Congson vs. NLRC

Wages must be paid exclusively in legal tender, and the cash value of non-monetary benefits such as tuna liver and intestines cannot be credited toward compliance with the statutory minimum wage, even when such arrangement was mutually agreed upon or expressly requested by the employees. Separation pay in lieu of reinstatement is proper where strained relationship is established by the employer's consistent refusal to readmit the dismissed employees and the employees' own aversion to continued employment.

Dominico C. Congson is the registered owner of Southern Fishing Industry, a tuna processing and storage enterprise in General Santos City. The private respondents — Noe Bargo, Roger Himeno, Raymundo Badagos, Patricio Salvador, Sr., Nehil Bargo, Joel Mendoza, and Emmanuel Calixihan — were hired on various dates (1980 and 1984) as regular piece-rate workers tasked with unloading tuna from fishing boats to truck haulers, processing and storing tuna at the cold storage plant, and loading processed tuna for shipment. They were paid on a per-movement basis and, by agreement, were also entitled to retrieve tuna intestines and liver as part of their compensation. The dispute arose in the context of statutory minimum wage obligations under Republic Act Nos. 6640 and 6727.

Dominico C. Congson is the registered owner of Southern Fishing Industry, a tuna processing enterprise based in General Santos City. He hired the private respondents — Noe Bargo, Roger Himeno, Raymundo Badagos, Patricio Salvador, Sr., Nehil Bargo, Joel Mendoza, and Emmanuel Calixihan — on various dates in 1980 and 1984 as regular piece-rate workers. They were uniformly paid at a rate of P1.00 per tuna weighing thirty to eighty kilos per movement, covering the load-unload cycle from fishing boats down to Congson's storage plant until the tuna catch reached its final shipment destination. Their work consisted of unloading tuna from fishing boats to truck haulers, unloading again at the cold storage plant for filing, storing, cleaning, and maintenance, and finally loading the processed tuna for shipment. They worked seven days a week. By agreement, the workers were also entitled to retrieve the intestines and liver of the tuna as part of their compensation.

During the first week of June 1990, Congson notified his workers of a proposal to reduce the rate-per-tuna movement due to the scarcity of tuna. The private respondents resisted the 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. They requested a dialogue with management and were instructed to wait for further notice, but no such notice ever came even after a full week of waiting.

On June 15, 1990, the private respondents filed a case before the NLRC Sub-Regional Arbitration Branch No. XI in General Santos City, docketed as Case No. RAB-11-06-50165-90, charging Congson with underpayment of wages (non-compliance with Republic Act Nos. 6640 and 6727) and non-payment of overtime pay, 13th month pay, holiday pay, rest day pay, and five-day service incentive leave pay, as well as constructive dismissal. They alleged that with Congson's rates and the scarcity of tuna catches, their average monthly earnings each did not exceed P1,000.00. On July 2, 1990, they filed a second case, docketed as Case No. RAB-11-07-50179-90, adding a claim for separation pay should their complaint for constructive dismissal be upheld. The two cases were consolidated, but no amicable settlement was reached during conciliation conferences.

Congson, in his position paper filed on September 20, 1991, claimed that the only issue was the monetary claims and that there was no constructive dismissal. He argued that the workers had abandoned their work after learning of his proposed rate reduction and that it took them one month to return, by which time replacements had already been hired. He alleged that repeated demands for them to return to work went unheeded. The Labor Arbiter rejected this defense, finding that the workers were summarily dismissed in the first week of June 1990 when Congson arbitrarily replaced them after their resistance to the new lower rate, and that the advice to "wait for further notice" was a confirmation of dismissal underscored by the fact that such notice never came. The Labor Arbiter found no deliberate refusal on the workers' part to resume work and no substantiation of Congson's general allegation that repeated demands were made. The NLRC affirmed these findings in toto on appeal.

• Accuracy of Wage Differential Computation: Petitioner argued that Labor Arbiter Aponesto erroneously computed wage differentials on the premise that workers' monthly average income was only P1,000.00. He contended that there were actually three movements from fishing boat to cold storage to ocean-going vessel, yielding P2.00 to P3.00 per tuna, and that the cash value of tuna intestines and liver — which workers were entitled to retrieve and which ranged from P15.00 to P20.00 per kilo — should be included in computing their total wages, as the combined value clearly exceeded the minimum wage fixed by law.
• Impropriety of Separation Pay Award: Petitioner contended that the general rule in cases of illegal dismissal is reinstatement, and that separation pay in lieu of reinstatement is a permissible exception only when strained relationship exists. Since there was no finding or even allegation of strained relationship, the award of separation pay should have been deleted.

• Forms of Payment of Wages: Whether the cash value of tuna liver and intestines given to workers as part of their compensation may be credited toward compliance with the statutory minimum wage.
• Separation Pay in Lieu of Reinstatement: Whether the award of separation pay in lieu of reinstatement was proper absent an explicit finding of strained relationship by the Labor Arbiter.

