Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

 

G.R. No. 110068 February 15, 1995

PHILIPPINE DUPLICATORS, INC., petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE DUPLICATORS EMPLOYEES UNION-TUPAS, respondents.

R E S O L U T I O N

FELICIANO, J.:

On 11 November 1993, this Court, through its Third Division, rendered a decision dismissing the Petition for Certiorari filed by petitioner Philippine Duplicators, Inc. (Duplicators) in G.R. No. 110068. The Court upheld the decision of public respondent National Labor Relations Commission (NLRC), which affirmed the order of Labor Arbiter Felipe T. Garduque II directing petitioner to pay 13th month pay to private respondent employees computed on the basis of their fixed wages plus sales commissions. The Third Division also denied with finality on 15 December 1993 the Motion for Reconsideration filed (on 12 December 1993) by petitioner.

On 17 January 1994, petitioner Duplicators filed (a) a Motion for Leave to Admit Second Motion for Reconsideration and (b) a Second Motion for Reconsideration. This time, petitioner invoked the decision handed down by this Court, through its Second Division, on 10 December 1993 in the two (2) consolidated cases of Boie-Takeda Chemicals, Inc. vs. Hon. Dionisio de la Serna and Philippine Fuji Xerox Corp. vs. Hon. Cresenciano B. Trajano, in G.R. Nos. 92174 and 102552, respectively. In its decision, the Second Division inter alia declared null and void the second paragraph of Section 5 (a) 1 of the Revised Guidelines issued by then Secretary of Labor Drilon. Petitioner submits that the decision in the Duplicators case should now be considered as having been abandoned or reversed by the Boie-Takeda decision, considering that the latter went "directly opposite and contrary to" the conclusion reached in the former. Petitioner prays that the decision rendered in Duplicators be set aside and another be entered directing the dismissal of the money claims of private respondent Philippine Duplicators' Employees' Union.

In view of the nature of the issues raised, the Third Division of this Court referred the petitioner's Second Motion for Reconsideration, and its Motion for Leave to Admit the Second Motion for Reconsideration, to the Court en banc en consulta. The Court en banc, after preliminary deliberation, and inorder to settle the condition of the relevant case law, accepted G.R. No. 110068 as a banc case.

Deliberating upon the arguments contained in petitioner's Second Motion for Reconsideration, as well as its Motion for Leave to Admit the Second Motion for Reconsideration, and after review of the doctrines embodied, respectively, in Duplicators and Boie-Takeda, we consider that these Motions must fail.

The decision rendered in Boie-Takeda cannot serve as a precedent under the doctrine of stare decisis. The Boie-Takeda decision was promulgated a month after this Court, (through its Third Division), had rendered the decision in the instant case. Also, the petitioner's (first) Motion for Reconsideration of the decision dated 10 November 1993 had already been denied, with finality, on 15 December 1993, i.e.; before the Boie-Takeda decision became final on 5 January 1994.

Preliminarily, we note that petitioner Duplicators did not put in issue the validity of the Revised Guidelines on the Implementary on of the 13th Month Pay Law, issued on November 16, 1987, by then Labor Secretary Franklin M. Drilon, either in its Petition for Certiorari or in its (First) Motion for Reconsideration. In fact, petitioner's counsel relied upon these Guidelines and asserted their validity in opposing the decision rendered by public respondent NLRC. Any attempted change in petitioner's theory, at this late stage of the proceedings, cannot be allowed.

More importantly, we do not agree with petitioner that the decision in Boie-Takeda is "directly opposite or contrary to" the decision in the present (Philippine Duplicators). To the contrary, the doctrines enunciated in these two (2) cases in fact co-exist one with the other. The two (2) cases present quite different factual situations (although the same word "commissions" was used or invoked) the legal characterizations of which must accordingly differ.

The Third Division in Durplicators found that:

In the instant case, there is no question that the sales commission earned by the salesmen who make or close a sale of duplicating machines distributed by petitioner corporation, constitute part of the compensation or remuneration paid to salesmen for serving as salesmen, and hence as part of the "wage" or salary of petitioner's salesmen. Indeed, it appears that petitioner pays its salesmen a small fixed or guaranteed wage; the greater part of the salesmen's wages or salaries being composed of the sales or incentive commissions earned on actual sales closed by them. No doubt this particular galary structure was intended for the benefit of the petitioner corporation, on the apparent assumption that thereby its salesmen would be moved to greater enterprise and diligence and close more sales in the expectation of increasing their sales commissions. This, however, does not detract from the character of such commissions as part of the salary or wage paid to each of its salesmen for rendering services to petitioner corporation.

In other words, the sales commissions received for every duplicating machine sold constituted part of the basic compensation or remuneration of the salesmen of Philippine Duplicators for doing their job. The portion of the salary structure representing commissions simply comprised an automatic increment to the monetary value initially assigned to each unit of work rendered by a salesman. Especially significant here also is the fact that the fixed or guaranteed portion of the wages paid to the Philippine Duplicators' salesmen represented only 15%-30% of an employee's total earnings in a year. We note the following facts on record:

Salesmen's Total Earnings and 13th Month Pay For the Year 1986 2

Name of Total Amount Paid Montly FixedSalesman Earnings as 13th Month Pay Wages x 12 3

Baylon, P76,610.30 P1,350.00 P16,200.00Benedicto

Bautista 90,780.85 1,182.00 14,184.00Salvador

Brito, 64,382.75 1,238.00 14,856.00Tomas

Bunagan, 89,287.75 1,266.00 15,192.00Jorge

Canilan, 74,678.17 1,350.00 16,200.00Rogelio

Dasig, 54,625.16 1,378,00 16,536.00Jeordan

Centeno, 51,854.15 1,266.04 15,192.00Melecio, Jr.

De los Santos 73,551.39 1,322.00 15,864.00Ricardo

del Mundo, 108,230.35 1,406.00 16,872.00Wilfredo

Garcia, 93,753.75 1,294.00 15,528.00Delfin

Navarro, 98,618.71 1,266.00 15,192.00Ma. Teresa

Ochosa, 66,275.65 1,406.00 16,872.00Rolano

Quisumbing, 101,065.75 1,406.00 16,872.00Teofilo

Rubina, 42,209.73 1,266.00 15,192.00Emma

Salazar, 64,643.65 1,238.00 14,856.00Celso

Sopelario, 52,622.27 1,350.00 16,200.00Ludivico

Tan, 30,127.50 1,238.00 14,856.00Leynard

Talampas, 146,510.25 1,434.00 17,208.00Pedro

Villarin, 41,888.10 1,434.00 17,208.00Constancio

Carrasco, 50,201.20 403.75*Cicero

Punzalan, 24,351.89 1,266.00 15,192.00Reynaldo

Poblador, 25,516.75 323.00*Alberto

Cruz, 32,950.45 323.00*Danilo

Baltazar, 15,681.35 323.00*Carlito

Considering the above circumstances, the Third Division held, correctly, that the sales commissions were an integral part of the basic salary structure of Philippine Duplicators' employees salesmen. These commissions are not overtime payments, nor profit-sharing payments nor any other fringe benefit. Thus, the salesmen's commissions, comprising a pre-determined percent of the selling price of the goods sold by each salesman, were properly included in the term "basic salary" for purposes of computing their 13th month pay.

In Boie-Takeda the so-called commissions "paid to or received by medical representatives of Boie-Takeda Chemicals or by the rank and file employees of Philippine Fuji Xerox Co.," were excluded from the term "basic salary" because these were paid to the medical representatives and rank-and-file employees as "productivity bonuses." 4 The Second Division characterized these payments as additional monetary benefits not properly included in the term "basic salary" in computing their 13th month pay. We note that productivity bonuses are generally tied to the productivity, or capacity for revenue production, of a corporation; such bonuses closely resemble profit-sharing payments and have no clear director necessary relation to the amount of work actually done by each individual employee. More generally, a bonus is an amount granted and paid ex gratia to the employee; its payment constitutes an act of enlightened generosity and self-interest on the part of the employer, rather than as a demandable or enforceable obligation. In Philippine Education Co. Inc. (PECO) v. Court of Industrial Relations, 5 the Court explained the nature of a bonus in the following general terms:

As a rule a bonus is an amount granted and paid to an employee for his industry loyalty which contributed to the success of the employer's business and made possible the realization of profits. It is an act of generosity of the employer for which the employee ought to be thankful and grateful. It is also granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits. . . . . From the legal point of view a bonus is not and mandable and enforceable obligation. It is so when It is made part of the wage or salary or compensation. In such a case the latter would be a fixed amount and the former would be a contingent one dependent upon the realization of profits. . . . 6 (Emphasis supplied)

In Atok-Big Wedge Mining Co., Inc. v. Atok-Big Wedge Mutual Benefit Association, 7 the Court amplified:

. . . . Whether or not [a] bonus forms part of waqes depends upon the circumstances or conditions for its payment. If it is an additional compensation which the employer promised and agreed to give without any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage. But if it is paid only if profits are realized or a certain amount of productivity achieved, it cannot be considered part of wages. . . . It is also paid on the basis of actual or actual work accomplished. If the desired goal of production is not obtained, or the amount of actual work accomplished, the bonus does not accrue. . . . 8 (Emphasis supplied)

More recently, the non-demandable character of a bonus was stressed by the Court in Traders Royal Bank v. National Labor Relations Commission: 9

A bonus is a "gratuity or act of liberality of the giver which the recipient has no right to demand as a matter of right." (Aragon v. Cebu Portland Cement Co., 61 O.G. 4567). "It is something given in addition to what is ordinarily received by or strictly due the recipient." The granting of a bonus is basically a management prerogative which cannot be forced upon the employer "who may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employee's basic salaries or wages . . ." (Kamaya Point Hotel v. NLRC, 177 SCRA 160 [1989]). 10 (Emphasis supplied)

If an employer cannot be compelled to pay a productivity bonus to his employees, it should follow that such productivity bonus, when given, should not be deemed to fall within the "basic salary" of employees when the time comes to compute their 13th month pay.

