21.

PLASTIC TOWN CENTER CORPORATION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION AND NAGKAKAISANG LAKAS NG MANGGAGAWA
(NLM)-KATIPUNAN, respondents.

FACTS: On September 7,1984, the respondent Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan filed a
complaint dated August 30, 1984 charging the petitioner with:

a. Violation of Wage Order No. 5, by crediting the Pl.00 per day increase in the CBA as part of the compliance
with said Wage Order No. 5, and y instead of thirty (30) days equivalent to one (1) month as gratuity pay to
resigning employees. (p. 3, Rollo)

b. Unfair labor practice thru violation of the CBA by giving only twenty-six (26) days pay instead of thirty (30)
days equivalent to one (1) month as gratuity pay to resigning employees. (p. 3, Rollo)

On July 25,1985, Labor Arbiter Ruben Alberto ruled in favor of Plastic Town Center Corporation. In this
particular case, the P1.00 increase was ahead of the implementation of the CBA provision or could be said
was advantageous to complainant members, chronologically stated. For the above cogent reason we can not
fault respondent for its refusal to grant a second Pl.00 increase on July 1, 1984.

On August 30, 1987, the respondent labor union appealed to the National Labor Relations Commission.

On June 30, 1987, the NLRC reversed the decision and the respondent is ordered to grant Pl.00 increase for
July 1, 1984 and the equivalent of thirty days salary in gratuity pay, as required by its CBA with the
complainants.

The motion for reconsideration of said decision was denied on December 7, 1987. Hence, this petition.

ISSUE: w/n there is a violation of age order No.5 on the part of the respondent by crediting the p1.00 per day
increase in the CBA and a violation of the CBA by giving only 26 days as gratuity pay for resigning employees?
YES.

HELD: Wage Order No. 4 provided for the integration of the mandatory emergency cost of living allowances
(ECOLA) under Presidential Decrees 1614,1634,1678 and 1713 into the basic pay of all covered workers
effective May 1, 1984. It further provided that after the integration, the applicable statutory minimum daily wage
rate must be complied with, which in this case is P32.00.

The petitioner incurred a deficiency of P1.00 in the wage rate after integrating the ECOLA with basic pay. So
the petitioner advanced to May 1, 1984 or two months earlier the implementation of the one-peso wage
increase provided for in the CBA starting July 1, 1984 for the benefit of the workers.

The petitioner argues that it did not credit the Pl.00 per day across the board increase under the CBA as
compliance with Wage Order No. 5 implemented on June 16,1984 since it gave an additional P3.00 per day to
the basic salary pursuant to said order. It, however, credited the Pl.00 a day increase to the requirement under
Wage Order No. 4 to which the private respondents allegedly did not object.

The petitioner alleges that one month salary for daily paid workers should be computed on the basis of twenty-
six (26) days and not thirty (30) days since daily wage workers do not work every day of the month including
Sundays and holidays.

In the case at bar, the petitioner alleges that on May 1, 1984, it granted a Pl.00 increase pursuant to Wage
Order No. 4 which in consonance with Section 3 of the CBA was to be credited to the July 1, 1984 increase
under the CBA. It was, therefore, a July increase. Section 3 of the CBA, however, clearly states that CBA
granted increases shall be credited against future allowances or wage orders. Thus, the CBA increase to be
effected on July 1, 1984 can not be retroactively applied to mean compliance with Wage Order No. 4 which
took effect on May 1, 1984. The words of the contract are plain and readily understandable so we find no need
for any further construction or interpretation petition.

The petitioner also maintains that under the principle of "fair day's wage for fair day's labor", gratuity pay
should be computed on the basis of 26 days for one month salary considering that the employees are daily
paid.

From the foregoing, gratuity pay is therefore, not intended to pay a worker for actual services rendered. It is a
money benefit given to the workers whose purpose is "to reward employees or laborers, who have rendered
satisfactory and efficient service to the company."

This is also in consonance with the principle enunciated in the Labor Code that all doubts should be resolved in
favor of the worker.

The Civil Code provides that when months are not designated by name, a month is understood to be thirty (30)
days. The provision applies under the circumstances of this case.

