3 Mayon Hotel v. Adana

5/19/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 458
VOL. 458, MAY 16, 2005 609

Mayon Hotel & Restaurant vs. Adana
*
G.R. No. 157634. May 16, 2005.
MAYON HOTEL & RESTAURANT, PACITA O. PO and/or

JOSEFA PO LAM, petitioners, vs. ROLANDO ADANA, CHONA
BUMALAY, ROGER BURCE, EDUARDO ALAMARES,
AMADO ALAMARES, EDGARDO TORREFRANCA, LOURDES
CAMIGLA, TEODORO LAURENARIA, WENEFREDO
LOVERES, LUIS GUADES, AMADO MACANDOG, PATERNO
LLARENA, GREGORIO NICERIO, JOSE ATRACTIVO,
MIGUEL TORREFRANCA, and SANTOS BROÑOLA,
respondents.
Labor Law; Appeals; Due Process; While it is within the NLRC’s

competence, as an appellate agency reviewing decisions of Labor Arbiters,
to disagree with and set aside the latter’s findings, it stands to reason that it
should state an acceptable cause therefore, otherwise it would be a
whimsical, capricious, oppressive, illogical, unreasonable exercise of quasi-
judicial prerogative, subject to invalidation by the extraordinary writ of
certiorari.—There is no denying
_______________
* SECOND DIVISION.
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610 SUPREME COURT REPORTS ANNOTATED
that it is within the NLRC’s competence, as an appellate agency reviewing

decisions of Labor Arbiters, to disagree with and set aside the latter’s
findings. But it stands to reason that the NLRC should state an acceptable
cause therefore, otherwise it would be a whimsical, capricious, oppressive,
illogical, unreasonable exercise of quasi-judicial prerogative, subject to
https://central.com.ph/sfsreader/session/00000179850da0ee783168cd000d00d40059004a/t/?o=False 1/39
invalidation by the extraordinary writ of certiorari. And when the factual

findings of the Labor Arbiter and the NLRC are diametrically opposed and
this disparity of findings is called into question, there is, necessarily, a re-
examination of the factual findings to ascertain which opinion should be
sustained.
Same; Same; Same; Administrative Law; Factual findings of
administrative bodies like the NLRC are affirmed only if they are supported
by substantial evidence that is manifest in the decision and on the records.
—It is explicit in Castillo v. NLRC that factual findings of administrative
bodies like the NLRC are affirmed only if they are supported by substantial
evidence that is manifest in the decision and on the records. As stated in
Castillo: [A]buse of discretion does not necessarily follow from a reversal
by the NLRC of a decision of a Labor Arbiter. Mere variance in evidentiary
assessment between the NLRC and the Labor Arbiter does not automatically
call for a full review of the facts by this Court. The NLRC’s decision, so
long as it is not bereft of substantial support from the records, deserves
respect from this Court. As a rule, the original and exclusive jurisdiction to
review a decision or resolution of respondent NLRC in a petition for
certiorari under Rule 65 of the Rules of Court does not include a correction
of its evaluation of the evidence but is confined to issues of jurisdiction or
grave abuse of discretion. Thus, the NLRC’s factual findings, if supported
by substantial evidence, are entitled to great respect and even finality, unless
petitioner is able to show that it simply and arbitrarily disregarded the
evidence before it or had misappreciated the evidence to such an extent as
to compel a contrary conclusion if such evidence had been properly
appreciated.
Same; Administrative Law; Evidence; Procedural Rules and
Technicalities; Article 221 of the Labor Code is clear—technical rules are
not binding, and the application of technical rules of procedure may be
relaxed in labor cases to serve the demand of substantial justice.—
Petitioners’ reliance on the rules of evidence, i.e., the certificate of
registration being the best proof of ownership, is misplaced.
Notwithstanding the certificate of registration, doubts were
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VOL. 458, MAY 16, 2005 611
cast as to the true nature of petitioner Josefa Po Lam’s involvement in the

enterprise, and the Labor Arbiter had the authority to resolve this issue. It
was therefore within his jurisdiction to require the additional documents to
ascertain who was the real owner of petitioner Mayon Hotel & Restaurant.
Article 221 of the Labor Code is clear: technical rules are not binding, and
the application of technical rules of procedure may be relaxed in labor cases
to serve the demand of substantial justice. The rule of evidence prevailing in

court of law or equity shall not be controlling in labor cases and it is the
spirit and intention of the Labor Code that the Labor Arbiter shall use every
and all reasonable means to ascertain the facts in each case speedily and
objectively and without regard to technicalities of law or procedure, all in
the interest of due process. Labor laws mandate the speedy administration of
justice, with least attention to technicalities but without sacrificing the
fundamental requisites of due process.
Same; Same; Same; Same; To apply the concept of judicial admissions
to lowly employees would be to exact compliance with technicalities of law
that is contrary to the demands of substantial justice.—Similarly, the fact
that the respondents’ complaints contained no allegation that petitioner
Josefa Po Lam is the owner is of no moment. To apply the concept of
judicial admissions to respondents—who are but lowly employees—would
be to exact compliance with technicalities of law that is contrary to the
demands of substantial justice. Moreover, the issue of ownership was an
issue that arose only during the course of the proceedings with the Labor
Arbiter, as an incident of determining respondents’ claims, and was well
within his jurisdiction.
Same; Same; Same; Due Process; The essence of due process in
administrative proceedings is simply an opportunity to explain one’s side or
an opportunity to seek reconsideration of the action or ruling complained
of.—Petitioners were also not denied due process, as they were given
sufficient opportunity to be heard on the issue of ownership. The essence of
due process in administrative proceedings is simply an opportunity to
explain one’s side or an opportunity to seek reconsideration of the action or
ruling complained of. And there is nothing in the records which would
suggest that petitioners had absolute lack of opportunity to be heard.
Obviously, the choice not to present evidence was made by petitioners
themselves.
612
Same; Same; Same; Presumptions; Failure to submit certain pieces of

evidence could only mean that if produced, they would have been adverse to
such party’s case.—We sustain the Labor Arbiter and the CA because even
when the case was on appeal with the NLRC, nothing was submitted to
negate the Labor Arbiter’s finding that Pacita Po is not the real owner of the
subject hotel and restaurant. Indeed, no such evidence was submitted in the
proceedings with the CA nor with this Court. Considering that petitioners
vehemently deny ownership by petitioner Josefa Po Lam, it is most telling
that they continue to withhold evidence which would shed more light on this
issue. We therefore agree with the CA that the failure to submit could only
mean that if produced, it would have been adverse to petitioners’ case.
Same; Dismissals; Article 286 of the Labor Code is clear—there is
termination of employment when an otherwise bona fide suspension of work
exceeds six (6) months.—The above factual finding of the Labor Arbiter was
never refuted by petitioners in their appeal with the NLRC. It confounds us,
therefore, how the NLRC could have so cavalierly treated this
uncontroverted factual finding by ruling that respondents have not
introduced any evidence to show that they were illegally dismissed, and that
the Labor Arbiter’s finding was based on conjecture. It was a serious error
that the NLRC did not inquire as to the legality of the cessation of
employment. Article 286 of the Labor Code is clear—there is termination of
employment when an otherwise bona fide suspension of work exceeds six
(6) months. The cessation of employment for more than six months was
patent and the employer has the burden of proving that the termination was
for a just or authorized cause.
Same; Same; Serious business losses do not excuse the employer from
complying with the clearance or report required under Art. 283 of the Labor
Code and its implementing rules before terminating the employment of its
workers; The requirement of law mandating the giving of notices was
intended not only to enable the employees to look for another employment
and therefore ease the impact of the loss of their jobs and the corresponding
income, but more importantly, to give the Department of Labor and
Employment (DOLE) the opportunity to ascertain the verity of the alleged
authorized cause of termination.—We are not impressed by petitioners’
claim that severe business losses justified their failure to reinstate
respondents. The evi-
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dence to prove this fact is inconclusive. But more important, serious

