Case Digest : Athenna International Manpower Services, Inc. vs. Villanos, 456 SCRA 313, G.R. No. 151303 April 15, 2005

Athenna International Manpower Services, Inc. is a domestic corporation engaged in recruitment and placement of workers for overseas employment.

Nonito Villanos is a contract worker recruited by petitioner to work as a caretaker in Taiwan.

Facts:

Villanos applied to work overseas thru Athenna International Manpower Services sometime in February 1998.

Villanos paid P30,000 cash as advance / partial placement fee, while for the remaining amount, Athenna gave him a schedule of his monthly salary deduction payments for one year for his balance, which included interest and other charges, amounting to P90,725

Villanos signed a Contract of Employment with Wei Yu Hsien where it was stipulated that he was to work as caretaker for one year, ten months and twenty-eight days with a monthly pay of New Taiwan Dollars (NT$) 15,840.

Upon his arrival in Taiwan, he was assigned to a mechanical shop, owned by Hsien, as a hydraulic installer/repairer for car lifters, instead of the job for which he was hired. He did not, however, complain because he needed money to pay for the debts he incurred back home.

Barely a month after his placement, he was terminated by Hsien.  On November 14, 1998, respondent was made to sign a document stating that he was not qualified for the position.  He did not, however, sign the document.  At dawn of November 16, 1998, respondent was handed his salary, with the accompanying computation and instruction for his departure to the Philippines.

he immediately went to petitioner’s office and confronted its representative, Lorenza Ching, about the assignment given to him and demanded that he be reimbursed the P30,000 he paid as downpayment.  Instead of returning the said amount, petitioner gave him a summary of expenses amounting to P30,493, which it allegedly incurred for his deployment abroad.

Aggrieved, respondent filed a complaint docketed as POEA Case No. RV98-12-1586, before the Adjudication Office of the Philippine Overseas Employment Administration (POEA).

However, because of financial constraints, he had to go home to Polanco, Zamboanga del Norte where, on February 17, 1999, he filed a complaint against petitioner for illegal dismissal, violation of contract, and recovery of unpaid salaries and other benefits before the NLRC Sub-Regional Arbitration Branch No. 9, Dipolog City.

Decision of the Labor Arbiter:

The Labor Arbiter declared that the respondents’ act for having severed complainant’s employment, after service of one (1) month founded on unjustifiable grounds and encroaching against the safeguard of fundamental due process and security of tenure clauses as well as for being in contradiction to the well engendered basic policy of the state to grant ample protection to labor, to be illegal.

Decision of NLRC

Reversed the decision of Labor Arbiter  It found that respondent was not at all dismissed, much less illegally.

Ruling of the Court of Appeals

The Court of Appeals held that Wei Yu Hsien violated the contract of employment when respondent was made to work as hydraulic installer/repairer, not as caretaker.  The appellate court concluded that the supposed voluntary resignation of respondent was inconsistent with his immediate demand for refund of the placement fee upon his arrival in the Philippines; his filing of an administrative case before the POEA Adjudication Office; and his subsequent filing of the complaint with the Labor Arbiter.

Issues:

Did the respondent voluntarily resign or was he illegally dismissed?

How is the monetary award properly computed?  

- (a) the award of his supposed salaries for the entire unexpired portion of his employment contract, i.e., NT$348,480.00

- (b) the award of “remittance of placement fee” in the amount of P99,110.00?

Ruling:

No, Villanos was illegally dismissed.

An employee voluntarily resigns when he finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service; thus, he has no other choice but to disassociate himself from his employment.

Records show that upon his repatriation from Taiwan, respondent immediately went to petitioner’s office and confronted its representative, Lorenza Ching, about the assignment given to him which was contrary to the agreed position of caretaker, for which he specifically applied.  He demanded that he be reimbursed the P30,000 he paid as down payment.  When refused, he lodged a complaint with the POEA.  He also immediately filed a complaint for illegal dismissal before Labor Arbiter Cresencio R. Iniego, upon his arrival in his hometown, indicating that respondent did not voluntarily resign, but was forced to resign, which was tantamount to a dismissal. Petitioner did not refute respondent’s contentions regarding these incidents.  Further, it failed to prove the legality of the dismissal, despite the fact that the burden of proof lies on the employment and recruitment agency.  Thus, the presumption stands to the effect that respondent was illegally dismissed by his employer.

Even assuming respondent was a mere probationary employee as claimed by petitioner, respondent could only be terminated for a pertinent and just cause, such as when he fails to qualify as a regular employee in accordance with reasonable standards of employment made known to him by his employer at the time of his engagement. Here, it appears that the petitioner failed to prove that, at the time of respondent’s engagement, the employer’s reasonable standards for the job were made known to respondent.  Moreover, in this case, respondent was assigned to a job different from the one he applied and was hired for.

Second Issue:

Pertinent to this issue is Section 10 of Rep. Act No. 8042

SEC. 10.  Money Claims. - . . .