In view of the foregoing, the public respondent did not act with grave abuse of discretion when it rendered the
assailed decision which is in accordance with law and jurisprudence.

22. DAVAO FRUITS CORPORATION, petitioner,

vs.
ASSOCIATED LABOR UNIONS (ALU) for in behalf of all the rank-and-file workers/employees of DAVAO
FRUITS CORPORATION and NATIONAL LABOR RELATIONS COMMISSION, respondents.

FACTS: On December 28, 1982 respondent Associated Labor Unions (ALU), for and in behalf of all the rank-
and-file workers and employees of petitioner, filed a complaint (NLRC Case No. 1791-MC-XI-82) before the
Ministry of Labor and Employment, Regional Arbitration Branch XI, Davao City, against petitioner, for
"Payment of the Thirteenth-Month Pay Differentials." Respondent ALU sought to recover from petitioner the
thirteenth month pay differential for 1982 of its rank-and-file employees, equivalent to their sick, vacation and
maternity leaves, premium for work done on rest days and special holidays, and pay for regular holidays which
petitioner, allegedly in disregard of company practice since 1975, excluded from the computation of the
thirteenth month pay for 1982.

In its answer, petitioner claimed that it erroneously included items subject of the complaint in the computation
of the thirteenth month pay for the years prior to 1982, upon a doubtful and difficult question of law. According
to petitioner, this mistake was discovered only in 1981 after the promulgation of the Supreme Court decision in
the case of San Miguel Corporation v. Inciong (103 SCRA 139).

A decision was rendered on March 7, 1984 by Labor Arbiter Pedro C. Ramos, in favor of respondent ALU.

Petitioner appealed the decision of the Labor Arbiter to the NLRC, which affirmed the said decision accordingly
dismissed the appeal for lack of merit.
Petitioner elevated the matter to this Court in a petition for review under Rule 45 of the Revised Rules of Court.

ISSUE: whether in the computation of the thirteenth month pay given by employers to their employees under
P.D. No. 851, payments for sick, vacation and maternity leaves, premiums for work done on rest days and
special holidays, and pay for regular holidays may be excluded in the computation and payment thereof,
regardless of long-standing company practice?

HELD: NO. Presidential Decree No. 851, promulgated on December 16, 1975, mandates all employers to pay
their employees a thirteenth month pay. How this pay shall be computed is set forth in Section 2 of the "Rules
and Regulations Implementing Presidential Decree No. 851," thus:
SECTION 2. . . .(a) "Thirteenth month pay" shall mean one twelfth (1/12) of the basic salary of an employee
within a calendar year.

(b) "Basic Salary" shall include all renumerations or earnings paid by an employer to an employee for services
rendered but may not include cost of living allowances granted pursuant to Presidential Decree No. 525 or
Letter of Instructions No. 174, profit-sharing payments, and all allowances and monetary benefits which are not
considered or integrated as part of the regular or basic salary of the employee at the time of the promulgation
of the Decree on December 16, 1975.

The Department of Labor and Employment issued on January 16, 1976 the "Supplementary Rules and
Regulations Implementing P.D. No. 851" which in paragraph 4 thereof further defines the term "basic salary,"
thus:

4. Overtime pay, earnings and other renumerations which are not part of the basic salary shall not be included
in the computation of the 13th month pay.

Clearly, the term "basic salary" includes renumerations or earnings paid by the employer to employee, but
excludes cost-of-living allowances, profit-sharing payments, and all allowances and monetary benefits which
have not been considered as part of the basic salary of the employee as of December 16, 1975.

In other words, whatever compensation an employee receives for an eight-hour work daily or the daily wage
rate in the basic salary. Any compensation or remuneration other than the daily wage rate is excluded. It
follows therefore, that payments for sick, vacation and maternity leaves, premium for work done on rest days
special holidays, as well as pay for regular holidays, are likewise excluded in computing the basic salary for the
purpose of determining the thirteen month pay.

Petitioner in the instant case, does not demand the return of what it paid respondent ALU from 1975 until 1981;
it merely wants to "rectify" the error it made over these years by excluding unilaterally from the thirteenth month
pay in 1982 the items subject of litigation. Solutio indebiti, therefore, is not applicable to the instant case.

