ROSALINA NUCUM, LUZ BERGUELLES, AIDA DIGA, AIDA FAJARDO, MIGUELA PATAWARAN, VICENTE GALICIA, MERLE ARCOS, AMOR STO. DOMINGO, REMEDIOS D. SAPIGAO, LUCY MONTENEGRO AND NORA SOLIS,…

This is a petition for certiorari seeking the
nullification of the decision issued by the respondent Deputy Minister of Labor
Amado G. Inciong dated
October 16, 1979 modifying the order of the Regional Director dated January 5,
1979 awarding an aggregate amount of P47,493.05 to the eleven (11) complainants
for underpayment of wages, non-payment of legal holidays, premium pay for
special holidays and rest days, overtime pay, emergency allowance under
Presidential Decree Nos. 525 and 1123, 13th month pay, service incentive leaves
and maternity benefits and granting instead an aggregate amount of P17,463.00
to said eleven (11) complainants; and the order dated March 27,  1980 denying the motion for reconsideration
for lack of merit.

The antecedent facts are as follows:

Petitioners Rosalina Nucum, Luz Berguelles, Aida Diga, Aida Fajardo, Miguela Patawaran, Vicente Galicia, Merle Arcos, Amor Sto. Domingo, Remedios D. Sapigao, Lucy
Montenegro and Nora Solis are employees of private respondent as sales ladies,
sewers, cutters, filing patterns, beaders and hand
painters.  Respondent Amado
G. Inciong is impleaded in
his official capacity as the Deputy Minister of the Ministry of Labor.  While private respondent D.S. Point/ Fashion
One is a single proprietorship owned and operated by
Daniel Soria.

Petitioners filed with the Ministry of Labor, Regional Office
Branch IV, Manila several complaints. 
The complaints allege that during the entire period of petitioners’
employment, they were underpaid in their wages and were not paid their holiday
pay, premium pay for special holidays and rest days, overtime pay, emergency
cost of living allowance under Presidential Decrees 525 and 1123, 13th month
pay, service incentive leaves and maternity benefits and that despite several
attempts of the petitioners to settle their claims, private respondent refused
to pay such claims.

By an order dated January 5, 1979, the Regional Director ordered
the private respondent to pay complainants the aggregate amount of P47,493.05, the pertinent portions of which provide as follows:

“x x x

“Inspection and summary investigation conducted by this Office
revealed that complainants were not duly compensated of the benefits due them
as provided for in the Labor Code, as amended and other social
legislations.  The complainants thru
counsel submitted their position paper to substantiate their claims which were
not controverted by respondent.  Despite sufficient time given to respondent
to submit its position paper, it failed to do so.  Respondent’s failure to submit the same
within the period given is tantamount to admission of its liabilities to the
complainants.

“WHEREFORE, premises considered, respondent is hereby ordered to
pay complainants the aggregate amount of FORTY SEVEN THOUSAND FOUR HUNDRED
NINETY THREE PESOS AND FIVE CENTAVOS (P47,493.05)
computed as follows x x x.” (Rollo, pp. 23-24)

On January 15, 1979 private respondent filed a motion for reconsideration
and /or appeal alleging that the order is contrary to law and arrived at
whimsically in defiance of a fair and impartial hearing, thus constituting
grave abuse of discretion.  Hence,
private respondent prayed that the order be set aside and be remanded for
hearing on the merits either to a
Conciliator or Labor Arbiter and/ or be dismissed for lack of merit.

On October 16, 1979 respondent Deputy Minister of Labor by
authority of the Minister rendered a decision modifying the order of the
Regional Director, to wit:

“x x x

“We have gone carefully over the records
of this case, and we cannot agree with the Regional Director in awarding
overtime pay, premium pay for
special holidays and rest days, and payment of cost of living allowance under
PD 1123 to herein complainants.

“Records show no proof whatsoever that herein complainants rendered
overtime and worked during special holidays and their scheduled rest days.  Claims for overtime pay and premium pay for
holidays and rest days must be proven by substantial evidence for these are not
incurred in the normal course of business.

“As to payment of PD 1123 we find respondent not liable.  Records show that respondent is a duly
registered NACIDA cottage industry and therefore exempt from payment of cost of
living allowance under PD 1123.

“The complaints filed by Amor Sto. Domingo, Lucy Montenegro, Miguela
Patawaran and Aida Diga
must also be dismissed for lack of merit. 
These complainants were paid depending on the number of pants or dresses
they would be able to finish.  They are
free to work outside provided that they would be able to finish the job
assigned to them within a particular period. 
They are not required to report for work.  They are not therefore independent
contractors paid depending on their out put (sic).

“As to the complaint of Remedios Sapigao, we have to reconsider the same in so far as that
covering the period starting January 1977. 
This is so because from said date she was an independant
contractor paid by result.

“WHEREFORE, decision appealed from is hereby modified and
respondent ordered to pay complainants the x x x.

“x x x

“GRAND TOTAL – P17,463.00.” (Rollo, pp. 73, 75)

From said decision, the petitioners filed a motion for
reconsideration on October 26, 1979 on grounds of abuse of discretion amounting
to lack of jurisdiction and on questions of facts and law.

Finding no merit to the motion for reconsideration filed by
complainant, the respondent Deputy Minister denied the same and held that his
previous decision stands.  Furthermore he
emphasized that no further motion of the same nature shall be entertained and
ordered the immediate execution of the said decision.