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

.  .  .

Thus, for the computation of the lump-sum salary due an illegally dismissed overseas employee, there are two clauses as points of reckoning: first is the cumulative salary for the unexpired portion of his employment; and the other is the grant of three months salary for every year of the unexpired term, whichever is lesser.

Since respondent was dismissed after only one month of service, the unexpired portion of his contract is admittedly one year, nine months and twenty-eight days.  But the applicable clause is not the first but the second: three months salary for every year of the unexpired term, as the lesser amount, hence it is what is due the respondent.

Note that the fraction of nine months and twenty-eight days is considered as one whole year following the Labor Code.  Thus, respondent’s lump-sum salary should be computed as follows: 

 

	3 months x 2   (years)	=						6 months worth of salary
	6 months x   (NT$) 15,840	=						NT$95,040, subject to proper conversion to Philippine currency by Labor Arbiter Cresencio Iniego.

Under the aforequoted provision, an illegally dismissed overseas worker is also entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum.

We note that while respondent was assessed P94,000 in placement fee, he paid only P30,000 on the agreement that the balance of P64,000 would be paid on a monthly salary deduction upon his deployment.  Hence, we cannot grant respondent reimbursement of the entire assessed amount of P94,000.  He is only entitled to the reimbursement of the amount of placement fee he actually paid, which is the P30,000 he gave as downpayment plus interest at twelve percent (12%) per annum.

Lastly, because of the breach of contract and bad faith alleged against the employer and the petitioner, we must sustain the award of P50,000 in moral damages and P50,000 as exemplary damages, in addition to attorney’s fees of ten percent (10%) of the aggregate monetary awards.

Case Digest : Magis Young Achievers’ Learning Center vs. Manalo, 579 SCRA 421, G.R. No. 178835 February 13, 2009

 Facts:

1. On April 18, 2002, respondent Adelaida P. Manalo was hired as a teacher and acting principal of petitioner Magis Young Achievers' Learning Center.

2. On March 29, 2003, wrote a letter of resignation addressed to Violeta T. Cariño, directress of the petitioner.

3. On March 31, 2003, respondent received a letter of termination from petitioner because the position of PRINCIPAL will be abolished next school year as a cost-cutting scheme of the school.

4. On April 4, 2003, respondent instituted against petitioner a Complaint for illegal dismissal and non-payment of 13th month pay, with a prayer for reinstatement, award of full backwages and moral and exemplary damages.

5. Respondent claimed that her termination violated the provisions of her employment contract, and that the alleged abolition of the position of Principal was not among the grounds for termination by an employer under Article 282 of the Labor Code. She further asserted that petitioner infringed Article 283 of the Labor Code, as the required 30-day notice to the Department of Labor and Employment (DOLE) and to her as the employee, and the payment of her separation pay were not complied with. She also claimed that she was terminated from service for the alleged expiration of her employment, but that her contract did not provide for a fixed term or period. She likewise prayed for the payment of her 13th month pay under Presidential Decree (PD) No. 851.

6. The petitioners claim that respondent was legally terminated because the one-year probationary period, from April 1, 2002 to March 3, 2003, had already lapsed and she failed to meet the criteria set by the school pursuant to the Manual of Regulation for Private Schools, adopted by the then Department of Education, Culture and Sports (DECS), paragraph 75 of which provides that:  (75) Full-time teachers who have rendered three years of satisfactory service shall be considered permanent.

7. Decision of the Labor Arbiter (LA): The Labor Arbiter dismissed the complaint for illegal dismissal, including the other claims of respondent, for lack of merit, except that it ordered the payment of her 13th month pay in the amount of P3,750.00 because the Labor Arbiter found that the complainant was not dismissed, instead she resigned. It is difficult to imagine complainant would accede to sign a resignation letter as a precondition to her hiring considering her educational background. Thus, in the absence of any circumstance tending to show she was probably coerced her resignation must be upheld.

8. Ruling of the National Labor Relations Commission (NLRC)  The NLRC reversed the Arbiter's judgment and the petitioner was ordered to reinstate respondent as a teacher.

9. Ruling of the CA  The CA affirmed the decision of the NLRC.

Issues & Ruling:

Whether the respondent’s resignation is valid.  No, not only because there was no express acceptance thereof by the employer, but because there is a cloud of doubt as to the voluntariness of respondent's resignation. Resignation is the voluntary act of an employee who finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and that he has no other choice but to dissociate himself from employment. Voluntary resignation is made with the intention of relinquishing an office, accompanied by the act of abandonment. It is the acceptance of an employee's resignation that renders it operative. Resignation is inconsistent with the filing of a complaint for illegal dismissal. To be valid, the resignation must be unconditional, with the intent to operate as such; there must be a clear intention to relinquish the position. In this case, respondent actively pursued her illegal dismissal case against petitioner, such that she cannot be said to have voluntarily resigned from her job.

