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click here for freelancing tutoring sitesASIAN CENTER FOR CAREER AND EMPLOYMENT SYSTEM AND SERVICES, INC. (ACCESS), petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and IBNO MEDIALES, respondents. 1998 Oct 12 2nd Division G.R. No. 131656

In this petition for certiorari, petitioner ASIAN CENTER FOR CAREER & EMPLOYMENT SYSTEM & SERVICES, INC. (ACCESS) seeks to modify the monetary awards against it in the Decision of respondent National Labor Relations Commission (NLRC), dated October 14, 1997, a case for illegal dismissal.

The records disclose that petitioner hired respondent IBNO MEDIALES to work as a mason in Jeddah, Saudi Arabia, with a monthly salary of 1,200 Saudi Riyals (SR). The term of his contract was two (2) years, from February 28, 1995 until February 28, 1997.

On May 26, 1996, respondent applied with petitioner for vacation leave with pay which he earned after working for more then a year. His application for leave was granted. While en route to the Philippines, his co-workers informed him that he has been dismissed from service. The information turned out to be true.

On June 17, 1996, respondent filed a complaint with the labor arbiter for illegal dismissal, non-payment of overtime pay, refund of transportation fare, illegal deductions, non-payment of 13th month pay and salary for the unexpired portion of his employment contract.

On March 17, 1997, the labor arbiter found petitioner guilty of illegal dismissal.1 [Decision, Rollo, pp. 11-20.] The dispositive portion reads:

"IN VIEW OF THE FOREGOING, judgment is hereby rendered declaring the illegality of complainant's dismissal and ordering the respondent ACCESS and/or ABDULLAH

LELINA to pay the complainant the amount of SR 13,200 representing complainant's payment for the unexpired portion of his contract and refund of the illegality deducted amount less P5,000.00, the legally allowed placement fee.

"Respondent are further ordered to pay attorney's fees equivalent to ten percent (10%) of the judgment award or the amount of SR 1,320, within ten (10) days from receipt hereof.

"All other issues are dismissed for lack of merit.

"SO ORDERD." mphasis supplied)

It is noteworthy, however, that in the body of his decision, the labor arbiter applied Section 10 R.A. 8042,2 [Entitled: Migrant Workers and Overseas Filipinos Act of 1995.] the law relative to the protection of Filipino overseas-workers, and computed private respondent's salary for the unexpired portion of his contract as follows: SR1,200 x 3 months = SR3,600.

On appeal by petitioner, the NLRC affirmed the factual findings of the labor arbiter but modified the appealed decision by deleting the order of refund of excessive placement fee for lack of jurisdiction.3 [NLRC Decision, dated August 18, 1997; Rollo, pp. 26-32.]

Petitioner moved for reconsideration with respect to the labor arbiter's award of SR13,200 in the dispositive portion of the decision, representing respondent's salary for the unexpired portion of his contract. invoking Section 10 R.A. 8042. Petitioner urged that its liability for respondent's salary is for only three (3) months. Petitioner claimed that it should pay only SR 3.600 (SR 1,200 x 3 months) for the unexpired portion of respondent's employment and SR360 (10% of SR3,600) for attorney's fees.4 [Motion for Reconsideration, Rollo, pp. 33-35.]

The NLRC denied petitioner's motion. It ruled that R.A. 8042 does not apply as respondent's employment which started in February 1995 occurred prior to its effectivity on July 15, 1995.5 [Decision, dated October 14, 1997; Rollo, pp. 36-38.]

Hence, this petition for certiorari.

In the case at bar, petitioner's illegal dismissal from service is no longer disputed. Petitioner merely impugns the monetary awards granted by the NLRC to private respondent. It submits that although the unexpired portion of private respondent's employment contract is eight (8) months,6 [Respondent was dismissed from service in June 1996 (after his vacation leave), while his employment contract was supposed to end on February 28, 1997.] it is liable to pay respondent only three (3) months of his basic salary, pursuant to Section 10 of R.A. 8042, or SR1,200 (monthly salary) multiplied by 3 months, for a total of SR3,600. Petitioner claims that the NLRC erred in ruling that as private respondent's employment started only on February 28, 1995, R.A. 8042, which took effect on July 15, 1995, would not apply to his case. Petitioner argues that it is not the date of employment but the date of dismissal which should be considered in determining the applicability of R.A. 8042. Petitioner prays that the award in the NLRC Decision dated October 14, 1997, be changed to SR3,600 instead of 13,200 and that the award of attorney's fees be deleted.

We affirm with modifications.

As a rule, jurisdiction is determined by the law at the time of the commencement of the action.7 [Erectors, Inc. vs. NLRC, 256 629, 637, (1996), citing Philippine-Singapore Ports. Corp. vs. NLRC, 218 SRA 77 (1993)] In the case at bar, private respondent's cause of action did not accrue on the date of his date of his employment or on February 28, 1995. His cause of action arose only from the-time he was illegally dismissed by

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petitioner from service in June 1996, after his vacation leave expired. It is thus clear that R.A. 8042 which took effect a year earlier in July 1995 applies to the case at bar.

Under Section 10 of R.A. 8042, a worker dismissed from overseas employment without just, valid or authorized cause is entitled to his salary for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

In the case at bar, the unexpired portion of private respondent's employment contract is eight (8) months. Private respondent should therefore be paid his basic salary corresponding to three (3) months or a total of SR3,600.8 [Computed as follows: monthly salary of SR1,200 x 3 months.]

We note that this same computation was made by the labor arbiter in the body of his decision.9 [Supra.] Despite said computation in the body of the decision, however, the labor arbiter awarded higher sum (SR13,200) in the dispositive portion.

The general rule is that where there is a conflict between the dispositive portion or the fallo and the body of the decision, the fallo controls. This rule rests on the theory that the fallo is the final order while the opinion in the body is merely a statement ordering nothing. However, where the inevitable conclusion from the body of the decision is so clear as to show that there was a mistake in the dispositive portion, the body of the decision will prevail.10 [Olac, vs. Court of Appeals, 213 SCRA 321, 328 (1992), citing Aguirre vs. Aguirre, 58 SCRA 461 (1974) and Magdalena Estate, Inc. vs. Calauag, 11 SCRA 333 (1964)]

We find that the labor arbiter's award of a higher amount in the dispositive portion was clearly an error for there is nothing in the text of the decision which support the award of said higher amount. We reiterate that the correct award to private respondent for the unexpired portion of his employment contract is SR3,600.

We come now to the award of attorney's fees in favor of private respondent. Article 2208 of the Civil Code allows attorney's fees to be awarded when its claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act or omission of the party for whom it is sought. Moreover, attorney's fees are recoverable when there is sufficient showing of bad faith.11 [Tumbiga vs. National Labor Relations Commission, 274 SCRA 338, 349 (1997)] The Labor Code,12 [Article 111, Chapter III, Title II, Book Three.] on the other hand, fixes the attorney's fees that may be recovered in an amount which should not exceed 10% of the total amount of wages awarded.

In the case at bar, petitioner's bad faith in dismissing private respondent is manifest. Respondent was made to believe that he would be temporarily leaving Jeddah, Kingdom of Saudi Arabia, for a 30-day vacation leave with pay. However, while on board the plane back to the Philippines, his co-employees told him that he has been dismissed from his job as he was given only a one-way plane ticket by petitioner. True enough, private respondent was not allowed to return to his jobsite in Jeddah after his vacation leave. Thus, private respondent was compelled to file an action for illegal dismissal with the labor arbiter and hence entitled to an award of attorney's fees.

IN VIEW OF THE FOREGOING, the decision of the public respondent National Labor Relations Commission, dated October 14, 1997, is AFFIRMED with modifications: petitioner is ordered to pay private respondent IBNO MEDIALES the peso equivalent of the amounts of SR3,600

for the unexpired portion of his employment contract, and SR360 for attorney's fees. No costs. SO ORDERED.

==

DOLE PHILIPPINES, INC., petitioner, vs. THE HON. VICENTE LEOGARDO, JR. (in his capacity as Deputy Minister of Labor), and ASSOCIATED LABOR UNION (ALU), respondents.1982 October 23 En Banc G.R. No. L-60018

Petition for certiorari to annul and set aside the order of respondent Deputy Minister of Labor, dated October 26, 1981, which affirmed the order of the Regional Director of the Ministry of Labor, Davao City, requiring petitioner Dole Philippines, Inc. to pay its employees the year-end productivity bonus agreed upon in their Collective Bargaining Agreement in addition to the 13th month pay prescribed under Presidential Decree No. 851.

The salient facts are as follows:

On June 6, 1975, Standard Philippines Fruit Corporation or STANFILCO, a company merged in 1981 with petitioner Dole Philippines, Inc., entered into a collective bargaining agreement with the Associated Labor Union, ALU for short, effective for a period of three (3) years, beginning June 1, 1975 to May 31, 1978. The Collective Bargaining Agreement provided, among others, the grant of a year-end productivity bonus to all workers within the collective bargaining unit. Section 1, Article XVII thereof reads as follows:

"ARTICLE XVII

YEAR-END PRODUCTIVITY BONUS

SECTION 1. The COMPANY agrees to grant each worker within the bargaining unit a year-end productivity bonus equivalent to ten (10) days of his basic daily wage if eighty percent (80%) or more of the average total banana production for the two (2) preceding calendar years together with the current year's estimate is attained. This bonus is exclusive of any bonus which the Company may be presently giving or may give in the future to its workers pursuant to the COMPANY's rights under Section 4, Article I of this Agreement." Section 4, Article I of the agreement referred to above provides:

"SECTION 4. All terms and conditions of employment of workers not specifically excluded in Section I of this Article are embodied in this Agreement, and the same shall govern the relationship between the COMPANY and such workers. On the other hand, all such benefits and/or privileges as are not expressly provided for in this Agreement but which are now being accorded, may in the future be accorded, or might have previously been accorded to the workers, no matter how long or how often, shall be deemed purely acts of grace and dependent upon the sole judgment and discretion of the COMPANY to grant, modify or withdraw, and shall not be construed as establishing an obligation on the part of the COMPANY."

