FIRST DIVISION

[G.R. No. 114250. April 5, 1995.]

DOMINICO C. CONGSON, petitioner, v s . NATIONAL LABOR

RELATIONS COMMISSION, NOE BARGO, ROGER HIMENO,
RAYMUNDO BADAGOS, PATRICIO SALVADOR, SR., NEHIL
BARGO, JOEL MENDOZA, and EMMANUEL CALIXIHAN,
respondents.

Garcia & Jacobo Law Office for petitioner.

The Solicitor General for respondent.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; WAGES; FORMS OF PAYMENT;

LEGAL TENDER; EXCEPTION; CASE AT BAR. — Petitioner’s practice of paying
the private respondents the minimum wage by means of legal tender
combined with tuna liver and intestines runs counter to the abovecited
provision of the Labor Code. The fact that said method of paying the
minimum wage was not only agreed upon by both parties in the employment
agreement but even expressly requested by private respondents, does not
shield petitioner. Article 102 of the Labor Code is clear. Wages shall be paid
only by means of legal tender. The only instance when an employer is
permitted to pay wages in forms other than legal tender, that is, by checks
or money order, is when the circumstances prescribed in the second
paragraph of Article 102 are present.
2. ID.; REINSTATEMENT; REFUSAL TO REINSTATE SHOWS THAT A
STRAINED RELATIONSHIP EXISTS BETWEEN EMPLOYER AND EMPLOYEES. — A
careful scrutiny of the records of the case at bench, readily discloses the
existence of strained relationship between the petitioner and private
respondents. Petitioner consistently refused to re-admit private respondents
in his establishment. Petitioner even replaced private respondents with a
new set of workers to perform the tasks of private respondents. Moreover,
although petitioner ostensibly argued in his supplemental motion for
reconsideration that reinstatement should have been the proper remedy in
the case at bench on his premise that the existence of strained relationship
was not adequately established, yet petitioner never sincerely intended to
effect the actual reinstatement of private respondents. For if petitioner were
to pursue further the entire logic of his argument, the prayer in his
supplemental motion for reconsideration should have contained not just the
mere deletion of the award of separation pay, but precisely, the
reinstatement of private respondents. Quite obviously then, notwithstanding
petitioner’s argument for reinstatement, he was only interested in the
deletion of the award of separation pay to private respondents.

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 DECISION

PADILLA, J : p

Petitioner Dominico C. Congson seeks the nullification of the decision

rendered by the National Labor Relations Commission in Case No. NLRC CA
M-000681-92 1 dated 28 May 1993 and its resolution dated 28 January 1994,
denying petitioner's motion for reconsideration.
In the challenged decision * , the NLRC affirmed in toto Labor Arbiter
Arturo Aponesto's decision dated 27 September 1991, holding thus:
"WHEREFORE, the appealed decision is hereby AFFIRMED IN
TOTO and the instant appeal is DISMISSED for lack of merit.
SO ORDERED." 2

Petitioner is the registered owner of Southern Fishing Industry. Private

respondents were hired on various dates 3 by petitioner as regular piece-rate
workers. They were uniformly paid at a rate of P1.00 per tuna weighing thirty
(30) to eighty (80) kilos per movement, that is — from the fishing boats
down to petitioner's storage plant at a load/unload cycle of work until the
tuna catch reached its final shipment/destination. They did the work of
unloading tuna from fishing boats to truck haulers; unloading them again at
petitioner's cold storage plant for filing, storing, cleaning, and maintenance;
and finally loading the processed tuna for shipment. They worked seven (7)
days a week.
During the first week of June 1990, petitioner notified his workers of his
proposal to reduce the rate-per-tuna movement due to the scarcity of tuna.
Private respondents resisted petitioner's proposed rate reduction. When they
reported for work the next day, they were informed that they had been
replaced by a new set of workers. When they requested for a dialogue with
the management, they were instructed to wait for further notice. They
waited for the notice of dialogue for a full week but in vain.
On 15 June 1990, private respondents filed a case against petitioner
before the NLRC Sub-Regional Arbitration Branch No. XI in General Santos
City, docketed as Case No. RAB-11-06-50165-90 for underpayment of wages
(non-compliance with Rep. Act Nos. 6640 and 6727) and non-payment of
overtime pay, 13th month pay, holiday pay, rest day pay, and five (5)-day
service incentive leave pay; and for constructive dismissal. With respect to
their monetary claims, private respondents charged petitioner with violation
of the minimum wage law, alleging that with petitioner's rates and the
scarcity of tuna catches, private respondents' average monthly earnings
each did not exceed ONE THOUSAND PESOS (P1,000.00).
Accusing petitioner of constructive dismissal, private respondents
claimed that petitioner refused to give them work assignments and replaced
them with new workers when they showed resistance to the petitioner's
proposed reduction of the rate-per-tuna movement.