It is also important to note that the purported "commissions" paid by the Boie-Takeda Company to its medical representatives could not have been "sales commissions" in the same sense that Philippine Duplicators paid its salesmen Sales commissions. Medical representatives are not salesmen; they do not effect any sale of any article at all. In common commercial practice, in the Philippines and elsewhere, of which we take judicial notice, medical representatives are employees engaged in the promotion of pharmaceutical products or medical devices manufactured by their employer. They promote such products by visiting identified physicians and inform much physicians, orally and with the aid of printed brochures, of the existence and chemical composition and virtues of particular products of their company. They commonly leave medical samples with each physician visited; but those samples are not "sold" to the physician and the physician is, as a matter of professional ethics, prohibited from selling such samples to their patients. Thus, the additional payments made to Boie-Takeda's medical representatives were not in fact sales commissions but rather partook of the nature of profit-sharing bonuses.

The doctrine set out in the decision of the Second Division is, accordingly, that additional payments made to employees, to the extent they partake of the nature of profit-sharing payments, are properly excluded from the ambit of the term "basic salary" for purposes of computing the 13th month pay due to employees. Such additional payments are not "commissions" within the meaning of the second paragraph of Section 5 (a) of the Revised Guidelines Implementing 13th Month Pay.

The Supplementary Rules and Regulations Implementing P.D. No. 851 subsequently issued by former Labor Minister Ople sought to clarify the scope of items excluded in the computation of the 13th month pay; viz.:

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

We observe that the third item excluded from the term "basic salary" is cast in open ended and apparently circular terms: "other remunerations which are not part of the basic salary." However, what particular types of earnings and remuneration are or are not properly included or integrated in the basic salary are questions to be resolved on a case to case basis, in the light of the specific and detailed facts of each case. In principle, where these earnings and remuneration are closely akin to fringe benefits, overtime pay or profit-sharing payments, they are properly excluded in computing the 13th month pay. However, sales commissions which are effectively an integral portion of the basic salary structure of an employee, shall be included in determining his 13th month pay.

We recognize that both productivity bonuses and sales commissions may have an incentive effect. But there is reason to distinguish one from the other here. Productivity bonuses are generally tied to the productivity or profit generation of the employer corporation. Productivity bonuses are not directly dependent on the extent an individual employee exerts himself. A productivity bonus is something extra for which no specific additional services are rendered by any particular employee and hence not legally demandable, absent a contractual undertaking to pay it. Sales commissions, on the other hand, such as those paid in Duplicators, are intimately related to or directly proportional to the extent or energy of an employee's endeavors. Commissions are paid upon the specific results achieved by a salesman-employee. It is a percentage of the sales closed by a salesman and operates as an integral part of such salesman's basic pay.

Finally, the statement of the Second Division in Boie-Takeda declaring null and void the second paragraph of Section 5(a) of the Revised Guidelines Implementing the 13th Month Pay issued by former Labor Secretary Drilon, is properly understood as holding that that second paragraph provides no legal basis for including within the term "commission" there used additional payments to employees which are,

as a matter of fact, in the nature of profit-sharing payments or bonuses. If and to the extent that such second paragraph is so interpreted and applied, it must be regarded as invalid as having been issued in excess of the statutory authority of the Secretary of Labor. That same second paragraph however, correctly recognizes that commissions, like those paid in Duplicators, may constitute part of the basic salary structure of salesmen and hence should be included in determining the 13th month pay; to this extent, the second paragraph is and remains valid.

ACCORDINGLY, the Motions for (a) Leave to File a Second Motion for Reconsideration and the (b) aforesaid Second Reconsideration are DENIED for lack of merit. No further pleadings will be entertained.

Narvasa, C.J., Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan, Mendoza and Francisco, JJ., concur.

 

Footnotes

1 The second paragraph of Section 5 (a) of the Revised Guidelines Implementing the 13th Month Pay reads as follows:

Employees who are paid a fixed or guaranteed wage plus commission are also entitled to the mandated 13th month pay, based on their total earnings during the calendar year, i.e., on both their fixed or guaranteed wage and commission.

2 See Annex "A", Records of G.R. No. 110068, Philippine Duplicators, Inc. v. National Labor Relations Commission.

3 This column is added by the Court. We have assumed that the amount paid as 13th month pay, as shown in the preceding column, represented a full month's fixed wage, without any deductions for, e.g., absences, undertime, etc. In the items below marked with an asterisk, the amount of the 13th month pay is so tiny as to give rise to the impression that some deduction therefrom was probably made; the nature of such deduction is not here pertinent.

The 15%-30% range in the proportion of fixed wages to total earnings is obtained by the following fraction:

Monthly Fixed Wage x 12

——————————

Total Earnings

4 See Rollo of Boie-Takeda v. Trajano, p. 126; Rollo of Fuji Xerox v. Trajano, p. 27.

5 92 Phil. 381 (1952).

6 92 Phil. at 385; see also Luzon Stevedoring Corporation v. Court of Industrial Relations, 15 SCRA 660 (1965).

7 92 Phil. 754 (1953).

8 92 Phil, at 757; see also Claparols v. Court of Industrial Relations, 65 SCRA 613 (1975).

9 189 SCRA 274 (1990).

10 189 SCRA at 277.

 

Republic of the Philippines

Supreme CourtManila

 

THIRD DIVISION

 

 

EASTERN TELECOMMUNICATIONS PHILIPPINES, INC.,

Petitioner,

 

 

 

- versus -

 

 

 

EASTERN TELECOMS EMPLOYEES UNION,

Respondent.

 

  G.R. No. 185665

 

Present:

 

VELASCO, JR., J., Chairperson,

BERSAMIN,*

ABAD,

MENDOZA, and

PERLAS-BERNABE, JJ.

 

 

Promulgated:

 

February 8, 2012

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

 

D E C I S I O N

 

MENDOZA, J.:

 

 

*

Before the Court is a petition for review on certiorari seeking modification

of the June 25, 2008 Decision1[1] of the Court of Appeals (CA) and its December

12, 2008 Resolution,2[2] in CA-G.R. SP No. 91974, annulling the April 28, 2005

Resolution3[3] of the National Labor Relations Commission (NLRC) in NLRC-

NCR-CC-000273-04 entitled “In the Matter of the Labor Dispute in Eastern

Telecommunications, Philippines, Inc.”

 

The Facts

 

As synthesized by the NLRC, the facts of the case are as follows, viz:

 

Eastern Telecommunications Phils., Inc. (ETPI) is a corporation engaged in the business of providing telecommunications facilities, particularly leasing international date lines or circuits, regular landlines, internet and data services, employing approximately 400 employees.

 Eastern Telecoms Employees Union (ETEU) is the certified

exclusive bargaining agent of the company’s rank and file employees with a strong following of 147 regular members. It has an existing collecti[ve] bargaining agreement with the company to expire in the year 2004 with a Side Agreement signed on September 3, 2001.

 In essence, the labor dispute was a spin-off of the

company’s plan to defer payment of the 2003 14th, 15th and 16th

month bonuses sometime in April 2004. The company’s main

1

2

3

ground in postponing the payment of bonuses is due to allege continuing deterioration of company’s financial position which started in the year 2000. However, ETPI while postponing payment of bonuses sometime in April 2004, such payment would also be subject to availability of funds.

 Invoking the Side Agreement of the existing Collective

Bargaining Agreement for the period 2001-2004 between ETPI and ETEU which stated as follows:

 “4. Employment Related Bonuses. The

Company confirms that the 14th, 15th and 16th month bonuses (other than 13th month pay) are granted.”

 The union strongly opposed the deferment in payment of the bonuses by filing a preventive mediation complaint with the NCMB on July 3, 2003, the purpose of which complaint is to determine the date when the bonus should be paid. 

In the conference held at the NCMB, ETPI reiterated its stand that payment of the bonuses would only be made in April 2004 to which date of payment, the union agreed. Thus, considering the agreement forged between the parties, the said agreement was reduced to a Memorandum of Agreement. The union requested that the President of the company should be made a signatory to the agreement, however, the latter refused to sign. In addition to such a refusal, the company made a sudden turnaround in its position by declaring that they will no longer pay the bonuses until the issue is resolved through compulsory arbitration.

 

 The company’s change in position was contained in a

letter dated April 14, 2004 written to the union by Mr. Sonny Javier, Vice-President for Human Resources and Administration, stating that “the deferred release of bonuses had been superseded and voided due to the union’s filing of the issue to the NCMB on July 18, 2003.” He declared that “until the matter is resolved in a compulsory arbitration, the company cannot and will not pay any ‘bonuses’ to any and all union members.”

 Thus, on April 26, 2004, ETEU filed a Notice of Strike on

the ground of unfair labor practice for failure of ETPI to pay the

bonuses in gross violation of the economic provision of the existing CBA.

 On May 19, 2004, the Secretary of Labor and

Employment, finding that the company is engaged in an industry considered vital to the economy and any work disruption thereat will adversely affect not only its operation but also that of the other business relying on its services, certified the labor dispute for compulsory arbitration pursuant to Article 263 (q) of the Labor Code as amended.