WHEREFORE, finding no grave abuse of discretion on the part of the NLRC, the petition is hereby
DISMISSED, and the questioned decision of respondent NLRC is AFFIRMED accordingly.

23. Nasipit Lumber Company, Inc. v. NLRC

FACTS: Petitioner Nasipit Lumber Company (Nasipit) and its affiliate, petitioner Philippine Wallboard
Corporation (Wallboard), employed, among others, thirty (30) individual workers at the Nasipit Processing
Plant. These workers were members of the respondent, the National Organization of Workingmen (NOWM),
which belonged to the Western Agusan Workers Union (WAWU-ALU-TUCP) which, in turn, was the certified
bargaining unit in the said plant.

Nasipit applied with the National Wage and Productivity Commission (NWPC) for exemption from compliance
with Wage Order Nos. RT-01 and RT-01-A. The NWPC rendered judgment on March 8, 1993 denying the
application. The corporation challenged the said decision in this Court.

On January 29, 1996, the officers of respondent NOWM, WAWU-ALU-TUCP, representatives of the
Department of Labor and Employment (DOLE) and the National Conciliation Mediation Board (NCMB) met and
discussed the complaint. The NOWM demanded for the balance of the health bonus of its members for the
year 1994, 13th month-pay, and the remaining backlog payables amounting to P1,800.000.00. Although no
agreement was arrived at by the conferees, the petitioners granted financial assistance to their rank-and-file
employees, security guards and company staff.
On February 18, 1996, the General Membership of WAWU-ALU-TUCP, approved and issued Resolution No.
02-96 in which it was stated that except for the rank-and-file workers assigned to the St. Christopher Hospital,
the thirty (30) members of respondent NOWM would not report for work effective February 19, 1996. .

In an Order dated September 4, 1996, the Regional Director directed petitioner Nasipit to pay to its employees
P7,629,490.00 as unpaid wages. Petitioner Nasipit filed a motion for reconsideration which was denied. It
appealed the Order to the DOLE.

In the meantime, respondents NOWM and its thirty (30) members filed a complaint on November 18, 1996
against the petitioners for illegal cessation of business operations, non-payment of separation pay,
underpayment of salary and salary arrears for one (1) year before the Sub-Regional Arbitration Branch of the
NLRC. The respondents claimed that the petitioners terminated their employment on the allegation that the
latter's operations were suspended effective January 1996.

ISSUE: W/N there is an illegal cessation on the part of the petitioners and is liable to private respondent of
separation fee? YES.

HELD: The cessation/suspension of NALCO's operations was not management initiated. The deliberate refusal
of the workers to work was stage-managed by the union hence Art. 286 of the Labor Code would surely not
apply and the complainants are not entitled to separation pay because there was no constructive dismissal. ...
In other words, complainants should have filed a case for non-payment of salaries or wages against the herein
respondents if this was the case, rather than resort to a concerted action resulting in the stoppage of
work/suspension of operations, as in the instant case and later on claim that they were constructively
dismissed. They should not blame respondents for the consequential effects of their own acts.9

The respondents appealed the decision to the NLRC, which rendered a Decision on March 31, 1998 setting
aside the decision of the labor arbiter and awarding separation pay to the thirty members of the respondent
union.

The petitioners moved for the reconsideration of the decision, but the NLRC denied the same, holding that the
separation pay was awarded as a matter of course to the respondents

On August 16, 2000, the CA affirmed the decision of the NLRC. We are not convinced. It must be borne in
mind that the services of the private respondents were terminated in January 1996, a month before the other
rank-and-file employees did not report to work. It seems to us that the petitioners made use of this event in
order to avoid the fulfillment of their obligation to the private respondents. Moreover, the petitioners' insistence
that the cessation of the operation was due to the union holds no water. As correctly observed by the union,
such is a mere offshoot of the petitioners' refusal to make good their obligation to the workers concerned.

Article 286 of the Labor Code which reads: Art. 286. When employment not deemed terminated - The bona
fide suspension of the operations of a business or undertaking for a period not exceeding six (6) months, or the
fulfillment by the employee of a military service or civic duty shall not terminate employment.