business losses do not excuse the employer from complying with the
clearance or report required under Article 283 of the Labor Code and its
implementing rules before terminating the employment of its workers. In the
absence of justifying circumstances, the failure of petitioners to observe the
procedural requirements set out under Article 284, taints their actuations
with bad faith, especially since they claimed that they have been
experiencing losses in the three years before 1997. To say the least, if it
were true that the lay-off was temporary but then serious business losses
prevented the reinstatement of respondents, then petitioners should have
complied with the requirements of written notice. The requirement of law
mandating the giving of notices was intended not only to enable the
employees to look for another employment and therefore ease the impact of
the loss of their jobs and the corresponding income, but more importantly, to
give the Department of Labor and Employment (DOLE) the opportunity to
ascertain the verity of the alleged authorized cause of termination.
Same; Same; While the Court recognizes the right of the employer to
terminate the services of an employee for a just or authorized cause, the
dismissal of employees must be made within the parameters of law and
pursuant to the tenets of fair play.—While we recognize the right of the
employer to terminate the services of an employee for a just or authorized
cause, the dismissal of employees must be made within the parameters of
law and pursuant to the tenets of fair play. And in termination disputes, the
burden of proof is always on the employer to prove that the dismissal was
for a just or authorized cause. Where there is no showing of a clear, valid
and legal cause for termination of employment, the law considers the case a
matter of illegal dismissal.
Same; Same; Evidence; Damages; If doubts exist between the evidence
presented by the employer and the employee, the scales of justice must be
tilted in favor of the latter—the employer must affirmatively show rationally
adequate evidence that the dismissal was for a justifiable cause; As a rule,
moral damages are recoverable where the dismissal of the employee was
attended by bad faith or fraud or constituted an act oppressive to labor, or
was done in a manner contrary to morals, good customs or public policy.—
Under these circumstances, the award of damages was proper. As a rule,
614
moral damages are recoverable where the dismissal of the employee was
attended by bad faith or fraud or constituted an act oppressive to labor, or
was done in a manner contrary to morals, good customs or public policy. We
believe that the dismissal of the respondents was attended with bad faith and
meant to evade the lawful obligations imposed upon an employer. To rule
otherwise would lead to the anomaly of respondents being terminated from
employment in 1997 as a matter of fact, but without legal redress. This runs
counter to notions of fair play, substantial justice and the constitutional
mandate that labor rights should be respected. If doubts exist between the
evidence presented by the employer and the employee, the scales of justice
must be tilted in favor of the latter—the employer must affirmatively show
rationally adequate evidence that the dismissal was for a justifiable cause. It
is a time-honored rule that in controversies between a laborer and his
master, doubts reasonably arising from the evidence, or in the interpretation
of agreements and writing should be resolved in the former’s favor. The
policy is to extend the doctrine to a greater number of employees who can
avail of the benefits under the law, which is in consonance with the avowed
policy of the State to give maximum aid and protection of labor.
Same; Labor Standards; Pleadings and Practice; Petitioners’
arguments are not only tiring, repetitive and unconvincing, but confusing
and confused—entitlement to labor standard benefits is a separate and
distinct concept from payment of separation pay arising from illegal
dismissal, and are governed by different provisions of the Labor Code.—
Petitioners assail this ruling by repeating their long and convoluted
argument that as there was no illegal dismissal, then respondents are not
entitled to their monetary claims or separation pay and damages. Petitioners’
arguments are not only tiring, repetitive and unconvincing, but confusing
and confused—entitlement to labor standard benefits is a separate and
distinct concept from payment of separation pay arising from illegal
dismissal, and are governed by different provisions of the Labor Code.
Same; Same; Evidence; One who pleads payment has the burden of
proving it, and even where the employees must allege nonpayment, the
general rule is that the burden rests on the defendant to prove nonpayment,
rather than on the plaintiff to prove nonpayment.—We agree with the CA
and the Labor Arbiter. Respondents have set out with particularity in their
complaint, position paper,
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VOL. 458, MAY 16, 2005 615
affidavits and other documents the labor standard benefits they are entitled
to, and which they alleged that petitioners have failed to pay them. It was
therefore petitioners’ burden to prove that they have paid these money
claims. One who pleads payment has the burden of proving it, and even
where the employees must allege nonpayment, the general rule is that the
burden rests on the defendant to prove nonpayment, rather than on the
plaintiff to prove nonpayment. This petitioners failed to do.
Same; Same; Same; Presumptions; Failure of an employer to submit
necessary documents which are in its possession, in spite of orders to do so,
gives rise to the presumption that their presentation is prejudicial to its
cause.—We also agree with the Labor Arbiter and the CA that the
documents petitioners submitted, i.e., affidavits executed by some of
respondents during an ocular inspection conducted by an inspector of the
DOLE; notices of inspection result and Facility Evaluation Orders issued by
DOLE, are not sufficient to prove payment. Despite repeated orders from
the Labor Arbiter, petitioners failed to submit the pertinent employee files,
payrolls, records, remittances and other similar documents which would
show that respondents rendered work entitling them to payment for
overtime work, night shift differential, premium pay for work on holidays
and rest day, and payment of these as well as the COLA and the SILP—
documents which are not in respondents’ possession but in the custody and
absolute control of petitioners. By choosing not to fully and completely
disclose information and present the necessary documents to prove payment
of labor standard benefits due to respondents, petitioners failed to discharge
the burden of proof. Indeed, petitioners’ failure to submit the necessary
documents which as employers are in their possession, in spite of orders to
do so, gives rise to the presumption that their presentation is prejudicial to
its cause. As aptly quoted by the CA: [W]hen the evidence tends to prove a
material fact which imposes a liability on a party, and he has it in his power
to produce evidence which from its very nature must overthrow the case
made against him if it is not founded on fact, and he refuses to produce such
evidence, the presumption arises that the evidence, if produced, would
operate to his prejudice, and support the case of his adversary.
Same; Same; Cost of Facilities; Meals and Snacks; Before an employer
may deduct the value of facilities from the employee’s wages,
616
it must first satisfy the following—(a) proof that such facilities are
customarily furnished by the trade, (b) the provision of deductible facilities
is voluntarily accepted in writing by the employee, and, (c) the facilities are
charged at fair and reasonable value—the law is clear that mere availment
is not sufficient to allow deductions from employees’ wages.—Even granting
that meals and snacks were provided and indeed constituted facilities, such
facilities could not be deducted without compliance with certain legal
requirements. As stated in Mabeza v. NLRC, the employer simply cannot
deduct the value from the employee’s wages without satisfying the
following: (a) proof that such facilities are customarily furnished by the
trade; (b) the provision of deductible facilities is voluntarily accepted in
writing by the employee; and (c) the facilities are charged at fair and
reasonable value. The records are clear that petitioners failed to comply with
these requirements. There was no proof of respondents’ written
authorization. Indeed, the Labor Arbiter found that while the respondents
admitted that they were given meals and merienda, the quality of food
served to them was not what was provided for in the Facility Evaluation
Orders and it was only when they filed the cases that they came to know of
this supposed Facility Evaluation Orders. Petitioner Josefa Po Lam herself
admitted that she did not inform the respondents of the facilities she had
applied for. Considering the failure to comply with the above-mentioned
legal requirements, the Labor Arbiter therefore erred when he ruled that the
cost of the meals actually provided to respondents should be deducted as
part of their salaries, on the ground that respondents have availed
themselves of the food given by petitioners. The law is clear that mere
availment is not sufficient to allow deductions from employees’ wages.
Same; Same; Same; Same; Food or snacks or other convenience
provided by the employers are deemed as supplements if they are granted
for the convenience of the employer—the criterion in making a distinction
between a supplement and a facility does not so much lie in the kind (food,
lodging) but the purpose.—We note the uncontroverted testimony of
respondents on record that they were required to eat in the hotel and
restaurant so that they will not go home and there is no interruption in the
services of Mayon Hotel & Restaurant. As ruled in Mabeza, food or snacks
or other convenience provided by the employers are deemed as supplements
if they are granted for the convenience of the employer. The criterion in
making
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a distinction between a supplement and a facility does not so much lie in the
kind (food, lodging) but the purpose. Considering, therefore, that hotel
workers are required to work different shifts and are expected to be
available at various odd hours, their ready availability is a necessary matter
in the operations of a small hotel, such as petitioners’ business. The
deduction of the cost of meals from respondents’ wages, therefore, should
be removed.
Same; Same; Serious business losses is not a defense to payment of
labor standard benefits.—As for petitioners repeated invocation of serious
business losses, suffice to say that this is not a defense to payment of labor
standard benefits. The employer cannot exempt himself from liability to pay
minimum wages because of poor financial condition of the company. The
payment of minimum wages is not dependent on the employer’s ability to
pay.
Same; Damages; While it is true that other forms of damages under the
Civil Code may be awarded to illegally dismissed employees, any award of
moral damages by the Labor Arbiter cannot be based on the Labor Code
but should be grounded on the Civil Code.—There is no denying that the
actuations of petitioners in this case have been reprehensible. They have
terminated the respondents’ employment in an underhanded manner, and
have used and abused the quasi-judicial and judicial processes to resist
payment of their employees’ rightful claims, thereby protracting this case
and causing the unnecessary clogging of dockets of the Court. They have
also forced respondents to unnecessary hardship and financial expense.
Indeed, the circumstances of this case would have called for exemplary
damages, as the dismissal was effected in a wanton, oppressive or
malevolent manner, and public policy requires that these acts must be
suppressed and discouraged. Nevertheless, we cannot agree with the Labor
Arbiter in granting exemplary damages of P10,000.00 each to all
respondents. While it is true that other forms of damages under the Civil
Code may be awarded to illegally dismissed employees, any award of moral
damages by the Labor Arbiter cannot be based on the Labor Code but
should be grounded on the Civil Code. And the law is clear that exemplary
damages can only be awarded if plaintiff shows proof that he is entitled to
moral, temperate or compensatory damages. As only respondents Loveres,
Guades, Macandog, Llarena, Nicerio, Atractivo and Broñola specifically
claimed
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damages from petitioners, then only they are entitled to exemplary damages.
Same; Same; Attorney’s Fees; In actions for recovery of wages or
where an employee was forced to litigate and incur expenses to protect his
rights and interest, he is entitled to an award of attorney’s fees.—We rule
that attorney’s fees in the amount to P10,000.00 should be granted to each
respondent. It is settled that in actions for recovery of wages or where an
employee was forced to litigate and incur expenses to protect his rights and
interest, he is entitled to an award of attorney’s fees. This case undoubtedly
falls within this rule.
PETITION for review on certiorari of the decision and resolution of

the Court of Appeals.
The facts are stated in the opinion of the Court.

Angelo R. Arizala for petitioners.
Public Attorney’s Office for respondents.
PUNO, J.:
This is a petition for certiorari to reverse and set aside the Decision
1
issued by the Court of Appeals (CA) in CA-G.R. SP No. 68642,
entitled “Rolando Adana, Wenefredo Loveres, et al. vs. National
Labor Relations Commission (NLRC), Mayon Hotel &
2
Restaurant/Pacita O. Po, et al.,” and the Resolution denying
petitioners’ motion for reconsideration. The assailed CA decision
reversed the NLRC Decision which had dismissed all of
3
respondents’ complaints, and reinstated the Joint Deci-
_______________
1 Dated January 17, 2003, penned by Court of Appeals Justice Tria-Tirona and
concurred in by JJ. Barrios and Sundiam; Rollo, pp. 75-86.
2 Promulgated on March 21, 2003; Rollo, pp. 88-89.
3 In NLRC CA-025902-00, penned by Commissioner Victoriano R. Calaycay, and
concurred in by Commissioners Raul T. Aquino and Angelita A. Gacutan, dated
August 31, 2001. This was followed by the Resolution denying the employees’
(respondents herein) Motion for Reconsideration dated October 8, 2001; Rollo, pp.
256-278.
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4
sion of the Labor Arbiter which ruled that respondents were
illegally dismissed and entitled to their money claims.
5
The facts, culled from the records, are as follows:
Petitioner Mayon Hotel & Restaurant is a single proprietor
6
business registered in the name of petitioner Pacita O. Po, whose
7
mother, petitioner Josefa Po Lam, manages the establishment. The
hotel and restaurant employed about sixteen (16) employees.
Records show that on various dates starting in 1981, petitioner
hotel and restaurant hired the following people, all respondents in
8
this case, with the following jobs:
1. Wenefredo Loveres Accountant and Officer-in-charge

2. Paterno Llarena Front Desk Clerk
3. Gregorio Nicerio Supervisory Waiter
4. Amado Macandog Roomboy
5. Luis Guades Utility/Maintenance Worker
6. Santos Broñola Roomboy
7. Teodoro Laurenaria Waiter
8. Eduardo Alamares Roomboy/Waiter
9. Lourdes Camigla Cashier
10. Chona Bumalay Cashier
11. Jose Atractivo Technician
12. Amado Alamares Dishwasher and Kitchen Helper
13. Roger Burce Cook
14. Rolando Adana Waiter
15. Miguel Torrefranca Cook
16. Edgardo Torrefranca Cook
_______________
4 Joint Decision of RAB V Case Nos. 04-00079-97, 04-00080-97, and 04-00079-