 Acting on the certified labor dispute, a hearing was called

on July 16, 2004 wherein the parties have submitted that the issues for resolution are (1) unfair labor practice and (2) the grant of 14th, 15th and 16th month bonuses for 2003, and 14th

month bonus for 2004. Thereafter, they were directed to submit their respective position papers and evidence in support thereof after which submission, they agreed to have the case considered submitted for decision.4[4]

  

In its position paper,5[5] the Eastern Telecoms Employees Union (ETEU)

claimed that Eastern Telecommunications Philippines, Inc. (ETPI) had consistently

and voluntarily been giving out 14th month bonus during the month of April, and

15th and 16th month bonuses every December of each year (subject bonuses) to its

employees from 1975 to 2002, even when it did not realize any net profits. ETEU

posited that by reason of its long and regular concession, the payment of these

monetary benefits had ripened into a company practice which could no longer be

unilaterally withdrawn by ETPI. ETEU added that this long-standing company

practice had been expressly confirmed in the Side Agreements of the 1998-2001

and 2001-2004 Collective Bargaining Agreements (CBA) which provided for the

continuous grant of these bonuses in no uncertain terms. ETEU theorized that the

4

5

grant of the subject bonuses is not only a company practice but also a contractual

obligation of ETPI to the union members.

 

ETEU contended that the unjustified and malicious refusal of the company

to pay the subject bonuses was a clear violation of the economic provision of the

CBA and constitutes unfair labor practice (ULP). According to ETEU, such refusal

was nothing but a ploy to spite the union for bringing the matter of delay in the

payment of the subject bonuses to the National Conciliation and Mediation Board

(NCMB). It prayed for the award of moral and exemplary damages as well as

attorney’s fees for the unfair labor practice allegedly committed by the company.

 

On the other hand, ETPI in its position paper,6[6] questioned the authority of

the NLRC to take cognizance of the case contending that it had no jurisdiction over

the issue which merely involved the interpretation of the economic provision of the

2001-2004 CBA Side Agreement. Nonetheless, it maintained that the complaint for

nonpayment of 14th, 15th and 16th month bonuses for 2003 and 14th month bonus for

2004 was bereft of any legal and factual basis. It averred that the subject bonuses

were not part of the legally demandable wage and the grant thereof to its

employees was an act of pure gratuity and generosity on its part, involving the

exercise of management prerogative and always dependent on the financial

performance and realization of profits. It posited that it resorted to the

discontinuance of payment of the bonuses due to the unabated huge losses that the

company had continuously experienced. It claimed that it had been suffering

serious business losses since 2000 and to require the company to pay the subject 6

bonuses during its dire financial straits would in effect penalize it for its past

generosity. It alleged that the non-payment of the subject bonuses was neither

flagrant nor malicious and, hence, would not amount to unfair labor practice.

 

Further, ETPI argued that the bonus provision in the 2001-2004 CBA Side

Agreement was a mere affirmation that the distribution of bonuses was

discretionary to the company, premised and conditioned on the success of the

business and availability of cash. It submitted that said bonus provision partook of

the nature of a “one-time” grant which the employees may demand only during the

year when the Side Agreement was executed and was never intended to cover the

entire term of the CBA. Finally, ETPI emphasized that even if it had an

unconditional obligation to grant bonuses to its employees, the drastic decline in its

financial condition had already legally released it therefrom pursuant to Article

1267 of the Civil Code.

 

On April 28, 2005, the NLRC issued its Resolution dismissing ETEU’s

complaint and held that ETPI could not be forced to pay the union members the

14th, 15th and 16th month bonuses for the year 2003 and the 14th month bonus for the

year 2004 inasmuch as the payment of these additional benefits was basically a

management prerogative, being an act of generosity and munificence on the part of

the company and contingent upon the realization of profits. The NLRC pronounced

that ETPI may not be obliged to pay these extra compensations in view of the

substantial decline in its financial condition. Likewise, the NLRC found that ETPI

was not guilty of the ULP charge elaborating that no sufficient and substantial

evidence was adduced to attribute malice to the company for its refusal to pay the

subject bonuses. The dispositive portion of the resolution reads:

 WHEREFORE, premises considered, the instant complaint

is hereby DISMISSED for lack of merit.

SO ORDERED.7[7]

 

Respondent ETEU moved for reconsideration but the motion was denied by

the NLRC in its Resolution dated August 31, 2005.

 

Aggrieved, ETEU filed a petition for certiorari8[8] before the CA ascribing

grave abuse of discretion on the NLRC for disregarding its evidence which

allegedly would prove that the subject bonuses were part of the union members’

wages, salaries or compensations. In addition, ETEU asserted that the NLRC

committed grave abuse of discretion when it ruled that ETPI is not contractually

bound to give said bonuses to the union members.

 

In its assailed June 25, 2008 Decision, the CA declared that the Side

Agreements of the 1998 and 2001 CBA created a contractual obligation on ETPI to

confer the subject bonuses to its employees without qualification or condition. It

also found that the grant of said bonuses has already ripened into a company 7

8

practice and their denial would amount to diminution of the employees’ benefits. It

held that ETPI could not seek refuge under Article 1267 of the Civil Code because

this provision would apply only when the difficulty in fulfilling the contractual

obligation was manifestly beyond the contemplation of the parties, which was not

the case therein. The CA, however, sustained the NLRC finding that the allegation

of ULP was devoid of merit. The dispositive portion of the questioned decision

reads:

 WHEREFORE, premises considered, the instant petition is

GRANTED and the resolution of the National Labor Relations Commission dated April 28, 2005 is hereby ANNULLED and SET ASIDE. Respondent Eastern Telecommunications Philippines, Inc. is ordered to pay the members of petitioner their 14th, 15th and 16th month bonuses for the year 2003 and 14th month for the year 2004. The complaint for unfair labor practice against said respondent is DISMISSED.

SO ORDERED.9[9]

 

 

 

ISSUES

 

Dissatisfied, ETPI now comes to this Court via Rule 45, raising the

following errors allegedly committed by the CA, to wit:

9

 

I.

THE COURT OF APPEALS COMMITTED GRAVE ERROR OF LAW WHEN IT ANNULLED AND SET ASIDE THE RESOLUTIONS OF THE NLRC DISREGARDING THE WELL SETTLED RULE THAT A WRIT OF CERTIORARI (UNDER RULE 65) ISSUES ONLY FOR CORRECTION OF ERRORS OF JURISDICTION OR GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION.

 

II.

 

THE COURT OF APPEALS COMMITTED GRAVE ERROR OF LAW WHEN IT DISREGARDED THE RULE THAT FINDINGS OF FACTS OF QUASI-JUDICIAL BODIES ARE ACCORDED FINALITY IF THEY ARE SUPPORTED BY SUBSTANTIAL EVIDENCE CONSIDERING THAT THE CONCLUSIONS OF THE NLRC WERE BASED ON SUBSTANTIAL AND OVERWHELMING EVIDENCE AND UNDISPUTED FACTS.

 

III.

 

IT WAS A GRAVE ERROR OF LAW FOR THE COURT OF APPEALS TO CONSIDER THAT THE BONUS GIVEN BY EASTERN COMMUNICATIONS TO ITS EMPLOYEES IS NOT DEPENDENT ON THE REALIZATION OF PROFITS.

 

IV.

 

THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW WHEN IT DISREGARDED THE UNDISPUTED FACT THAT EASTERN COMMUNICATIONS IS SUFFERING FROM TREMENDOUS FINANCIAL LOSSES, AND ORDERED EASTERN COMMUNICATIONS

TO GRANT THE BONUSES REGARDLESS OF THE FINANCIAL DISTRESS OF EASTERN COMMUNICATIONS.

 

V.

 

THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW WHEN IT ARRIVED AT THE CONCLUSION THAT THE GRANT OF BONUS GIVEN BY EASTERN COMMUNICATIONS TO ITS EMPLOYEES HAS RIPENED INTO A COMPANY PRACTICE.10[10]

 

 

A careful perusal of the voluminous pleadings filed by the parties leads the

Court to conclude that this case revolves around the following core issues:

1. Whether or not petitioner ETPI is liable to pay 14th, 15th and 16th

month bonuses for the year 2003 and 14th month bonus for the year 2004 to the members of respondent union; and 2. Whether or not the CA erred in not dismissing outright ETEU’s petition for certiorari.

 

ETPI insists that it is under no legal compulsion to pay 14th, 15th and 16th

month bonuses for the year 2003 and 14th month bonus for the year 2004

contending that they are not part of the demandable wage or salary and that their

grant is conditional based on successful business performance and the availability

10

of company profits from which to source the same. To thwart ETEU’s monetary

claims, it insists that the distribution of the subject bonuses falls well within the

company’s prerogative, being an act of pure gratuity and generosity on its part.

Thus, it can withhold the grant thereof especially since it is currently plagued with

economic difficulties and financial losses. It alleges that the company’s fiscal

situation greatly declined due to tremendous and extraordinary losses it sustained

beginning the year 2000. It claims that it cannot be compelled to act liberally and

confer upon its employees additional benefits over and above those mandated by

law when it cannot afford to do so. It posits that so long as the giving of bonuses

will result in the financial ruin of an already distressed company, the employer

cannot be forced to grant the same.

 

ETPI further avers that the act of giving the subject bonuses did not ripen

into a company practice arguing that it has always been a contingent one dependent

on the realization of profits and, hence, the workers are not entitled to bonuses if

the company does not make profits for a given year. It asseverates that the 1998

and 2001 CBA Side Agreements did not contractually afford ETEU a vested

property right to a perennial payment of the bonuses. It opines that the bonus

provision in the Side Agreement allows the giving of benefits only at the time of its

execution. For this reason, it cannot be said that the grant has ripened into a

company practice. In addition, it argues that even if such traditional company

practice exists, the CA should have applied Article 1267 of the Civil Code which

releases the obligor from the performance of an obligation when it has become so

difficult to fulfill the same.

