[G.R. No. 101825.

April 2, 1996]

the
resolution
reconsideration.

TIERRA
INTERNATIONAL
CONSTRUCTION
CORPORATION, PERINIJMONENCO, CHERRY LYNN
S. RICAFRENTE and KENNETH BUTT, petitioners,
vs. NATIONAL LABOR RELATIONS COMMISSION,
PHILIPPINE
OVERSEAS
EMPLOYMENT
ADMINISTRATION, MANUEL S. CRUZ, RAYMUNDO
G. NEPA and ROLANDO F. CARINO, respondents.
SYLLABUS

LABOR LAW AND SOCIAL LEGISLATION; LABOR

CODE; RIGHT OF EMPLOYER TO REGULATE ALL
ASPECTS
OF
EMPLOYMENT;
SHOULD
BE
EXERCISED IN KEEPING WITH GOOD FAITH. - The
right of an employer to regulate all aspects of
employment is recognized. Let there be no doubt
about this. This right, aptly called management
prerogative, gives employers the freedom to
regulate, according to their discretion and best
judgment, all aspects of employment including
work assignments, working methods, processes
to be followed, working regulations, transfer of
employees, work supervision, lay-off of workers
and the discipline, dismissal and recall of work.
But the exercise of this right must be in keeping
with good faith and not be used as a pretext for
defeating the rights of employees under the laws
and applicable contracts.

APPEARANCES OF COUNSEL

Robles, Ricafrente
petitioners.

&

Aguirre

Law

Firm

for

of

the

NLRC

denying

The facts are as follows:

Private respondents Manuel S. Cruz, Raymundo
G. Nepa and Rolando F. Cario were recruited by
petitioner
Tierra
International
Construction
Corporation to work as transit mixer, truck driver,
and batch plant operator, respectively, in a
construction project at Diego Garcia, British
Indian
Ocean
Territory.
The
contract
of
employment was for a period of twelve months at
the following rates of salary per month:

Name Salary Date Hired

Manuel S. Cruz US$375.00 12-01-88

Raymundo G. Nepa US$375.00 11-23-88
Rolando F. Cario US$500.00 11-20-88
Private respondents had barely started work in
the foreign assignment when they had a
disagreement with the plant supervisor, Engineer
Terrance Filby. What exactly they had been
ordered to do which they refused to execute whether to dig and excavate canals and to haul
bags of cement, cement pipes, heavy plumbing
equipments and large electric cables, as they
claimed, or only to do household chores
consisting of keeping the work place clean, as the
company alleges - is the question in this case.
The fact is that private respondents refused to
work as ordered and for this, they were dismissed
on January 28, 1989 and sent back to the
Philippines.

Fausto C. Ignacio and Jaime Linsangan for private

respondents.
DECISION
MENDOZA, J.:

This is a petition for certiorari to set aside the

decision of the National Labor Relations
Commission (Second Division) dated February 22,
1991, finding private respondents to have been
illegally dismissed, reversing for this purpose the
contrary decision of the Labor Arbiter, as well as

Labor Standards Case Assignment 04 July 2016

The company offered to pay the final fees

representing their salaries from December 26,
1988 to January 28, 1989, but private
respondents demanded as well the payment of
their salaries corresponding to the balance of
their employment contracts. Private respondents
made their formal demand on petitioners on
February 27, 1989, claiming that, in violation of
their contract of employment, they had been
required to perform work not related to the jobs
for which they had been hired. As their demand
was denied, private respondents filed on March
20, 1989 a complaint for illegal dismissal with the

POEA. They sought recovery of unpaid salaries

and salaries corresponding to the unexpired
portion of their employment contracts.

Private respondents alleged that they had been

required by the company to dig and excavate
canals and to haul bags of cement and cement
pipes, heavy plumbing equipment and electric
cables which was outside the work for which they
had been recruited and that because they
refused to carry out their supervisors order, they
were dismissed and immediately sent back to the
Philippines.