97, dated July 14, 2000.
5 Rollo, pp. 75-77.
6 See Complainants’ (Respondents herein) Position Paper, dated July 3, 1997,
Rollo, p. 144; and Petition, Rollo, p. 15.
7 Id.
8 Rollo, pp. 144-178.
620

Due to the expiration and non-renewal of the lease contract for the
rented space occupied by the said hotel and restaurant at Rizal
Street, the hotel operations of the business were suspended on
9
March 31, 1997. The operation of the restaurant was continued in
its new location at Elizondo Street, Legazpi City, while waiting for
the construction of a new Mayon Hotel & Restaurant at Peñaranda
10
Street, Legazpi City. Only nine (9) of the sixteen (16) employees
11
continued working in the Mayon Restaurant at its new site.
On various dates of April and May 1997, the 16 employees filed
complaints for underpayment of wages and other money claims
12
against petitioners, as follows:
Wenefredo Loveres, Luis Guades, Amado Macandog and Jose Atractivo for
illegal dismissal, underpayment of wages, nonpayment of holiday and rest
day pay; service incentive leave pay (SILP) and claims for separation pay
plus damages;
Paterno Llarena and Gregorio Nicerio for illegal dismissal with claims
for underpayment of wages; nonpayment of cost of living allowance
(COLA) and overtime pay; premium pay for holiday and rest day; SILP;
nightshift differential pay and separation pay plus damages;
Miguel Torrefranca, Chona Bumalay and Lourdes Camigla for
underpayment of wages; nonpayment of holiday and rest day pay and SILP;
Rolando Adana, Roger Burce and Amado Alamares for under-payment
of wages; nonpayment of COLA, overtime, holiday, rest day, SILP and
nightshift differential pay;
Eduardo Alamares for underpayment of wages, nonpayment of holiday,
rest day and SILP and night shift differential pay;
_______________
9 Complainants’ (respondents herein) Position Paper, dated July 3, 1997; Rollo, p.

144.
10 Rollo, pp. 15-16.
11 Id.
12 Rollo, pp. 90-105. See complainants’ (respondents herein) Position Paper with
annexes, dated July 3, 1997; Rollo, pp. 144-178.
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VOL. 458, MAY 16, 2005 621

Santos Broñola for illegal dismissal, underpayment of wages, overtime pay,

13
rest day pay, holiday pay, SILP, and damages; and
Teodoro Laurenaria for underpayment of wages; nonpayment of COLA
and overtime pay; premium pay for holiday and rest day, and SILP.
On July 14, 2000, Executive Labor Arbiter Gelacio L. Rivera, Jr.

rendered a Joint Decision in favor of the employees. The Labor
Arbiter awarded substantially all of respondents’ money claims, and
held that respondents Loveres, Macandog and Llarena were entitled
to separation pay, while respondents Guades, Nicerio and Alamares
were entitled to their retirement pay. The Labor Arbiter also held
that based on the evidence presented, Josefa Po Lam is the owner/
proprietor of Mayon Hotel & Restaurant and the proper respondent
in these cases.
On appeal to the NLRC, the decision of the Labor Arbiter was
reversed, and all the complaints were dismissed.
Respondents filed a motion for reconsideration with the NLRC
and when this was denied, they filed a petition for certiorari with the
CA which rendered the now assailed decision.
After their motion for reconsideration was denied, petitioners
now come to this Court, seeking the reversal of the CA decision on
the following grounds:
I. The Honorable Court of Appeals erred in reversing the

decision of the National Labor Relations Commission
(Second Division) by holding that the findings of fact of the
NLRC were not supported by substantial evidence despite
ample and sufficient evidence showing that the NLRC
decision is indeed supported by substantial evidence;
II. The Honorable Court of Appeals erred in upholding the
joint decision of the labor arbiter which ruled that private
respondents were illegally dismissed from their
employment, despite the
_______________
13 Amended Complaint, Rollo, p. 116.
622

fact that the reason why private respondents were out of

work was not due to the fault of petitioners but to causes
beyond the control of petitioners.
III. The Honorable Court of Appeals erred in upholding the
award of monetary benefits by the labor arbiter in his joint
decision in favor of the private respondents, including the
award of damages to six (6) of the private respondents,
despite the fact that the private respondents have not proven
by substantial evidence their entitlement thereto and
especially the fact that they were not illegally dismissed by
the petitioners.
IV. The Honorable Court of Appeals erred in holding that
Pacita Ong Po is the owner of the business establishment,
petitioner Mayon Hotel and Restaurant, thus disregarding
the certificate of registration of the business establishment
issued by the local government, which is a public
document, and the unqualified admissions of complainants-
14
private respondents.
In essence, the petition calls for a review of the following issues:
1. Was it correct for petitioner Josefa Po Lam to be held liable

as the owner of petitioner Mayon Hotel & Restaurant, and
the proper respondent in this case?
2. Were respondents Loveres, Guades, Macandog, Atractivo,
Llarena and Nicerio illegally dismissed?
3. Are respondents entitled to their money claims due to
underpayment of wages, and nonpayment of holiday pay,
rest day premium, SILP, COLA, overtime pay, and night
shift differential pay?
It is petitioners’ contention that the above issues have already been

threshed out sufficiently and definitively by the NLRC. They
therefore assail the CA’s reversal of the NLRC decision, claiming
15
that based on the ruling in Castillo v. NLRC, it is non sequitur that
the CA should re-examine the
_______________
14 Rollo, pp. 34-35.

15 G.R. No. 104319, June 17, 1999 (308 SCRA 326).
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VOL. 458, MAY 16, 2005 623

factual findings of both the NLRC and the Labor Arbiter, especially
as in this case the NLRC’s findings are allegedly supported by
substantial evidence.
We do not agree.
There is no denying that it is within the NLRC’s competence, as
an appellate agency reviewing decisions of Labor 16
Arbiters, to
disagree with and set aside the latter’s findings. But it stands to
reason that the NLRC should state an acceptable cause therefore,
otherwise it would be a whimsical, capricious, oppressive, illogical,
unreasonable exercise of quasi-judicial prerogative, subject to
17
invalidation by the extraordinary writ of certiorari. And when the
factual findings of the Labor Arbiter and the NLRC are diametrically
opposed and this disparity of findings is called into question, there
is, necessarily, a re-examination of the factual findings to ascertain
18
which 19opinion should be sustained. As ruled in Asuncion v.
NLRC.
Although, it is a legal tenet that factual findings of administrative bodies are

entitled to great weight and respect, we are constrained to take a second
look at the facts before us because of the diversity in the opinions of the
Labor Arbiter and the NLRC. A disharmony between the factual findings of
the Labor Arbiter and those of the NLRC opens the door to a review thereof
20
by this Court.
_______________
16 Coca-Cola Bottlers, Philippines, Inc. v. Hingpit, G.R. No. 127238, August 25,
1998 (294 SCRA 594).
17 Id.
18 See Jo v. National Labor Relations Commission, G.R. No. 121605, February 2,
2000 (324 SCRA 437); PAL, Inc. v. National Labor Relations Commission, G.R. No.
126805, March 16, 2000 (328 SCRA 273); and Villar v. National Labor Relations
Commission, G.R. No. 130935, May 11, 2000 (331 SCRA 686).
19 G.R. No. 129329, July 31, 2001 (362 SCRA 56). See Philippine Employ
Services and Resources, Inc. v. Paramio, G.R. No. 144786, April 15, 2004 (427
SCRA 732).
20 At p. 62.
624

The CA, therefore, did not err in reviewing the records to determine
which opinion was supported by substantial evidence.
21
21
Moreover, it is explicit in Castillo v. NLRC that factual findings
of administrative bodies like the NLRC are affirmed only if they are
supported by substantial evidence that is manifest in the decision
and on the records. As stated in Castillo:
[A]buse of discretion does not necessarily follow from a reversal by the

NLRC of a decision of a Labor Arbiter. Mere variance in evidentiary
assessment between the NLRC and the Labor Arbiter does not automatically
call for a full review of the facts by this Court. The NLRC’s decision, so
long as it is not bereft of substantial support from the records, deserves
respect from this Court. As a rule, the original and exclusive jurisdiction to
review a decision or resolution of respondent NLRC in a petition for
certiorari under Rule 65 of the Rules of Court does not include a correction
of its evaluation of the evidence but is confined to issues of jurisdiction or
grave abuse of discretion. Thus, the NLRC’s factual findings, if supported
by substantial evidence, are entitled to great respect and even finality, unless
petitioner is able to show that it simply and arbitrarily disregarded the
evidence before it or had misappreciated the evidence to such an extent as
to compel a contrary conclusion if such evidence had been properly
22
appreciated. (citations omitted)
After careful review, we find that the reversal of the NLRC’s

decision was in order precisely because it was not supported by
substantial evidence.
1. Ownership by Josefa Po Lam
The Labor Arbiter ruled that as regards the claims of the employees,
petitioner Josefa Po Lam is, in fact, the owner of Mayon Hotel &
Restaurant. Although the NLRC reversed this decision, the CA, on
review, agreed with the Labor Arbiter that notwithstanding the
certificate of registration in the
_______________
21 G.R. No. 104319, June 17, 1999 (308 SCRA 326).