 

It is the petitioner’s stance that the CA should have dismissed outright the

respondent union’s petition for certiorari alleging that no question of jurisdiction

whatsoever was raised therein but, instead, what was being sought was a judicial

re-evaluation of the adequacy or inadequacy of the evidence on record. It claims

that the CA erred in disregarding the findings of the NLRC which were based on

substantial and overwhelming evidence as well as on undisputed facts. ETPI added

that the CA court should have refrained from tackling issues of fact and, instead,

limited itself on issues of jurisdiction and grave abuse of jurisdiction amounting to

lack or excess of it.

 

The Court’s Ruling

As a general rule, in petitions for review under Rule 45, the Court, not being

a trier of facts, does not normally embark on a re-examination of the evidence

presented by the contending parties during the trial of the case considering that the

findings of facts of the CA are conclusive and binding on the Court. The rule,

however, admits of several exceptions, one of which is when the findings of the

appellate court are contrary to those of the trial court or the lower administrative

body, as the case may be.11[11] Considering the incongruent factual conclusions of

the CA and the NLRC, this Court finds Itself obliged to resolve it.

 

11

The pivotal question determinative of this controversy is whether the

members of ETEU are entitled to the payment of 14th, 15th and 16th month bonuses

for the year 2003 and 14th month bonus for year 2004.

 

After an assiduous assessment of the record, the Court finds no merit in the

petition.

 

From a legal point of view, a bonus is a gratuity or act of liberality of the

giver which the recipient has no right to demand as a matter of right.12[12] The

grant of a bonus is basically a management prerogative which cannot be forced

upon the employer who may not be obliged to assume the onerous burden of

granting bonuses or other benefits aside from the employee’s basic salaries or

wages.13[13]

 

A bonus, however, becomes a demandable or enforceable obligation when it

is made part of the wage or salary or compensation of the employee.14[14]

Particularly instructive is the ruling of the Court in Metro Transit Organization,

Inc. v. National Labor Relations Commission,15[15] where it was written:

 

12

13

14

15

Whether or not a bonus forms part of wages depends upon the circumstances and conditions for its payment. If it is additional compensation which the employer promised and agreed to give without any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage. But if it is paid only if profits are realized or if a certain level of productivity is achieved, it cannot be considered part of the wage. Where it is not payable to all but only to some employees and only when their labor becomes more efficient or more productive, it is only an inducement for efficiency, a prize therefore, not a part of the wage.

 

 

The consequential question that needs to be settled, therefore, is whether the

subject bonuses are demandable or not. Stated differently, can these bonuses be

considered part of the wage, salary or compensation making them enforceable

obligations?

 

The Court believes so.

 

In the case at bench, it is indubitable that ETPI and ETEU agreed on the

inclusion of a provision for the grant of 14 th, 15th and 16th month bonuses in the

1998-2001 CBA Side Agreement,16[16] as well as in the 2001-2004 CBA Side

Agreement,17[17] which was signed on September 3, 2001. The provision, which

was similarly worded, states:

16

17

 

Employment-Related BonusesThe Company confirms that the 14th, 15th and 16th month bonuses (other than the 13th month pay) are granted.

 

A reading of the above provision reveals that the same provides for the

giving of 14th, 15th and 16th month bonuses without qualification. The wording of

the provision does not allow any other interpretation. There were no conditions

specified in the CBA Side Agreements for the grant of the benefits contrary to the

claim of ETPI that the same is justified only when there are profits earned by the

company. Terse and clear, the said provision does not state that the subject bonuses

shall be made to depend on the ETPI’s financial standing or that their payment was

contingent upon the realization of profits. Neither does it state that if the company

derives no profits, no bonuses are to be given to the employees. In fine, the

payment of these bonuses was not related to the profitability of business

operations.

 

The records are also bereft of any showing that the ETPI made it clear

before or during the execution of the Side Agreements that the bonuses shall be

subject to any condition. Indeed, if ETPI and ETEU intended that the subject

bonuses would be dependent on the company earnings, such intention should have

been expressly declared in the Side Agreements or the bonus provision should

have been deleted altogether. In the absence of any proof that ETPI’s consent was

vitiated by fraud, mistake or duress, it is presumed that it entered into the Side

Agreements voluntarily, that it had full knowledge of the contents thereof and that

it was aware of its commitment under the contract. Verily, by virtue of its

incorporation in the CBA Side Agreements, the grant of 14th, 15th and 16th month

bonuses has become more than just an act of generosity on the part of ETPI but a

contractual obligation it has undertaken. Moreover, the continuous conferment of

bonuses by ETPI to the union members from 1998 to 2002 by virtue of the Side

Agreements evidently negates its argument that the giving of the subject bonuses is

a management prerogative.

 

From the foregoing, ETPI cannot insist on business losses as a basis for

disregarding its undertaking. It is manifestly clear that although it incurred

business losses of ₱149,068,063.00 in the year 2000, it continued to distribute 14th,

15th and 16th month bonuses for said year. Notwithstanding such huge losses, ETPI

entered into the 2001-2004 CBA Side Agreement on September 3, 2001 whereby it

contracted to grant the subject bonuses to ETEU in no uncertain terms. ETPI

continued to sustain losses for the succeeding years of 2001 and 2002 in the

amounts of ₱348,783,013.00 and ₱315,474,444.00, respectively. Still and all, this

did not deter it from honoring the bonus provision in the Side Agreement as it

continued to give the subject bonuses to each of the union members in 2001 and

2002 despite its alleged precarious financial condition. Parenthetically, it must be

emphasized that ETPI even agreed to the payment of the 14th, 15th and 16th month

bonuses for 2003 although it opted to defer the actual grant in April 2004. All

given, business losses could not be cited as grounds for ETPI to repudiate its

obligation under the 2001-2004 CBA Side Agreement.

 

The Court finds no merit in ETPI’s contention that the bonus provision

confirms the grant of the subject bonuses only on a single instance because if this

is so, the parties should have included such limitation in the agreement. Nowhere

in the Side Agreement does it say that the subject bonuses shall be conferred once

during the year the Side Agreement was signed. The Court quotes with approval

the observation of the CA in this regard:

 

ETPI argues that assuming the bonus provision in the Side Agreement of the 2001-2004 CBA entitles the union members to the subject bonuses, it is merely in the nature of a “one-time” grant and not intended to cover the entire term of the CBA. The contention is untenable. The bonus provision in question is exactly the same as that contained in the Side Agreement of the 1998-2001 CBA and there is no denying that from 1998 to 2001, ETPI granted the subject bonuses for each of those years. Thus, ETPI may not now claim that the bonus provision in the Side Agreement of the 2001-2004 CBA is only a “one-time” grant.18

[18]

 

ETPI then argues that even if it is contractually bound to distribute the

subject bonuses to ETEU members under the Side Agreements, its current

financial difficulties should have released it from the obligatory force of said

contract invoking Article 1267 of the Civil Code. Said provision declares:

 

Article 1267. When the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part.

18

 

 

 

The Court is not persuaded.

 

The parties to the contract must be presumed to have assumed the risks of

unfavorable developments. It is, therefore, only in absolutely exceptional changes

of circumstances that equity demands assistance for the debtor.19[19] In the case at

bench, the Court determines that ETPI’s claimed depressed financial state will not

release it from the binding effect of the 2001-2004 CBA Side Agreement.

 

ETPI appears to be well aware of its deteriorating financial condition when

it entered into the 2001-2004 CBA Side Agreement with ETEU and obliged itself

to pay bonuses to the members of ETEU. Considering that ETPI had been

continuously suffering huge losses from 2000 to 2002, its business losses in the

year 2003 were not exactly unforeseen or unexpected. Consequently, it cannot be

said that the difficulty in complying with its obligation under the Side Agreement

was “manifestly beyond the contemplation of the parties.” Besides, as held in

Central Bank of the Philippines v. Court of Appeals,20[20] mere pecuniary inability

to fulfill an engagement does not discharge a contractual obligation. Contracts,

once perfected, are binding between the contracting parties. Obligations arising

19

20

therefrom have the force of law and should be complied with in good faith. ETPI

cannot renege from the obligation it has freely assumed when it signed the 2001-

2004 CBA Side Agreement.

 

Granting arguendo that the CBA Side Agreement does not contractually

bind petitioner ETPI to give the subject bonuses, nevertheless, the Court finds that

its act of granting the same has become an established company practice such that

it has virtually become part of the employees’ salary or wage. A bonus may be

granted on equitable consideration when the giving of such bonus has been the

company’s long and regular practice. In Philippine Appliance Corporation v.

Court of Appeals,21[21] it was pronounced:

 To be considered a “regular practice,” however, the giving

of the bonus should have been done over a long period of time, and must be shown to have been consistent and deliberate. The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowing fully well that said employees are not covered by the law requiring payment thereof.

 

The records show that ETPI, aside from complying with the regular 13th

month bonus, has been further giving its employees 14th month bonus every April

as well as 15th and 16th month bonuses every December of the year, without fail,

from 1975 to 2002 or for 27 years whether it earned profits or not. The

considerable length of time ETPI has been giving the special grants to its

21

employees indicates a unilateral and voluntary act on its part to continue giving

said benefits knowing that such act was not required by law. Accordingly, a

company practice in favor of the employees has been established and the payments

made by ETPI pursuant thereto ripened into benefits enjoyed by the employees.