Whether the probationary appointment of the respondent on April 18, 2002 was for a fixed period of one (1) year, or without a fixed term The probationary appointment is without a fixed term. 

The Court was confronted with two (2) copies of an agreement, one with a negative period and one provided for a one (1) year period for its effectivity. Ironically, none among the parties offered corroborative evidence as to which of the two (2) discrepancies is the correct one that must be given effect.

Under this circumstance, the Court applied Article 1702 of the Civil Code which provides that, in case of doubt, all labor contracts shall be construed in favor of the laborer. Then, too, settled is the rule that any ambiguity in a contract whose terms are susceptible of different interpretations must be read against the party who drafted it. In the case at bar, the drafter of the contract is herein petitioners and must, therefore, be read against their contention.

Thus, following Article 1702 of the Civil Code that all doubts regarding labor contracts should be construed in favor of labor, then it should be respondent's copy which did not provide for an express period which should be upheld, especially when there are circumstances that render the version of petitioner suspect. This is in line with the State policy of affording protection to labor, such that the lowly laborer, who is usually at the mercy of the employer, must look up to the law to place him on equal footing with his employer.

In addition, the employment agreement may be likened into a contract of adhesion considering that it is petitioner who insists that there existed an express period of one year from April 1, 2002 to March 31, 2003, using as proof its own copy of the agreement. While contracts of adhesion are valid and binding, in cases of doubt which will cause a great imbalance of rights against one of the parties, the contract shall be construed against the party who drafted the same. Hence, in this case, where the very employment of respondent is at stake, the doubt as to the period of employment must be construed in her favor.

Whether respondent, even as a probationary employee, was illegally dismissed  Yes, probationary employees enjoy security of tenure during the term of their probationary employment such that they may only be terminated for cause as provided for by law, or if at the end of the probationary period, the employee failed to meet the reasonable standards set by the employer at the time of the employee's engagement. Undeniably, respondent was hired as a probationary teacher and, as such, it was incumbent upon petitioner to show by competent evidence that she did not meet the standards set by the school. This requirement, petitioner failed to discharge. To note, the termination of respondent was effected by that letter stating that she was being relieved from employment because the school authorities allegedly decided, as a cost-cutting measure, that the position of "Principal" was to be abolished. Nowhere in that letter was respondent informed that her performance as a school teacher was less than satisfactory.

Thus, in light of our ruling of Espiritu Santo Parochial School v. NLRC that, in the absence of an express period of probation for private school teachers, the three-year probationary period provided by the Manual of Regulations for Private Schools must apply likewise to the case of respondent. In other words, absent any concrete and competent proof that her performance as a teacher was unsatisfactory from her hiring on April 18, 2002 up to March 31, 2003, respondent is entitled to continue her three-year period of probationary period, such that from March 31, 2003, her probationary employment is deemed renewed for the following two school years.

Case Digest : People vs. Matheus, 826 SCRA 364, G.R. No. 198795 June 7, 2017

 

The Parties:

1. Merceditas Matheus y Delos Reyes, accused-appellant.

2. Thelma N. Suratos (Suratos), private complainant, gave Php 55,000 to Merceditas based on representation which Mereceditas made to Thelma Suratos that Merceditas had the power and capacity to recruit and employ Thelma Suratos for a job in Cyprus as a caretaker.

3. Glenda R. Guillarte (Guillarte), private complainant, gave Merceditas PhP55,000 as full payment for her deployment abroad as a hotel staff member in Cyprus.

4. Merly O. Alayon (Alayon), private complainant, gave Merceditas an initial payment of Php 15,000 in exchange Mereceditas promised her a job in Cyprus as a part of the laundry staff.

5. Celso J. Bagay, Jr. (Bagay, Jr.), private complainant, gave Php 30,000 to Merceditas in exchange for the promise that he would leave in three months for a job as a dentist in London.

6. Rogelio Duldulao (Duldulao), private complainant, paid a total of PhP 29,000 to Merceditas in exchange for a tourist visa in Spain.

7. Doriza P. Gloria (Gloria), private complainant, however she did not testify during the pre-trial hence her complaint was not considered in the decision.

Facts:

1. Merceditas, accused-appellant, was charged with six counts of Estafa under Article 315 (2) (a) of the Revised Penal Code (RPC) and one count of Large Scale Illegal Recruitment under RA 8042, based on the affidavit-complaints made by the following: Thelma N. Suratos (Suratos); Glenda R. Guillarte (Guillarte); Merly O. Alayon (Alayon); Celso J. Bagay, Jr. (Bagay, Jr.); Rogelio Duldulao (Duldulao); and Doriza P. Gloria (Gloria).

2. The Regional Trial Court (RTC), Branch 218 of Quezon City, found accused-appellant guilty beyond reasonable doubt of five counts of Estafa and one count of Large Scale Illegal Recruitment under Republic Act (RA) No. 8042 or the Migrant Workers and Overseas Filipino Act of 1995.