22 At pp. 334-335.
625
VOL. 458, MAY 16, 2005 625

name of Pacita Po, it is Josefa Po Lam who is the owner/ proprietor

of Mayon Hotel & Restaurant, and the proper respondent in the
complaints filed by the employees. The CA decision states in part:
[Despite] the existence of the Certificate of Registration in the name of

Pacita Po, we cannot fault the labor arbiter in ruling that Josefa Po Lam is
the owner of the subject hotel and restaurant. There were conflicting
documents submitted by Josefa herself. She was ordered to submit
additional documents to clearly establish ownership of the hotel and
restaurant, considering the testimonies given by the [respondents] and the
non-appearance and failure to submit her own position paper by Pacita Po.
But Josefa did not comply with the directive of the Labor Arbiter. The
ruling of the Supreme Court in Metropolitan Bank and Trust Company v.
Court of Appeals applies to Josefa Po Lam which is stated in this wise:
When the evidence tends to prove a material fact which imposes a liability on a
party, and he has it in his power to produce evidence which from its very nature must
overthrow the case made against him if it is not founded on fact, and he refuses to
produce such evidence, the presumption arises that the evidence[,] if produced,
would operate to his prejudice, and support the case of his adversary.
Furthermore, in ruling that Josefa Po Lam is the real owner of the hotel
and restaurant, the labor arbiter relied also on the testimonies of the
witnesses, during the hearing of the instant case. When the conclusions of
the labor arbiter are sufficiently corroborated by evidence on record, the
same should be respected by appellate tribunals, since he is in a better
23
position to assess and evaluate the credibility of the contending parties.
(citations omitted)
Petitioners insist that it was error for the Labor Arbiter and the CA
to have ruled that petitioner Josefa Po Lam is the
_______________
23 Rollo, pp. 79-80. The quoted ruling from Metropolitan Bank and Trust
Company v. Court of Appeals, G.R. No. 122899, June 8, 2000 (333 SCRA 212, 219),
was in turn, merely citing one of the pronouncements made in Manila Bay Club Corp.
v. Court of Appeals, G.R. No. 110015, October 13, 1995 (249 SCRA 303, 306).
626

owner of Mayon Hotel & Restaurant. They allege that the

documents they submitted to the Labor Arbiter sufficiently and
clearly establish the fact of ownership by petitioner Pacita Po, and
not her mother, petitioner Josefa Po Lam. They contend that
petitioner Josefa Po Lam’s participation was limited to merely (a)
being the overseer; (b) receiving the month-to-month and/or year-to-
year financial reports prepared and submitted by respondent
24
Loveres; and (c) visitation of the premises. They also put emphasis
on the admission of the respondents in their position paper submitted
to the Labor Arbiter, identifying petitioner Josefa Po Lam as the

25
manager, and Pacita Po as the owner. This, they claim, is a judicial
admission and is binding on respondents. They protest the reliance
the Labor Arbiter and the CA placed on their failure to submit
additional documents to clearly establish ownership of the hotel and
restaurant, claiming that there was no need for petitioner Josefa Po
Lam to submit additional documents considering that the Certificate
of Registration is the best and primary evidence of ownership.
We disagree with petitioners. We have scrutinized the records
and find the claim that petitioner Josefa Po Lam is merely the
overseer is not borne out by the evidence.
First. It is significant that only Josefa Po Lam appeared in the
proceedings with the Labor Arbiter. Despite receipt of the Labor
Arbiter’s notice and summons, other notices and Orders, petitioner
Pacita Po failed to appear in any of the proceedings with the Labor
26
Arbiter in these cases, nor file her position paper. It was only on
27
appeal with the NLRC that Pacita Po signed the pleadings. The
apathy shown by petitioner Pacita Po is contrary to human
experience as one would think that the owner of an establishment
would natu-
_______________
24 Petition, Rollo, pp. 61-62.

25 Id.
26 Joint Decision of Labor Arbiter, Rollo, p. 188.
27 Rollo, p. 227.
627
VOL. 458, MAY 16, 2005 627

rally be concerned when all her employees file complaints against

her.
Second. The records of the case belie petitioner Josefa Po Lam’s
claim that she is merely an overseer. The findings of the Labor
Arbiter on this question were based on credible, competent and
substantial evidence. We again quote the Joint Decision on this
matter:
Mayon Hotel and Restaurant is a [business name] of an enterprise. While

[petitioner] Josefa Po Lam claims that it is her daughter, Pacita Po, who
owns the hotel and restaurant when the latter purchased the same from one
Palanos in 1981, Josefa failed to submit the document of sale from said
Palanos to Pacita as allegedly the sale was only verbal although the license
to operate said hotel and restaurant is in the name of Pacita which, despite
our Order to Josefa to present the same, she failed to comply (p. 38, tsn,
August 13, 1998). While several documentary evidences were submitted by

Josefa wherein Pacita was named therein as owner of the hotel and
restaurant (pp. 64, 65, 67 to 69; vol. I, rollo)[,] there were documentary
evidences also that were submitted by Josefa showing her ownership of said
enterprise (pp. 468 to 469; vol. II, rollo). While Josefa explained her
participation and interest in the business as merely to help and assist her
daughter as the hotel and restaurant was near the former’s store, the
testimonies of [respondents] and Josefa as well as her demeanor during the
trial in these cases proves (sic) that Josefa Po Lam owns Mayon Hotel and
Restaurant. [Respondents] testified that it was Josefa who exercises all the
acts and manifestation of ownership of the hotel and restaurant like
transferring employees from the Greatwall Palace Restaurant which she and
her husband Roy Po Lam previously owned; it is Josefa to whom the
employees submits (sic) reports, draws money for payment of payables and
for marketing, attending (sic) to Labor Inspectors during ocular inspections.
Except for documents whereby Pacita Po appears as the owner of Mayon
Hotel and Restaurant, nothing in the record shows any circumstance or
manifestation that Pacita Po is the owner of Mayon Hotel and Restaurant.
The least that can be said is that it is absurd for a person to purchase a hotel
and restaurant in the very heart of the City of Legazpi verbally. Assuming
this to be true, when [petitioners], particularly Josefa, was directed to submit
evidence as to the ownership of Pacita of the hotel and restaurant,
considering
628

the testimonies of [respondents], the former should [have] submitted the

lease contract between the owner of the building where Mayon Hotel and
Restaurant was located at Rizal St., Legazpi City and Pacita Po to clearly
establish ownership by the latter of said enterprise. Josefa failed. We are not
surprised why some employers employ schemes to mislead Us in order to
evade liabilities. We therefore consider and hold Josefa Po Lam as the
owner/proprietor of Mayon Hotel and Restaurant and the proper respondent
28
in these cases.
Petitioners’ reliance on the rules of evidence, i.e., the certificate of

registration being the best proof of ownership, is misplaced.
Notwithstanding the certificate of registration, doubts were cast as to
the true nature of petitioner Josefa Po Lam’s involvement in the
enterprise, and the Labor Arbiter had the authority to resolve this
issue. It was therefore within his jurisdiction to require the
additional documents to ascertain who was the real owner of
petitioner Mayon Hotel & Restaurant.
Article 221 of the Labor Code is clear: technical rules are not
binding, and the application of technical rules of procedure may be
29
29
relaxed in labor cases to serve the demand of substantial justice.
The rule of evidence prevailing in court of law or equity shall not be
controlling in labor cases and it is the spirit and intention of the
Labor Code that the Labor Arbiter shall use every and all reasonable
means to ascertain the facts in each case speedily and objectively
and without regard to technicalities of law or procedure, all in the
30
interest of due process. Labor laws mandate the speedy
administration of justice, with least attention to technicalities but
31
without sacrificing the fundamental requisites of due process.
_______________
28 Rollo, pp. 190-191.

29 Havtor Management Phils., Inc. v. National Labor Relations Commission, G.R.
No. 146336, December 13, 2001 (372 SCRA 271).
30 Labor Code, Art. 221.
31 Taberrah v. National Labor Relations Commission, G.R. No. 117742, July 29,
1997 (276 SCRA 431). See Samahan ng Mangagawa sa Moldex Products, Inc. v.
National Labor Relations Commis-
629
VOL. 458, MAY 16, 2005 629

Similarly, the fact that the respondents’ complaints contained no

allegation that petitioner Josefa Po Lam is the owner is of no
moment. To apply the concept of judicial admissions to respondents
—who are but lowly employees—would be to exact compliance
with technicalities of law that is contrary to the demands of
substantial justice. Moreover, the issue of ownership was an issue
that arose only during the course of the proceedings with the Labor
Arbiter, as an incident of determining respondents’ claims, and was
32
well within his jurisdiction.
Petitioners were also not denied due process, as they were given
33
sufficient opportunity to be heard on the issue of ownership. The
essence of due process in administrative proceedings is simply an
opportunity to explain one’s side or an opportunity to seek
34
reconsideration of the action or ruling complained of. And there is
nothing in the records which would suggest that petitioners had
absolute lack of opportunity to be
_______________
sion, G.R. No. 119467, February 1, 2000 (324 SCRA 242); Samar II Electric
Cooperative, Inc. v. National Labor Relations Commission, G.R. No. 116692, March
21, 1997 (270 SCRA 290); Domasig v. National Labor Relations Commission, G.R.
No. 118101, September 16, 1996 (261 SCRA 779); and Sigma Personnel Services vs.
National Labor Relations Commission, G.R. No. 108284, June 30, 1993 (224 SCRA
181).
32 Domasig v. National Labor Relations Commission, G.R. No. 118101, September
16, 1996 (261 SCRA 779).
33 Robusta Agro Marine Products, Inc. v. Gorombalem, G.R. No. 80500, July 5,
1989 (175 SCRA 93).
34 Damasco v. National Labor Relations Commission, G.R. No. 115755, December
4, 2000 (346 SCRA 714). See Ginete v. Sunrise Manning Agency, G.R. No. 142023,
June 21, 2001 (359 SCRA 404); and Robusta Agro Marine Products, Inc. v.
Gorombalem, G.R. No. 80500, July 5, 1989 (175 SCRA 93).
630

35
heard. Obviously, the choice not to present evidence was made by
36
petitioners themselves.
But more significantly, we sustain the Labor Arbiter and the CA
because even when the case was on appeal with the NLRC, nothing
was submitted to negate the Labor Arbiter’s finding that Pacita Po is
not the real owner of the subject hotel and restaurant. Indeed, no
such evidence was submitted in the proceedings with the CA nor
with this Court. Considering that petitioners vehemently deny
ownership by petitioner Josefa Po Lam, it is most telling that they
continue to withhold evidence which would shed more light on this
issue. We therefore agree with the CA that the failure to submit
could only mean that if produced, it would have been adverse to
37
petitioners’ case.
Thus, we find that there is substantial evidence to rule that
petitioner Josefa Po Lam is the owner of petitioner Mayon Hotel &
Restaurant.
2. Illegal Dismissal: claim for separation pay
Of the sixteen employees, only the following filed a case for illegal
dismissal: respondents Loveres,38
Llarena, Nicerio, Macandog,
Guades, Atractivo and Broñola.
The Labor Arbiter found that there was illegal dismissal, and
granted separation pay to respondents Loveres, Macandog and
Llarena. As respondents Guades, Nicerio and Alamares were already
79, 66 and 65 years old respectively at the time of the dismissal, the
Labor Arbiter granted retirement benefits pursuant to Article 287 of
the Labor Code as
_______________
35 See Marquez v. Secretary of Labor, G.R. No. 80685, March 16, 1989 (171
SCRA 337).
36 Id.
37 Coca-Cola Bottlers Philippines, Inc. v. National Labor Relations Commission,
G.R. No. 78787, December 18, 1989 (180 SCRA 195), citing Sec. 3(e), Rule 131,
Rules of Court. See People vs. Balansag, 60 Phil. 266 (1934); and Cuyugan vs.
Dizon, 79 Phil. 80 (1947).
38 Amended Complaint, Rollo, p. 116.
631
VOL. 458, MAY 16, 2005 631