 

The giving of the subject bonuses cannot be peremptorily withdrawn by

ETPI without violating Article 100 of the Labor Code:

 

Art. 100. Prohibition against elimination or diminution of benefits. – Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.

 

The rule is settled that any benefit and supplement being enjoyed by the

employees cannot be reduced, diminished, discontinued or eliminated by the

employer. The principle of non-diminution of benefits is founded on the

constitutional mandate to protect the rights of workers and to promote their welfare

and to afford labor full protection.22[22]

 

Interestingly, ETPI never presented countervailing evidence to refute

ETEU’s claim that the company has been continuously paying bonuses since 1975

up to 2002 regardless of its financial state. Its failure to controvert the allegation,

22

when it had the opportunity and resources to do so, works in favor of ETEU. Time

and again, it has been held that should doubts exist between the evidence presented

by the employer and the employee, the scales of justice must be tilted in favor of

the latter.23[23]

 

WHEREFORE, the petition is DENIED. The June 25, 2008 Decision of

the Court of Appeals and its December 12, 2008 Resolution are AFFIRMED.

 

SO ORDERED.

 SECOND DIVISION

[G.R. No. 150478.  April 15, 2005]

HACIENDA BINO/HORTENCIA STARKE, INC./HORTENCIA L. STARKE, petitioners, vs. CANDIDO CUENCA, FRANCISCO ACULIT, ANGELINA ALMONIA, DONALD ALPUERTO, NIDA BANGALISAN, ROGELIO CHAVEZ, ELMO DULINGGIS, MERCEDES EMPERADO, TORIBIO EMPERADO, JULIANA ENCARNADO, REYNALDO ENCARNADO, GENE FERNANDO, JOVEN FERNANDO, HERNANI FERNANDO, TERESITA FERNANDO, BONIFACIO GADON, JOSE GALLADA, RAMONITO KILAYKO, ROLANDO KILAYKO, ALFREDO LASTIMOSO, ANTONIO LOMBO, ELIAS LOMBO, EMMA LOMBO, LAURENCIA LOMBO, LUCIA LOMBO, JOEL MALACAPAY, ADELA MOJELLO, ERNESTO MOJELLO, FRUCTOSO MOJELLO, JESSICA MOJELLO, JOSE MOJELLO, MARITESS MOJELLO, MERLITA MOJELLO, ROMEO MOJELLO, RONALDO MOJELLO, VALERIANA MOJELLO, JAIME NEMENZO, RODOLFO NAPABLE, SEGUNDIA OCDEN, JARDIOLINA PABALINAS, LAURO PABALINAS, NOLI PABALINAS, RUBEN PABALINAS, ZALDY PABALINAS, ALFREDO PANOLINO, JOAQUIN PEDUHAN, JOHN PEDUHAN, REYNALDO PEDUHAN, ROGELIO PEDUHAN, JOSEPHINE PEDUHAN, ANTONIO PORRAS, JR., LORNA PORRAS, JIMMY REYES, ALICIA ROBERTO, MARCOS ROBERTO, JR., MARIA SANGGA, RODRIGO SANGGA, ARGENE SERON, SAMUEL SERON, SR., ANGELINO SENELONG, ARMANDO SENELONG, DIOLITO SENELONG, REYNALDO SENELONG, VICENTE SENELONG, FEDERICO STA. ANA, ROGELIO SUASIM, EDNA TADLAS, ARTURO TITONG, JR.,

23

JOSE TITONG, JR., NANCY VINGNO, ALMA YANSON, JIMMY YANSON, MYRNA VILLANUEVA BELENARIO, SALVADOR MALACAPAY, and RAMELO TIONGCO, respondents.

D E C I S I O N

CALLEJO, SR., J.:

Before us is a petition for review of the Decision[1] of the Court of Appeals (CA), dated July 31, 2001, and the Resolution dated September 24, 2001 denying the petitioners’ motion for reconsideration. The assailed decision modified the decision of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000099-98.

Hacienda Bino is a 236-hectare sugar plantation located at Barangay Orong, Kabankalan City, Negros Occidental, and represented in this case by Hortencia L. Starke, owner and operator of the said hacienda.

The 76 individual respondents were part of the workforce of Hacienda Bino consisting of 220 workers, performing various works, such as cultivation, planting of cane points, fertilization, watering, weeding, harvesting, and loading of harvested sugarcanes to cargo trucks.[2]

On July 18, 1996, during the off-milling season, petitioner Starke issued an Order or Notice which stated, thus:

To all Hacienda Employees:

Please bear in mind that all those who signed in favor of CARP are expressing their desire to get out of employment on their own volition.

Wherefore, beginning today, July 18, only those who did not sign for CARP will be given employment by Hda. Bino.

(Sgd.) Hortencia Starke[3]

The respondents regarded such notice as a termination of their employment. As a consequence, they filed a complaint for illegal dismissal, wage differentials, 13th month pay, holiday pay and premium pay for holiday, service incentive leave pay, and moral and exemplary damages with the NLRC, Regional Arbitration Branch No. VI, Bacolod City, on September 17, 1996.[4]

In their Joint Sworn Statement, the respondents as complainants alleged inter alia that they are regular and permanent workers of the hacienda and that they were dismissed without just and lawful cause. They further alleged that they were dismissed because they applied as beneficiaries under the Comprehensive Agrarian Reform Program (CARP) over the land owned by petitioner Starke.[5]

For her part, petitioner Starke recounted that the company’s Board of Directors petitioned the Sangguniang Bayan of Kabankalan for authority to re-classify, from agricultural to industrial, commercial and residential, the whole of Hacienda Bino, except the portion earmarked for the CARP. She asserted that half of the workers supported the re-classification but the others, which included the herein respondents, opted to become beneficiaries of the land under the CARP.  Petitioner Starke alleged that in July 1996, there was little work in the plantation as it was off-season; and so, on account of the seasonal nature of the work, she issued the order giving preference to those who supported the re-classification. She pointed out that when the milling season began in October 1996, the work was plentiful again and she issued notices to all workers, including the respondents, informing them of the availability of work. However, the respondents refused to report back to work. With respect to the respondents’ money claims, petitioner Starke submitted payrolls evidencing payment thereof.

On October 6, 1997, Labor Arbiter Ray Allan T. Drilon rendered a Decision,[6] finding that petitioner Starke’s notice dated July 18, 1996 was tantamount to a termination of the respondents’ services, and holding that the petitioner company was guilty of illegal dismissal. The dispositive portion of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal of the complainants illegal and ordering respondent Hortencia L. Starke, Inc. represented by Hortencia L. Starke, as President, to:

1.  Reinstate the complainants to their former position without loss of seniority rights immediately upon receipt of this decision;

2.  PAY the backwages and wage differentials of the complainants, to wit:

…

in the total amount of Four Hundred Ninety-Five Thousand Eight Hundred Fifty-Two and 72/100 (P495,852.72) Pesos; and

3.  TO PAY the complainants attorney's fee in the amount of Forty-Nine Thousand Five Hundred Eighty-Five and 27/100 (P49,585.27) Pesos.

Respondents are further directed to deposit to this Office the total judgment award of FIVE HUNDRED FORTY-FIVE THOUSAND AND FOUR HUNDRED THIRTY-SEVEN AND 99/100 (P545,437.99) PESOS within ten (10) days from receipt of this decision.

All other claims are hereby DISMISSED for lack of merit.

SO ORDERED.[7]

Both the petitioners and the respondents appealed the case to the NLRC.  On July 24, 1998, the NLRC affirmed with modification the decision of the Labor Arbiter. The dispositive part of its decision reads:

WHEREFORE, premises considered, the Decision of the Labor Arbiter is AFFIRMED WITH MODIFICATIONS. Respondent is further ordered to pay the complainants listed in the Holiday Pay Payroll the amounts due them.

SO ORDERED.[8]

A motion for reconsideration of the said decision was denied by the NLRC.[9] Dissatisfied, the respondents appealed the case to the CA where the following issues were raised:

A.  THE HONORABLE COMMISSION GRAVELY ABUSED ITS DISCRETION AND POWER BY VIOLATING THE DOCTRINE OF “STARE DECISIS” LAID DOWN BY THE SUPREME COURT AND THE APPLICABLE LAWS AS TO THE STATUS OF THE SUGAR WORKERS.

B. THE HONORABLE COMMISSION COMMITTED SERIOUS ERRORS BY ADMITTING THE MOTION TO DISMISS AND/OR ANSWER TO PETITIONERS’ APPEAL MEMORANDUM DATED MARCH 26, 1998 FILED BY COUNSEL FOR THE HEREIN RESPONDENTS INSPITE OF THE FACT THAT IT WAS FILED WAY BEYOND THE REGLEMENTARY PERIOD.

C. THE HONORABLE COMMISSION COMMITTED GRAVE ERROR IN GIVING CREDENCE TO THE SWEEPING ALLEGATIONS OF THE COMPLAINANTS AS TO THE AWARD OF BACKWAGES AND HOLIDAY PAY WITHOUT ANY BASIS.[10]

On July 31, 2001, the CA rendered a Decision,[11] the dispositive portion of which reads:

WHEREFORE, the decision of the National Labor Relations Commission is hereby MODIFIED by deleting the award for holiday pay and premium pay for holidays. The rest of the Decision is hereby AFFIRMED.

SO ORDERED.[12]

The CA ruled that the concept of stare decisis is not relevant to the present case. It held that the ruling in Mercado, Sr. v. NLRC[13] does not operate to abandon the settled doctrine that sugar workers are considered regular and permanent farm workers of a sugar plantation owner, considering that there are facts peculiar in that case which are not present in the case at bar. In the Mercado case, the farm laborers worked only for a definite period for a farm owner since the area of the land was comparatively small, after which they offer their services to other farm owners. In this case, the area of the hacienda, which is 236 hectares, simply does not allow for the respondents to work for a definite period only.

