Millares v. National Labor Relations Commission
REITERATIONFacts
1. The Antecedents: One hundred sixteen (116) employees, occupying various managerial and technical positions at Paper Industries Corporation of the Philippines (PICOP), were retrenched in 1992 due to the company's financial setbacks. They received separation pay computed at one month's basic pay for every year of service. The employees claimed that certain allowances they regularly received should have been included in the computation of their separation pay. 2. Procedural History: The Executive Labor Arbiter ruled that the subject allowances constituted part of the employees' wages and ordered PICOP to pay separation pay differentials. The National Labor Relations Commission (NLRC) reversed this decision, holding that the allowances did not form part of the salary base for separation pay computation, citing Estate of the late Eugene J. Kneebone v. NLRC and finding the allowances to be contingency-based. The NLRC denied reconsideration. 3. The Petition: The petitioners filed a petition for certiorari, arguing that their allowances were included in the definition of "facilities" under Article 97(f) of the Labor Code and were received with permanency, regularity, and customariness, thus forming part of their wages. They insisted on the applicability of cases like Santos v. NLRC and Soriano v. NLRC.
Issue(s)
Whether the Staff/Manager's Allowance, Transportation Allowance, and Bislig Allowance constitute "wages" under Article 97(f) of the Labor Code for the purpose of computing separation pay. Whether the Supreme Court committed grave abuse of discretion in affirming the NLRC's ruling.
Ruling
The petition is dismissed. The resolution of the National Labor Relations Commission holding that the Staff/Manager's, transportation and Bislig allowances did not form part of the salary base used in computing the separation pay of petitioners, as well as its resolution denying reconsideration, is affirmed.
Ratio Decidendi
On whether the allowances constitute "wages" under Article 97(f) of the Labor Code for the purpose of computing separation pay: The Court affirmed the NLRC's finding that the subject allowances did not form part of the petitioners' wages. The definition of "wage" under Article 97(f) includes the fair and reasonable value of board, lodging, or other facilities customarily furnished by the employer. However, the Court clarified that the term "customary" implies regularity and constant practice, and the mere receipt of an allowance on a monthly basis does not automatically make it regular if its nature is contingent. The Staff/Manager's allowance was granted in lieu of housing and ceased when a vacancy occurred. The transportation allowance was a conditional grant for employees using their own vehicles for company business, requiring liquidation. The Bislig allowance was given due to the hostile environment in Bislig and ceased upon transfer. These allowances were found to be contingency-based and granted for the employer's benefit and convenience, as evidenced by their non-subjection to withholding tax, aligning with the criteria for "facilities" and "expenses" for the employer's business. Therefore, they did not constitute "wages" as defined by law for separation pay computation. On whether the Supreme Court committed grave abuse of discretion: The Court found no showing of grave abuse of discretion on the part of the NLRC. The NLRC correctly distinguished the present case from those involving illegal dismissal where separation pay is granted in lieu of reinstatement, such as Santos v. NLRC and Soriano v. NLRC. In those cases, the allowances were considered part of the salary base because the employer was obligated to pay the employee what they would have earned had they not been illegally dismissed. However, in cases of retrenchment to prevent losses, as in the present case, separation pay is mandated by Article 283 of the Labor Code. The Court reiterated that separation pay, whether in cases of illegal dismissal or retrenchment, should be computed based on "regular" allowances. Since the allowances in this case were found to be contingency-based and not regularly received, the jurisprudence cited by the petitioners was deemed inapplicable. The Court also distinguished the Kneebone case, noting that it involved retirement benefits and the company's retirement plan expressly excluded such allowances from salary, a factual difference from the present case concerning separation pay.
Main Doctrine
Allowances that are contingency-based, granted for the employer's benefit and convenience, and not regularly received by employees do not form part of the wage base for the computation of separation pay.