39
amended. The Labor Arbiter ruled that respondent Atractivo was
not entitled to separation pay because he had been transferred to
work in the restaurant operations in Elizondo Street, but awarded
him damages. Respondents Loveres, Llarena, Nicerio, Macandog
40
and Guades were also awarded damages.
The NLRC reversed the Labor Arbiter, finding that “no clear act
of termination is attendant in the case at bar” and that respondents
“did not submit any evidence to that effect, but the finding and
conclusion of the Labor 41 Arbiter [are] merely based on his own
surmises and conjectures.” In turn, the NLRC was reversed by the
CA.
It is petitioners contention that the CA should have sustained the
NLRC finding that none of the above-named respondents were
illegally dismissed, or entitled to separation or retirement pay.
According to petitioners, even the Labor Arbiter and the CA admit
that when the illegal dismissal case was filed by respondents on
April 1997, they had as yet no cause of action. Petitioners therefore
conclude that the filing by respondents of the illegal dismissal case
was premature and should have been dismissed outright by the
42
Labor Arbiter. Petitioners also claim that since the validity of
respon-dents’ dismissal is a factual question, 43it is not for the
reviewing court to weigh the conflicting evidence.
We do not agree. Whether respondents are still working for
petitioners is a factual question. And the records are unequivocal
that since April 1997, when petitioner Mayon Hotel & Restaurant
suspended its hotel operations and transferred
_______________
39 Joint Decision, Rollo, p. 192.

40 We note that respondent Broñola was not included in this award, probably
overlooked because he had alleged illegal dismissal only in an amended complaint
filed on May 27, 1997. Amended Complaint, Rollo, p. 116.
41 NLRC decision, Rollo, pp. 269-272.
43 Rollo, p. 36.
632

its restaurant operations in Elizondo Street, respondents Loveres,

Macandog, Llarena, Guades and Nicerio have not been permitted to
work for petitioners. Respondent Alamares, on the other hand, was
also laid-off when the Elizondo Street operations closed, as were all
the other respondents. Since then, respondents have not been
permitted to work nor recalled, even after the construction of the
new premises at Peñaranda Street and the reopening of the hotel
operations with the restaurant in this new site. As stated by the Joint
Decision of the Labor Arbiter on July 2000, or more than three (3)
44
years after the complaint was filed:
[F]rom the records, more than six months had lapsed without [petitioner]
having resumed operation of the hotel. After more than one year from the
temporary closure of Mayon Hotel and the temporary transfer to another site
of Mayon Restaurant, the building which [petitioner] Josefa allege[d]
w[h]ere the hotel and restaurant will be transferred has been finally
constructed and the same is operated as a hotel with bar and restaurant
nevertheless, none of [respondents] herein who were employed at Mayon
Hotel and Restaurant which was also closed on April 30, 1998 was/were
recalled by [petitioner] to continue their services . . .
Parenthetically, the Labor Arbiter did not grant separation pay to the
other respondents as they had not filed an amended complaint to
question the cessation of their employment 45after the closure of
Mayon Hotel & Restaurant on March 31, 1997.
The above factual finding of the Labor Arbiter was never refuted
by petitioners in their appeal with the NLRC. It confounds us,
therefore, how the NLRC could have so cavalierly treated this
uncontroverted factual finding by ruling that respondents have not
introduced any evidence to show that they were illegally dismissed,
and that the Labor Arbiter’s
_______________
44 Rollo, pp. 191-192.

45 Joint Decision, Rollo, pp. 192-193.
633
VOL. 458, MAY 16, 2005 633
46
finding was based on conjecture. It was a serious error that the
NLRC did not inquire as to the legality of the cessation of
employment. Article 286 of the Labor Code is clear—there is
termination of employment when an otherwise bona fide suspension
47
of work exceeds six (6) months. The cessation of employment for
more than six months was patent and the employer has the burden of
48
proving that the termination was for a just or authorized cause.
Moreover, we are not impressed by any of petitioners’ attempts
to exculpate themselves from the charges. First, in the proceedings
with the Labor Arbiter, they claimed that it could not be illegal
dismissal because the lay-off was merely temporary (and due to the
expiration of the lease contract over the old premises of the hotel).
They specifically invoked Article 286 of the Labor Code to argue
that the claim for separation pay was premature and without legal
49
and factual basis. Then, because the Labor Arbiter had ruled that
there was already illegal dismissal when the lay-off had exceeded
the six-month period provided for in Article 286, petitioners raise
this novel argument, to wit:
It is the firm but respectful submission of petitioners that reliance on Article

286 of the Labor Code is misplaced, considering that the reason why private
respondents were out of work was not due to
_______________
46 Id., pp. 207-228.

47 Article 286 of the Labor Code provides: When Employment Not Deemed Terminated. The
bona fide suspension of the operation of a business or undertaking for a period not exceeding
six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate
employment. In all such cases, the employer shall reinstate the employee to his former position
without loss of seniority rights if he indicates his desire to resume his work not later than one
(1) month from the resumption of operations of his employer or from his relief from the
military or civic duty.
48 See VH Manufacturing, Inc. v. National Labor Relations Commission, G.R. No. 130957,
January 19, 2000 (322 SCRA 417).
49 Petitioners’ position paper, Rollo, p. 110.
634

the fault of petitioners. The failure of petitioners to reinstate the private

respondents to their former positions should not likewise be attributable to
said petitioners as the private respondents did not submit any evidence to
prove their alleged illegal dismissal. The petitioners cannot discern why
they should be made liable to the private respondents for their failure to be
reinstated considering that the fact that they were out of work was not due to
the fault of petitioners but due to circumstances beyond the control of
petitioners, which are the termination and non-renewal of the lease contract
over the subject premises. Private respondents, however, argue in their
Comment that petitioners themselves sought the application of Article 286
of the Labor Code in their case in their Position Paper filed before the Labor
Arbiter. In refutation, petitioners humbly submit that even if they invoke
Article 286 of the Labor Code, still the fact remains, and this bears stress
and emphasis, that the temporary suspension of the operations of the
establishment arising from the non-renewal of the lease contract did not
result in the termination of employment of private respondents and,
therefore, the petitioners cannot be faulted if said private respondents were
out of work, and consequently, they are not entitled to their money claims
50
against the petitioners.
It is confounding how petitioners have fashioned their arguments.

After having admitted, in effect, that respondents have been laid-off
since April 1997, they would have this Court excuse their refusal to
reinstate respondents or grant them separation pay because these
same respondents purportedly have not proven the illegality of their
dismissal.
Petitioners’ arguments reflect their lack of candor and the blatant
attempt to use technicalities to muddle the issues and defeat the
lawful claims of their employees. First, petitioners admit that since
April 1997, when hotel operations were suspended due to the
termination of the lease of the old premises, respondents Loveres,
Macandog, Llarena, Nicerio and Guades have not been permitted to
work. Second, even after six months of what should have been just a
temporary lay-off, the same respondents were still not recalled to
work. As a matter
_______________
50 Rollo, pp. 43-44.
635
VOL. 458, MAY 16, 2005 635

of fact, the Labor Arbiter even found that as of the time when he
rendered his Joint Decision on July 2000—or more than three (3)
years after the supposed “temporary lay-off,” the employment of all
of the respondents with petitioners had ceased, notwithstanding that
the new premises had been completed and the same operated as a
hotel with bar and restaurant. This is clearly dismissal—or the
permanent severance or complete separation of the worker from the
service on the initiative of the employer regardless of the reasons

51
therefor.
On this point, we note that the Labor Arbiter and the CA are in
accord that at the time of the filing of the complaint, respondents had
no cause of action to file the case for illegal dismissal. According to
the CA and the Labor Arbiter, the lay-off of the respondents was
merely temporary, pending construction of the new building at
52
Peñaranda Street.
While the closure of the hotel operations in April of 1997 may
have been temporary, we hold that the evidence on record belie any
claim of petitioners that the lay-off of respondents on that same date
was merely temporary. On the contrary, we find substantial evidence
that petitioners intended the termination to be permanent. First,
respondents Loveres, Macandog, Llarena, Guades, Nicerio and
Alamares filed the complaint for illegal dismissal immediately after
the closure of the hotel operations in Rizal Street, notwithstanding
the alleged temporary nature of the closure of the hotel operations,
and petitioners’ allegations that the employees assigned to the hotel
operations knew about this beforehand. Second, in their position
paper submitted to the Labor Arbiter, petitioners invoked Article 286
of the Labor Code to assert that the employer-employee relationship
was merely suspended, and therefore the claim for separation pay
was premature and
_______________
51 Jo Cinema Corporation v. Abellana, G.R. No. 132837, June 28, 2001 (360
SCRA 142).
52 See Rollo, p. 7.
636

53
without legal or factual basis. But they made no mention of any
intent to recall these respondents to work upon completion of the
new premises. Third, the various pleadings on record show that
petitioners held respondents, particularly Loveres, as responsible for
mismanagement of the establishment and for abuse of trust and
confidence. Petitioner Josefa Po Lam’s affidavit on July 21, 1998,
for example, squarely blamed respondents, specifically Loveres,
Bumalay and Camigla, for abusing her leniency and causing
petitioner Mayon Hotel & Restaurant to sustain “continuous losses
until it is closed.” She then asserts that respondents “are not entitled
to separation pay for they were not terminated and if ever the
54
business ceased to operate it was because of losses.” Again,
petitioners make the same allegation in their memorandum on
appeal with the NLRC, where they alleged that three (3) years prior
to the expiration of the lease in 1997, the operation of the Hotel had
been sustaining consistent losses, and these were solely attributed to
respondents, but most especially due to Loveres’s mismanagement
55
and abuse of petitioners’ trust and confidence. Even the petition
filed in this court made reference to the separation of the
respondents due to “severe financial losses and reverses,” again
56
imputing it to respondents’ mismanagement. The vehemence of
petitioners’ accusation of mismanagement against respondents,
especially against Loveres, is inconsistent with the desire to recall
them to work. Fourth, petitioners’ memorandum on appeal also
averred that the case was filed “not because of the business
_______________
53 Petitioners’ position paper, Rollo, p. 110.