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 On 2 July 1990, private respondents filed another case against
petitioner, docketed as Case No. RAB-11-07-50179-90 containing an
additional claim for separation pay should their complaint for constructive
dismissal be upheld.
The two (2) cases were consolidated. Conciliation conferences were
scheduled. On 24 July 1990, however, Labor Arbiter Aponesto directed the
parties to submit their respective position papers within twenty (20) days
from receipt of the directive, since no amicable settlement was reached in
conciliation between the parties.
On 22 August 1990, private respondents filed their position paper
reiterating the charges in their complaint for constructive dismissal,
attaching thereto a Bill of Particulars containing the computations of their
monetary claims. Petitioner, instead of filing his position paper, sought,
through counsel, an extension of time within which to file his position paper.
On 20 September 1991, petitioner filed his position paper wherein he
claimed that the only issue for resolution was private respondents' monetary
claims, and that there was no constructive dismissal. Petitioner further
argued that private respondents were not dismissed but rather, they
abandoned their work after learning of petitioner's proposal to reduce tuna
movement rates because of the scarcity of tuna, and that, it took private
respondents one (1) month to return to work, but they could no longer be
accommodated as petitioner had already hired their replacements after
private respondents failed to heed petitioner's repeated demands for them
to return to work. Upon said premises, petitioner contended that private
respondents were not entitled to separation pay.
On 27 September 1991, Labor Arbiter Aponesto rendered a decision,
with the following disposition:
"WHEREFORE, finding that complainants Noe Bargo, Roger
Himeno, Raymundo Badagos, Patricio Salvador, Sr., Nehil Bargo, Joel
Mendoza and Emmanuel Calixihan were (constructively) dismissed
from employment without just or unauthorized cause, hence illegal,
respondents Southern Fishing Industry and Mr. Dominico Congson are
hereby directed to pay, jointly and severally, their respective
separation pay and monetary claims for salary differentials, 13th
month pay and service incentive leave pay, as computed above, in the
total sum of FIVE HUNDRED TWO THOUSAND EIGHT HUNDRED SIXTY
FIVE (P502,865.00) PESOS.

The claims for overtime pay, holiday pay and rest day pay are,
however, dismissed for lack of factual basis and for reasons aforecited.
SO ORDERED." 4

In holding petitioner guilty of constructive dismissal, Labor Arbiter

Aponesto made the following findings:
"After a careful evaluation of the foregoing facts, proofs,
evidence, arguments and counter-arguments adduced by the parties
we find that complainants were summarily dismissed from employment
on the first week of June, 1990, when respondent Dominico Congson
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 arbitrarily replaced them with another group of laborers to do the work
of complainants. This was brought about by their reluctance or
resistance to accept a new lower rate proposed by respondent the day
before. The advise to 'wait for further notice' was indeed a confirmation
that complainants were dismissed as underscored by the fact that such
notice never came even until this date. Having been constructively and
illegally dismissed complainants are therefore entitled to their prayer
for separation pay. Their length of service 10 years and 6 years,
respectively (supra), which respondent dismally failed to controvert or
refute, shall be the basis of our computation, thus:
1. N. Bargo (P2,670 x 10) P26,700
2. R. Himeno (P2,670 x 10) 26,700
3. R. Badayos (P2,670 x 10) 26,700
4. P. Salvador, Jr. (P2,670 x 6) 16,020
5. Nehil Bargo (P2,670 x 10) 26,700
6. J. Mendoza (P2,670 x 6) 16,020
7. E. Calixihan (P2,670 x 6) 16,020
––––––––
Total P154,860 5
=======