Petitioners denied the allegations of private

respondents and claimed that the latters
dismissal was for cause. Petitioners claimed that,
on January 27, 1989, private respondents were
merely requested by the plant supervisor,
Terrance Filby, to do housekeeping job since they
were idle for the rest of the day. Because private
respondents did not do what they had been
ordered to do, they were confronted by Filby. This
led to an altercation between Filby and private
respondents. When brought before the project
manager, private respondents allegedly said that
they refused to execute Filby s order because it
involved doing the menial job of cleaning up the
mess. They allegedly said in the vernacular,
Nakakahiya naman yatang magpulot kami ng
basura.1 According to petitioners, because
private respondents were unyielding, they were
given three options: (1) apologize to their
supervisors; (2) go back to work; or (3)
repatriation.2 Private respondents refused to go
back to work and instead asked to be repatriated.
Accordingly, they were sent home on January 28,
1989.

The POEA dismissed private respondents claim

that they had been required to do work other
than that for which they had been hired. The
POEA said no evidence had been presented to
support this allegation. But finding that private
respondents had not been paid their salaries, it
ordered petitioners as follows:

WHEREFORE,
in
view
of
the
foregoing,
respondents are hereby ordered, jointly and
severally, to pay complainants the following, in
Labor Standards Case Assignment 04 July 2016

Philippine Currency at the prevailing rate of

exchange at the time of payment:

Manuel S. Cruz - FIVE HUNDRED FIFTY ONE & 34/

100 (US$551.34) US DOLLARS - representing
salaries for the period December 26, 1988 to
January 28, 1989;

Raymundo G. Nepa - FIVE HUNDRED FIFTY NINE

and 46/100 US DOLLARS (US$559.46) representing salaries for the period December 26,
1988 to January 28, 1989;

Rolando F. Cario - SEVEN HUNDRED SIXTY SIX and

48/100 (US$766.48) US DOLLARS - representing
salaries for the period December 26, 1988 to
January 28, 1989.

Private respondents appealed to the NLRC. In its

decision rendered on February 22, 1991, the
NLRC found private respondents to have been
illegally dismissed. Accordingly, it modified the
decision of the POEA and ordered petitioners to
pay private respondents salaries corresponding to
the unexpired portion of their contracts, in
addition to the salaries ordered paid to them by
the POEA.

Petitioners filed a motion for reconsideration but

their motion was denied on April 19, 1991 for lack
of merit. Hence this petition.

Petitioners contend that the NLRC gravely abused

its discretion and/or acted in excess of its
jurisdiction by (1) deciding the wrong issue of the
case; (2) not considering the evidence presented;
(3) rendering a decision which is not supported
by substantial evidence; and (4) rendering a
decision not based on the evidence presented at
the hearing or at least contained in the record
and disclosed to the parties.

The question in this case boils down to whether

private respondents were dismissed because they
had been required to dig canals and haul
construction materials and they refused to do so,

or whether they had simply been asked to do

housekeeping chores which they refused to do
because they thought it was menial work and
beneath their dignity to do. Petitioners claim that
the NLRC assumed that private respondents had
been required to do work other than that for
which they were hired, which was contrary to the
finding of the POEA that the allegations that they
[private respondents] were required, in addition
to their regular jobs, to perform work which were
not in any way connected with their jobs, was not
supported even by a single evidence.

Petitioners argue that the decision of the POEA

was not based on the provision of employment
contract giving the company the power to assign
any employee to some other type of work of
which he is capable but on two documents
submitted, (1) the letter-report of the companys
Site
Administration
Officer
and
(2)
the
termination notices given to private respondents
which they did not dispute.

As the Solicitor General states, the burden of

proving that private respondents had been
dismissed for cause was on petitioners, as
employers. While it is true that in the letter-report
dated January 27, 1989 of the Site Administration
Officer it was stated that private respondents had
been merely asked to do some housekeeping
around their work area as they will not have
something to do for the day, we think the NLRC
correctly found that what they had actually been
ordered to do was to dig canals and haul
construction materials.