The 80% production level stated in Article XVII of said CBA having been attained in 1975, the workers were paid the stipulated year-end productivity bonus on December 11, 1975.

Shortly thereafter, or on December 16, 1975, Presidential Decree 851 took effect. Section 1 thereof required all employers to pay their employees receiving a basic salary of not more than P1,000.00 a month, regardless of the nature of their employment, a 13th month pay not later than December 24 of every year. Section 2 of the law, however, exempted

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from its coverage those employers already paying their employees a 13th month pay or its equivalent.

On June 22, 1975, Secretary (now Minister) of Labor, Hon. Blas F. Ople, issued the "Rules and Regulations Implementing Presidential Decree 851." Section 3(c) thereof provides that "the term 'its equivalent' . . . shall include Christmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting to not less than 1/12th of the basic salary but shall not include cash and stock dividends, cost of living allowance and other allowances regularly enjoyed by the employee as well as non-monetary benefits . . . ."

The rules further added that "where an employer pays less than 1/12th of the employee's basic salary, the employer shall pay the difference."

To comply with the provision of P.D. 851 on the 13th month pay, STANFILCO paid its workers on December 29, 1975 the difference between 1/12th of their yearly basic salary and their year-end productivity bonus. In doing so, STANFILCO relied on Section 2 of the decree, as interpreted by the MOLE's implementing rules. The same method of computation was followed in the payment of the year-end productivity bonus and the 13th month pay for the years 1976, 1977 and 1978.

Questioning this procedure, respondent ALU, joined by STANFILCO technical employees as well as its rank-and-file workers, filed on February 19, 1979 a complaint with the South Cotabato District Labor Office at General Santos City, docketed as LR-003-G.S.-79, ALU charging STANFILCO with unfair labor practice and non-implementation of the CBA provision on the year-end productivity bonus. The following day, February 20, 1979, Oscar Rabino, Oscar Serenuela, Raul Montejo and all the rank-and-file workers of STANFILCO instituted another complaint before the same district labor office, docketed as LR-010-G.S.-79, changing the company with non-payment of the production incentive bonus for the years 1975, 1976, 1977 and 1978.

The issues having been joined, the two (2) cases were consolidated and the parties were required to file their position papers.

On May 25, 1979, the Regional Director of MOLE, Davao City, issued an order sustaining respondents' position that the year-end productivity bonus, being a contractual commitment, is separate and distinct from the 13th month pay and must, therefore, be paid separately in full. The decretal portion of the order reads:

"WHEREFORE, in view of all the foregoing, judgment is hereby rendered:

"1) DISMISSING the complaint of the office and technical employee; "2) DISMISSING the claim of ALU for damages and interest including its charges against respondent for unfair labor practice; "3) ABSOLVING respondent Thomas M. Leahy from any personal liability; "4) GRANTING the complaint of OSCAR RABINO and his group as the complaint of all rank and file workers covered by the CBA, and which will also include all rank and file workers under the complaint filed by ALU; "5) ORDERING respondent to pay the bonuses under the CBA for the years 1975, 1976, 1977 and 1978."

On appeal, the respondent Deputy Minister of Labor affirming the order.

In mandating the payment of the 13th month compensation to employees earning less than P1,000.00, PD 851 obviously

seeks to remedy the sad plight of labor in a milieu of worldwide inflation vis-a-vis a static wage level. However, cognizant of the fact that the remedy sought to be enforced had long been granted by some employers out of their own volition and magnanimity, the law has expressly exempted from its coverage those employers "who are already paying their employees a 13th month pay or its equivalent." [1] While the intention to exclude those certain employers from the operation of the law is quite clear, the parties advance conflicting views as to the meaning of the phrase "or its equivalent."

Section 3(e) of the Rules and Regulations Implementing PD No. 851, issued by the Minister of Labor on December 22, 1975 explicitly states that the term "or its equivalent . . . shall include Christmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting to not less than one-twelfth of the basic salary. Where an employer pays less than 1/12 of the employee's basic salary, the employer shall pay the difference."

In "National Federation of Sugar Workers versus Ovejera, et al.", [2] the interpretation given by the MOLE received the imprimatur of this Court, thus:

"Having been issued by the agency charged with the implementation of PD No. 851 as its contemporaneous interpretation of the law, the quoted rule shall be accorded great weight."

Furthermore, to resolve the growing number of controversies stemming from the interpretation of Section 2, PD No. 851, this Court in the above-cited case, speaking thru Justice Plana, established definitely the legal equivalent of the 13th month pay in this wise:

"The evident intention of the law, as revealed by the law itself, was to grant an additional income in the form of a 13th month pay to employees not already receiving the same. Otherwise put, the intention was to grant some relief - not to all workers - but only to the unfortunate ones not actually paid a 13th month salary or what amounts to it, by whatever name called; but it was not envisioned that a double burden would be imposed on the employer already paying his employees a 13th month pay or its equivalent - whether out of pure generosity or on the basis of a binding agreement, and in the latter case, regardless of the conditional character of the grant (such as making the payment dependent on profit), so long as there is actual payment. Otherwise, what was conceived to be a 13th month salary would in effect become a 14th or possibly 13th month pay."

Continuing, this Court said:

"Pragmatic considerations also weigh heavily in favor of crediting both voluntary and contractual bonuses for the purpose of determining liability for the 13th month pay . . . ."

Tested against this norm, it becomes clear that the year-end productivity bonus granted by petitioner to private respondents pursuant to their CBA is, in legal contemplation, an integral part of their 13th month pay, notwithstanding its conditional nature. When, therefore, petitioner, in order to comply with the mandate of PD No. 851, credited the year-end productivity bonus as part of the 13th month pay and adopted the procedure of paying only the difference between said bonus and 1/12th of the worker's yearly basic salary, it acted well within the letter and spirit of the law and its implementing rules. For in the event that "an employer pays less than one-twelfth of the employees' basic salary, all that said employer is required to do under the law is to pay the difference." [3]

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To hold otherwise would be to impose an unreasonable and undue burden upon those employers who had demonstrated their sensitivity and concern for the welfare of their employees. A contrary stance would indeed create an absurd situation whereby an employer who started giving his employees the 13th month pay only because of the unmistakable force of the law would be in a far better position than another who, by his own magnanimity or by mutual agreement, had long been extending to his employees the benefits contemplated under PD No. 851, by whatever nomenclature these benefits have come to be known. Indeed, PD No. 851, a legislation benevolent in its purpose, never intended to bring about such oppressive situation.

WHEREFORE, this petition is hereby granted and, accordingly, the order of respondent Deputy Minister of Labor, dated October 26, 1981, is set aside. No costs. SO ORDERED.

==

G.R. No. 119930.  March 12, 1998]

INSULAR LIFE ASSURANCE CO., LTD., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (Fourth Division, Cebu City), LABOR ARBITER NICASIO P. ANINON and PANTALEON DE LOS REYES, respondents.

On 17 June 1994 respondent Labor Arbiter dismissed for lack of jurisdiction NLRC RAB-VII Case No. 03-0309-94 filed by private respondent Pantaleon de los Reyes against petitioner Insular Life Assurance Co., Ltd. (INSULAR LIFE), for illegal dismissal and nonpayment of salaries and back wages after findings no employer-employee relationship between De los Reyes and petitioner INSULAR LIFE.[1] On appeal by private respondent, the order of dismissal was reversed by the National Labor Relations Commission (NLRC) which ruled that respondent De los Reyes was an employee of petitioner.[2] Petitioner’s motion for reconsideration having been denied, the NLRC remanded the case to the Labor Arbiter for hearing on the merits.

Seeking relief through this special civil action for certiorari with prayer for a restraining order and/or preliminary injunction, petitioner now comes to us praying for annulment of the decision of respondent NLRC dated 3 March 1995 and its Order dated 6 April 1995 denying the motion for reconsideration of the decision. It faults NLRC for acting without jurisdiction and/or with grave abuse of discretion when, contrary to established facts and pertinent law and jurisprudence, it reversed the decision of the Labor Arbiter and held instead that the complaint was properly filed as an employer-employee relationship existed between petitioner and private respondent.

Petitioner reprises the stand it assumed below that it never had any employer-employee relationship with private respondent, this being an express agreement between them in the agency contracts, particularly reinforced by the stipulation therein de los Reyes was allowed discretion to devise ways and means to fulfill his obligations as agent and would be paid commission fees based on his actual output. It further insists that the nature of this work status as described in the contracts had already been squarely resolved by the Court in the earlier case of Insular Life Assurance Co., Ltd. v. NLRC and Basiao [3]where the complainant therein, Melecio Basiao, was similarly situated as respondent De los Reyes in that he was appointed first as an agent and then promoted as agency manager, and the contracts under which he was appointed contained terms and

conditions Identical to those of De los Reyes. Petitioner concludes that since Basiao was declared by the Court to be an independent contractor and not an employee of petitioner, there should be no reason why the status of De los Reyes herein vis-à-vis petitioner should not be similarly determined.