In all such cases, the employer shall reinstate the employee to his former position without loss of seniority
rights if he indicates his desire to resume his work not later than one (1) month from the resumption of
operations of his employer or from his relief from the military or civic duty.

Closure or suspension of operations for economic reasons is, therefore, recognized as a valid exercise of
management prerogative. The determination to cease or suspend operations is a prerogative of management,
which the State does not usually interfere with as no business or undertaking is required to continue operating
at a loss simply because it has to maintain its workers in employment. Such an act would be tantamount to a
taking of property without due process of law.27

However, the burden of proving, with sufficient and convincing evidence, that such closure or suspension is
bona fide falls upon the employer.
In the present case, the petitioners failed to prove with convincing evidence a bona fide suspension of their
operations in 1994, 1995 and even in January 1996 due to acute economic losses in their operations.

The petitioners are DIRECTED to pay, jointly and severally, each of the individual private respondents
separation pay equivalent to one-half (1/2) month pay for every year of service.

24. EMPLOYERS CONFEDERATION OF THE PHILIPPINES, petitioner,

vs.
NATIONAL WAGES AND PRODUCTIVITY COMMISSION AND REGIONAL TRIPARTITE WAGES AND
PRODUCTIVITY BOARD-NCR, TRADE UNION CONGRESS OF THE PHILIPPINES, respondents.

FACTS: The Employers Confederation of the Philippines (ECOP) is questioning the validity of Wage Order No.
NCR-01-A dated October 23, 1990 of the Regional Tripartite Wages and Productivity Board, National Capital
Region, promulgated pursuant to the authority of Republic Act No. 6727, "AN ACT TO RATIONALIZE WAGE
POLICY DETERMINATION BY ESTABLISHING THE MECHANISM AND PROPER STANDARDS
THEREFORE, AMENDING FOR THE PURPOSE ARTICLE 99 OF, AND INCORPORATING ARTICLES 120,
121, 122, 123, 124, 126, AND 127 INTO, PRESIDENTIAL DECREE NO. 442 AS AMENDED, OTHERWISE
KNOWN AS THE LABOR CODE OF THE PHILIPPINES, FIXING NEW WAGE RATES, PROVIDING WAGE
INCENTIVES FOR INDUSTRIAL DISPERSAL TO THE COUNTRYSIDE, AND FOR OTHER PURPOSES,"
was approved by the President on June 9, 1989. Aside from providing new wage rates, 1 the "Wage
Rationalization Act" also provides, among other things, for various Regional Tripartite Wages and Productivity
Boards in charge of prescribing minimum wage rates for all workers in the various regions 2 and for a National
Wages and Productivity Commission to review, among other functions, wage levels determined by the boards. 3

On October 15, 1990, the Regional Board of the National Capital Region issued Wage Order No. NCR-01,
increasing the minimum wage by P17.00 daily in the National Capital Region. 4 The Trade Union Congress of
the Philippines (TUCP) moved for reconsideration; so did the Personnel Management Association of the
Philippines (PMAP).5 ECOP opposed.

ECOP appealed to the National Wages and Productivity Commission. On November 6, 1990, the Commission
promulgated an Order, dismissing the appeal for lack of merit. On November 14, 1990, the Commission denied
reconsideration.

The Solicitor General, in his rejoinder, argues that Republic Act No. 6727 is intended to correct "wage
distortions" and the salary-ceiling method (of determining wages) is meant, precisely, to rectify wage
distortions.10

ISSUE: W/N Regional Tripartite Wages and Productivity Board, National Capital Region, has the power to
promulgate R.A. 6727? YES.

HELD: The Court is inclined to agree with the Government

Republic Act No. 6727 was intended to rationalize wages, first, by providing for full-time boards to police wages
round-the-clock, and second, by giving the boards enough powers to achieve this objective.