First, as private respondents stated in their

Position Paper:

P8,000.00 a month, while complainant Cario

stands to receive the equivalent of more than P
10,500.00 a month, excluding overtime pay. . . .
They would have willingly performed the simple
housekeeping chores, even if they know that this
is not covered by their employment contracts,
merely to keep their jobs. BUT SUCH WAS NOT
THE CASE.

In addition to their regular jobs, they were

required to perform different and completely
foreign jobs not called for in their contract of
employment. When they refused to do these
heavy, grievous and oppressive works, their
services were unlawfully terminated.

Second, petitioners own counsel, in denying

respondents demand for the payment of salaries
for the balance of their contracts, invoked
paragraphs I (b) and XIII (b)(1) of the contracts
which provided:

Paragraph 1(b):

EMPLOYEE shall be utilized by EMPLOYER to

perform work in the classification above at the
location of the project. There is no representation
nor guarantee that the EMPLOYEE will be
employed on any particular work or job,
EMPLOYER having the right to assign EMPLOYEE
to some other type of work for which he might be
capable.

Paragraph XIII (b) (1):

Termination for cause:

If it were mere HOUSEKEEPING CHORES, they
would not have refused specially if they were not
then performing their respective jobs. Everybody
knows that it is difficult to secure a job in the
Philippines for abroad and, if one has a job in the
Philippines, one would find difficulty sustaining
the needs of the family because the salary is
insignificant compared to the high cost of living
and prices. That is why the job with the
respondents is welcome. Complainant Cruz
stands to receive the equivalent of more than
Labor Standards Case Assignment 04 July 2016

(1) Notwithstanding any other terms and

conditions of this Agreement, EMPLOYER may, at
his sole discretion, terminate EMPLOYEES services
for cause at any time. Termination for CAUSE
shall include but not limited to the following: Lack
of ability of EMPLOYEE to perform in the
classification for which hired . . . failure or refusal
to work or comply with EMPLOYERs working rules;
.

The NLRCs mistake was in attributing to the

POEA, rather than to petitioners the claim that
the dismissal of private respondents was justified
on the basis of these provisions of the
employment contract. But the mistake may be
overlooked because the fact is that the POEA
sustained petitioners claim or allegation based on
these provisions of the contract.

There is therefore basis for the finding of the

NLRC that private respondents had been required
to dig canals, make excavations, and haul
construction materials. It is not disputed that to
make them do this would be to require them to
do work not connected to their employment as
transit mixer, truck driver and batch operator.
They were therefore fully justified in refusing to
do the assignment.

The right of an employer to regulate all aspects of

employment is recognized. Let there be no doubt
about this. This right, aptly called management
prerogative, gives employers the freedom to
regulate, according to their discretion and best
judgment, all aspects of employment, including
work assignments, working methods, processes
to be followed, working regulations, transfer of
employees, work supervision, lay-off of workers
and the discipline, dismissal and recall of work.3
But the exercise of this right must be in keeping
with good faith and not be used as a pretext for
defeating the rights of employees under the laws
and applicable contracts.4

Petitioners assert that private respondents were

dismissed because they refused to go back to
work and instead opted for repatriation.
According to the report of the companys Site
Administration Officer, private respondents were
given three options: (1) to go back to work; (2) to
apologize to their supervisor; and (3) to be
repatriated. What private respondents were given
were not really options. They were given the
choice of apologizing for their refusal to work and
then resume working as ordered, or else, resign
and be sent back home. Under the circumstances
they really had no choice but to resign. It was not
pride or arrogance which made them refuse to
work as ordered, but the assertion of their right
not to be made to work Outside of what they had
Labor Standards Case Assignment 04 July 2016

been hired to do. For asserting their right, private

respondents should not be punished. We,
therefore, hold that private respondents dismissal
was illegal and that for this reason they are
entitled to be paid their salaries corresponding to
the unexpired portion of their employment
contract,5 in addition to their unpaid salaries
prior to their dismissal, as found by both the
POEA and the NLRC.

