Posted by: Elmer Brabante | December 9, 2009

Mayon Hotel & Restaurant vs. Rolando Adana, et al.


G.R. No. 157634

May 16, 2005



Petitioner Mayon Hotel & Restaurant (MHR) hired herein 16 respondents as employees in its business in Legaspi City.  Its operation was suspended on March 31, 1997 due to the expiration and non-renewal of the lease contract for the space it rented.  While waiting for the completion of the construction of its new site, MHR continued its operation in another site with 9 of the 16 employees.  When the new site constructed and MHR resumed its business operation, none of the 16 employees was recalled to work. 

MHR alleged business losses as the reason for not reinstating the respondents.  On various dates, respondents filed complaints for underpayment of wages, money claims and illegal dismissal. 


1. Whether or not respondents were illegally dismissed by petitioner;

2. Whether or not respondents are entitled to their money claims due to underpayment of wages, and nonpayment of holiday pay, rest day premium, SILP, COLA, overtime pay, and night shift differential pay. 


1. Illegal Dismissal: claim for separation pay

Since April 1997 until the time the Labor Arbiter rendered its decision in July 2000, or more than three (3) years after the supposed “temporary” lay-off, the employment of all the respondents with petitioner had ceased, notwithstanding that the new premises had been completed and the same resumed its operation.  This is clearly dismissal – or the permanent severance or complete separation of the worker from the service on the initiative of the employer regardless of the reasons therefor.

Article 286 of the Labor Code is clear — there is termination of employment when an otherwise bona fide suspension of work exceeds six (6) months. The cessation of employment for more than six months was patent and the employer has the burden of proving that the termination was for a just or authorized cause.

While we recognize the right of the employer to terminate the services of an employee for a just or authorized cause, the dismissal of employees must be made within the parameters of law and pursuant to the tenets of fair play. And in termination disputes, the burden of proof is always on the employer to prove that the dismissal was for a just or authorized cause. Where there is no showing of a clear, valid and legal cause for termination of employment, the law considers the case a matter of illegal dismissal.

If doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter — the employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. It is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writing should be resolved in the former’s favor. The policy is to extend the doctrine to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection of labor. 

2. Money claims

The Supreme Court reinstated the award of monetary claims granted by the Labor Arbiter.

The cost of meals and snacks purportedly provided to respondents cannot be deducted as part of respondents’ minimum wage. As stated in the Labor Arbiter’s decision.

Even granting that meals and snacks were provided and indeed constituted facilities, such facilities could not be deducted without compliance with certain legal requirements. As stated in Mabeza v. NLRC, the employer simply cannot deduct the value from the employee’s wages without satisfying the following: (a) proof that such facilities are customarily furnished by the trade; (b) the provision of deductible facilities is voluntarily accepted in writing by the employee; and (c) the facilities are charged at fair and reasonable value. The law is clear that mere availment is not sufficient to allow deductions from employees’ wages.

As for petitioners repeated invocation of serious business losses, suffice to say that this is not a defense to payment of labor standard benefits. The employer cannot exempt himself from liability to pay minimum wages because of poor financial condition of the company. The payment of minimum wages is not dependent on the employer’s ability to pay.


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