Wage exemption is recognized by law provided there is compliance with the requirements for its availment.

Retail/service establishments regularly employing not more than ten (10) workers may be exempted from the applicability of Wage Rationalization Act upon application for exemption with and as determined by the appropriate Regional Board in accordance with the applicable rules and regulations issued by the NWPC.

Thus, the SC held that:

Pablico vs. Cerro
G.R. No. 227200, June 10, 2019

Wage order; Exemption from Wage Order; Application for Exemption; Ignorance of the law; Interest on non-compliance with the wage order; 3% interest on forbearance of money


Respondent Numeriano Cerro, Jr. (Cerro) works as a bartender in Master’s Pab Resto Bar (MPRB). At the former’s suggestion, Pablico Manuel B. Pablico (Pablico) purchased and took over the management of MPRB from its original owner on November 18, 2008.

On the same day, Pablico took over, he promoted Cerro as Officer-in-Charge with a daily wage of P200.00, and gave the latter the authority to hire additional employees which Cerro did.

Thereafter, due to several infractions that caused MPRB losses, Pablico transferred Cerro to another establishment. Allegedly, several employees received text messages, which they interpreted to mean that they have been terminated from work on account of their close association to Cerro.

Acting on the text messages, said employees, along with Cerro (Cerro, et al.) then filed a complaint for illegal dismissal, underpayment of salaries and benefits, damages and attorney’s fees before the National Labor Relations Commission (NLRC). Apparently as discussed in the case, Cerro was suspended from work for appropriating the MPRB funds without the knowledge and consent of its owner.

LA Ruling:

The LA dismissed the complaint for lack of merit.

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The LA dismissed the Cerro, et al.’s claim of illegal dismissal. Insofar as Cerro, the LA held that his suspension is a valid exercise by the employer of disciplinary authority pursuant to the former’s infractions. Anent the other Cerro, et al. on the other hand, the LA held that they failed to discharge the burden of proving that they have been terminated. Finally, on account of the Cerro, et al.’s money claims, the LA found the payrolls presented by Pablico as sufficient proof of payment.

The aggrieved complainants appealed to the NLRC.

NLRC Ruling:

The NLRC partially granted the appeal and affirmed with modification the Decision of the LA.

The NLRC upheld the legality of complainant Cerro’s suspension, dismissal of complainants’ claim of illegal dismissal and dismissal of complainants’ claim for moral and exemplary damages are concerned.

However, regarding complainants’ monetary claims, the Commission finds that they are entitled to wage differentials for 3 years and 13th month pay and that they were required to return to work not being dismissed from service.

Unsatisfied with the decision of the NLRC, the Cerro, et al. filed a partial motion for reconsideration, which the NLRC denied.

Pablico, on the other hand, elevated the case to the CA via a petition for certiorari under Rule 65 of the Rules of Court.

CA Ruling:

The CA rendered a Decision dismissing the petition for lack of merit.

On motion for reconsideration, the CA issued an Amended Decision partially granting the MR. The CA modified the NLRC’s Decision affirming the same except for the award of Separation Pay which it deleted.

Hence, the Petition before the Supreme Court.


Whether or not an employer who has less than ten (10) employees can be exempt from compliance with the minimum wage despite failure to apply for exemption

Whether or not an owner of establishment who is not a lawyer can be excused compliance of the minimum wage for not having known the requirements of the law

Whether or not for failure to pay proper wage the employer is liable for the payment of interest

SC Ruling:

The SC did not find merit in the petition.

Pablico argues that he is exempted from the application of the “Minimum Wage Law” as he is engaged in the service business that employs less than ten (10) employees. He asserts that the mere fact that his business has not been granted exemption by the Department of Labor and Employment (DOLE) does not disqualify him from availing the benefits of the said law, as a layman like him cannot be expected to be knowledgeable of this requirement.