3. The CA affirmed the finding of the RTC.

Issues & Ruling:

Whether or not Merceditas Matheus y Delos Reyes is guilty beyond reasonable doubt for the crime of Illegal Recruitment in Large Scale. Yes, all elements of the crime Illegal Recruitment in Large Scale are obtaining in the case.

The elements of the crime Illegal Recruitment in Large Scale are:

(1) the person charged undertook any recruitment activity as defined under Section 6 of RA 8042;

(2) accused did not have the license or the authority to lawfully engage in the recruitment of workers; and

(3) accused committed the same against three or more persons individually or as a group.

As regards the first element,

• Merceditas had undertaken recruitment activity when she promised the private complainants overseas employment for a fee.
• She also received money from the private complainants for their deployment abroad, as she even issued receipts to them though the absence of receipts cannot defeat a criminal prosecution for illegal recruitment.
• She impressed on complainants that she had the power or ability to send them abroad for employment so much so that the latter got convinced to part with their money in exchange therefor. Illegal recruiters need not even expressly represent themselves to the victims as persons who have the ability to send workers abroad. It is enough that these recruiters give the impression that they have the ability to enlist workers for job placement abroad in order to induce the latter to tender payment of fees.

Regarding the second element,

• The Philippine Overseas Employment Administration unmistakably reveals that Merceditas neither had a license nor authority to recruit workers for overseas employment.
• She also admitted during the pre-trial that she did not have a license or authority to lawfully engage in recruitment and placement of workers.

As regards the third element,

• It was established that there were five complainants, i.e., Suratos, Guillarte, Alayon, Bagay, Jr., and Duldulao.
• Private complainants' individual testimonies were so replete with details on how appellant convincingly, albeit deceptively, enticed them to pay all her demands in case, how she provided for their fake documents, and how she manipulated their thoughts and dreams for a better life, ending up in the cruel realization that she was nothing but a fraud.

Whether or not Merceditas Matheus y Delos Reyes is guilty beyond reasonable doubt for the crime of Estafa under Article 315(2)(a) of the RPC. Yes, all the elements of the crime of Estafa under Article 315(2)(a) of the RPC are present. It is settled that a person, for the same acts, may be convicted separately of illegal recruitment under RA 8042 or the Labor Code, and estafa under Article 315 (2) (a) of the RPC.

The elements of estafa are:

(1) the accused defrauded another by abuse of confidence or by means of deceit; and

(2) the offended party or a third party suffered damage or prejudice capable of pecuniary estimation.

(1) Merceditas deceived private complainants into believing that she had the authority and capability to send them abroad for employment, despite her not being licensed by the POEA to recruit workers for overseas employment.

(2) Because of the assurances given by Merceditas, the private complainants parted with their hard-earned money for the payment of the agreed placement fee, for which accused-appellant issued petty cash vouchers and used fictitious names evidencing her receipt of the payments.

Dispositive Portion

WHEREFORE, premises considered, the March 7, 2011 Decision of the Court of Appeals in CA-G.R. CR. H.C. No. 03737, which affirmed the November 26, 2008 Joint Decision of the Regional Trial Court, Branch 218 of Quezon City, in Criminal Case Nos. Q-03-119663-69, finding appellant Merceditas Matheus y Delos Reyes GUILTY beyond reasonable doubt of five counts of Estafa and one count of Large Scale Illegal Recruitment under R.A. No. 8042, otherwise known as Migrant Workers and Overseas Filipino Act of 1995 is hereby AFFIRMED with MODIFICATION

Case Digest : American Wire and Cable Daily Rated Employees Union v. American Wire and Cable, April 29, 2005

 

The Parties:

1. American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and cables.  There are two unions in this company, the American Wire and Cable Monthly-Rated Employees Union (Monthly-Rated Union) and the American Wire and Cable Daily-Rated Employees Union (Daily-Rated Union).

2. Daily-Rated Union, petitioner, one of the two unions of American Wire and Cable Co., Inc.

Topics Discussed:

1. Definition of a Bonus.  A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employer’s business and made possible the realization of profits—it is an act of generosity granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits.

In the case of Producers Bank of the Philippines v. NLRC we have characterized what a bonus is, viz.:

a) Payment for industry and loyalty which contributed to business success A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employer’s business and made possible the realization of profits.

b) Act of Generosity It is an act of generosity granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits.

c) Management Prerogative The granting of a bonus is a management prerogative, something given in addition to what is ordinarily received by or strictly due the recipient. 

d) Not demandable and enforceable obligation Thus, a bonus is not a demandable and enforceable obligation, except when it is made part of the wage, salary or compensation of the employee. 

2. Rules for a bonus to be enforceable 1) it must have been promised by the employer and expressly agreed upon by the parties, OR 2) it must have had a fixed amount and had been a long and regular practice on the part of the employer.

3. Rules for a bonus to be considered as a regular practice To be considered a “regular practice,” the giving of the bonus should have been done over a long period of time, and must be shown to have been consistent and deliberate.