We reject the submissions of petitioner and hold that respondent NLRC acted appropriately within the bounds of the law. The records of the case are replete with telltale indicators of an existing employer-employee relationship between the two parties despite written contractual disavowals.

These facts are undisputed: on 21 August 1992 petitioner entered into an agency contract with respondent Pantaleon de los Reyes[4] authorizing the latter to solicit within the Philippines applications for life insurance and annuities for which he would be paid compensation in the form of commissions. The contract was prepared by petitioner in its entirety and De los Reyes merely signed his conformity thereto. It contained the stipulation that no employer-employee relationship shall be created between the parties and that the agent shall be free to exercise his own judgment as to time, place and means of soliciting insurance. De los Reyes however was prohibited by petitioner from working for any other life insurance company, and violation of this stipulation was sufficient ground for termination of the contract. Aside from soliciting insurance for the petitioner, private respondent was required to submit to the former all completed applications for insurance within ninety (90) consecutive days, deliver policies, receive and collect initial premiums and balances of first year premiums, renewal premiums, deposits on applications and payments on policy loans. Private respondent was also bound to turn over to the company immediately any and all sums of money collected by him. In a written communication by petitioner to respondent De los Reyes, the latter was urged to register with the Social Security System as a self-employed  individual as provided under PD No. 1636.[5]

On 1 March 1993 petitioner and private respondent entered into another contract[6]where the latter was appointed as Acting Unit Manager under its office – the Cebu DSO V (157). As such, the duties and responsibilities of De los Reyes included the recruitment, training, organization and development within his designated territory of a sufficient number of qualified, competent and trustworthy underwriters, and to supervise and coordinate the sales efforts of the underwriters in the active solicitation of new business and in the furtherance of the agency’s assigned goals. It was similarly provIded in the management contract that the relation of the acting unit manager and/or the agents of his unit to the company shall be that of independent contractor. If the appointment was terminated for any reason other than for cause, the acting unit manager would be reverted to agent status and assigned to any unit. As in the previous agency contract, De los Reyes together with his unit force was granted freedom to exercise judgment as to time, place and means of soliciting insurance. Aside from being granted override commissions, the acting unit manager was given production bonus, development allowance and a unit development financing scheme euphemistically termed “financial assistance” consisting of payment to him of a free portion of P300.00 per month and a valIdate portion of P1,200.00. While the latter amount was deemed as an advance against expected commissions, the former was not and would be freely given to the unit manager by the company only upon fulfillment by him of certain manpower and premium quota requirements. The agents and underwriters recruited and trained by the

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acting unit manager would be attached to the unit but petitioner reserved the right to determine if such assignment would be made or, for any reason, to reassign them elsewhere.

Aside from soliciting insurance, De los Reyes was also expressly obliged to participate in the company’s conservation program, i.e., preservation and maintenance of existing insurance policies, and to accept moneys duly receipted on agent’s receipts provided the same were turned over to the company. As long as he was unit manager in an acting capacity, De los Reyes was prohibited from working for other life insurance companies or with the government. He could not also accept a managerial or supervisory position in any firm doing business in the Philippines without the written consent of petitioner.

Private respondent worked concurrently as agent and Acting Unit Manager until he was notified by petitioner on 18 November 1993 that his services were terminated effective 18 December 1993. On 7 March 1994 he filed a complaint before the Labor Arbiter on the ground that he was illegally dismissed and that he was not paid his salaries and separation pay.

Petitioner filed a motion to dismiss the complaint of De los Reyes for lack of jurisdiction, citing the absence of employer-employee relationship. it reasoned out that based on the criteria for determining the existence of such relationship or the so-called “four-fold test,” i.e., (a) selection and engagement of employee, (b) payment of wages, (c) power of dismissal, and, (d) power of control, De los Reyes was not an employee but an independent contractor.

On 17 June 1994 the motion of petitioner was granted by the Labor Arbiter and the case was dismissed on the ground that the element of control was not sufficiently established since the rules and guidelines set by petitioner in its agency agreement with respondent De los Reyes were formulated only to achieve the desired result without dictating the means or methods of attaining it.

Respondent NLRC however appreciated the evidence from a different perspective. It determined that respondent De los Reyes was under the effective control of petitioner in the critical and most important aspects of his work as Unit Manager. This conclusion was derived from the provisions in the contract which appointed private respondent as Acting Unit Manager, to wit: (a) De los Reyes was to serve exclusively the company, therefore, he was not an independent contractor; (b) he was required to meet certain manpower and production quota; and, (c) petitioner controlled the assignment to and removal of soliciting agents from his unit.

The NLRC also took into account other circumstances showing that petitioner exercised employer’s prerogatives over De los Reyes, e.g., (a) limiting the work of respondent De los Reyes to selling a life insurance policy known as “Salary Deduction Insurance” only to members of the Philippine National Police, public and private school teachers and other employees of private companies; (b) assigning private respondent to a particular place and table where he worked whenever he has not in the field; (c) paying private respondent during the period of twelve (12) months of his appointment as Acting Unit Manager the amount of P1,500.00 as Unit Development Financing of which 20% formed his salary and the rest, i.e., 80%, as advance of his expected commissions; and (d) promising that upon completion of certain requirements, he would

be promoted to Unit Manager with the right of petitioner to revert him to agent status when warranted.

Parenthetically, both petitioner and respondent NLRC treated the agency contract and the management contract entered into between petitioner and De los Reyes as contracts of agency. We however hold otherwise. Unquestionably there exist major distinctions between the two agreements. While the first has the earmarks of an agency contract, the second is far removed from the concept of agency in that provided therein are conditionalities that indicate an employer-employee relationship. the NLRC therefore was correct in finding that private respondent was an employee of petitioner, but this holds true only insofar as the management contract is concerned. In view thereof, he Labor Arbiter has jurisdiction over the case.

It is axiomatic that the existence of an employer-employee relationship cannot be negated by expressly repudiating it in the management contract and providing therein that the “employee” is an independent contractor when the terms of agreement clearly show otherwise. For, the employment status of a person is defined and prescribed by law and not by what the parties say it should be.[7] In determining the status of the management contract, the “four-fold test” on employment earlier mentioned has to be applied.

Petitioner contends that De los Reyes was never required to go through the pre-employment procedures and that the probationary employment status was reserved only to employees of petitioner. On this score, it insists that the first requirement of selection and engagement of the employee was not met.

A look at the provisions of the contract shows that private respondent was appointed as Acting Unit Manager only upon recommendation of the District Manager.[8] This indicates that private respondent was hired by petitioner because of the favorable endorsement of its duly authorized officer. But, this approbation could only have been based on the performance of De los Reyes with petitioner was nothing more than a trial or probationary period for his eventual appointment as Acting Unit Manager of petitioner. Then, again, the very designation of the appointment of private respondent as “acting” unit manager obviously implies a temporary employment status which may be made permanent only upon compliance with company standards such as those enumerated under Sec. 6 of the management contract.[9]

On the matter of payment of wages, petitioner points out that respondent was compensated strictly on commission basis, the amount of which was totally dependent on his total output. But, the manager’s contract speaks differently. Thus –

4. Performance Requirements.- To maintain your appointment as Acting Unit Manager you must meet the following manpower and production requirements:

Quarter                  Active                      Calendar Year                             Production Agents    Cumulative FYP                                                            Production

1ST                                                  2                             P125,0002ND                                                  3                                250,0003RD                                                  4                                375,0004TH                                                  5                                500,000

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5.4 Unit Development Financing (UDF). – As an Acting Unit Manager you shall be given during the first 12 months of your appointment a financial assistance which is composed of two parts:

5.4.1        Free Portion amounting to P300 per month, subject to your meeting prescribed minimum performance requirement on manpower and premium production. The free portion is not payable by you.

5.4.2    Validate Portion amounting to P1,200 per month, also subject to meeting the same prescribed minimum performance requirements on manpower and premium production. The valIdated portion is an advance against expected compensation during the UDF period and thereafter as may be necessary.

The above provisions unquestionably demonstrate that the performance requirement imposed on De los Reyes was applicable quarterly while his entitlement to the free portion (P300) and the validated portion (P1,200) was monthly starting on the first month of the twelve (12) months of the appointment. Thus, it has to be admitted that even before the end of the first quarter and prior to the so-called quarterly performance evaluation, private respondent was already entitled to be paid both the free and validated portions of the UDF every month because his production performance could not be determined until after the lapse of the quarter involved. This indicates quite clearly that the unit manager’s quarterly performance had no bearing at all on his entitlement at least to the free portion of the UDF which for all intents and purposes comprised the salary regularly paid to him by petitioner. Thus it cannot be validly claimed that the financial assistance consisting of the free portion of the UDF was purely dependent on the premium production of the agent. Be that as it may, it is worth considering that the payment of compensation by way of commission does not militate against the conclusion that private respondent was an employee of petitioner. Under Art. 97 of the Labor Code, “wage” shall mean “however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, price or commission basis x x x x” [10]

As to the matter involving the power of dismissal and control by the employer, the latter of which is the most important of the test, petitioner asserts that its termination of De los Reyes was but an exercise of its inherent right as principal under the contracts and that the rules and guIdelines it set forth in the contract cannot, by any stretch of imagination, be deemed as an exercise of control over the private respondent as these were merely directives that fixed the desired result without dictating the means or method to be employed in attaining it. The following factual findings of the NLRC[11] however contradict such claims:

A perusal of the appointment of complainant as Acting Unit Manager reveals that:

1.  Complainant was to “exclusively” serve respondent company. Thus it is provIded: x x x 7..7 Other causes of Termination: This Appointment may likewise be terminated for any of the following causes: x x x 7..7..2. Your entering the service of the government or another life insurance company; 7..7..3. Your accepting a managerial or supervisory position in any firm

doing business in the Philippines without the written consent of the Company; x x x

2.  Complainant was required to meet certain manpower and production quotas.

3.  Respondent (herein petitioner) controlled the assignment and removal of soliciting agents to and from complainant’s unit, thus: x x x 7..2. Assignment of Agents: Agents recruited and trained by you shall be attached to your unit unless for reasons of Company policy, no such assignment should be made. The Company retains the exclusive right to assign new soliciting agents appointed and assigned to the saId unit x x x x

It would not be amiss to state the respondent’s duty to collect the company’s premiums using company receipts under Sec. 7.4 of the management contract is further evIdence of petitioner’s control over respondent, thus:

xxxx

7.4 Acceptance and Remittance of Premiums. – x x x x the Company hereby authorizes you to accept and receive sums of money in payment of premiums, loans, deposits on applications, with or without interest, due from policy holders and applicants for insurance, and the like, specially from policyholders of business solicited and sold by the agents attached to your unit provIded however, that all such payments shall be duly receipted by you on the corresponding Company’s “Agents’ Receipt” to be provIded you for this purpose and to be covered by such rules and accounting regulations the Company may issue from time to time on the matter. Payments received by you shall be turned over to the Company’s designated District or Service Office clerk or directly to the Home Office not later than the next working day from receipt thereof x x x x

Petitioner would have us apply our ruling in Insular Life Assurance Co., Ltd. v. NLRC and Basiao [12] to the instant case under the doctrine of stare decisis, postulating that both cases involve parties similarly situated and facts which are almost Identical.

But we are not convinced that the cited case is on all fours with the case at bar. In Basiao, the agent was appointed Agency Manager under an Agency Manager Contract. To implement his end of the agreement, Melecio Basiao organized an agency office to which he gave the name M. Basiao and Associates. The Agency Manager Contract practically contained the same terms and conditions as the Agency Contract earlier entered into, and the Court observed that “drawn from the terms of the contract they had entered into, (which) either expressly or by necessary implication, Basiao (was) made the master of his own time and selling methods, left to his own judgment the time, place and means of soliciting insurance, set no accomplishment quotas and compensated him on the bases of results obtained. He was not bound to observe any schedule of working hours or report to any regular station; he could seek and work on his prospects anywhere and anytime he chose to and was free to adopt the selling methods he deemed most effective.” Upon these premises, Basiao was considered as agent – an independent contractor – of petitioner INSULAR LIFE.

Unlike Basiao, herein respondent De los Reyes was appointed Acting Unit Manager, not agency manager.

6

There is not evidence that to implement his obligations under the management contract, De los Reyes had organized an office. Petitioner in fact has admitted that it provIded De los Reyes a place and a table at its office where he reported for and worked whenever he was not out in the field. Placed under petitioner’s Cebu District Service Office, the unit was given a name by petitioner – De los Reyes and Associates – and assigned Code No. 11753 and Recruitment No. 109398. Under the managership contract, De los Reyes was obliged to work exclusively for petitioner in life insurance solicitation and was imposed premium production quotas. Of course, the acting unit manager could not underwrite other lines of insurance because his Permanent Certificate of Authority was for life insurance only and for no other. He was proscribed from accepting a managerial or supervisory position in any other office including the government without the written consent of petitioner. De los Reyes could only be promoted to permanent unit manager if he met certain requirements and his promotion was recommended by the petitioner’s District Manager and Regional Manager and approved by its Division Manager. As Acting Unit Manager, De los Reyes performed functions beyond mere solicitation of insurance business for petitioner. As found by the NLRC, he exercised administrative functions which were necessary and beneficial to the business of INSULAR LIFE.

In Great Pacific Life Insurance Company v. NLRC[13] which is closer in application that Basiao to this present controversy, we found that “the relationships of the Ruiz brothers and Grepalife were those of employer-employee. First, their work at the time of their dismissal as zone supervisor and district manager was necessary and desirable to the usual business of the insurance company. They were entrusted with supervisory, sales and other functions to guard Grepalife’s business interests and to bring in more clients to the company, and even with administrative functions to ensure that all collections, reports and data are faithfully brought to the company x x x x A cursory reading of their respective functions as enumerated in their contracts reveals that the company practically dictates the manner by which their jobs are to be carried out x x x x” We need elaborate no further.

Exclusivity of service, control of assignments and removal of agents under private respondent’s unit, collection of premiums, furnishing of company facilities and materials as well as capital described as Unit Development Fund are but hallmarks of the management system in which herein private respondent worked. This obtaining, there is no escaping the conclusion that private respondent Pantaleon de los Reyes was an employee of herein petitioner.

WHEREFORE, the petition of Insular Life Assurance Company, Ltd., is DENIED and the Decision of the National Labor Relations Commission dated 3 March 1995 and its Order of 6 April 1996 sustaining it are AFFIRMED. Let this case be REMANDED to the Labor Arbiter a quo who is directed to hear and dispose of this case with deliberate dispatch in light of the views expressed herein.

SO ORDERED.

==

G.R. No. 73887 December 21, 1989

GREAT PACIFIC LIFE ASSURANCE CORPORATION, petitioner, vs.

HONORATO JUDICO and NATIONAL LABOR RELATIONS COMMISSION, respondents.

Before us is a Petition for certiorari to review the decision of the National Labor Relations Commission (NLRC, for brevity) dated September 9, 1985 reversing the decision of Labor Arbiter Vito J. Minoria, dated June 9, 1983, by 1) ordering petitioner insurance company, Great Pacific Life Assurance Corporation (Grepalife, for brevity) to recognize private respondent Honorato Judico, as its regular employee as defined under Art. 281 of the Labor Code and 2) remanding the case to its origin for the determination of private respondent Judico's money claims.

The records of the case show that Honorato Judico filed a complaint for illegal dismissal against Grepalife, a duly organized insurance firm, before the NLRC Regional Arbitration Branch No. VII, Cebu City on August 27, 1982. Said complaint prayed for award of money claims consisting of separation pay, unpaid salary and 13th month pay, refund of cash bond, moral and exemplary damages and attorney's fees.

Both parties appealed to the NLRC when a decision was rendered by the Labor Arbiter dismissing the complaint on the ground that the employer-employee relations did not exist between the parties but ordered Grepalife to pay complainant the sum of Pl,000.00 by reason of Christian Charity.

On appeal, said decision was reversed by the NLRC ruling that complainant is a regular employee as defined under Art. 281 of the Labor Code and declaring the appeal of Grepalife questioning the legality of the payment of Pl,000.00 to complainant moot and academic. Nevertheless, for the purpose of revoking the supersedeas bond of said company it ruled that the Labor Arbiter erred in awarding Pl,000.00 to complainant in the absence of any legal or factual basis to support its payment.

Petitioner company moved to reconsider, which was denied, hence this petition for review raising four legal issues to wit:

I. Whether the relationship between insurance agents and their principal, the insurance company, is that of agent and principal to be governed by the Insurance Code and the Civil Code provisions on agency, or one of employer-employee, to be governed by the Labor Code.

II. Whether insurance agents are entitled to the employee benefits prescribed by the Labor Code.

III. Whether the public respondent NLRC has jurisdiction to take cognizance of a controversy between insurance agent and the insurance company, arising from their agency relations.

IV. Whether the public respondent acted correctly in setting aside the decision of Labor Arbiter Vito J. Minoria and in ordering the case remanded to said

7

Labor Arbiter for further proceedings.(p. 159, Rollo)

The crux of these issues boil down to the question of whether or not employer-employee relationship existed between petitioner and private respondent.

Petitioner admits that on June 9, 1976, private respondent Judico entered into an agreement of agency with petitioner Grepalife to become a debit agent attached to the industrial life agency in Cebu City. Petitioner defines a debit agent as "an insurance agent selling/servicing industrial life plans and policy holders. Industrial life plans are those whose premiums are payable either daily, weekly or monthly and which are collectible by the debit agents at the home or any place designated by the policy holder" (p. 156, Rollo). Such admission is in line with the findings of public respondent that as such debit agent, private respondent Judico had definite work assignments including but not limited to collection of premiums from policy holders and selling insurance to prospective clients. Public respondent NLRC also found out that complainant was initially paid P 200. 00 as allowance for thirteen (13) weeks regardless of production and later a certain percentage denominated as sales reserve of his total collections but not lesser than P 200.00. Sometime in September 1981, complainant was promoted to the position of Zone Supervisor and was given additional (supervisor's) allowance fixed at P110.00 per week. During the third week of November 1981, he was reverted to his former position as debit agent but, for unknown reasons, not paid so-called weekly sales reserve of at least P 200.00. Finally on June 28, 1982, complainant was dismissed by way of termination of his agency contract.

Petitioner assails the findings of the NLRC that private respondent is an employee of the former. Petitioner argues that Judico's compensation was not based on any fixed number of hours he was required to devote to the service of petitioner company but rather it was the production or result of his efforts or his work that was being compensated and that the so-called allowance for the first thirteen weeks that Judico worked as debit agent, cannot be construed as salary but as a subsidy or a way of assistance for transportation and meal expenses of a new debit agent during the initial period of his training which was fixed for thirteen (13) weeks. Stated otherwise, petitioner contends that Judico's compensation, in the form of commissions and bonuses, was based on actual production, (insurance plans sold and premium collections).