Also, Pablico faults the NLRC in not considering the “Pinagsamang Sinumpaang Salaysay” issued by the Guest Relations Officers/Waitresses working at MPRB as proof that the same individuals are not its employees. Cerro admitted having appropriated the funds of the MPRB without the knowledge and consent of its owner, for sure, this act justifies the exercise of management prerogative to place him under preventive suspension particularly considering his position. Being an Officer-in-Charge of MPRB, Cerro is responsible for the company’s over-all operations and, as such in a position, cause damage to the property of the employer.

Similarly, the SC affirmed that the rest of the Cerro, et al. have not been terminated. It is a basic principle in illegal dismissal cases that the employees must first establish by competent evidence the fact of their termination from employment.

Mere allegation does not suffice, evidence must be substantial and the fact of dismissal must be clear, positive and convincing. In the case at bar, Cerro, et al. Caliguiran, Panganiban, Pauig, Lim, Napitan, Caronan, and Baguno failed to discharge this burden. The only evidence they presented are text messages supposedly informing them that they have been terminated. However, nowhere from the language thereof can it be remotely inferred that they are being terminated. It was also not shown that the Cerro, et al. tried reporting for work, but were prevented to do so.

It is a basic principle in procedure that the burden is upon the person who asserts the truth of the matter that he has alleged. The Court emphasized in C. Planas Commercial vs. NLRC, that in order to be exempted under Republic Act (R.A.) No. 6727 or the Wage Rationalization Act, two elements must concur -first, it must be shown that the establishment is regularly employing not more than ten (10) workers, and second, that the establishment had applied for and was granted exemption by the appropriate Regional Board in accordance with the applicable rules and regulations issued by the Commission.

R.A. 6727 provides that retail/service establishments regularly employing not more than ten (10) workers may be exempted from the applicability of this Act upon application with and as determined by the appropriate Regional Board in accordance with the applicable rules and regulations issued by the Commission. Whenever an application for exemption has been duly filed with the appropriate Regional Board, action on any complaint for alleged non-compliance with this Act shall be deferred pending resolution of the application for exemption by the appropriate Regional Board.

In the event that applications for exemptions are not granted, employees shall receive the appropriate compensation due them as provided for by this Act plus interest of one per cent (1%) per month retroactive to the effectivity of this Act. Herein, Pablico himself admitted that he did not apply for such exemption, thus, it is clear that he cannot claim benefits under the law.

Pablico cannot shield himself from complying with the law by the lone fact that he is just a layman and cannot be expected to know of the law’s requirements. Under our legal system, ignorance of the law excuses no one from compliance therewith. Furthermore, the policy of the Labor Code, under which R.A. No. 6727 is premised, is to include all establishments, except a few specific classes, under the coverage of the law.

As Pablico failed to apply for an exemption, and it is undisputed that the Cerro, et al. are MPRB’s employees and are paid less than the prescribed mm1mum wage, Pablico’s liability for wage differential cannot be denied.

Since there is a clear violation of R.A. No. 6727, Pablico is also liable to pay interest on the appropriate compensation due, not only by the express provision of the law but because the failure to pay constitutes a loan or forbearance of money, at the rate of one percent (1%) per month or twelve percent (12%) per annum.

The Court must clarify that in keeping with the reason behind the law in imposing the same interest, and in light of the Court’s ruling in Nacar vs. Gallery Frames, et al., the imposition of interest must be reconciled with Bangko Sentral ng Pilipinas Monetary Board Resolution No. 796 dated May 16, 2013, which effectively amended the rate of interest. Accordingly, the amount of wage differentials which Pablico owed to the Cerro, et al. shall earn interest at the rate of twelve percent (12%) per annum from the time payment thereof has accrued or their respective dates of employment until the date they last reported for work or July 1, 7013, whichever is earlier.

Thereafter, it having been concluded that the Cerro, et al. have not been illegally dismissed and as such entitled to reinstatement, provided that they have rendered services within the period, the interest shall be six percent ( 6%) per annum until their full satisfaction. Simple enough, the case presents no controversy on this aspect as it appears.

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