Except for private respondents' claim for overtime pay, holiday pay,
and rest day pay which were dismissed, Labor Arbiter Aponesto granted the
monetary claims of private respondents, in this wise:
We likewise grant the monetary claims of complainants for wage
differentials, 13th month pay and service incentive leave pay payment of or
exemption from which respondents failed to show. Hence, given the 3-year
period covered by their monetary claims, i.e. from June, 1987 to June, 1990 the
monetary awards due complainants are as follows:
Name Wage 13th SIL Total
Diff'l Mo. Pay
Noe Bargo 42,120 6,510 1,085 P49,715.00
R. Himeno 42,120 6,510 1,085 49,715.00
R. Badagos 42,120 6,510 1,085 49,715.00
P. Salvador 42,120 6,510 1,085 49,715.00
N. Bargo 42,120 6,510 1,085 49,715.00
J. Mendoza 42,120 6,510 1,085 49,715.00
Calixihan 42,120 6,510 1,085 49,715.00
–––––––––––
Total P348,005.00
==========

xxx xxx xxx

"Pertaining to salary differentials respondent failed to adduce any
evidence or document at all to show that under their peculiar
arrangements complainants were receiving compensation at par or
above the then existing minimum wage; this, despite more than
sufficient time afforded. Consequently, we have no other alternative
but to give credence to complainants' assertion that their average
income (each) did not exceed P1,000.00 a month (Annex "B",
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 complainants' position paper), thus the differentials. 6

On the other hand, Labor Arbiter Aponesto made short shrift of

petitioner's defense by ruling that:
"We cannot give credence to the allegations or defenses put up
by respondents: As stated, one of the principal claims of complainants
is the payment of their separation pay which was specifically prayed by
complainants when they filed the second case on July 2, 1990; this
claim is likewise included in their Bill of Particulars (Annex "C",
complainants' position paper). We cannot sustain respondents' theory
of abandonment. Record shows that shortly after complainants were
constructively dismissed on the first week of June, 1990 they
immediately filed the instant case for constructive dismissal on June
15, 1990. There is also no showing of a deliberate refusal on their part
to resume work. Moreover, respondents dismally failed to substantiate
their general allegation that 'repeated demands' were made upon
complainants to return to work." 7

On appeal by petitioner, respondent NLRC found petitioner guilty of

illegal dismissal. Holding that petitioner failed to substantiate his contention
that private respondents abandoned their work, respondent NLRC ruled that
petitioner replaced private respondents with a new set of workers without
just cause and the required notice and hearing. Respondent NLRC therefore
affirmed Labor Arbiter Aponesto's findings and monetary awards. Petitioner's
motion for reconsideration and supplemental motion for reconsideration
were denied for lack of merit in the challenged resolution dated 28 January
1994.
Hence, the present recourse by petitioner.
Petitioner imputes grave abuse of discretion to respondent NLRC in
completely disregarding his motion for reconsideration and supplemental
motion for reconsideration. He contends that said motions for
reconsideration raised substantial issues which respondent NLRC failed to
consider and resolve.
Petitioner's motion for reconsideration and supplemental motion for
reconsideration raised only two (2) issues: a) the accuracy of Labor Arbiter
Aponesto's computations in arriving at the monetary awards representing
salary differentials; and b) the propriety or correctness of Labor Arbiter
Aponesto's grant of separation pay to private respondents.
Petitioner takes issue with the manner Labor Arbiter Aponesto
computed private respondents' wage differentials. In his supplemental
motion for reconsideration, petitioner argued, thus:
"In the Decision rendered, the Arbiter awarded wage differential
on the premise that complainants monthly average income is only
P1,000.00 as alleged in their position paper. This is erroneous. Here is
why:
Herein complainants were employed by respondents on a load-
unload cycle of hauling 'bariles' from the fishing boats to the truck
hauler of the respondents; then from the truck hauler down to the cold
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 storage; the herein complainants were paid P1.00 per movement; that
is, from the fishing boat to the cold storage, the herein complainants
actually received the amount of P2.00, one (1) peso per movement;
that there are two (2) movements from the fishing boat to the cold
storage, hence complainants are actually receiving P2.00 per piece of
tuna. The Arbiter must have been on the impression that there is only
one (1) movement from the fishing boat to the cold storage. This is
erroneous.