54 Petitioner Josefa Po Lam claimed that respondents, specifically Loveres,
Camigla and Bumalay, had absolute control of the entire operations of Mayon Hotel
& Restaurant, such that respondents “have abused the leniency of Mrs. Josefa [Po
Lam] and because of [respondents’] indiscretions the business Mayon Hotel &
Restaurant sustained continuous losses until it is closed.” See Affidavit, Rollo, pp.
141-143.
55 Memorandum on Appeal, Rollo, pp. 210, 218-219.
637
VOL. 458, MAY 16, 2005 637

being operated by them or that they were supposedly not receiving

benefits from the Labor Code which is true, but because of the fact
that the source of their livelihood, whether legal or immoral, was
stopped on March 31, 1997, when the owner of the building
57
terminated the Lease Contract.” Fifth, petitioners had
inconsistencies in their pleadings (with the NLRC, CA and with this
58
Court) in referring to the closure, i.e., in the petition filed with this
court, they assert that there is no illegal dismissal because there was
“only a temporary cessation or suspension of operations of the hotel
and restaurant due to circumstances beyond the control of
59
petitioners, and that is, the non-renewal of the lease contract . . .”
And yet, in the same petition, they also assert that: (a) the separation
of respondents was due to severe financial losses and reverses
leading to the closure of the business; and (b) petitioner Pacita Po
had to close shop and was bankrupt and has no liquidity to put up
60
her own building to house Mayon Hotel & Restaurant. Sixth, and
finally, the uncontroverted finding of the Labor Arbiter that
petitioners terminated all the other respondents, by not employing
them when the Hotel and Restaurant transferred to its new site on
61
Peñaranda Street. Indeed, in this same memorandum, petitioners
referred to all respondents as “former employees of Mayon Hotel &
62
Restaurant.”
These factors may be inconclusive individually, but when taken
together, they lead us to conclude that petitioners
_______________
57 Memorandum on Appeal, Rollo, p. 219.

58 Id.
59 Petition, Rollo, pp. 44, 47, 49.
61 Petitioners’ Memorandum on Appeal (NLRC), Rollo, pp. 207-228.
Parenthetically, petitioners appealed to the NLRC the ruling of the Labor Arbiter on
the following: that (a) Josefa Po Lam is the real owner of Mayon Hotel & Restaurant;
(b) the Facility Evaluation Order cannot be deemed part of the minimum wage; and
(c) computation of the applicable minimum wage.
62 Memorandum on Appeal, Rollo, pp. 209, 210.
638

really intended to dismiss all respondents and merely used the

termination of the lease (on Rizal Street premises) as a means by
which they could terminate their employees.
Moreover, even assuming arguendo that the cessation of
employment on April 1997 was merely temporary, it became
dismissal by operation of law when petitioners failed to reinstate
respondents after the lapse of six (6) months, pursuant to Article 286
of the Labor Code.
We are not impressed by petitioners’ claim that severe business
losses justified their failure to reinstate respondents. The evidence to
prove this fact is inconclusive. But more important, serious business
losses do not excuse the employer from complying with the
clearance or report required under Article 283 of the Labor Code and
its implementing rules before terminating the employment of its
63
workers. In the absence of justifying circumstances, the failure of
petitioners to observe the procedural requirements set out under
Article 284, taints their actuations with bad faith, especially since
they claimed that they have been experiencing losses in the three
years before 1997. To say the least, if it were true that the lay-off
was temporary but then serious business losses prevented the
reinstatement of respondents, then petitioners should have complied
with the requirements of written notice. The requirement of law
mandating the giving of notices was intended not only to enable the
employees to look for another employment and therefore ease the

impact of the loss of their jobs and the corresponding income, but
more importantly, to give the Department of Labor and Employment
(DOLE) the opportunity to ascertain the verity of the alleged
64
authorized cause of termination.
_______________
63 Needle Queen Corp. v. Nicolas, G.R. Nos. 60741-43, December 22, 1989 (180
SCRA 568).
64 NDC-Guthrie Plantations, Inc. v. National Labor Relations Commission, G.R.
No. 110740, August 9, 2001 (362 SCRA 416).
639
VOL. 458, MAY 16, 2005 639

And even assuming that the closure was due to a reason beyond the
control of the employer, it still has to accord its employees some
65
relief in the form of severance pay.
While we recognize the right of the employer to terminate the
services of an employee for a just or authorized cause, the dismissal
of employees must be made within the parameters of law and
66
pursuant to the tenets of fair play. And in termination disputes, the
burden of proof is always on the employer to prove that the
67
dismissal was for a just or authorized cause. Where there is no
showing of a clear, valid and legal cause for termination of
employment, the law considers the case a matter of illegal
68
dismissal.
Under these circumstances, the award of damages was proper. As
a rule, moral damages are recoverable where the dismissal of the
employee was attended by bad faith or fraud or constituted an act
oppressive to labor, or was done in a manner contrary to morals,
69
good customs or public policy.
_______________
65 Cheniver Deco Print Technics Corporation v. National Labor Relations

Commission, G.R. No. 122876, February 17, 2000 (325 SCRA 758).
66 Hantex Trading Co., Inc. v. Court of Appeals, G.R. No. 148241, September 27,
2002 (390 SCRA 201). See Uichico v. National Labor Relations Commission, G.R.
No. 121434, June 2, 1997 (273 SCRA 35).
67 See VH Manufacturing, Inc. v. National Labor Relations Commission, G.R. No.
130957, January 19, 2000 (322 SCRA 417); Columbus Philippine Bus Corporation v.
National Labor Relations Commission, G.R. Nos. 114858-59, September 7, 2001
(364 SCRA 606); and Hyatt Taxi Services, Inc. v. Catinoy, G.R. No. 143204, June 26,
2001 (359 SCRA 686).
68 Sevillana v. I.T. (International) Corp., G.R. No. 99047, April 16, 2001 (356
SCRA 451).
69 Equitable Banking Corp. v. National Labor Relations Commission, G.R. No.
102467, June 13, 1997 (273 SCRA 352); Litonjua Group of Companies v. Vigan, G.R.
No. 143723, June 28, 2001 (360 SCRA 194); and Airline Pilots Association of the
Philippines v. National Labor Relations Commission, G.R. No. 115224, July 26, 1996
640

We believe that the dismissal of the respondents was attended with

bad faith and meant to evade the lawful obligations imposed upon an
employer.
To rule otherwise would lead to the anomaly of respondents
being terminated from employment in 1997 as a matter of fact, but
without legal redress. This runs counter to notions of fair play,
substantial justice and the constitutional mandate that labor rights
should be respected. If doubts exist between the evidence presented
by the employer and the employee, the scales of justice must be
tilted in favor of the latter—the employer must affirmatively show
rationally adequate evidence that the dismissal was for a justifiable
70
cause. It is a time-honored rule that in controversies between a
laborer and his master, doubts reasonably arising from the evidence,
or in the interpretation of agreements and writing should be resolved
71
in the former’s favor. The policy is to extend the doctrine to a
greater number of employees who can avail of the benefits under the
law, which is in consonance with the avowed policy of the State to
72
give maximum aid and protection of labor.
We therefore reinstate the Labor Arbiter’s decision with the
following modifications:
_______________
(259 SCRA 459). See Maglutac v. National Labor Relations Commission, G.R.
No. 78345, September 21, 1990 (189 SCRA 767), citing Guita v. Court of Appeals,
139 SCRA 576 (1985).
70 Asuncion v. National Labor Relations Commission, G.R. No. 129329, July 31,
2001 (362 SCRA 56); and Nicario v. National Labor Relations Commission, G.R. No.
125340, September 17, 1998 (295 SCRA 619).
71 Nicario v. National Labor Relations Commission, G.R. No. 125340, September
17, 1998 (295 SCRA 619), citing Prangan v. National Labor Relations Commission,
G.R. No. 126529, April 15, 1998 (289 SCRA 142).
72 Sarmiento v. Employees’ Compensation Commission, No. L-68648, September
24, 1986 (144 SCRA 421).
641
VOL. 458, MAY 16, 2005 641

(a) Separation pay for the illegal dismissal of respondents

Loveres, Macandog and Llarena; (Santos Broñola cannot be
granted separation pay as he made no such claim);
(b) Retirement pay for respondents Guades, Nicerio, and
Alamares, who at the time of dismissal were entitled to
their retirement benefits73 pursuant to Article 287 of the
Labor Code as amended; and
(c) Damages for respondents Loveres, Macandog, Llarena,
Guades, Nicerio, Atractivo, and Broñola.
3. Money claims
The CA held that contrary to the NLRC’s ruling, petitioners had not
discharged the burden of proving that the monetary claims of the
74
respondents have been paid. The CA thus reinstated the Labor
Arbiter’s grant of respondents’ monetary claims, including damages.
Petitioners assail this ruling by repeating their long and
convoluted argument that as there was no illegal dismissal, then
respondents are not entitled to their monetary claims or separation
pay and damages. Petitioners’ arguments are not only tiring,
repetitive and unconvincing, but confusing and confused—
entitlement to labor standard benefits is a separate and distinct
concept from payment of separation pay arising from illegal
dismissal, and are governed by different provisions of the Labor
Code.
We agree with the CA and the Labor Arbiter. Respondents have
set out with particularity in their complaint, position paper, affidavits
and other documents the labor standard benefits they are entitled to,
and which they alleged that petitioners have failed to pay them. It
was therefore petitioners’ burden to prove that they have paid these
money claims. One who pleads payment has the burden of proving
it, and even where the employees must allege nonpayment, the
general rule is that the burden rests on the defendant to prove
_______________