• Forms of Payment of Wages: No. The cash value of tuna liver and intestines cannot be credited toward minimum wage compliance, Article 102 of the Labor Code mandating that wages be paid exclusively in legal tender, with payment by check or money order allowed only under circumstances specified in the provision's second paragraph.
• Separation Pay in Lieu of Reinstatement: Yes. The award of separation pay was proper, the records sufficiently establishing strained relationship through petitioner's consistent refusal to readmit the workers and the workers' own filing of a separate case specifically praying for separation pay.

• Forms of Payment of Wages: Petitioner admitted that the P1.00-per-tuna movement was the actual cash wage rate and that workers were entitled to retrieve tuna intestines and liver as part of their compensation. He also did not refute the Labor Arbiter's computation fixing each worker's monthly wage at P2,670 based on the mandatory daily wage of P89.00. The contention that the cash value of tuna liver and intestines should supplement the cash wage to meet minimum wage requirements was rejected because Article 102 of the Labor Code expressly prohibits payment of wages by means of any object other than legal tender, even when expressly requested by the employee. The only exception — payment by check or money order — was inapplicable. The mutual agreement on, or even express request for, this payment arrangement did not shield petitioner from the statutory prohibition. The NLRC therefore committed no grave abuse of discretion in upholding the award of salary differentials.

• Separation Pay in Lieu of Reinstatement: Petitioner's argument that separation pay was improper absent a finding of strained relationship was found specious. A careful scrutiny of the records disclosed the existence of strained relationship on two grounds. First, petitioner consistently refused to readmit the workers, having replaced them with a new set of workers, and never sincerely intended to effect actual reinstatement — as evidenced by the fact that his supplemental motion sought only the deletion of separation pay rather than an order of reinstatement. Consistent refusal by the employer to accept the dismissed employee establishes strained relationship, as held in Esmalin vs. NLRC. Second, the workers themselves had indicated aversion to continued employment by filing a separate case specifically praying for separation pay. The refusal of dismissed employees to be readmitted is constitutive of strained relations, as held in Lagniton vs. NLRC, where reinstatement would only exacerbate animosities and separation pay was properly ordered in the interest of industrial peace.

• Legal Tender Rule in Payment of Wages — Under Article 102 of the Labor Code, no employer shall pay wages by means of promissory notes, vouchers, coupons, tokens, tickets, chits, or any object other than legal tender, even when expressly requested by the employee. The only permitted non-cash forms are checks or money orders, and only when customary on the date of effectivity of the Code, necessary as specified by the Secretary of Labor, or stipulated in a collective bargaining agreement. In this case, the Court applied the rule to hold that the cash value of tuna liver and intestines could not be credited toward minimum wage compliance, notwithstanding mutual agreement or the employees' express request for such arrangement.

• Strained Relationship as Basis for Separation Pay in Lieu of Reinstatement — While reinstatement is the general remedy for illegal dismissal, separation pay may be awarded in lieu of reinstatement when strained relationship exists between employer and employee. Strained relationship may be established by: (a) the employer's consistent refusal to accept the dismissed employee back, and (b) the employee's own refusal or aversion to being readmitted, as evidenced by a prayer for separation pay. In this case, both elements were present — petitioner replaced the workers and never sought their reinstatement, and the workers themselves filed a separate case specifically praying for separation pay.

• "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." — The Court quoted this provision verbatim to establish the controlling rule that non-monetary compensation cannot satisfy minimum wage obligations, forming the ratio decidendi for rejecting petitioner's wage computation argument.

• "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." — This passage articulates the principle that mutual consent or employee request cannot override the mandatory legal tender requirement, a point frequently cited in subsequent wage-payment jurisprudence.

• "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." — This observation underscores the Court's reasoning that petitioner's invocation of reinstatement as the proper remedy was not bona fide, thereby reinforcing the finding of strained relationship.

• Esmalin vs. National Labor Relations Commission (3rd Division) and CARE Philippines, G.R. No. 67880, September 15, 1989, 177 SCRA 537 — Followed. The Court relied on this case for the proposition that strained relationship is fairly established when the records show the employer's consistent refusal to accept the dismissed employee, warranting separation pay as an alternative to reinstatement.

• Lagniton, Sr. vs. National Labor Relations Commission, et al., G.R. No. 86339, February 5, 1993, 218 SCRA 456 — Followed. The Court cited this case for the rule that the dismissed employee's refusal to be readmitted is constitutive of strained relations, justifying the grant of separation pay in lieu of reinstatement in the interest of industrial peace.

• Article 102, Labor Code (Forms of Payment) — Cited as the controlling provision prohibiting payment of wages by any means other than legal tender, even when expressly requested by the employee. Applied to hold that the cash value of tuna liver and intestines could not be credited toward compliance with the statutory minimum wage, rendering petitioner liable for salary differentials.

Davide, Jr., Bellosillo, Quiason, and Kapunan, JJ., concurred.