Said contentions of petitioner are strongly rejected by private respondent. He maintains that he received a definite amount as his Wage known as "sales reserve" the failure to maintain the same would bring him back to a beginner's employment with a fixed weekly wage of P 200.00 regardless of production. He was assigned a definite place in the office to work on when he is not in the field; and in addition to canvassing and making regular reports, he was burdened with the job of collection and to make regular weekly report thereto for which an anemic performance would mean dismissal. He earned out of his faithful and productive service, a promotion to Zone Supervisor with additional supervisor's allowance, (a definite or fixed amount of P110.00) that he was dismissed primarily because of anemic performance and not because of the termination of the contract of agency substantiate the fact that he was indeed an employee of the petitioner and not an insurance agent in the ordinary meaning of the term.

That private respondent Judico was an agent of the petitioner is unquestionable. But, as We have held in Investment Planning Corp. vs. SSS, 21 SCRA 294, an insurance company may have two classes of agents who sell its insurance policies: (1) salaried employees who keep definite hours and work under the control and supervision of the company; and (2) registered representatives who work on commission basis. The agents who belong to the second category are not required to report for work at anytime, they do not have to devote their time exclusively to or work solely for the company since the time and the effort they spend in their work depend entirely upon their own will and initiative; they are not required to account for their time nor submit a report of their activities; they shoulder their own selling expenses as well as transportation; and they are paid their commission based on a certain percentage of their sales. One salient point in the determination of employer-employee relationship which cannot be easily ignored is the fact that the compensation that these agents on commission received is not paid by the insurance company but by the investor (or the person insured). After determining the commission earned by an agent on his sales the agent directly deducts it from the amount he received from the investor or the person insured and turns over to the insurance company the amount invested after such deduction is made. The test therefore is whether the "employer" controls or has reserved the right to control the "employee" not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished.

Applying the aforementioned test to the case at bar, We can readily see that the element of control by the petitioner on Judico was very much present. The record shows that petitioner Judico received a definite minimum amount per week as his wage known as "sales reserve" wherein the failure to maintain the same would bring him back to a beginner's employment with a fixed weekly wage of P 200.00 for thirteen weeks regardless of production. He was assigned a definite place in the office to work on when he is not in the field; and in addition to his canvassing work he was burdened with the job of collection. In both cases he was required to make regular report to the company regarding these duties, and for which an anemic performance would mean a dismissal. Conversely faithful and productive service earned him a promotion to Zone Supervisor with additional supervisor's allowance, a definite amount of P110.00 aside from the regular P 200.00 weekly "allowance". Furthermore, his contract of services with petitioner is not for a piece of work nor for a definite period.

On the other hand, an ordinary commission insurance agent works at his own volition or at his own leisure without fear of dismissal from the company and short of committing acts detrimental to the business interest of the company or against the latter, whether he produces or not is of no moment as his salary is based on his production, his anemic performance or even dead result does not become a ground for dismissal. Whereas, in private respondent's case, the undisputed facts show that he was controlled by petitioner insurance company not only as to the kind of work; the amount of results, the kind of performance but also the power of dismissal. Undoubtedly, private respondent, by nature of his position and work, had been a regular employee of petitioner and is therefore entitled to the protection of the law and could not just be terminated without valid and justifiable cause.

8

Premises considered, the appealed decision is hereby AFFIRMED in toto.

SO ORDERED.

==G.R. No. 112574.  October 8, 1998]

MERCIDAR FISHING CORPORATION represented by its President DOMINGO B. NAVAL, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and FERMIN AGAO, JR., respondents.

This is a petition for certiorari to set aside the decision, dated August 30, 1993, of the National Labor Relations Commission dismissing the appeal of petitioner Mercidar Fishing Corporation from the decision of the Labor Arbiter in NLRC NCR Case No. 09-05084-90, as well as the resolution dated October 25, 1993, of the NLRC denying reconsideration.

This case originated from a complaint filed on September 20, 1990 by private respondent Fermin Agao, Jr. against petitioner for illegal dismissal, violation of P.D. No. 851, and non-payment of five days service incentive leave for 1990. Private respondent had been employed as a “bodegero” or ship’s quartermaster on February 12, 1988.  He complained that he had been constructively dismissed by petitioner when the latter refused him assignments aboard its boats after he had reported to work on May 28, 1990.[1]

Private respondent alleged that he had been sick and thus allowed to go on leave without pay for one month from April 28, 1990 but that when he reported to work at the end of such period with a health clearance, he was told to come back another time as he could not be reinstated immediately.  Thereafter, petitioner refused to give him work.  For this reason, private respondent asked for a certificate of employment from petitioner on September 6, 1990.  However, when he came back for the certificate on September 10, petitioner refused to issue the certificate unless he submitted his resignation.  Since private respondent refused to submit such letter unless he was given separation pay, petitioner prevented him from entering the premises.[2]

Petitioner, on the other hand, alleged that it was private respondent who actually abandoned his work.  It claimed that the latter failed to report for work after his leave had expired and was, in fact, absent without leave for three months until August 28, 1998.  Petitioner further claims that, nonetheless, it assigned private respondent to another vessel, but the latter was left behind on September 1, 1990.  Thereafter, private respondent asked for a certificate of employment on September 6 on the pretext that he was applying to another fishing company.  On September 10, 1990, he refused to get the certificate and resign unless he was given separation pay.[3]

On February 18, 1992, Labor Arbiter Arthur L. Amansec rendered a decision disposing of the case as follows:

ACCORDINGLY, respondents are ordered to reinstate complainant with backwages, pay him his 13th month pay and incentive leave pay for 1990.

All other claims are dismissed.

SO ORDERED.

Petitioner appealed to the NLRC which, on August 30, 1993, dismissed the appeal for lack of merit.  The NLRC dismissed petitioner’s claim that it cannot be held liable for service incentive leave pay by fishermen in its employ as the latter supposedly are “field personnel” and thus not entitled to such pay under the Labor Code.[4]

The NLRC likewise denied petitioner’s motion for reconsideration of its decision in its order dated October 25, 1993.

Hence, this petition.  Petitioner contends:

I

THE RESPONDENT COMMISSION PALPABLY ERRED IN RULING AND SUSTAINING THE VIEW THAT FISHING CREW MEMBERS, LIKE FERMIN AGAO, JR., CANNOT BE CLASSIFIED AS FIELD PERSONNEL UNDER ARTICLE 82 OF THE LABOR CODE.

II

THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT UPHELD THE FINDINGS OF THE LABOR ARBITER THAT HEREIN PETITIONER HAD CONSTRUCTIVELY DISMISSED FERMIN AGAO, JR., FROM EMPLOYMENT.

The petition has no merit.

Art. 82 of the Labor Code provides:

ART. 82. Coverage. - The provisions of this Title [Working Conditions and Rest Periods] shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.

. . . .         . . .                                           . . .

“Field personnel” shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.

Petitioner argues essentially that since the work of private respondent is performed away from its principal place of business, it has no way of verifying his actual hours of work on the vessel. It contends that private respondent and other fishermen in its employ should be classified as “field personnel” who have no statutory right to service incentive leave pay.

In the case of Union of Filipro Employees (UFE) v. Vicar,[5] this Court explained the meaning of the phrase “whose actual hours of work in the field cannot be determined with reasonable certainty” in Art. 82 of the Labor Code, as follows:

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

Rule IV Holidays with Pay9

Section 1. Coverage - This rule shall apply to all employees except:

. . . .         . . .                                           . . .

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

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

Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not add another element to the Labor Code definition of field personnel.  The clause “whose time and performance is unsupervised by the employer” did not amplify but merely interpreted and expounded the clause “whose actual hours of work in the field cannot be determined with reasonable certainty.”  The former clause is still within the scope and purview of Article 82 which defines field personnel.  Hence, in deciding whether or not an employee’s actual working hours in the field can be determined with reasonable certainty, query must be made as to whether or not such employee’s time and performance is constantly supervised by the employer.[6]

Accordingly, it was held in the aforementioned case that salesmen of Nestle Philippines, Inc. were field personnel:

It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-based.

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

The Court does not agree.  The law requires that the actual hours of work in the field be reasonably ascertained.  The company has no way of determining whether or not these sales personnel, even if they report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m., really spend the hours in between in actual field work.[7]

In contrast, in the case at bar, during the entire course of their fishing voyage, fishermen employed by petitioner have no choice but to remain on board its vessel.  Although they perform non-agricultural work away from petitioner’s business offices, the fact remains that  throughout the duration of their work they are under the effective control and supervision of petitioner through the vessel’s patron or master as the NLRC correctly held.[8]

Neither did petitioner gravely abuse its discretion in ruling that private respondent had constructively been

dismissed by petitioner.  Such factual finding of both the NLRC and the Labor Arbiter is based not only on the pleadings of the parties but also on a medical certificate of fitness which, contrary to petitioner’s claim, private respondent presented when he reported to work on May 28, 1990.[9] As the NLRC held:

Anent grounds (a) and (b) of the appeal, the respondent, in a nutshell, would like us to believe that the Arbiter abused his discretion (or seriously erred in his findings of facts) in giving credence to the factual version of the complainant.  But it is settled that “(W)hen confronted with conflicting versions of factual matters,” the Labor Arbiter has the “discretion to determine which party deserves credence on the basis of evidence received.” [Gelmart Industries (Phils.), Inc. vs. Leogardo, 155 SCRA 403, 409, L-70544, November 5, 1987].  And besides, it is settled in this jurisdiction that “to constitute abandonment of position, there must be concurrence of the intention to abandon and some overt acts from which it may be inferred that the employee concerned has no more interest in working” (Dagupan Bus Co., Inc. vs. NLRC, 191 SCRA 328), and that the filing of the complaint which asked for reinstatement plus backwages (Record, p. 20) is inconsistent with respondents’ defense of abandonment (Hua Bee Shirt Factory vs. NLRC, 188 SCRA 586).[10]

It is trite to say that the factual findings of quasi-judicial bodies are generally binding as long as they are supported substantially by evidence in the record of the case.[11] This is especially so where, as here, the agency and its subordinate who heard the case in the first instance are in full agreement  as to the facts.[12]

As regards the labor arbiter’s award which was affirmed by respondent NLRC, there is no reason to apply the rule that reinstatement may not be ordered if, as a result of the case between the parties, their relation is strained.[13] Even at this late stage of this dispute, petitioner continues to reiterate its offer to reinstate private respondent.[14]

WHEREFORE,  the petition is DISMISSED.