The downtrend in the grant of the two bonuses over the years demonstrates that there is nothing consistent about it; hence not a "regular practice".

Facts:

1. On 16 February 2001, Monthly-Rated Union and Daily-Rated Union filed an original action for voluntary arbitration alleging that American Wire and Cable Co., the private respondent, without valid cause, suddenly and unilaterally withdrew and denied certain benefits and entitlements which they have long enjoyed.

a) Service Award;

b) 35% premium pay of an employee’s basic pay for the work rendered during selected days of Holy Week and December (Holy Monday, Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29);

c) Christmas Party; and

d) promotional increase for fifteen (15) of its members who were given or assigned new job classifications. According to petitioner, the new job classifications were in the nature of a promotion, necessitating the grant of an increase in the salaries of the said 15 members.

2) The petitioner contends that the withdrawal of the private respondent of the abovementioned benefits violated Article 100 of the Labor Code or the PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS.

• The grant of these benefits was a customary practice that can no longer be unilaterally withdrawn by private respondent without the tacit consent of the petitioner.
• The benefits in question were given by the respondent to the petitioner consistently, deliberately, and unconditionally since time immemorial.
• The benefits/entitlements were not given to petitioner due to an error in interpretation, or a construction of a difficult question of law, but simply, the grant has been a practice over a long period of time.
• As such, the benefits/entitlements cannot be withdrawn from the petitioner at respondent’s whim and caprice, and without the consent of the former.
• The benefits given by the respondent cannot be considered as a “bonus” as they are not founded on profit. Even assuming that it can be treated as a “bonus,” the grant of the same, by reason of its long and regular concession, may be regarded as part of regular compensation.

With respect to the fifteen (15) employees who are members of petitioner union that were given new job classifications, it asserts that a promotional increase in their salaries was in order. Salary adjustment is a must due to their promotion.

3) American Wire and Cable Co. avers that the grant of all subject benefits has not ripened into practice that the employees concerned can claim a demandable right over them.

• The grant of these benefits was conditional based upon the financial performance of the company and that conditions/circumstances that existed before have indeed substantially changed thereby justifying the discontinuance of said grants.
• The company’s financial performance was affected by the recent political turmoil and instability that led the entire nation to a bleeding economy.
• Hence, it only necessarily follows that the company’s financial situation at present is already very much different from where it was three or four years ago.

With respect to the 15 members of petitioner union, American Wire claims that they were not actually promoted. There was only a realignment of positions.

4. Ruling of the Voluntary Arbitrator (Angel A. Ancheta)  The Voluntary Arbitrator declared that the Company is not guilty of violating Article 100 of the Labor Code ; the Company however, is directed to grant the service award to deserving employees in amounts and extent at its discretion, in consultation with the Unions on grounds of equity and fairness.

5. An appeal under Rule 43 of the 1997 Rules on Civil Procedure was made by the Daily-Rated Union before the Court of Appeals.

6. Ruling of the Court of Appeals The Court of Appeals AFFIRMED and UPHELD the decision of the Voluntary Arbitrator.

Issue:

Whether the benefits/entitlements are in the nature of a bonus or not. The benefits/ entitlements are in the nature of a bonus.

Whether the subject benefits/entitlements, which are bonuses, are demandable or not. Stated another way, can these bonuses be considered part of the wage or salary or compensation making them enforceable obligations? No, because the benefits/entitlements were not promised by the employer and expressly agreed upon by the parties, nor the amount for which have been fixed and had been a long and regular practice on the part of the employer.

Ruling:

The benefits/entitlements subjects of the instant case are all bonuses which were given by the private respondent out of its generosity and munificence.

In the case of Producers Bank of the Philippines v. NLRC we have characterized what a bonus is, viz:

A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employer’s business and made possible the realization of profits. It is an act of generosity granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits. The granting of a bonus is a management prerogative, something given in addition to what is ordinarily received by or strictly due the recipient. Thus, a bonus is not a demandable and enforceable obligation, except when it is made part of the wage, salary or compensation of the employee.

The additional 35% premium pay for work done during selected days of the Holy Week and Christmas season, the holding of Christmas parties with raffle, and the cash incentives given together with the service awards are all in excess of what the law requires each employer to give its employees.  Since they are above what is strictly due to the members of petitioner-union, the granting of the same was a management prerogative, which, whenever management sees necessary, may be withdrawn, unless they have been made a part of the wage or salary or compensation of the employees.

The benefits/entitlements cannot be considered part of the wage or salary or compensation making them enforceable obligations.

For a bonus to be enforceable, 

• it must have been promised by the employer and expressly agreed upon by the parties, OR
• it must have had a fixed amount and had been a long and regular practice on the part of the employer.

The benefits/entitlements have not been subjects of any express agreement between the union and the company, and have not yet been incorporated in the CBA. In fact, the petitioner has not denied having made proposals with the private respondent for the service award and the additional 35% premium pay to be made part of the CBA.