That finally, when the tuna is ready for export, the same is to be
transferred from the cold storage to the ocean going vessel berthed at
respondents wharf at Talisay, General Santos City, this time herein
complainants are paid P3.00 per piece of tuna from the cold storage to
the ocean going vessel as shown in the herewith attached Annexes.
In fine, all in all, there are three (3) movements from the time
the tuna is unloaded from the fishing boat to the fish car then to the
cold storage; and, finally from the cold storage to the vessel.

In addition to the amount of P1.00 per 'bariles' per movement

herein complainants get the intestines and liver of the tuna as part of
their salary. That for every tuna delivered, herein complainants extract
at least three (3) kilos of intestines and liver. That the minimum
prevailing price of tuna intestine and liver in 1986 to 1990 range from
P15.00 to P20.00/kilo. The value of the tuna intestine and liver should
be computed in arriving at the daily wage of herein complainants
because the very essence of the agreement between complainants and
respondent is: complainants shall be paid only P1.00 per tuna per
movement BUT the intestines and liver of the tuna delivered shall go to
the herein complainants. It should be noted that tuna intestines and
liver are easily disposed of in any public market. Complainants
themselves would not have agreed and would not have served
respondent that long period of time if they are only paid P1.00 per tuna
movement. What they are after, in truth and in fact is the tuna
intestines and liver which they can easily convert into cash." 8

Quite clearly, petitioner admits that the P1.00-per-tuna movement is

the actual wage rate applied to private respondents as expressly agreed
upon by both parties. Petitioner further admits that private respondents, per
their request, were entitled to retrieve the tuna intestines and liver as part of
their compensation. Finally, petitioner does not refute Labor Arbiter
Aponesto when the latter fixed private respondents' individual monthly wage
at P2,670 computed at the mandatory daily wage of P89.00.
However, it is the contention of petitioner that notwithstanding the fact
that private respondents' actual cash wage fell below the minimum wage
fixed by law, respondent NLRC should have considered as forming a
substantial part of private respondents' total wages the cash value of the
tuna liver and intestines private respondents were entitled to retrieve.
Petitioner therefore argues that the combined value of private respondents'
cash wage and the monetary value of the tuna liver and intestines clearly
exceeded the minimum wage fixed by law.
Petitioner's foregoing arguments do not impress us.
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 The Labor Code expressly provides:
"ARTICLE 102. Forms of Payment . — No employer shall pay
the wages of an employee by means of promissory notes, vouchers,
coupons, tokens, tickets, chits, or any object other than legal tender,
even when expressly requested by the employee.
Payment of wages by check or money order shall be allowed
when such manner of payment is customary on the date of effectivity
of this Code, or is necessary because as specified in appropriate
regulations to be issued by the Secretary of Labor or as stipulated in a
collective bargaining agreement." (Emphasis supplied)