SO ORDERED.

==Mercidar Fishing Corporation vs. NLRC, G.R. No. 112574. October 8, 1998; 297 SCRA 440

Posted by Pius Morados on November 10, 2011(Labor Standards – Fishermen are not  field personnels, Article 82)Facts: Private respondent employed as a “bodegero” or ship’s quartermaster complained of being constructively dismissed by petitioner corporation when the latter refused him assignments aboard its boats after he had reported to work. The Larbor Arbiter rendered a decision ordering petitioner corporation to reinstate complainant with back wages, pay him his 13th month pay and incentive leave. Petitioner claims that it cannot be held liable for service incentive leave pay by fishermen in its employ as the latter supposedly are “field personnel” and thus not entitled to such pay under the Labor Code.Article 82 of the Labor Code provides among others that “field personnel” shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch of office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.

10

Issue: WON fishermen are considered field personnel.Held: No. Although fishermen perform non-agricultural work away from their employer’s business offices, the fact remains that throughout the duration of their work they are under the effective control and supervision of the employer through the vessel’s patron or master.

==

G.R. No. 85073 August 24, 1993

DAVAO FRUITS CORPORATION, petitioner, vs.ASSOCIATED LABOR UNIONS (ALU) for in behalf of all the rank-and-file workers/employees of DAVAO FRUITS CORPORATION and NATIONAL LABOR RELATIONS COMMISSION, respondents.

This is a petition for certiorari to set aside the resolution of the National Labor Relations Commission (NLRC), dismissing for lack of merit petitioner's appeal from the decision of the Labor Arbiter in NLRC Case No. 1791-MC-X1-82.

On December 28, 1982 respondent Associated Labor Unions (ALU), for and in behalf of all the rank-and-file workers and employees of petitioner, filed a complaint (NLRC Case No. 1791-MC-XI-82) before the Ministry of Labor and Employment, Regional Arbitration Branch XI, Davao City, against petitioner, for "Payment of the Thirteenth-Month Pay Differentials." Respondent ALU sought to recover from petitioner the thirteenth month pay differential for 1982 of its rank-and-file employees, equivalent to their sick, vacation and maternity leaves, premium for work done on rest days and special holidays, and pay for regular holidays which petitioner, allegedly in disregard of company practice since 1975, excluded from the computation of the thirteenth month pay for 1982.

In its answer, petitioner claimed that it erroneously included items subject of the complaint in the computation of the thirteenth month pay for the years prior to 1982, upon a doubtful and difficult question of law. According to petitioner, this mistake was discovered only in 1981 after the promulgation of the Supreme Court decision in the case of San Miguel Corporation v. Inciong (103 SCRA 139).

A decision was rendered on March 7, 1984 by Labor Arbiter Pedro C. Ramos, in favor of respondent ALU. The dispositive portion of the decision reads as follows:

WHEREFORE, in view of all the foregoing considerations, judgment is hereby rendered ordering respondent to pay the 1982 — 13th month pay differential to all its rank-and-file workers/employees herein represented by complainant Union (Rollo, p. 32).

Petitioner appealed the decision of the Labor Arbiter to the NLRC, which affirmed the said decision accordingly dismissed the appeal for lack of merit.

Petitioner elevated the matter to this Court in a petition for review under Rule 45 of the Revised Rules of Court. This error notwithstanding and in the interest of justice, this Court resolved to treat the instant petition as a special civil action for certiorari under Rule 65 of the Revised Rules of Court (P.D. No. 1391, Sec. 5; Rules Implementing P.D. No. 1391, Rule II, Sec. 7; Cando v.

National Labor Relations Commission, 189 SCRA 666 [1990]: Pearl S. Buck Foundation, Inc. v. National Labor Relations Commission, 182 SCRA 446 [1990]).

The crux of the present controversy is whether in the computation of the thirteenth month pay given by employers to their employees under P.D. No. 851, payments for sick, vacation and maternity leaves, premiums for work done on rest days and special holidays, and pay for regular holidays may be excluded in the computation and payment thereof, regardless of long-standing company practice.

Presidential Decree No. 851, promulgated on December 16, 1975, mandates all employers to pay their employees a thirteenth month pay. How this pay shall be computed is set forth in Section 2 of the "Rules and Regulations Implementing Presidential Decree No. 851," thus:

SECTION 2. . . .

(a) "Thirteenth month pay" shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year.

(b) "Basic Salary" shall include all renumerations or earnings paid by an employer to an employee for services rendered but may not include cost of living allowances granted pursuant to Presidential Decree No. 525 or Letter of Instructions No. 174, profit-sharing payments, and all allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975.

The Department of Labor and Employment issued on January 16, 1976 the "Supplementary Rules and Regulations Implementing P.D. No. 851" which in paragraph 4 thereof further defines the term "basic salary," thus:

4. Overtime pay, earnings and other renumerations which are not part of the basic salary shall not be included in the computation of the 13th month pay.

Clearly, the term "basic salary" includes renumerations or earnings paid by the employer to 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 renumerations shall be excluded in computing the thirteenth month pay.

11

In other words, whatever compensation an employee receives for an eight-hour work daily or the daily wage rate in 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 special holidays, as well as pay for regular holidays, are likewise excluded in computing the basic salary for the purpose of determining the thirteen month pay.

Petitioner claims that the mistake in the interpretation of "basic salary" was caused by the opinions, orders and rulings rendered by then Acting Labor Secretary Amado C. Inciong, expressly including the subject items in computing the thirteenth month pay. The inclusion of these items is clearly not sanctioned under P.D. No. 851, the governing law and its implementing rules, which speak only of "basis salary" as the basis for determining the thirteenth month pay.

Moreover, whatever doubt arose in the interpretation of P.D. No. 851 was erased by the Supplementary Rules and Regulations which clarified the definition of "basic salary."

As pointed out in San Miguel Corporation v. Inciong, (supra):

While doubt may have been created by the prior Rules and Regulations and Implementing Presidential Decree 851 which defines basic salary to include all remunerations or earnings paid by an employer to an employee, this cloud is dissipated in the later and more controlling Supplementary Rules and Regulations which categorically, exclude from the definition of basic salary earnings and other remunerations paid by employer to an employee. A cursory perusal of the two sets of Rules indicates that what has hitherto been the subject of broad inclusion is now a subject of broad exclusion. The Supplementary Rules and Regulations cure the seeming tendency of the former rules to include all remunerations and earnings within the definition of basic salary.

The all-embracing phrase "earnings and other remunerations which are deemed not part of the basic salary includes within its meaning payments for sick, vacation, or maternity leaves, premium for work performed on rest days and special holidays, pay for regular holidays and night differentials. As such they are deemed not part of the basic salary and shall not be considered in the computation of the 13th-month pay. If they were not so excluded, it is hard to find any "earnings and other remunerations" expressly excluded in computation of the 13th month-pay. Then the exclusionary provision would prove to be idle and with purpose.

The "Supplementary Rules and Regulations Implementing P.D. No. 851," which put to rest all doubts in the computation of the thirteenth month pay, was issued by the Secretary of Labor as early as January 16,

1976, barely one month after the effectivity of P.D. No. 851 and its Implementing Rules. And yet, petitioner computed and paid the thirteenth month pay, without excluding the subject items therein until 1981. Petitioner continued its practice in December 1981, after promulgation of the afore-quoted San Miguel decision on February 24, 1981, when petitioner purportedly "discovered" its mistake.

From 1975 to 1981, petitioner had freely, voluntarily and continuously included in the computation of its employees' thirteenth month pay, the payments for sick, vacation and maternity leaves, premiums for work done on rest days and special holidays, and pay for regular holidays. The considerable length of time the questioned items had been included by petitioner indicates a unilateral and voluntary act on its part, sufficient in itself to negate any claim of mistake.

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 of the Philippines, which prohibit the diminution or elimination by the employer of the employees' existing benefits (Tiangco v. Leogardo, Jr., 122 SCRA 267, [1983]).

Petitioner cannot invoke the principle of solutio indebiti which as a civil law concept that is not applicable in Labor Law. Besides, in solutio indebiti, the obligee is required to return to the obligor whatever he received from the latter (Civil Code of the Philippines, Arts. 2154 and 2155). Petitioner in the instant case, does not demand the return of what it paid respondent ALU from 1975 until 1981; it merely wants to "rectify" the error it made over these years by excluding unilaterally from the thirteenth month pay in 1982 the items subject of litigation. Solutio indebiti, therefore, is not applicable to the instant case.