Hence this petition raising two (2) grounds, to wit:

“First, the respondent Deputy Minister of Labor committed grave
abuse of discretion which is tantamount to lack of jurisdiction and

“Second, the decision is contrary to law and jurisprudence.” (Rollo, p. 9)

However, this Court through a resolution dated October 28, 1980
issued by the First Division gave the petition limited due course as to the
question of whether petitioners are entitled to emergency allowance under
Presidential Decree No. 1123.  Deputy
Minister Inciong had ruled that respondent is exempt
from the provisions of P.D. 1123 (re: 
payment of emergency living allowance) on the basis of the Certificate
of Registration issued on September 25, 1967 by the then National Cottage
Industries Development Authority (NACIDA) to Daniel Soria
certifying that he is engaged in Needlecraft (manufacture of ready made dresses
and children’s wear).  The then Rules
implementing P.D. 1123 exempt among others, NACIDA -registered industries from
the coverage of the Decree.

The controversy boils down to the sole issue of whether or not
the petitioners are entitled to emergency cost of living allowance.

Petitioners maintain that the xerox
copy of the certificate of registration dated September 25, 1967 purportedly
showing that is a NACIDA-registered industry should not have been given
credence by the respondent Deputy Minister because the same was submitted for
the first time on appeal.

However, the private respondent stresses that the document was
presented in a motion for reconsideration where petitioners were given ample
opportunity to present evidence to the contrary or rebut the evidence
presented, however, petitioners failed to do so.

Furthermore, petitioners allege that the certificate of
registration concerns “needlecraft” (making of ready made dresses and
children’s wear) and not for a tailoring or dress shop.  A close scrutiny of the rules implementing PD
1123 will show that the tailoring or dress shop is not one of those industries
that may be exempt.

Private respondent argues that this allegation is against the
express provision of paragraph 10 section 11 of Republic Act no. 3470 as amended which states that the term
cottage industry shall include embroidery, dressmaking and tailoring
industries.

Petitioners emphasize that granting that the license covers
private respondent, the same was issued on September 25, 1967 for a period of five (5) years, hence,
there being no showing that it was renewed the same therefore expired on September 25, 1972.

On this point private respondent strongly submits that the
non-renewal of a license is not a ground to deny private respondent of the
benefits granted by law.  In addition
private respondent stresses that the creation of small industries with certain
privileges is intended primarily to promote small industries and to enable them
to compete with big establishments.

Finally, petitioners contend that granting that the license
covers private respondent and that it did not expire, such cannot exempt
private respondent from complying with the provisions of PD 1123 which requires
strict adherence to the requirements of policy no. 27.

In sum, petitioners insist that the respondent Deputy Minister
committed grave abuse of discretion amounting to lack of jurisdiction in
considering the evidence submitted for the first time on appeal and in finally
ruling that private respondent is exempt from payment of the emergency cost of
living allowance under PD 1123.

We find the petition meritorious.

A careful perusal of the applicable rules implementing
Presidential Decree No. 1123 increasing the emergency allowance under
Presidential Decree No. 525 provides that:

“Sec. 1.  Coverage – These Rules shall apply to all employers except the following:

x   x   x                                            x  
x   x

“f)
NACIDA-registered industries and duly registered cooperatives, employing not
more than thirty (30) employees
for a period of two (2) years
from the effectivity of the Decree;

x   x   x                                              x   x   x.”

In order to be exempt from the coverage, private respondent must
be considered a NACIDA-registered industry or a cottage industry as defined
under Section 11 Republic Act No. 3470 as amended by Republic Act No.
5326.  The pertinent portion of which
provides as follows:

“The term ‘cottage industry’ as used in this Act shall mean an
economic activity in a small scale carried on mainly in the home or in other
places for profit and mainly done with
the help of the members of the family with capitalization not exceeding fifteen
thousand pesos.  x x x.  It shall include the following:  x x x (11) embroidery, dressmaking and tailoring industries; x x x.”

A close scrutiny of the aforequoted
section will show that private respondent may rightfully be considered a
NACIDA-registered industry being a dressmaking and
tailoring industry, despite the wrong designation made by the NACIDA in the
issued certificate of registration as a needlecraft.

However, notwithstanding the fact that private respondent may
fall under a NACIDA industry, the failure to renew and the subsequent
expiration of its certificate of registration amounted to its non-entitlement of the benefits provided
by PD no. 1123, specifically the exemption from payment of emergency allowance
as emphasized in Section 12 RA No. 3470 as amended, to wit:

“Sec. 12. 
Any person, corporation, partnership, or association who desires to
avail of the benefits and assistance under this Act may register with the
Board, and any such registered person or firm who fails to comply with the
rules and regulations issued by the
Board shall not be entitled to the assistance and benefits of this law,
including but not limited to those provided in Section ten of this Act.”

Hence, We adhere to petitioners’
contention that private respondent can no longer avail of the benefits provided
by PD 1123 such as the exemption
from payment of emergency allowance because of the non-renewal and subsequent
expiration of its certificate of registration.

All premises considered, the Court is
convinced that the respondent Deputy Minister committed grave abuse of
discretion in ruling that private respondent is exempt from paying the
emergency cost of living allowance.

ACCORDINGLY, the petition is GRANTED and the decision of
the respondent Deputy Minister is hereby nullified on the matter of payment of
emergency cost of living allowance under PD 1123 and the order of the Regional
Director on the same is hereby reinstated.

SO ORDERED.

Narvasa, C.J., (Chairman), Cruz,
Feliciano, and Grino-Aquino,
JJ., concur.