the case at bar, the right of the employee, separated from the service of his employer to the benefits under the Termination Pay Law (Rep. Act No. 1052 as amended by Rep. Act No. 1787), is subject to the limitations prescribed in their agreement affecting his retirement. This agreement reads: "Regular employees who are separated from the service of the company for any reason other than misconduct or voluntary resignation shall be entitled to either 100% of the benefits provided in Section 2, Article VIII hereof, regardless of their length of service in the company or to the severance pay provided by law, whichever is the greater amount" Pursuant thereto, such employee was entitled to "either" the amount prescribed in the plan "or" the "severance pay provided by law, whichever is the greater amount." In other words, he had a right to one of the two benefits, not to both, at the same time. The exclusion of one by the other is clearly deducible, not only from the terms "either" and "or" used in the agreement, but, also, by the qualifying phrase "whichever is the greater amount." Indeed, "whichever is the greater amount" would be immaterial, if the retiring employee were entitled to both. Needless to say, the benefits under said plan—compensation for one (1) month for each year of service—is bigger than the termination pay provided by law, which is limited to one-half of the monthly compensation for every year of service (Sec. 1, Rep. Act No. 1052, as amended by Rep. Act No. 1787).