WHEREFORE, this petition is DISMISSED. SO

ORDERED.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXX
FACILITIES AND SUPPLEMENTS:
65. What are facilities?
1. Facilities shall include articles or services for
the benefit of the employee or his family but shall
not include tools of the trade or articles or
services primarily for the benefit of the employer
or necessary to the conduct of the employers
business.
2. Value of facilities - the fair and reasonable
value of board, lodging and other facilities
customarily furnished by an employer to his
employees
both
in
agricultural
and
nonagricultural enterprises.
66. What are supplements?
1. Supplements means extra remuneration or
special privileges or benefits given to or received
by the laborers over and above their ordinary
earnings or wages.
In the same 2005 case of Mayon Hotel &
Restaurant vs. Adana, [G. R. No. 157634, May 16,
2005] it was noted by the Supreme Court 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 [infra],
food or snacks or other convenience provided by
the employers are deemed as supplements if
they are granted for the convenience of the
employer. The criterion in making a distinction
between a supplement and a facility does not so
much lie in the kind (food, lodging) but the
purpose. Considering, therefore, that hotel
workers are required to work different shifts and
are expected to be available at various odd

hours, their ready availability is a necessary

matter in the operations of a small hotel, such as
petitioners business. The deduction of the cost of
meals from respondents wages, therefore, should
be removed.
Legal requirements must be complied with
before deducting facilities from wages.
As stated in Mabeza vs. NLRC, [G.R. No. 118506,
April 18, 1997 (271 SCRA 670)], 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.
Consequently, as held in Mayon Hotel &
Restaurant [supra], even granting that meals and
snacks were provided by the hotel to its
employees and indeed constituted facilities, such
facilities could not be deducted without
compliance with certain legal requirements. 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. 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.

67. What is the distinction between facilities

and supplements?
Facilities" and "supplements, distinction: The
benefit or privilege given to the employee which
constitutes an extra remuneration over and
above his basic or ordinary earning or wage, is
supplement; and when said benefit or privilege is
part of the laborers basic wage, it is a facility.
The criterion is not so much with the kind of the
benefit or item (food, lodging, bonus or sick
leave) given but its purpose. Thus, free meals
supplied by the ship operator to crew members,
out of necessity, cannot be considered as
facilities but supplements which could not be
reduced having been given not as part of wages
but as a necessary matter in the maintenance of
the health and efficiency of the crew personnel
during the voyage.
68. What is the rule on deductibility of facilities
or supplements from wages?
Facilities may be charged to or deducted from
wages. Supplements, on the other hand, may not
be so charged. Thus, when meals are freely given
to crew members of a vessel while they were on
the high seas, not as part of their wages but as a
necessary matter in the maintenance of the
health and efficiency of the crew personnel
during the voyage, the deductions made
therefrom for the meals should be returned to
them, and the operator of the coastwise vessels
affected should continue giving the same benefit.
(State Marine Cooperation and Royal Line, Inc. vs.
Cebu Seamens Association, Inc., G. R. No. L12444, Feb. 28, 1963).
In another case where the company used to pay
to its drivers and conductors, who were assigned
outside of the city limits, aside from their regular
salary, a certain percentage of their daily wage,
as allowance for food, it was ruled that the
company should continue granting the said
privilege. (Cebu Autobus Company vs. United
Cebu Autobus Employees Association, G. R. No. L9742, Oct. 27, 1955)

Voluntary acceptance of facilities required.

In order that the cost of facilities furnished by the
employer may be charged against an employee,
his acceptance of such facilities must be
voluntary. (Section 7, Rule VII, Book III, Rules to
Implement the Labor Code).