Undoubtedly, petitioner's practice of paying the private respondents

the minimum wage by means of legal tender combined with tuna liver and
intestines runs counter to the abovecited provision of the Labor Code. The
fact that said method of paying the minimum wage was not only agreed
upon by both parties in the employment agreement but even expressly
requested by private respondents, does not shield petitioner. Article 102 of
the Labor Code is clear. Wages shall be paid only by means of legal tender.
The only instance when an employer is permitted to pay wages in forms
other than legal tender, that is, by checks or money order, is when the
circumstances prescribed in the second paragraph of Article 102 are
present.
We therefore find no grave abuse of discretion on the part of
respondent NLRC in upholding Labor Arbiter Aponesto's award of salary
differentials.
With respect to the issue concerning the propriety or correctness of the
grant of separation pay to private respondents, petitioner contends that,
assuming arguendo that Labor Arbiter Aponesto's findings were proper as to
private respondents' illegal dismissal, his decision did not state the reason
why instead of reinstatement, separation pay has to be awarded to private
respondents. Petitioner submits that under existing laws and jurisprudence,
whenever there is a finding of illegal dismissal, the available and logical
remedy is reinstatement. As a permissible exception to the general rule,
separation pay may be awarded to the employee in lieu of reinstatement, by
reason of strained relationship between the employer and employee. Since
there was no finding or even allegation of strained relationship between
petitioner and private respondents, respondent NLRC should have deleted,
according to petitioner, the award of separation pay in Labor Arbiter
Aponesto's decision.
We find petitioner's ratiocination on the impropriety of the award of
separation pay to private respondents to be specious. Petitioner seeks to
defeat the award of separation pay, in lieu of reinstatement, on the pretext
that inasmuch as the existence of strained relationship — as a permissible
exception to an axiomatic order of reinstatement in cases of illegal dismissal
— was not adequately established, Labor Arbiter Aponesto should not have
entertained at all private respondents' claim for separation pay.
A careful scrutiny of the records of the case at bench, however, readily
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 discloses the existence of strained relationship between the petitioner and
private respondents.
Firstly, petitioner consistently refused to re-admit private respondents
in his establishment. Petitioner even replaced private respondents with a
new set of workers to perform the tasks of private respondents. Moreover,
although petitioner ostensibly argued in his supplemental motion for
reconsideration that reinstatement should have been the proper remedy in
the case at bench on his premise that the existence of strained relationship
was not adequately established, yet petitioner never sincerely intended to
effect the actual reinstatement of private respondents. For if petitioner were
to pursue further the entire logic of his argument, the prayer in his
supplemental motion for reconsideration should have contained not just the
mere deletion of the award of separation pay, but precisely, the
reinstatement of private respondents. Quite obviously then, notwithstanding
petitioner's argument for reinstatement, he was only interested in the
deletion of the award of separation pay to private respondents.
In the case of Felix Esmalin vs. National Labor Relations Commission
(3rd Division) and CARE Philippines, 9 we held that strained relationship is
fairly established if the records of the case showed consistent refusal of the
employer to accept the dismissed employee, to wit:
"From the records of the case, it can be discerned that
reinstatement is no longer viable in view of the strained relations
between petitioner-employee (Felix Esmalin) and private respondent-
employer (CARE Philippines). This is very evident from the vehement
and consistent stand of CARE Philippines in refusing to accept back
petitioner Esmalin. Instead, petitioner should be awarded separation
pay as an alternative for reinstatement."

And secondly, private respondents themselves, from the very start, had
already indicated their aversion to their continued employment in
petitioner's establishment. The very filing of their second case before Labor
Arbiter Aponesto (RAB-11-07-90179-90) specifically for separation pay is
conclusive of private respondents' intention to sever their working ties with
petitioner.
In the case of Arturo Lagniton, Sr. vs. National Labor Relations
Commission, et al., 10 we ruled that the refusal of the dismissed employee to
be re-admitted is constitutive of strained relations, thus:
"It appears that relations between the petitioner and the
complainants have been so strained that the complainants are no
longer willing to be reinstated. As such reinstatement would only
exacerbate the animosities that have developed between the parties,
the public respondents were correct in ordering instead the grant of
separation pay to the dismissed employees in the interest of industrial
peace."

We therefore find no grave abuse of discretion on the part of

respondent NLRC in upholding Labor Arbiter Aponesto's grant of private
respondents' prayer for separation pay in lieu of reinstatement.
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 WHEREFORE, premises considered, the petition is hereby DISMISSED.
The challenged decision of respondent NLRC dated 28 May 1993 is hereby
AFFIRMED.
SO ORDERED.
Davide, Jr., Bellosillo, Quiason and Kapunan, JJ., concur.

Footnotes
1. A consolidation of Cases No. RAB-11-06-50165-90 and No. RAB-11-07-90179-
90 both entitled TUPAS In Behalf of Its Members: Noe Bargo and Six (6)
Others v. Southern Fishing Industries/Dominico Congson.
* Penned by Hon. Commissioner Oscar Abella, with the concurrence of Hon.
Commissioners Leon Gonzaga, Jr., and Musib Buat.
2. Rollo , p. 34.
3. Noe and Nehil Bargo, Roger Himeno and Badagos, in 1980; Patricio Salvador,
Sr., Joel Mendoza and Emmanuel Calixihan, in 1984.
4. Rollo , pp. 72-73.
5. Rollo , pp. 69-70.
6. Rollo , pp. 70-72.
7. Rollo , pp. 71-72.
8. Rollo , pp. 41-42.
9. G.R. No. 67880, 15 September 1989, 177 SCRA 537, 549.
10. G.R. No. 86339, 5 February 1993, 218 SCRA 456, 459-460.

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