74 Rollo, p. 82.
642

75
nonpayment, rather than on the plaintiff to prove nonpayment. This
petitioners failed to do.
We also agree with the Labor Arbiter and the CA that the
documents petitioners submitted, i.e., affidavits executed by some of
respondents during an ocular inspection conducted by an inspector
of the DOLE; notices of inspection result and Facility Evaluation
76
Orders issued by DOLE, are not sufficient to prove payment.
Despite repeated orders from the Labor
_______________
75 Sevillana v. I.T. (International) Corp., G.R. No. 99047, April 16, 2001 (356
SCRA 451).
76 As stated in the Joint Decision, Rollo, pp. 193-194:
In defense against the claims of [respondents], [petitioner] submitted the affidavit of

[respondents] Loveres and Llarena executed allegedly during an ocular inspection of the DOLE
Regional Office whereby said [respondents] admitted as having rendered eight hours of work a
day only. The same however, does not bear the signature of the Labor Inspector who conducted
said inspection to prove that [respondents] gave the information therein freely and voluntarily
before the Labor Inspector (pp. 64, 65; vol. I, Rollo). While the Notice of Inspection Results
issued in 1995 and 1997 by the DOLE Regional Office on account of an inspection conducted
on Mayon Hotel and Restaurant shows that [petitioners] complied with the mandated Wage
Order applicable during said period (pp. 68 and 69; vol. I, Rollo), the same cannot prove that
[respondents] were indeed paid of (sic) all the labor standard benefits they ought to receive for
their services rendered. A case in point is Paterno Llarena, Jr. who in his affidavit (p. 65; vol. I,
Rollo), states that his salary was P75.00/day (item 10) which is paid in the frequency of twice a
month (item 9) from which the value of the food given to him was deducted in the amount of
P38.00 per pay day (item 18) hence P76.00/month which if divided by the number of days he
rendered services, say 26 days a month, is P2.92/day which if added to his daily wage of
P75.00 is P77.92/day thus, in 1995, is less than the minimum wage applicable in Legazpi City.
Also, if indeed an actual ocular inspection was conducted by a Labor Inspector of DOLE and
the employees of Mayon Hotel and Restaurant were individually
643
VOL. 458, MAY 16, 2005 643

77
Arbiter, petitioners failed to submit the pertinent employee files,
payrolls, records, remittances and other similar documents which
would show that respondents rendered work entitling them to
payment for overtime work, night shift differential, premium pay for
work on holidays and rest day, and payment of these as well as the
COLA and the SILP—documents which are not in respondents’
78
possession but in the custody and absolute control of petitioners.
By choosing
_______________
interviewed insofar as their employment was concerned, how come that Luis Guades, who by
his appearance can be readily seen as too old, as in fact he was 79 years old, and Gregorio
Nicerio, 66 in 1997, were still employed at Mayon Hotel and Restaurant. The labor inspectors
of DOLE are trained not only to investigate matters concerning wages but are deemed to know
the various laws, issuances, policies and regulations concerning employment of workers. We
are surprised why [petitioner Josefa Po Lam], who had been inspected by the DOLE yearly,
cannot submit the DTR/logbook, payrolls/payslips of her employees which, by law, she must
maintain and keep. Against the evidences of [petitioners], we are constrained to consider the
testimonies of [respondents] that they were compelled to sign their affidavits by Josefa Po Lam
during inspections (pp. 57, 102, 108; vol. II, Rollo) hence, the affidavits of [respondents]
during an ocular inspection were not their own voluntary act and therefore inadmissible.

78 As stated in the Joint Decision, Rollo, p. 181:
After parties failed to agree on an amicable settlement of these cases, we directed them to
submit their respective position paper [and] attached (sic) thereto are (sic) the affidavit of their
witnesses and documentary evidences such as complainants’ DTR/logbook, payrolls/payslips
and/or vouchers in support of their respective claims and/or defenses.
When respondents failed to timely comply as directed, we reiterated in our order [the
requirement of] their submission of complainant[s’] records of employment particularly their
DTR/ logbook and payroll/payslips covering three years backdated from their last date of
employment.
644

not to fully and completely disclose information and present the

necessary documents to prove payment of labor standard benefits
due to respondents, petitioners failed to discharge the burden of
79
proof. Indeed, petitioners’ failure to submit the necessary
documents which as employers are in their possession, in spite of
orders to do so, gives rise to the presumption that their presentation
80
is prejudicial to its cause. As aptly quoted by the CA:
[W]hen the evidence tends to prove a material fact which imposes a liability
on a party, and he has it in his power to produce evidence which from its
very nature must overthrow the case made against him if it is not founded
on fact, and he refuses to produce such evidence, the presumption arises that
the evidence, if produced, would operate to his prejudice, and support the
81
case of his adversary.
_______________
Respondents, in their position paper, contends (sic) that complainants were paid in accordance
with the mandated wages applicable in Legazpi City as other than their wages they were given
meals the amount of which [is] part of their salaries. Except to submit affidavits executed by
some of herein complainants during an ocular inspection conducted by an inspector of the
Department of Labor and Employment; notices of inspection result and Facility Evaluation
Orders issued by DOLE, respondents failed to submit complainants’ DTR and payrolls/payslips
to prove the latter’s working time and the compensation they actually received for their services
rendered.
79 National Semiconductor (HK) Distribution Ltd. v. National Labor Relations

Commission, G.R. No. 123520, June 26, 1998 (291 SCRA 348). See Building Care
Corporation v. National Labor Relations Commission, G.R. No. 94237, February 26,
1997 (268 SCRA 666).
80 See National Semiconductor (HK) Distribution, Ltd. v. National Labor
Relations Commission, G.R. No. 123520, June 26, 1998 (291 SCRA 348).
81 Metropolitan Bank and Trust Company v. Court of Appeals, G.R. No. 122899,
June 8, 2000 (333 SCRA 212, 219), citing Manila Bay Club Corp. v. Court of
Appeals, et al., 249 SCRA 303, 306 (1995).
645
VOL. 458, MAY 16, 2005 645

Petitioners next claim that the cost of the food and snacks provided
to respondents as facilities should have been included in reckoning
the payment of respondents’ wages. They state that although on the
surface respondents appeared to receive minimal wages, petitioners
had granted respondents other benefits which are considered part
82
and parcel of their wages and are allowed under existing laws.
They claim that these benefits make up for whatever inadequacies
83
there may be in compensation. Specifically, they invoked Sections
5 and 6, Rule VII-A, which allow the deduction of facilities
provided by the employer through an appropriate Facility Evaluation
84
Order issued by the Regional Director of the DOLE. Petitioners
also aver that they give five (5) percent of the gross income each
month as incentives. As proof of compliance of payment of
minimum wages, petitioners submitted the Notice of Inspection
85
Results issued in 1995 and 1997 by the DOLE Regional Office.
The cost of meals and snacks purportedly provided to
respondents cannot be deducted as part of respondents’ minimum
86
wage. As stated in the Labor Arbiter’s decision:
While [petitioners] submitted Facility Evaluation Orders (pp. 468, 469; vol.
II, rollo) issued by the DOLE Regional Office whereby the cost of meals
given by [petitioners] to [respondents] were specified for purposes of
considering the same as part of their wages, We cannot consider the cost of
meals in the Orders as applicable to [respondents]. [Respondents] were not
interviewed by the DOLE as to the quality and quantity of food appearing in
the applications of [petitioners] for facility evaluation prior to its approval to

determine whether or not [respondents] were indeed given such kind and
quantity of food. Also, there was no evidence that the quality and quantity
of food in the Orders were voluntarily accepted by [respondents].
_______________
82 Petitioners’ Position Paper, Rollo, pp. 106-108.

83 Id.
84 Id.
85 Joint Decision, Rollo, pp. 118-119.
86 Rollo, pp. 194-195.
646

On the contrary; while some [of the respondents] admitted that they were
given meals and merienda, the quality of food serve[d] to them were not
what were provided for in the Orders and that it was only when they filed
these cases that they came to know about said Facility Evaluation Orders
(pp. 100; 379[,] vol. II, rollo; p. 40, tsn[,] June 19, 1998). [Petitioner] Josefa
herself, who applied for evaluation of the facility (food) given to
[respondents], testified that she did not inform [respondents] concerning
said Facility Evaluation Orders (p. 34, tsn[,] August 13, 1998).
Even granting that meals and snacks were provided and indeed
constituted facilities, such facilities could not be deducted without
compliance with certain legal requirements. As stated in Mabeza v.
87
NLRC, the employer simply cannot deduct the value from the
employee’s wages without satisfying the following: (a) proof that
such facilities are customarily furnished by the trade; (b) the
provision of deductible facilities is voluntarily accepted in writing
by the employee; and (c) the facilities are charged at fair and
reasonable value. The records are clear that petitioners failed to
comply with these requirements. There was no proof of respondents’
written authorization. Indeed, the Labor Arbiter found that while the
respondents admitted that they were given meals and merienda, the
quality of food served to them was not what was provided for in the
Facility Evaluation Orders and it was only when they filed the cases
that they came to know of this supposed Facility Evaluation
88
Orders. Petitioner Josefa Po Lam herself admitted that she did not
89
inform the respondents of the facilities she had applied for.
Considering the failure to comply with the above-mentioned
legal requirements, the Labor Arbiter therefore erred when he ruled
that the cost of the meals actually provided to respondents should be
deducted as part of their salaries, on the ground that respondents
have availed themselves of the food
_______________
87 G.R. No. 118506, April 18, 1997 (271 SCRA 670).