The Christmas parties and its incidental benefits, and the giving of cash incentive together with the service award cannot be said to have fixed amounts.  In fact, there had been a downtrend in the amount given as service award. There was also a downtrend with respect to the holding of the Christmas parties in the sense that its location changed from paid venues to one which was free of charge, evidently to cut costs.

Also, the grant of these two aforementioned bonuses cannot be considered to have been the private respondent’s long and regular practice.  To be considered a “regular practice,” the giving of the bonus should have been done over a long period of time, and must be shown to have been consistent and deliberate. The downtrend in the grant of these two bonuses over the years demonstrates that there is nothing consistent about it.

The additional 35% premium pay for work rendered during selected days of the Holy Week and Christmas season cannot be held to have ripened into a company practice that the petitioner herein have a right to demand.  There had been no evidence adduced that it had been a regular practice as observed by the Court of Appeals:

. . . [N]otwithstanding that the subject 35% premium pay was deliberately given and the same was in excess of that provided by the law, the same however did not ripen into a company practice on account of the fact that it was only granted for two (2) years and with the express reservation from respondent corporation’s owner that it cannot continue to grant the same in view of the company’s current financial situation.

To hold that an employer should be forced to distribute bonuses which it granted out of kindness is to penalize him for his past generosity.

Case Digest : Asis v. Minister of Labor, March 15, 1989

 

The Parties:

1. MAMERTO B. ASIS, petitioner, appointed Legal Counsel of the Central Azucarera de Pilar.

2. MINISTER OF LABOR AND EMPLOYMENT, public respondent.

3. CENTRAL AZUCARERA DE PILAR, private respondent, employer of Mamerto B. Asis.

4. EMMANUEL JAVELLANA, Finance Manager and Comptroller of the Central Azucarera de Pilar, impleaded by the petitioner as co-respondent for he had signed the memorandum for the relief of Mamerto B. Asis.

Topics Discussed:

1. Diminution of Benefits. The temporary revocation of the petitioner's monthly ration of fuel ... had been occasioned by force of circumstances affecting the Central's business. The monthly ration was not a part of his basic salary, and is not indeed found in any of the management payroll vouchers pertinent to the petitioner. Moreover, the adverse consequences of the suspension of the monthly rations had been largely if not entirely negated by the Central's undertaking to reimburse the petitioner for his actual consumption of fuel during the period of suspension.

In 7 SCRA 294 (1963), it was held that the daily subsistence rations given to the crew of sea-going vessels while on a voyage and during the duration of their contract, could not be withdrawn after the effectivity of the Minimum Wage Law, these being given “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 seamen being expected to serve regardless of the “stress and strain concomitant to bad weather, unmindful of the dangers that luck ahead in the midst of the high seas”.

2. Procedural law should not override substantial justice. It may be that as held in Acda vs. MOLE, 119 SCRA 306 [1982], payment of the appeal fee is by no means a mere technicality but is an essential requirement in the perfection of an appeal. However, where as in this case, the fee had been paid, unlike in the Acda case, although payment was delayed, the broader interest of justice and the desired objective of resolving controversies on the merits demanded that the appeal be given course as, in fact, it was so given by the NLRC. Besides, it was within the inherent power of the NLRC to have allowed the late payment of the appeal fee.

Facts:

1. The petitioner, Mamerto B. Asis, was appointed Legal Counsel of the Central Azucarera de Pilar. Later, concurrently with his position as Legal Counsel, he was named Head of its Manpower and Services Department.

2. In addition to his basic salaries and other fringe benefits, his employer granted him, and a few other officials of the company, a monthly ration of 200 liters of gasoline and a small tank of liquefied petroleum gas (LPG).

3. This monthly ration was temporarily revoked some five (5) years later as a cost reduction measure of the Central.

4. The petitioner then commenced an action against the Central with the Regional Office of the Ministry of Labor and Employment, seeking restoration of his monthly ration of gasoline and LPG which, as aforesaid, had been temporarily suspended.

5. Shortly afterwards, he filed another action against his employer, this time complaining against the Central's memorandum ordaining his relief (by being placed on leave of absence) as the Central's Legal Counsel and Head of the Manpower Services Department. The petitioner theorized that he had in effect been dismissed, illegally.

6. Ruling of the Regional Director.  The Regional Director held that there was diminution of benefits and that Asis was illegally dismissed hence ordered the petitioner's reinstatement to his former positions without loss of seniority, benefits and other privileges, the payment to him of back wages from date of his relief up to time of reinstatement, and the delivery to him of the monthly benefits from the time of their temporary revocation up to actual restoration or, at his option, the money equivalent thereof.

7. Ruling of the Deputy Minister of Labor and Employment.  The Deputy Minister reversed the decision of the Regional Director and dismissed the petitioner's complaint.