Labor Standards Case Assignment 04 July 2016

In short, the benefit or privilege given to the

employee
which
constitutes
an
extra
remuneration above and over his basic or
ordinary earning or wage is supplement; and
when said benefit or privilege is part of the
laborers basic wages, it is a facility.

Comparison Chart

BASIS FOR
COMPARISO

BASIS FOR
COMPARISO

SALARY

SALARY

WAGE

WAGE

N
KRA
Meaning

Yes

No

No

Yes

(Key resultant

A fixed pay that

A variable pay

an individual

that an

draws for the

individual

work done by

draws on the

Extra pay for

him on an

basis of hours

extra hours

annual basis.

spent in

area)

completing the
certain amount
of work.

Skills

Skilled

Semi-skilled or

personnel

unskilled

Type of cost

Fixed

Variable

Rate of payment

Fixed rate

Wage rate

Payment cycle

Monthly

Daily

Basis of payment

Performance

Hourly basis

basis

Paid to whom

Employees

Labor

Nature of work

Administrative-

Manufacturing-

office work

process work

Labor Standards Case Assignment 04 July 2016

Key Differences Between Salary and Wages

Following are the major differences between

salary and wages:

Salary is the fixed amount of compensation which

is paid for the performance of an employee. Wage
is the variable amount of compensation which is
paid on the basis of hours spent in finishing the
certain amount of work.
Salary is given to the skilled persons who apply
their proficiencies in respective fields and
generate the revenues for the firm. Whereas
wages are paid to the semi-skilled or unskilled
worker such as carpenter, welder, electrician, etc.
who work on hourly basis.
In case of salary, the cost incurred is fixed i.e.
fixed amount is paid monthly. Whereas in wages,
the cost is variable, because it can vary with the
day to day performance of an individual.
Salary once decided in the beginning remains
fixed throughout. Whereas in wage system, there
is a wage rate that keeps on changing and an
individual is paid on the basis of prevailing wage
rate.
Salary is generally paid at fixed intervals i.e.
monthly. Whereas wages are paid on daily basis
for the number of hours spent.

Salary is paid on the basis of the performance of

an individual. Whereas wages are paid on hourly
basis i.e. the amount of work done in hours.
Salary is paid to employees who possess the
skills and efficiencies in completing the office
work. Whereas wages are paid to the labors who
are engaged in manufacturing processes and do
the work on an hourly basis.
Salary is given to those who are engaged in
administrative or office work job. Whereas wages
are paid to those who are engaged in
manufacturing processes that requires unskilled
or semi skilled workers.
Salaried person usually have KRA i.e. key
resultant area set for the month on the basis of
which their performance is judged. Whereas the
waged person do not have any KRA and is judged
on the basis of hourly work done.
Salaried persons are not paid additional
compensation for any extra hours . Whereas
wage holder do get an additional pay for the
extra hours devoted by him.

(l)
"Statutory Minimum Wages" refer to the
lowest basic wages as provided by law;

BASIC WAGE
(a)
means all the remuneration or earnings
paid by an employer to a worker for services
rendered on normal working days and hours but
does not include cost-of-living-allowances, profit
sharing payments, premium payments, 13th
month pay or other monetary benefits which are
not considered as part of or integrated into the
regular salary of the workers on the date the act
became effective. (definition of terms IRR of
RA6727)

STATUTORY MINIMUM WAGE

(b)
Is the lowest wage rate fixed by law that
an employer can pay his workers. (definition of
terms IRR of RA6727)

WAGE ORDER
(k)
"Regional Minimum Wage Rates" refer to
the lowest basic wage rates that an employer can
pay his workers, as fixed by the Board which shall
not be lower than the applicable statutory
minimum wage rates;

Labor Standards Case Assignment 04 July 2016

(c)
Refers to the order promulgated by RTWPB
pursuant to its wage fixing authority.