The CA also held that the petitioners’ reliance on Bacolod-Murcia Milling Co. Inc. v. NLRC[14] was misplaced, as it in fact, bolstered the respondents' posture that they are regular employees. In that case, the Court held that a sugar worker may be considered as in regular employment even during those years when he is merely a seasonal worker where the issues concern the determination of an employer-employee relationship and security of tenure.

Further, the CA held that the respondents’ appeal to the NLRC was not perfected since they failed to accompany their notice of appeal with a memorandum of appeal, or to timely file a memorandum of appeal. Thus, as to them, the decision of the Labor Arbiter became final and executory. The NLRC, therefore, gravely abused its discretion when it modified the decision of the Labor Arbiter and awarded to the respondents holiday pay and premium for holiday pay. Finally, the CA affirmed the award of backwages, finding no circumstance that would warrant a reversal of the findings of the Labor Arbiter and NLRC on this point. [15]

On September 24, 2001, the CA denied the motion for reconsideration filed by the petitioners due to their failure to indicate the date of the receipt of the decision to determine the timeliness of the motion.[16]

Hence, this petition for review.

The petitioners submit the following issues:

A.  WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND POWER BY VIOLATING THE DOCTRINE OF "STARE DECISIS" LAID DOWN BY THE SUPREME COURT AND THE APPLICABLE LAWS AS TO THE STATUS OF THE SUGAR WORKERS.

B. WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DISMISSING THE MOTION FOR RECONSIDERATION FOR FAILURE TO STATE THE DATE OF THE RECEIPT OF THE DECISION IN THE MOTION FOR RECONSIDERATION.[17]

Petitioner Starke contends that the established doctrine that seasonal employees are regular employees had been overturned and abandoned by Mercado, Sr. v. NLRC.[18] She stresses that in that case, the Court held that petitioners therein who were sugar workers, are seasonal employees and their employment legally ends upon completion of the project or the season.  Petitioner Starke argues that the CA violated the doctrine of stare decisis in not applying the said ruling.  She asserts that the respondents, who are also sugar workers, are seasonal employees; hence, their employment can be terminated at the end of the season and such termination cannot be considered an illegal dismissal.  Petitioner Starke maintains that the determination of whether the workers are regular or seasonal employees is not dependent on the number of hectares operated upon by them, or the number of workers, or the capitalization involved, but rather, in the nature of the work. She asserts that the respondents also made their services available to the neighboring haciendas.  To buttress her contention that the respondents are seasonal employees, petitioner Starke cites Rep. Act 6982, An Act Strengthening the Social Amelioration Program in the Sugar Industry, Providing the Mechanics for its Implementation, and for other Purposes, which recognizes the seasonal nature of the work in the sugar industry.[19]

Petitioner Starke also takes exception to the denial of her motion for reconsideration due to failure to state the date of the receipt of the decision. She asserts that a denial of a motion for reconsideration due to such cause is merely directory and not mandatory on the part of the CA.  Considering that the amount involved in this case and the fact that the motion was filed within

the reglementary period, the CA should have considered the motion for reconsideration despite such procedural lapse.[20]

On the other hand, the respondents aver that the petitioners erroneously invoke the doctrine of stare decisis since the factual backdrop of this case and the Mercado case is not similar.  The respondents posit that the Mercado case ruled on the status of employment of farm laborers who work only for a definite period of time for a farm owner, after which they offer their services to other farm owners.  Contrarily, the respondents contend that they do not work for a definite period but throughout the whole year, and do not make their services available to other farm owners.  Moreover, the land involved in the Mercado case is comparatively smaller than the sugar land involved in this case. The respondents insist that the vastness of the land involved in this case requires the workers to work on a year-round basis, and not on an “on-and-off” basis like the farm workers in the Mercado case.

Finally, the respondents maintain that the requirement that the date of receipt of the decision should be indicated in the motion for reconsideration is mandatory and jurisdictional and, if not complied with, the court must deny the motion outright.[21]

The petition is without merit.

On the substantial issue of whether the respondents are regular or seasonal employees, the petitioners contend that the CA violated the doctrine of stare decisis by not applying the ruling in the Mercado case that sugar workers are seasonal employees.  We hold otherwise. Under the doctrine of stare decisis, when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases in which the facts are substantially the same.[22] Where the facts are essentially different, however, stare decisis does not apply, for a perfectly sound principle as applied to one set of facts might be entirely inappropriate when a factual variance is introduced.[23]

The CA correctly found that the facts involved in this case are different from the Mercado case; therefore, the ruling in that case cannot be applied to the case at bar, thus:

We do not find the concept of stare decisis relevant in the case at bench. For although in the Mercado case, the Supreme Court held the petitioners who were sugar workers not to be regular but seasonal workers, nevertheless, the same does not operate to abandon the settled doctrine of the High Court that sugar workers are considered regular and permanent farm workers of a sugar plantation owner, the reason being that there are facts present that are peculiar to the Mercado case. The disparity in facts between the Mercado case and the instant case is best exemplified by the fact that the former decision ruled on the status of employment of farm laborers, who, as found by the labor arbiter, work only for a definite period for a farm worker, after which they offer their services to other farm owners, considering the area in question being comparatively small, comprising of seventeen and a half (17½) hectares of land, such that the planting of rice and sugar cane thereon could not possibly entail a whole year operation. The herein case presents a different factual condition as the enormity of the size of the sugar hacienda of petitioner, with an area of two hundred thirty-six (236) hectares, simply do not allow for private respondents to render work only for a definite period.

Indeed, in a number of cases, the Court has recognized the peculiar facts attendant in the Mercado case.  In Abasolo v. NLRC,[24] and earlier, in Philippine Tobacco Flue-Curing & Redrying Corporation v. NLRC,[25] the Court made the following observations:

… In Mercado, although respondent constantly availed herself of the petitioners’ services from year to year, it was clear from the facts therein that they were not in her regular employ. Petitioners therein performed different phases of agricultural work in a given year.  However, during that period, they were free to work for other farm owners, and in fact they did. In other words, they worked for respondent, but were nevertheless free to contract their services with other farm owners. The Court was thus emphatic when it ruled that petitioners were mere project employees, who could be hired by other farm owners….[26]

Recently, the Court reiterated the same observations in Hacienda Fatima v. National Federation of Sugarcane Workers-Food and General Trade [27] and added that the petitioners in the Mercado case were “not hired regularly and repeatedly for the same phase/s of agricultural work, but on and off for any single phase thereof.”

In this case, there is no evidence on record that the same particulars are present. The petitioners did not present any evidence that the respondents were required to perform certain phases of agricultural work for a definite period of time. Although the petitioners assert that the respondents made their services available to the neighboring haciendas, the records do not, however, support such assertion.

The primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer.[28] There is no doubt that the respondents were performing work necessary and desirable in the usual trade or business of an employer. Hence, they can properly be classified as regular employees.

For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature.  They must have been employed only for the duration of one season.[29] While the records sufficiently show that the respondents’ work in the hacienda was seasonal in nature, there was, however, no proof that they were hired for the duration of one season only. In fact, the payrolls,[30] submitted in evidence by the petitioners, show that they availed the services of the respondents since 1991.  Absent any proof to the contrary, the general rule of regular employment should, therefore, stand. It bears stressing that the employer has the burden of proving the lawfulness of his employee’s dismissal.[31]

On the procedural issue, petitioner Starke avers that the CA should not have denied outright her motion for reconsideration, considering its timely filing and the huge amount involved. This contention is already moot. Petitioner Starke has already aired in this petition the arguments in her motion for reconsideration of the CA decision, which have been adequately addressed by this Court. Assuming arguendo that the CA indeed failed to consider the motion for reconsideration, petitioner Starke was not left without any other recourse.[32]

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED.  The Decision of the Court of Appeals, dated July 31, 2001, and its Resolution dated September 24, 2001 are hereby AFFIRMED.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 152949             August 14, 2007

AKLAN COLLEGE, INCORPORATED and MSGR. ADOLFO P. DEPRA, petitioners, vs.RODOLFO P. GUARINO, respondent.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before the Court is a petition for Review on Certiorari under Rule 45 of the Rules of Court filed by Aklan College, Incorporated (ACI) and Msgr. Adolfo P. Depra (Msgr. Depra) assailing the Decision1 of the Court of Appeals (CA) dated March 9, 2001, and its Resolution2 of April 5, 2002 in CA-G.R. SP No. 54035.

The undisputed facts, as summarized by the CA, are as follows:

Private respondent Guarino was first hired in 1972 as an instructor by petitioner College.

In 1974, private respondent was appointed as Acting Dean of the Commerce and Secretarial Department.

On November 26, 1990, he was again appointed by the petitioner as Acting Personnel Director, in addition to his duties as acting dean. His appointment as Acting Personnel Director was in a temporary basis and until it is revoked by the President or Rector of the College. (Annex "A", Rollo, 32)

A year after, private respondent went on leave for one year from November 4, 1991 up to November 4, 1992.

On October 20, 1992, private respondent wrote the petitioner through its Rector informing the latter of his intention of reassuming his positions with the petitioner college.

However, in petitioner’s response, it informed private respondent that he cannot anymore reassume his former position as Acting Dean of the Commerce and Secretarial Department because he is not qualified for the position.

Then, on November 10, 1992, petitioner formally informed private respondent that the Board of Trustees of the petitioner college has decided not to allow him to reassume his position as Acting Dean for the reason that he has not qualified to continue holding the position and that the position of Acting Personnel director has already been filled up by a regular incumbent.