The Deputy Minister held that:

RE: suspension of monthly ration of gasoline and LPG

(a) evidence satisfactorily established that the Central's suspension of the petitioner's and others' monthly ration of gasoline and LPG, had been caused by unavoidable financial constraints;

(b) such a suspension, in line with its conservation and cost-saving policy, did not in truth effect any significant diminution of said benefits, since the petitioner was nevertheless entitled to reimbursement of the actual amount of gas consumed

RE: illegal dismissal

(a) petitioner had encouraged his co-employees to file complaints against the Central over the rations issue, and this, as well as his institution of his own actions, had created an atmosphere of enmity in the Central, and caused the loss by the Central of that trust and confidence in him so essential in a lawyer-client relationship as that theretofore existing between them;

(b) and that under the circumstances, petitioner's discharge as the Central's Legal Counsel and Head of the Manpower & Services Department was justified.

Issues & Ruling:

Does the Deputy Minister lack jurisdiction to entertain the Central's appeal from the decision of the Regional Director since Central was tardy in the payment of the appeal fee of P25.00?  No, the fee had been paid, although payment was delayed, the broader interest of justice and the desired objective of resolving controversies on the merits demanded that the appeal be given course as, in fact, it was so given by the NLRC. 

Whether there is diminution of benefits when Central revoked the provision of the monthly ration of fuel?  No, the temporary revocation of the petitioner's monthly ration of fuel ... had been occasioned by force of circumstances affecting the Central's business. The monthly ration was not a part of his basic salary, and is not indeed found in any of the management payroll vouchers pertinent to the petitioner. Moreover, the adverse consequences of the suspension of the monthly rations had been largely if not entirely negated by the Central's undertaking to reimburse the petitioner for his actual consumption of fuel during the period of suspension. 

Case Digest : Agee v. Paramount Communications USCA, 2nd District, June 26, 1995

The Parties:

1. Plaintiff-appellant Michael L. Agee, a California resident, is proprietor of L & H Records, a music recording studio located in California.   Through L & H Records, Agee owns copyrights in two sound recordings, “Laurel and Hardy's Music Box” (“Music Box”) and “Laurel and Hardy's Music Box:  Volume II” (“Music Box-Two”).   Agee does not own the copyright in the musical compositions embodied in these sound recordings.

2. Defendant-appellee Paramount Communications, Inc. is a Delaware corporation whose principal place of business is California.  Defendants-appellees Paramount Pictures and Paramount Television Group are divisions of Paramount.   Paramount Pictures produces the daily, half-hour news magazine television program Hard Copy and transmits it to independently owned and operated television stations for broadcast nationwide.

Facts:

1. Paramount copied portions of three songs from Agee's “Music Box-Two,” entitled “Ku-Ku,” “Cops,” and “The Donkey's Ears,” to make the audio track of a four-minute segment of its Hard Copy feature called “Caught on Tape.”   After duplicating parts of the recording, Paramount created an audiovisual work that timed or “synchronized” portions of the duplicated recording to visual images showing two young men engaged in an unsuccessful burglary attempt.

 

2. Paramount recorded the “Caught on Tape” feature on February 15, 1993, and integrated it into the Hard Copy program for satellite transmission to the TV stations for airing the next day.   Portions of the feature, including Agee's recording, were also included in the opening and closing credits of the program.   In addition, Paramount produced and transmitted to the TV stations a promotional commercial excerpted from the program, again including Agee's copyrighted work.   The TV stations made their own copies of the program and the commercial and broadcast them to the public.   Paramount neither sought nor obtained a license from Agee for the use of his recording, nor did it refer to him in the program's credits.

 

3. On September 10, 1993, Agee brought a copyright infringement action against Paramount and the TV stations for the unauthorized copying and synchronization of the songs from his sound recording, creation of a derivative work, and distribution or publication of that work to the public.   Agee also alleged that defendants had engaged in unfair competition and that Paramount's use of his recording violated section 43(a) of the Lanham Act.

Issue:

Whether incorporating a copyrighted sound recording into the soundtrack of a taped commercial television production infringes the copyright owner's exclusive right of reproduction under the Copyright Act of 1976, 17 U.S.C. §§ 106 and 114(b) (1993)  YES

Whether the copies of the program, including the duplicated portions of Agee's work, made by the TV stations violate the Lanham Act NO

Whether the copies of the program, including the duplicated portions of Agee's work, made by the TV stations constitute unfair competition NO

Ruling:

RE: Copyright Infringement

Section 106 of the Copyright Act of 1976 gives owners of copyrights in most works the exclusive right to reproduce the copyrighted work in copies or phonorecords, to prepare derivative works based upon the copyrighted work, to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending, to perform the work publicly, and to display the work publicly.  17 U.S.C. § 106.   However, with respect to copyrights in sound recordings, which the Act defines as “works that result from the fixation of a series of musical, spoken, or other sounds,” id. § 101, the Act confers more limited rights.   Only the rights of reproduction, preparation of derivative works, and distribution of copies are conferred, and a performance right is explicitly not conferred.  Id. § 114(a).   Moreover, the rights that are conferred are more limited than in the case of other works.