WHEREFORE, finding no grave abuse of discretion on the part of the NLRC, the petition is hereby DISMISSED, and the questioned decision of respondent NLRC is AFFIRMED accordingly.

==G.R. No. L-12950           December 9, 1959

BENJAMIN CELESTIAL, ET AL. Petitioners, vs. THE SOUTHERN MINDANAO EXPERIMENTAL STATION, ET

AL., Respondents.

This is a petition by Benjamin Celestial and 175 others for review of the decision of the Auditor General, dated September 9, 1957, denying their claim for differential pay under the Minimum Wage Law.

The record discloses that petitioner are employees and/or workers of the Southern Mindanao Experimental Station, later referred to as Experimental Station, Bureau of Plant Industry in Davao City, and that since 1952 they had been paid each a daily wage of P2.50; that some time in March 1957, petitioners filed with the Auditor General's Office their claims for differential pay,

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alleging among other things that they were entitled to the minimum wage of P4.00 a day, instead of P2.50, which was actually paid them by the Experimental Station; and that as already stated, on September 9, 1957, the Auditor General rendered a decision, holding that petitioner were not entitled to the minimum daily wage of P4.00, but only to P2.50.

The resolution of this case depends upon the interpretation and application of Section 3 (a), (b) and (c) of the Minimum Wage Law, which we reproduce below for purposes of ready reference:

SEC. 3. Minimum wage. - (a) Every employer shall pay to each of his employees who is employed by an enterprise other than in agriculture wage at the rate of not less than -

(1) . . . .

(2) Three pesos a day on the effective date of this Act and for one year after the effective date, and thereafter P4.00 a day, for employees of establishment located outside of Manila or its environs: . . . .

(b) Every employer who operates a farm enterprise comprising more than 12 hectares shall pay each of his employees who is engaged in agriculture, wage at the rate of not less than -

(1) . . ., (2) . . .;

(3) One year thereafter, P2.50 a day and no allowance for board and lodging shall reduce this wage below P2.25 in cash.

(c) Effective on the first of July, nineteen hundred and fifty-two, the minimum wage rates for employees in the Government service shall be those provided in subsection (a) and (b) of this section . . .

From the legal provisions above-reproduce, it will readily be seen that in order that an employee or laborer may be paid the minimum wage of P2.50 a day, he must be employed by an enterprise (in this case, the Southern Mindanao Experimental Station) engaged in agriculture; that said employer operates s farm comprising more than 12 hectares; and that the employee or laborer is engaged in agriculture. The second condition is satisfied because the Experimental Station is operating a farm comprising 960 hectares. The next question to be decided is whether or not said Experimental Station is engaged in agriculture. To determine this, we have to go back to the function of the Bureau of Plant Industry (Section 1753, Revised Administrative Code) of which the Experimental Station is an agency or adjunction, said Experimental Station being provided for in Section 1754 of the same Revised Administrative Code. Said two sections are reproduced below for ready reference:

SEC. 1753. Function of Bureau of Plant Industry. - It shall be the function of said Bureau to collect and disseminate useful information pertaining to agriculture in the Philippines, to encourage the

use of improved agriculture methods; and, in general, to promote the development of the agriculture resources of the Philippines, as follows:

(a) By the introduction of new domesticated animals, and the improvement of the breeds of domesticated animal now found in the Philippines;

(b) By the control and eradication of diseases of live stock;

(c) By the investigation of soil and climate conditions, and the methods of producing and handling agriculture products;

(d) By the introduction, production, and distribution of improved seeds and plants;

(e) By the control and eradication of diseases, insects, and other pests injurious to cultivated plants;

(f) By the operation of a system of demonstration and agriculture extension work;

(g) By the collection of agricultural statistics; and

(h) By the publication and distribution of bulletins, circulars, and other printed matter.

SEC. 1754. Experiment station, farms, and stations for agricultural instruction. - In such place in the Philippines as may be considered suitable for the purpose, the Director of Plant Industry, with the approval of the Head of the Department, shall be funds shall be available therefore, establish, equip, maintain, and operate experiment stations, farms, stock farms, and station for practical agriculture instruction.

(In the Bureau of Agriculture is also vested the supervision and control of American agriculture colonies).

On the basis of the legal provision above-reproduced, we are of the opinion that both the Bureau of Plant Industry and Experimental Station, particularly the latter, are engaged in agriculture or are dedicated to agricultural functions, specially when we take into consideration the definition of agriculture in Section 2 of the Minimum Wage Law itself, Republic Act No. 602, which is as follow:

Agriculture includes faring in all its branches and among other things include the cultivation and things of the soil, dairying, the production, cultivation, growing, and harvesting of any agricultural or horticular commodities, the raising of livestock or poultry, and any practice performer by a farmer or on a farm as an incident to or in conjunction with such farming operations, but does not include the manufacturing or processing of sugar, coconut, abaca, tobacco, pineapples or other farm products.

And is a matter of public knowledge that experimental stations maintained by the Bureau

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of Plant Industry, specially when done on a big scale like the Southern Mindanao Experimental Station that operates a farm comprising 960 hectares, though its employees and laborers, actually till the soil, introduce and plant seeds of the best crop varieties found by it after study and experiment, raise said crops in the best approved methods of cultivation, including the spacing of each plant or seedling and the amount of water needed though irrigation, weeding, et., and the proper harvesting of the crop, including the timing and method, all for the instruction and benefit of Philippine farmers, and to foster agriculture in the country. Included in this cultivation is the discovery of plant pests and their eradication by means of treatment with the proper insecticides. Thereafter, from the harvest are extracted the seeds which are called certified seeds, for sale and distribution to farmers. There can be no question that all these acts and function fall within the definition of agriculture provided in the Minimum Wage Law, and, consequently, are agricultural as distinguished from no-agricultural functions. It follows that the laborers and farm workers who actually carry out and perform these functions are also engaged in agriculture. It is possible that not all the laborers and employees in the Experimental Station are actually engaged in preparing the land for planting, such as plowing, tilling, and planting the seeds or seedlings, in weeding the farm, in treating plant diseases and harvesting crops. some employees may be engaged in office work, such as, clerks, supervisors, maintenance workers, etc. But inasmuch as they are all employed by the Experimental Station, which is a farm enterprise, and their work is incidental to agriculture, they may also be considered as agricultural workers and employees. Interpretative Bulletin No. 14, issued by the United States Wage Administration Service, implementing the provisions of the Fair Labor Standards Act of the United States of 1938, from which our Minimum Wage Law was copied (Morave: Minimum Wage Law, p. 279), under the title "Office Workers, Etc.," says:

Office Workers, Etc.

12. We have received inquiries concerning office help - secretaries, clerks, bookkeepers, etc., night watchmen, maintenance workers, engineers, etc., who are employed by a farmer or a farm in connection with the activities described in the definition of "agriculture" contained in section 3 (f). In our opinion such employees are exempt. (Teller" Labor Disputes and Collective Bargaining, Vol. II, p. 1209)

The above-reproduced portion of the bulletin, applied in this jurisdiction, means that the employees mentioned therein are not governed by our Minimum Wage Law, as regards the minimum wage of P4.00 a day for non-agricultural workers; consequently, they may receive a only the minimum wage of P2.50 a day, prescribed for workers engaged in agriculture.

But petitioners contend that the Bureau of Plant Industry and Experimental Station could not be engaged in agriculture for the reason that their farm enterprise is not for profit. In answer to this

contention, it is enough to say that Minimum Wage Law in defining agriculture, does not prescribe the condition that the person or entity is engaged in it for purposes of profit. We can well imagine a person interested in research and scientific agriculture who proceeds to cultivate a little farm of, say, one or two hectares, to put into practice the results of his research, introducing in the cultivation the most modern methods, the most suitable fertilizers, etc., so that a hectare so cultivated can produce, say, from 250 to 300 cavans of palay and incidentally to compete a prize or a medal offered by the Government or any of its agencies. The fact that he does not cultivate the farm for purposes of profit, but rather in the interest of science and to prove his scientific and agricultural theories, and incidentally enter the contest for a prize, does not make him less agriculturist and his activities as agriculture.

Incidentally, it may be stated that the Secretary of Justice in an opinion rendered in connection with the different activities of the Davao Regional Fiber Station, holds that the laborers and employees of said fiber experimental station are not entitled to the minimum wage of P4.00.

In view of the foregoing, the decision appealed from is hereby reversed affirmed. No costs.

==G.R. No. 122827.  March 29, 1999]

LIDUVINO M. MILLARES, et. al, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, (FIFTH DIVISION), and PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES (PICOP), respondents.

Petitioners numbering one hundred sixteen (116)[1] occupied the positions of Technical Staff, Unit Manager, Section Manager, Department Manager, Division Manager and Vice President in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur.  In 1992 PICOP suffered a major financial setback allegedly brought about by the joint impact of restrictive government regulations on logging and the economic crisis.  To avert further losses, it undertook a retrenchment program and terminated the services of petitioners.  Accordingly, petitioners received separation pay computed at the rate of one (1) month basic pay for every year of service.  Believing however that the allowances they allegedly regularly received on a monthly basis during their employment should have been included in the computation thereof they lodged a complaint for separation pay differentials.