88 Rollo, p. 95.
89 Id.
647
VOL. 458, MAY 16, 2005 647

90
given by petitioners. The law is clear that mere availment is not
sufficient to allow deductions from employees’ wages.
More important, we note the uncontroverted testimony of
respondents on record that they were required to eat in the hotel and
restaurant so that they will not go home and there is no interruption
in the services of Mayon Hotel & Restaurant. As ruled in Mabeza,
food or snacks or other convenience provided by the employers are
deemed as supplements if they are granted for the convenience of
the employer. The criterion in making a distinction between a
supplement and a facility does not so much lie in the kind (food,
91
lodging) but the purpose. Considering, therefore, that hotel workers
are required to work different shifts and are expected to be available
at various odd hours, their ready availability is a necessary matter in
92
the operations of a small hotel, such as petitioners’ business. The
deduction of the cost of meals from respondents’ wages, therefore,
should be removed.
We also do not agree with petitioners that the five (5) percent of
the gross income of the establishment can be considered as part of
the respondents’ wages. We quote with approval the Labor Arbiter
on this matter, to wit:
While complainants, who were employed in the hotel, receive[d] various

amounts as profit share, the same cannot be considered as part of their
wages in determining their claims for violation of labor standard benefits.
Although called profit share[,] such is in the nature of share from service
charges charged by the hotel. This is more explained by [respondents] when
they testified that what they received are not fixed amounts and the same are
paid not on a monthly basis (pp. 55, 93, 94, 103, 104; vol. II, rollo). Also,
[petitioners] failed to submit evidence that the amounts received by
[respondents] as profit share are to be considered part of their wages and had
been agreed by them prior to their employment. Further, how can the
amounts receive[d] by [respondents] be considered as profit
_______________
90 Id., p. 196.
91 Id.
92 Id.
648

share when the same [are] based on the gross receipt of the hotel[?] No
profit can as yet be determined out of the gross receipt of an enterprise.
Profits are realized after expenses are deducted from the gross income.
On the issue of the proper minimum wage applicable to respondents,

we sustain the Labor Arbiter. We note that petitioners themselves
have admitted that the establishment employs “more or less sixteen
93
(16) employees,” therefore they are estopped from claiming that
the applicable minimum wage should be for service establishments
employing 15 employees or less.
As for petitioners repeated invocation of serious business losses,
suffice to say that this is not a defense to payment of labor standard
benefits. The employer cannot exempt himself from liability to pay
minimum wages because of poor financial condition of the company.
The payment of minimum wages is not dependent on the employer’s
94
ability to pay.
Thus, we reinstate the award of monetary claims granted by the
Labor Arbiter.
4. Conclusion
There is no denying that the actuations of petitioners in this case

have been reprehensible. They have terminated the respondents’
employment in an underhanded manner, and have used and abused
the quasi-judicial and judicial processes to resist payment of their
employees’ rightful claims, thereby protracting this case and causing
the unnecessary clogging of dockets of the Court. They have also
forced respondents to unnecessary hardship and financial expense.
Indeed, the circumstances of this case would have called for
exemplary damages, as the dismissal was effected in a wan-
_______________
93 Petition, Rollo, p. 15, adopting the statement of facts of the NLRC.

94 Vda. de Racho v. Municipality of Ilagan, No. L-23542, January 2, 1968 (22
SCRA 1).
649
VOL. 458, MAY 16, 2005 649

95
95
ton, oppressive or malevolent manner, and public policy requires
96
that these acts must be suppressed and discouraged.
Nevertheless, we cannot agree with the Labor Arbiter in granting
exemplary damages of P10,000.00 each to all respondents. While it
is true that other forms of damages under the Civil Code may be
97
awarded to illegally dismissed employees, any award of moral
damages by the Labor Arbiter cannot be based on the Labor Code
98
but should be grounded on the Civil Code. And the law is clear that
exemplary damages can only be awarded if plaintiff shows proof
99
that he is entitled to moral, temperate or compensatory damages.
As only respondents Loveres, Guades, Macandog, Llarena,
Nicerio, Atractivo and Broñola specifically claimed damages from
petitioners, then only they are entitled to exemplary damages.
_______________
95 |Equitable Banking Corp. v. National Labor Relations Commission, G.R. No.

102467, June 13, 1997 (273 SCRA 352).
96 Nadura v. Benguet Comsolidated, Inc., No. L-17780, August 24, 1962 (5 SCRA
879).
97 Maglutac v. National Labor Relations Commission, G.R. No. 78345, September
21, 1990 (189 SCRA 767), citing Primero v. Intermediate Appellate Court, G.R. No.
72644, December 14, 1987 (156 SCRA 435).
98 Id.
99 Article 2234 of the Civil Code provides:
While the amount of the exemplary damages need not be proved, the plaintiff must show that
he is entitled to moral, temperate or compensatory damages before the court may consider the
question of whether or not exemplary damages should be awarded. In case liquidated damages
may have been agreed upon, although no proof of loss is necessary in order that such liquidated
damages may be recovered, nevertheless, before the court may consider the question of
granting exemplary in addition to the liquidated damages, the plaintiff must show that he would
be entitled to moral, temperate or compensatory damages were it not for the stipulation for
liquidated damages.
650

Finally, we rule that attorney’s fees in the amount to P10,000.00

should be granted to each respondent. It is settled that in actions for
recovery of wages or where an employee was forced to litigate and
incur expenses to protect his rights and interest, he is entitled to an
100
award of attorney’s fees. This case undoubtedly falls within this
rule.
IN VIEW WHEREOF, the petition is hereby DENIED. The
Decision of January 17, 2003 of the Court of Appeals in CA-G.R.
SP No. 68642 upholding the Joint Decision of July 14, 2000 of the
Labor Arbiter in RAB V Case Nos. 04-00079-97 and 04-00080-97 is
AFFIRMED, with the following MODIFICATIONS:
(1) Granting separation pay of one-half (1/2) month for every

year of service to respondents Loveres, Macandog and
Llarena;
(2) Granting retirement pay for respondents Guades, Nicerio,
and Alamares;
(3) Removing the deductions for food facility from the amounts
due to all respondents;
(4) Awarding moral damages of P20,000.00 each for
respondents Loveres, Macandog, Llarena, Guades, Nicerio,
Atractivo, and Broñola;
_______________
100 Litonjua Group of Companies v. Vigan, G.R. No. 143723, June 28, 2001 (360
SCRA 194). Article III of the Labor Code and Rule VIII, Sec. II, Book III of the
Omnibus Rules Implementing the Labor Code, provide:
Art. III. Attorney’s fees.—(a) In cases of unlawful withholding of wages the culpable party may
be assessed attorney’s fees equivalent to ten percent of the amount of wages recovered.
x x x x x x x x x
Sec. II. Attorney’s fees.—Attorney’s fees in any judicial or administrative proceedings for
the recovery of wages shall not exceed 10% of the amount awarded. The fees may be deducted
from the total amount due the winning party.
651
VOL. 458, MAY 16, 2005 651

(5) Deleting the award of exemplary damages of P10,000.00

from all respondents except Loveres, Macandog, Llarena,
Guades, Nicerio, Atractivo, and Broñola; and
(6) Granting attorney’s fees of P10,000.00 each to all
respondents.
The case is REMANDED to the Labor Arbiter for the

RECOMPUTATION of the total monetary benefits awarded and due
to the employees concerned in accordance with the decision. The
Labor Arbiter is ORDERED to submit his compliance thereon
within thirty (30) days from notice of this decision, with copies
furnished to the parties.
SO ORDERED.
Austria-Martinez, Callejo, Sr., Tinga and Chico-Nazario,

JJ., concur.
Petition denied, judgment affirmed with modifications.
Notes.—A mere board resolution of the directors, and not by the

majority of all the members of a labor organization, cannot validly
allow deductions from an employee’s salary—a written individual
authorization duly signed by the employee concerned is also a
condition sine qua non for such deduction. (Stellar Industrial
Services, Inc. vs. National Labor Relations Commission, 252 SCRA
323 [1996])
A benefit or privilege granted to an employee for the convenience
of the employer is not a facility but a supplement. (Mabeza vs.
National Labor Relations Commission, 271 SCRA 670 [1997])
——o0o——
652
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5/19/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 458

VOL. 458, MAY 16, 2005 609

MAYON HOTEL & RESTAURANT, PACITA O. PO and/or

Labor Law; Appeals; Due Process; While it is within the NLRC’s

610 SUPREME COURT REPORTS ANNOTATED

Mayon Hotel & Restaurant vs. Adana

that it is within the NLRC’s competence, as an appellate agency reviewing

invalidation by the extraordinary writ of certiorari. And when the factual

VOL. 458, MAY 16, 2005 611

Mayon Hotel & Restaurant vs. Adana

cast as to the true nature of petitioner Josefa Po Lam’s involvement in the

to serve the demand of substantial justice. The rule of evidence prevailing in

612 SUPREME COURT REPORTS ANNOTATED

Mayon Hotel & Restaurant vs. Adana

Same; Same; Same; Presumptions; Failure to submit certain pieces of

VOL. 458, MAY 16, 2005 613

Mayon Hotel & Restaurant vs. Adana

dence to prove this fact is inconclusive. But more important, serious

614 SUPREME COURT REPORTS ANNOTATED

Mayon Hotel & Restaurant vs. Adana

VOL. 458, MAY 16, 2005 615

Mayon Hotel & Restaurant vs. Adana

616 SUPREME COURT REPORTS ANNOTATED

Mayon Hotel & Restaurant vs. Adana

VOL. 458, MAY 16, 2005 617

Mayon Hotel & Restaurant vs. Adana

618 SUPREME COURT REPORTS ANNOTATED

Mayon Hotel & Restaurant vs. Adana

PETITION for review on certiorari of the decision and resolution of

The facts are stated in the opinion of the Court.

VOL. 458, MAY 16, 2005 619

1. Wenefredo Loveres Accountant and Ofﬁcer-in-charge

4 Joint Decision of RAB V Case Nos. 04-00079-97, 04-00080-97, and 04-00079-

620 SUPREME COURT REPORTS ANNOTATED

9 Complainants’ (respondents herein) Position Paper, dated July 3, 1997; Rollo, p.

VOL. 458, MAY 16, 2005 621

Santos Broñola for illegal dismissal, underpayment of wages, overtime pay,

On July 14, 2000, Executive Labor Arbiter Gelacio L. Rivera, Jr.

I. The Honorable Court of Appeals erred in reversing the

13 Amended Complaint, Rollo, p. 116.

622 SUPREME COURT REPORTS ANNOTATED

fact that the reason why private respondents were out of

In essence, the petition calls for a review of the following issues:

1. Was it correct for petitioner Josefa Po Lam to be held liable

It is petitioners’ contention that the above issues have already been

14 Rollo, pp. 34-35.

VOL. 458, MAY 16, 2005 623

Although, it is a legal tenet that factual ﬁndings of administrative bodies are

624 SUPREME COURT REPORTS ANNOTATED

[A]buse of discretion does not necessarily follow from a reversal by the

After careful review, we ﬁnd that the reversal of the NLRC’s

1. Ownership by Josefa Po Lam

21 G.R. No. 104319, June 17, 1999 (308 SCRA 326).

VOL. 458, MAY 16, 2005 625

name of Pacita Po, it is Josefa Po Lam who is the owner/ proprietor

[Despite] the existence of the Certiﬁcate of Registration in the name of

626 SUPREME COURT REPORTS ANNOTATED

owner of Mayon Hotel & Restaurant. They allege that the

to the Labor Arbiter, identifying petitioner Josefa Po Lam as the

24 Petition, Rollo, pp. 61-62.