Hence, on November 11, 1992, private respondent filed the instant case for illegal dismissal against petitioner with the office of the Department of Labor in Kalibo, Aklan.3

On May 24, 1994, the Labor Arbiter (LA) handling the case rendered judgment dismissing the complaint for lack of merit.

Rodolfo P. Guarino (respondent) filed an appeal with the National Labor Relations Commission (NLRC). On March 9, 1995, the NLRC rendered a Decision reversing the LA, with the following dispositive portion:

WHEREFORE, the respondents are hereby ordered to pay the complainant separation pay for his discharge from the position of Dean of Commerce and Secretarial Science, equivalent to one month pay for every year of service, a fraction of six months being considered one year.

The respondents are further ordered to reinstate the complainant in his position as personnel director with full backwages from the time his salaries were withheld from him until his actual reinstatement, and as instructor without backwages.

The respondents are furthermore ordered to pay the complainant 10% of the monetary awards as attorney’s fees.

Other claims are hereby DISMISSED for lack of sufficient evidence.

Complainant's monetary awards up to March 10, 1995 are (sic) P149,955.85 computed as follows:

I Separation Pay as Dean P4,395.50 x 17 years ------ P74,723.50

II Backwages as Personnel Director (Nov. 10, 1992-March 10, 1995) P2,200 x 28 months P 61,600.00

Sub-total ------P136,

323.50

III 10% ATTORNEY’S FEES ------ P 13,632.35

Grand total ------ P149,955.85

SO ORDERED.4

Aggrieved by the Decision of the NLRC, petitioners filed a special civil action for certiorari with the CA. On March 9, 2001, the CA rendered judgment denying the petition and affirming the assailed decision of the NLRC.5 Petitioners’ Motion for Reconsideration was subsequently denied by the CA in its Resolution dated April 5, 2002.6

Hence, herein petition with a sole Assignment of Error, to wit:

THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN DISREGARDING THE WELL-SETTLED DOCTRINE LAID DOWN IN LA SALETTE OF SANTIAGO, INC. v. NLRC, 195 SCRA 80 [1991] THAT NO EMPLOYEE ATTAINS A SECOND SECURITY OF TENURE TO AN ADMINISTRATIVE POSITION.7

Petitioners contend that it is not a disputed fact that, during his employment with petitioner ACI, respondent held three concurrent positions: those of an instructor, Acting Dean of the Commerce Department and Acting Personnel Director; what petitioners refused to give back to respondent when he was sent a letter dated November 10, 1992 were his positions as Acting Dean and Acting Personnel Director; respondent was never stripped of his position as an instructor. Citing the case of La Salette of Santiago, Inc. v. National Labor Relations Commission,8 petitioners assert that while an employee attains security of tenure as a member of the teaching staff of a private educational institution from which he could only be removed for cause, he cannot always aspire for a second tenure in an administrative position and can, therefore, be stripped of this position by the appointing power without the latter being held responsible for illegal dismissal. Petitioners argue that when private respondent was not allowed to re-assume his former administrative positions as Acting Dean and Acting Personnel Director but was still considered as an instructor and was even prodded to resume his teaching responsibilities, he could not be considered as having been illegally dismissed.

Petitioners further argue that there was no law or agreement which gave respondent additional tenure as dean; that his appointment as dean in a regular capacity was made dependent on his graduation with a degree of Master in Business Administration (MBA), as this is a requirement imposed by DECS Order No. 5, Series of 1990 as well as the Manual of Regulations for Private Schools; that petitioner was not able to finish his MBA which compelled petitioner ACI to withhold the position from him.

Petitioners also aver that respondent’s appointment as Dean and Personnel Director was only in an acting but never in a regular capacity. Citing various rulings of this Court, petitioners contend

that a bona fide appointment in an acting capacity is essentially temporary and revocable in character and the holder of such an appointment may be removed anytime even without hearing or cause.

On the other hand, respondent argues that petitioners’ reliance on La Salette is misplaced, as the factual circumstances obtaining therein are materially different from those in the present case. Respondent contends that in La Salette, the complainant therein was appointed to various administrative positions for a definite or fixed term, while in the present case respondent was appointed as dean not for a fixed duration but for an indefinite period. In addition, respondent claims that by continuously serving as Dean of ACI’s Commerce and Secretarial Department for more than 17 years, his assumption of the said office could not be considered as temporary. He claims that while he was not formally appointed as dean, he has acquired security of tenure as such pursuant to the provisions of Article 280 of the Labor Code.9

The Court finds the petition meritorious.

Respondent’s termination as Acting Personnel Director is valid.

The factual milieu in La Salette is similar to the present case insofar as respondent’s position as Personnel Director is concerned. In La Salette, the respondent therein occupied different administrative positions in various capacities every so often and for a period not exceeding three years. For three years, she was the principal of La Salette Jones High School. For the next three years she worked as teacher and Subject Area Coordinator of a sister school, La Salette of Santiago. Thereafter, for seven years, she was employed as a full-time instructor in still another sister corporation, La Salette College; and for two years of that period, she served as the Head of the Department of Education and Liberal Arts. After which, for three years, she was assigned as Assistant Principal of the High School Department of La Salette of Santiago, concurrently with her work as part-time instructor in La Salette College. For the last two years of her connection with the La Salette School System, she was designated as High School Principal of La Salette of Santiago. On this matter, the Court held as follows:

What is immediately apparent from this second look at the material facts is that while Clarita Javier’s work as teacher in the La Salette School System was more or less continuous, or was evidently intended to be on a permanent basis, her assignment in one administrative office or another-i.e., as high school principal, subject area coordinator, head of a college department, assistant principal- was not. In these administrative posts, she served in a non-permanent capacity, either at the pleasure of the school or for a fixed term. She could not but have become aware of the pattern in her employment relationship with her employer, of the duality in the nature of her employment, particularly of the non-permanent character of her stints in the administrative positions to which she was designated.

There was therefore no cause for her to believe that security of tenure could be obtained by her in any of the administrative positions she held at one time or another. On the contrary, the temporariness of her occupancy of those administrative offices must have become quite apparent to her, in light of the facts. x x x10

In the present case, it is not disputed that respondent was appointed as Acting Personnel Director on November 26, 1990. He went on leave for one year from November 4, 1991 until November 4, 1992, after which he was no longer allowed to re-assume his administrative posts. Having assumed the position of Personnel Director in an acting capacity, respondent could not reasonably have expected that he had acquired security of tenure.

Moreover, in La Salette, the respondent’s appointment to the various administrative positions she held were not even in an acting capacity. Yet this Court held that she never attained security of tenure with respect to these positions. In the present case, with all the more reason should respondent not expect that he has gained security of tenure, considering that his appointment was only in an acting capacity.

This Court has held that an acting appointment is merely temporary, or one which is good until another appointment is made to take its place.11 And if another person is appointed, the temporary appointee should step out and cannot even dispute the validity of his successor’s appointment.12 The undisturbed unanimity of cases is that one who holds a temporary appointment has no fixed tenure of office; his employment can be terminated anytime at the pleasure of the appointing power without need to show that it is for cause.13

Insofar as the principles governing permanent and temporary appointments are concerned, this Court finds the ruling in the more recent case of Achacoso v. Macaraig[14] relevant and instructive. While Achacoso served as the jurisprudential basis in cases involving the issue of security of tenure in career executive service positions in the government, this Court finds the rules on permanent and temporary appointments enunciated therein applicable to the present case.

This Court held in Achacoso that a permanent appointment can be issued only to a person who meets all the requirements for the position to which he is being appointed; a person who does not have the requisite qualifications for the position cannot be appointed to it in the first place or, only as an exception to the rule, may be appointed to it merely in an acting capacity in the absence of persons who are qualified; the purpose of an acting or temporary appointment is to prevent a hiatus in the discharge of official functions by authorizing a person to discharge the same pending the selection of a permanent or another appointee; the person named in an acting capacity accepts the position under the condition that he shall surrender the office once he is called upon to do so by the appointing authority.15

Consistent with the rulings in La Salette, Achacoso and the other cases cited above, respondent could not have attained security of tenure with respect to his position as Personnel Director of ACI. His termination as such is valid.

On the other hand, the factual circumstances are different with respect to respondent’s appointment as Acting Dean of ACI’s Commerce Department. In the present case, respondent was allowed to occupy the position of Acting Dean for a continuous period of 17 years, more or less, beginning in 1974 until he went on leave on November 4, 1991. Unlike the private respondent in La Salette, herein respondent’s term as acting dean remained uninterrupted. In fact,

there was not even any showing that he was handed any re-appointment paper or made to sign a renewal contract regarding the said position.

Nonetheless, the Court finds respondent’s termination as Acting Dean also valid for the following reasons:

Petitioners assert that under DECS Order No. 5, Series of 1990, as well as Section 41 of the Manual of Regulations for Private Schools, the acquisition of a Master’s degree has been made a requirement before a person can be appointed as Dean of an undergraduate program.

Article IV (1) (1.2) of DECS Order No. 5, Series of 1990, provides for the following minimum qualifications for the position of chairman, dean or director of a school’s accounting program, to wit:

a. Holder of a CPA certificate issued by the Professional Regulation Commission;

b. Holder of at least a master’s degree in business, accountancy, or business education;

c. Teaching experience of at least three (3) years;

d. The ability to lead and gain the confidence and respect of the faculty.