The allowances in question pertained to the following -

1.  Staff/Manager's Allowance   -

Respondent PICOP provides free housing facilities to supervisory and managerial employees assigned in Bislig.  The privilege includes free water and electric consumption.  Owing however to shortage of such facilities, it was constrained to grant Staff allowance instead to those who live in rented houses outside but

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near the vicinity of the mill site.  But the allowance ceases whenever a vacancy occurs in the company's housing facilities.  The former grantee is then directed to fill the vacancy.  For Unit, Section and Department Managers, respondent PICOP gives an additional amount to meet the same kind of expenses called Manager's allowance.

2.  Transportation Allowance   -

To relieve respondent PICOP's motor pool in Bislig from a barrage of requests for company vehicles and to stabilize company vehicle requirements it grants transportation allowance to key officers and Managers assigned in the mill site who use their own vehicles in the performance of their duties.  It is a conditional grant such that when the conditions no longer obtain, the privilege is discontinued.  The recipients of this kind of allowance are required to liquidate it by submitting a report with a detailed enumeration of expenses incurred.

3.  Bislig Allowance   -

The Bislig Allowance is given to Division Managers and corporate officers assigned in Bislig on account of the hostile environment prevailing therein.  But once the recipient is transferred elsewhere outside Bislig, the allowance ceases.

Applying Art.,97, par. (f), of the Labor Code which defines if wage," the Executive Labor Arbiter opined that the subject allowances, being customarily furnished by respondent PICOP and regularly received by petitioners, formed part of the latter's wages.  Resolving the controversy from another angle, on the strength of the ruling in Santos v. NLRC[2] and Soriano v. NLRC[3] that in the computation of separation pay account should be taken not just of the basic salary but also of the regular allowances that the employee had been receiving, he concluded that the allowances should be included in petitioners' base pay.  Thus respondent PICOP was ordered on 28 April 1994 to pay petitioners Four Million Four Hundred Eighty-One Thousand Pesos (P4,481,000.00) representing separation pay differentials plus ten per cent (10%) thereof as attorney's fees.[4]

The National Labor Relations Commission (NLRC) did not share the view of the Executive Labor Arbiter.  On 7 October 1994 it set aside the assailed decision by decreeing that the allowances did not form part of the salary base used in computing separation pay.[5]

Its ruling was based on the finding that the cases relied upon by the Executive Labor Arbiter were inapplicable since they involved illegal dismissal where separation pay was granted in lieu of reinstatement which was no longer feasible.  Instead, what it considered in point was Estate of the late Eugene J. Kneebone v. NLRC[6] where the Court held that representation and transportation allowances were deemed not part of salary and should therefore be excluded in the computation of separation benefits.  Relating the present case with Art. 97, par. (f), of the Labor Code, the NLRC likewise found that petitioners' allowances were contingency-based and thus

not included in their salaries.  On 26 September 1995 reconsideration was denied.[7]

In this petition for certiorari, petitioners submit that their allowances are included in the definition of "facilities" in Art. 97, par. (f), of the Labor Code, being necessary and indispensable for their existence and subsistence.  Furthermore they claim that their availment of the monetary equivalent of those "facilities" on a monthly basis was characterized by permanency, regularity and customariness.  And to fortify their arguments they insist on the applicability of Santos,[8] Soriano,[9] The Insular Life Assurance Company,[10] Planters Products, Inc.[11] and Songco[12] which are all against the NLRC holding that the salary base in computing separation pay includes not just the basic salary but also the regular allowances.

There is no showing of grave abuse of discretion on the part of the NLRC.  In case of retrenchment to prevent losses, Art. 283 of the the Labor Code imposes on the employer an obligation to grant to the affected employees separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher.  Since the law speaks of "pay," the question arises, "What exactly does the term connote?" We correlate Art. 283 with Art. 97 of the same Code on definition of terms.  "Pay" is not defined therein but  "wage."  In Songco the Court explained that both words (as well as salary) generally refer to one and the same meaning, i.e., a reward or recompense for services performed.  Specifically, "wage" is defined in letter (f) as the remuneration or earnings, however designated, capable of being expressed in terms ofmoney, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee.

We invite attention to the above-underlined clause.  Stated differently, when an employer customarily furnishes his employee board, lodging or other facilities, the fair and reasonable value thereof, as determined by the Secretary of Labor and Employment, is included in "wage." In order to ascertain whether the subject allowances form part of petitioner's "wages," we divide the discussion on the following - "customarily furnished;" "board, lodging or other facilities;" and, "fair and reasonable value as determined by the Secretary of Labor."

"Customary" is founded on long-established and constant practice[13] connoting regularity.[14] The receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary[15]because the nature of the grant is a factor worth considering.  We agree with the observation of the Office of the Solicitor General- that the subject allowances were temporarily, not regularly, received by petitioners because -

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In the case of the housing allowance, once a vacancy occurs in the company-provided housing accommodations, the employee concerned transfers to the company premises and his housing allowance is discontinued x x x x

On the other hand, the transportation allowance is in the form of advances for actual transportation expenses subject to liquidation x x x given only to employees who have personal cars.

The Bislig allowance is given to Division Managers and corporate officers assigned in Bislig, Surigao del Norte.  Once the officer is transferred outside Bislig, the allowance stops.[16]

We add that in the availment of the transportation allowance, respondent PICOP set another requirement that the personal cars be used by the employees in the performance of their duties.  When the conditions for availment ceased to exist, the allowance reached the cutoff point.  The finding of the NLRC along the same line likewise merits concurrence, i.e., petitioners' continuous enjoyment of the disputed allowances was based on contingencies the occurrence of which wrote finis to such enjoyment.

Although it is quite easy to comprehend "board" and "lodging," it is not so with "facilities." Thus Sec. 5, Rule VII, Book III, of the Rules Implementing the Labor Code gives meaning to the term as including articles or services for the benefit of the employee or his family but excluding tools of the trade or articles or service primarily for the benefit of the employer or necessary to the conduct of the employer's business. The Staff /Manager's allowance may fall under "lodging" but the transportation and Bislig allowances are not embraced in "facilities" on the main consideration that they are granted as well as the Staff/Manager's allowance for respondent PICOP's benefit and convenience, i.e., to insure that petitioners render quality performance.  In determining whether a privilege is a facility, the criterion is not so much its kind but its purpose.[17] That the assailed allowances were for the benefit and convenience of respondent company was supported by the circumstance that they were not subjected to withholding tax.  Revenue Audit Memo Order No. 1-87 pertinently provides -

3.2 x x x x transportation, representation or entertainment expenses shall not constitute taxable compensation if:

(a) It is for necessary travelling and representation or entertainment expenses paid or incurred by the employee in the pursuit of the trade or business of the employer, and

(b) The employee is required to, and does, make an accounting/liquidation for such expense in accordance with the specific requirements of substantiation for such category or expense.

Board and lodging allowances furnished to an employee not in excess of the latter's needs and given free of charge, constitute income to the latter except if such

allowances or benefits are furnished to the employee for the convenience of the employer and as necessary incident to proper performance of his duties in which case such benefits or allowances do not constitute taxable income.[18]

The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules Implementing the Labor Code may from time to time fix in appropriate issuances the "fair and reasonable value of board, lodging and other facilities customarily furnished by an employer to his employees." Petitioners' allowances do not represent such fair and reasonable value as determined by the proper authority simply because the Staff/Manager's allowance and transportation allowance were amounts given by respondent company in lieu of actual provisions for housing and transportation needs whereas the Bislig allowance was given in consideration of being assigned to the hostile environment then prevailing in Bislig.

The inevitable conclusion is that, as reached by the NLRC, subject allowances did not form part of petitioners' wages.

In Santos[19] the Court decreed that in the computation of separation pay awarded in lieu of reinstatement, account must be taken not only of the basic salary but also of transportation and emergency living allowances. Later, the Court in Soriano, citing Santos, was general in its holding that the salary base properly used in computing separation pay where reinstatement was no longer feasible should include not just the basic salary but also the regular allowances that the employee had been receiving.  Insular merely reiterated the aforementioned rulings.  The rationale is not difficult to discern.  It is the obligation of the employer to pay an illegally dismissed employee the whole amount of his salaries plus all other benefits, bonuses and general increases to which he would have been normally entitled had he not been dismissed and had not stopped working.[20] The same holds true in case of retrenched employees.  And thus we applied Insular and Soriano in Planters in the computation of separation pay of retrenched employees.  Songco likewise involved retrenchment and was relied upon inPlanters, Soriano and Santos in determining the proper amount of separation pay.  As culled from the foregoing jurisprudence, separation pay when awarded to an illegally dismissed employee in lieu of reinstatement or to a retrenched employee should be computed based not only on the basic salary but also on the regular allowances that the employee had been receiving.  But in view of the previous discussion that the disputed allowances were not regularly received by petitioners herein, there was no reason at all for petitioners to resort to the above cases.

Neither is Kneebone applicable, contrary to the finding of the NLRC, because of the difference in factual circumstances.  In Kneebone, the Court was tasked to resolve the issue whether the representation and transportation allowances formed part of salary as to be considered in the computation of retirement benefits.  The ruling was in the negative on the main ground that the retirement plan of the company expressly excluded such allowances from salary.

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WHEREFORE, the petition is DISMISSED.  The resolution of public respondent National Labor Relations Commission dated 7 October 1994 holding that the Staff /Manager's, transportation and Bislig allowances did not form part of the salary base used in computing the separation pay of petitioners, as well as its resolution dated 26 September 1995 denying reconsideration, is AFFIRMED.  No costs.

SO ORDERED.

==

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