The reproduction right is limited to the right “to duplicate the sound recording in the form of phonorecords, or of copies of motion pictures and other audiovisual works, that directly or indirectly recapture the actual sounds fixed in the recording.”  Id. § 114(b) (emphasis added).   The derivative work right is limited to the right “to prepare a derivative work in which the actual sounds fixed in the sound recording are rearranged, remixed, or otherwise altered in sequence or quality.”  Id.

 

Also pertinent to our inquiry in this case is the exemption that section 114 extends to broadcasters for “ephemeral recordings.”   Specifically, it is not an infringement for a “transmitting organization entitled to transmit to the public a performance or display of a work, under a license or transfer of the copyright or under the limitations on exclusive rights in sound recordings specified by section 114(a), to make no more than one copy or phonorecord of a particular transmission program embodying the performance or display.”   Id. § 112(a).  To be eligible for this exemption, a “transmitting organization” must satisfy three conditions:  (1) the copy must be used solely by the transmitting organization that made it, and no further copies can be reproduced from it;  (2) the copy must be used “solely for the transmitting organization's own transmissions within its local service area, or for purposes of archival preservation or security”;  and (3) unless preserved exclusively for archival purposes, the copy must be destroyed within six months from the date the program was first transmitted to the public.

Paramount infringed the reproduction rights of Agee’s. House Report at 106 infringement of copyright owner's reproduction right takes place “whenever all or any substantial portion of the actual sounds that go to make up a copyrighted sound recording are reproduced in phonorecords ․ by reproducing them in the soundtrack or audio portion of a motion picture or other audiovisual work”). A synchronization of previously recorded sounds onto the soundtrack of an audiovisual work is simply an example of the reproduction right explicitly granted by section 114(b) to the owner of rights in a sound recording. Paramount derived independent commercial value from copying Agee's sound recording because that reproduction not only shifted the timing of performance but actually enhanced the performance by ensuring that there would be no mistakes in the synchronized program broadcast to viewers.   Reproducing Agee's recording in the soundtrack of Hard Copy also enabled Paramount to preserve the program intact for possible distribution or re-broadcast at a later date. It therefore infringed Agee's sound recording at the moment it put portions of his recording on tape to make a segment of Hard Copy.   Its incorporation of the sound recording without permission violated Agee's reproduction right.

Paramount’s act of mere synchronization of Agee’s sound recording with visual images did not create an infringing derivative work. Under the Copyright Act, a “derivative work” is defined as a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgement, condensation, or any other form in which a work may be recast, transformed, or adapted.   See 17 U.S.C. § 101.

In the case of sound recordings, the Copyright Act imposes additional requirements before such a “transformation” of a preexisting work is sufficient to create a derivative work.   See id. § 114(b);  House Report at 106.   Under section 114(b), the use of a sound recording qualifies as a derivative work only if “the actual sounds fixed in the sound recording are rearranged, remixed, or otherwise altered in sequence or quality.”

Paramount did not infringe Agee’s exclusive right to distribute his sound recording when it transmitted Hard Copy, including his work, by satellite to the TV stations because such a transmission did not constitute a distribution of one or more copies of his recording “to the public” under 17 U.S.C. § 106(3).  The Court finds no basis for concluding that Paramount's transmission of Agee's recording to viewers via the TV stations, rather than directly, was a “distribution.”   In a slightly different context, a number of courts have held that “[t]ransmissions by a cable network or service to local cable companies who in turn transmit to individual cable subscribers constitute ‘public performances' by the network under [the Copyright Act].” 

RE: Violation of Lanham Act

To state a claim for damages under the Lanham Act, Agee must allege a false representation of the source of his sound recording and actual confusion by consumers as to the source. However, Agee has alleged no facts suggesting that appellees “deliberately engaged in a deceptive commercial practice” designed to deceive the public as to the source of the product. Agee based his Lanham Act claim entirely on the fact that appellees made unauthorized use of his sound recording without paying him a royalty or recognizing him in the credits to the program.   See Merchant v. Lymon, 828 F.Supp. 1048, 1060 (S.D.N.Y.1993) (extending Lanham Act to cover “circumstances where an artist has not been properly credited for his ownership would simply transform every copyright action into a Lanham Act action as well”).   Consequently, dismissal of the Lanham Act claim for failure to state a cause of action was appropriate.

RE: Unfair Competition

Agee's state law unfair competition claim is baseless.   Although Agee alleges that appellees' use of his sound recording has caused a “diminution of good will” by connecting his sound recording to “criminal activities” or associating it with Hard Copy, Agee has failed to plead facts indicating that his record sales or licensing revenues have in any way been affected by Paramount's use of the recording.   There is no reasonable ground for believing that Agee has suffered economic losses as a result of appellees' actions, or that consumers think less of the recording.