However, the Court finds that petitioners erred in relying upon the above-quoted provisions of DECS Order No. 5, Series of 1990, as its basis in dismissing respondent as the Acting Dean of its Commerce Department, because the said Order specifically applies only to the position of chairman, dean or director of a school’s Accounting Department. Moreover, petitioners failed to refute respondent’s contention in his Position Paper that the Department of Commerce to which he was assigned consists of many fields of study other than accounting.

The Court also notes that the Manual being referred to by petitioners is the 1992 Manual of Regulations for Private Schools (8th Edition). The 1992 Manual took effect at the beginning of the summer session of 1993.16 Prior to its effectivity, what was in force was the 1970 Manual of Regulations (7th Edition). The alleged illegal dismissal of respondent took place on November 10, 1992. At the time of the dismissal, what was in effect was the 1970 Manual. Hence, it should have been the 1970 Manual, and not the 1992 Manual, that petitioners cited as their basis in dismissing respondent from his position as Acting Dean.

In any case, it must be pointed out that like the 1992 Manual, the 1970 Manual requires that a Dean of an undergraduate program must have acquired an appropriate graduate degree. Paragraph 69 of the 1970 Manual provides:

69. Administrative and supervisory officials should have the following minimum qualifications, duly supported by credentials on file with the school.

a. For principal of primary and/or intermediate schools, a holder of a Bachelor's degree in Elementary Education or equivalent with three years of successful teaching experience in the elementary grades.

b. For principal of secondary schools, a holder of a Bachelor of Science in Education degree or equivalent with three years of successful teaching experience in the high school.

c. College dean, a holder of an appropriate graduate degree with at least three years of successful college teaching experience.

d. Dean of the Graduate School, a holder of an appropriately earned doctorate degree with at least three years of successful graduate school teaching experience. (emphasis supplied)

Both the 1970 and 1992 Manuals were promulgated by the Department of Education, Culture and Sports (now, Department of Education) in the exercise of its rule-making power as provided for under Section 7017 of Batas Pambansa Blg. 232, otherwise known as the Education Act of 1982. As such, these Manuals have the force and effect of law.18

Since the 1970 Manual imposes minimum requirements that must be complied with before a person can be appointed as a college dean, petitioner ACI is duty-bound to comply with these requirements. Otherwise, it runs the risk of incurring administrative sanctions from DECS.19 In the present case, the fact that respondent was retained as an acting dean for 17 years did not give him a vested right to occupy in a permanent capacity the position to which he was appointed. Neither do his long years of service confer upon him the requisite qualifications which he does not possess. Not being a master’s degree holder, he was never and could never have been appointed in a permanent capacity, as he is not qualified under the law. Thus, pursuant to the 1970 Manual, respondent’s dismissal as acting dean of ACI’s Commerce Department is valid.

Respondent’s appointment as dean of petitioners’ Commerce Department was also in an acting capacity. Hence, the Court finds the rulings in La Salette and Achacoso, which were earlier discussed, applicable.

The Court is not persuaded by respondent’s contention that petitioner ACI is estopped from assailing respondent’s qualification since it allowed the latter to continue occupying the position of acting dean for more than 17 years despite the said requirement being imposed by the DECS.

In the present case, the employment of respondent as Acting Dean is contrary to the express provisions of the 1970 Manual. It is settled that estoppel cannot give validity to an act that is prohibited by law, or one that is against public policy.20 Neither can the defense of illegality be waived.21 Hence, respondent’s appointment as Acting Dean can never be deemed validated by estoppel.

Moreover, respondent cannot deny that he is aware of the fact that a master’s degree in business administration is required of a person who is appointed to the position of ACI’s Dean of

Commerce. He never disputed petitioners' contention in their Answer/Position Paper22 filed with the Labor Arbiter that he was indeed aware of this requirement. In fact, it was in his Memorandum-Proposal addressed to the Rector of ACI dated May 26, 197223 that respondent suggested that ACI grant him financial assistance so that he can go to graduate school and take up MBA. ACI acted favorably on his suggestion and awarded him a scholarship grant less than a month after the said Memorandum-Proposal was submitted.

In addition, one of the conditions imposed by petitioners upon respondent in their Scholarship and Employment contract was for him to serve as Dean of its Commerce Department after he finished his MBA. Despite the opportunity given him, respondent still failed to obtain an MBA. Nonetheless, respondent was still allowed to retain his position as Acting Dean. Under the foregoing circumstances, especially in light of the requirements imposed by law, petitioners’ extension of respondent’s appointment can be considered simply as an act of grace on the part of the former and may not be interpreted as a change of status from temporary to permanent. If the intention of the petitioners was to make respondent’s appointment permanent, they would have done so by executing a different appointment paper considering the fact that the original appointment was of a temporary nature.

Moreover, the provisions of Article 280 of the Labor Code are not applicable to the present case especially with respect to the issue of respondent's acquisition of security of tenure. It is settled that questions respecting a private school teacher’s entitlement to security of tenure are governed by the Manual of Regulations for Private Schools and not the Labor Code. Paragraph 7524 of the 1970 Manual (now Section 9325 of the 1992 Manual) lays down the requisites before a teacher can be considered as having attained a permanent status and therefore entitled to security of tenure. In La Salette, the Court was clear in ruling that, unlike teachers (assistant instructors, instructors, assistant professors, associate professors, full professors) who aspire for and expect to acquire permanency, or security of tenure, in their employment as faculty members, teachers who are appointed as department heads or administrative officials (e.g., college or department secretaries, principals, directors, assistant deans, deans) do not normally, and should not expect to, acquire a second status of permanency or an additional or second security of tenure as such officer. In the instant case, it is not disputed that respondent was never removed from his position as instructor. He was only dismissed from his capacity as Acting Dean and Acting Personnel Director.

As to respondent’s right to procedural due process, this Court has held that there is no need of a notice to the acting appointee or any form of hearing.26 Such procedural requirements apply where the officer is removable only for cause.27 This Court reiterates the rule that a bona fide appointment in an acting capacity is essentially temporary and revocable in character and the holder of such appointment may be removed anytime even without hearing or cause.28

As to respondent’s entitlement to separation pay, the settled rule is that separation pay is the amount that an employee receives at the time of his severance from the service and is designed to provide the employee with the wherewithal during the period that he is seeking another employment.29 In the present case, while respondent was no longer allowed to return to his positions as Acting Dean and Acting Personnel Director he was, nonetheless, retained as an

instructor. Hence, he could not be deemed as separated from the service because his employment as instructor remains.

On the other hand, if respondent chose to seek another employment as there is no showing in the present case that he returned to his position as instructor, petitioners should not be faulted and made to suffer the consequence of respondent's decision. In such a case he is deemed to have voluntarily resigned. Settled is the rule that an employee who voluntarily resigns from employment is not entitled to separation pay unless, however, there is a stipulation for payment of such in the employment contract or Collective Bargaining Agreement, or payment of the amount is sanctioned by established employer practice or policy.30 There is no proof to show that the present case falls under any of the above-enumerated exceptions. Hence, the Court finds no cogent reason to award him separation pay.

WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals dated March 9, 2001 in CA-G.R. SP No. 54035, which affirmed the Decision of the National Labor Relations Commission, Fourth Division, Cebu City in NLRC Case No. V-0261-94 is REVERSED and SET ASIDE. The Labor Arbiter's Decision dated May 24, 1994 in RAB Case No. 0210-AKLAN-92 (06-11-700045-92), dismissing respondent’s complaint for lack of merit, is REINSTATED.

No costs.

SO ORDERED.

Ynares-Santiago, Chairperson, Chico-Nazario, Nachura, Reyes, JJ., concur.

Philippine Duplicators, Inc. vs. NLRC, 241 SCRA 380 (1995)Posted by Pius Morados on November 10, 2011

(Labor Standards – Commissions included in the computation of 13th month pay)Facts:  Petitioner Corporation pays its salesmen a small fixed or guaranteed wage; the greater part of the

latter’s wages or salaries being composed of the sales or incentive commissions earned on actual sales

of duplicating machines closed by them. Thus the sales commissions received for every duplicating

machine sold constituted part of the basic compensation or remuneration of the salesmen of the

Philippine Duplicators for doing their job.

The Labor Arbiter directed Petitioner Duplicators to pay 13th month pay to private respondent employees

computed on the basis of their fixed wages plus sales commission.

Sec. 4 of the Supplementary Rules and Regulations Implementing PD No. 851 (Revised Guidelines

Implementing 13th Month Pay) provides that overtime pay, earning and other remuneration which are not

part of the basic salary shall not be included in the computation of the 13th month pay.

Petitioner Corporation contends that their sales commission should not be included in the computation of

the 13th month pay invoking the consolidated cases of Boie-Takeda Chemicals, Inc. vs Hon. Dionisio dela

Serna and Philippine Fuji Xerox Corp. vs Hon. Crecencio Trajano, were the so-called commissions of

medical representatives of Boie-Takeda Chemicals and rank-and-file employees of Fuji Xerox Co. were

not included in the term “basic salary” in computing the 13th month pay.

Issue: WON sales commissions comprising a pre-determined percent of the selling price of the goods are

included in the computation of the 13th month pay.

Held: Yes. These commission which are an integral part of the basic salary structure of the Philippine

Duplicator’s employees-salesmen, are not overtime payments, nor profit-sharing payments nor any other

fringe benefit. Thus, salesmen’s commissions comprising a pre-determined percent of the selling price of

the goods were properly included in the term “basic salary”  for purposes of computing the 13th month

pay.

Commissions of medical representatives of Boie-Takeda Chemicals and rank-and-file employees of Fuji

Xerox Co. were not included in the term “basic salary” because these were paid as “productivity bonuses”

which is not included in the computation of 13th month pay.