ART. 124. Standards / Criteria for Minimum Wage Fixing. The regional minimum wages to be
established by the Regional Board shall be as nearly adequate as is economically feasible to maintain
the minimum standards of living necessary for the health, efficiency and general well-being of the
employees within the framework of the national economic and social development program. In the
determination of such regional minimum wages, the Regional Board shall, among other relevant
factors, consider the following:

(a) The demand for living wages;

 (b) Wage adjustment vis-a-vis the consumer price index;

(c) The cost of living and changes or increases therein;

(d) The needs of workers and their families;

(e) The need to induce industries to invest in the countryside;

(f) Improvements in standards of living;

(g) The prevailing wage levels;

(h) Fair return of the capital invested and capacity to pay of emphasis employers;

(i) Effects of employment generation and family income; and

(j) The equitable distribution of income and wealth along the imperatives of economic and social
development.12

The Court is not convinced that the Regional Board of the National Capital Region, in decreeing an across-the-
board hike, performed an unlawful act of legislation. It is true that wage-fixing, like rate constitutes an act
Congress;13 it is also true, however, that Congress may delegate the power to fix rates 14 provided that, as in all
delegations cases, Congress leaves sufficient standards. As this Court has indicated, it is impressed that the
above-quoted standards are sufficient, and in the light of the floor-wage method's failure, the Court believes
that the Commission correctly upheld the Regional Board of the National Capital Region.

The concept of "minimum wage" is, however, a different thing, and certainly, it means more than setting a floor
wage to upgrade existing wages, as ECOP takes it to mean. "Minimum wages" underlies the effort of the State,
as Republic Act No. 6727 expresses it, "to promote productivity-improvement and gain-sharing measures to
ensure a decent standard of living for the workers and their families; to guarantee the rights of labor to its just
share in the fruits of production; to enhance employment generation in the countryside through industry
dispersal; and to allow business and industry reasonable returns on investment, expansion and growth,"25 and
as the Constitution expresses it, to affirm "labor as a primary social economic force."

25. CAGAYAN SUGAR MILLING COMPANY, petitioner, vs. SECRETARY OF LABOR AND
EMPLOYMENT, DIRECTOR RICARDO S. MARTINEZ, SR., and CARSUMCO EMPLOYEES
UNION, respondents.

FACTS: On November 16, 1993, Regional Wage Order No. RO2-02[1] was issued by the Regional Tripartite
Wage and Productivity Board, Regional Office No. II of the Department of Labor and Employment (DOLE). It
provided, inter alia, that:

"Section 1. Upon effectivity of this Wage Order, the statutory minimum wage rates applicable to workers and
employees in the private sector in Region II shall be increased as follows: xxx 1.2 P14.00 per day .... Cagayan
xxx

On September 12 and 13, 1994, labor inspectors from the DOLE Regional Office examined the books of
petitioner to determine its compliance with the wage order. They found that petitioner violated the wage order
as it did not implement an across the board increase in the salary of its employees.
At the hearing at the DOLE Regional Office for the alleged violation, petitioner maintained that it complied
with Wage Order No. RO2-02 as it paid the mandated increase in the minimum wage.
In an Order dated December 16, 1994, public respondent Regional Director Ricardo S. Martinez, Sr. ruled
that petitioner violated Wage Order RO2-02 by failing to implement an across the board increase in the salary
of its employees. He ordered petitioner to pay the deficiency in the salary of its employees in the total amount
of P555,133.41.
Petitioner appealed to public respondent Labor Secretary Leonardo A. Quisumbing. On the same date, the
Regional Wage Board issued Wage Order No. RO2-02-A,[2] amending the earlier wage order, thus:
"Section 1. Section 1 of Wage Order No. RO2-02 shall now read as, "Upon effectivity of this Wage Order,
the workers and employees in the private sector in Region 2 shall receive an across the board wage
increase of P14.00 per day. On October 8, 1996, the Secretary of Labor dismissed petitioner's appeal and
affirmed the Order of Regional Director Martinez, motion for reconsideration was likewise denied.
Private respondent CARSUMCO EMPLOYEES UNION moved for execution of the December 16, 1994
Order. The regional director granted the motion and issued the writ of execution. On March 4, 1997, petitioner
moved for reconsideration to set aside the writ of execution. The DOLE regional sheriff served on petitioner a
notice of garnishment of its account with the Far East Bank and Trust Company. On March 10, the sheriff
seized petitioner's dump truck and scheduled its public sale on March 20, 1997.
Hence, this petition, with a prayer for the issuance of a temporary restraining order (TRO).

ISSUE: WON the Wage Order No. RO2-02-A is valid and effective.
RULING: No, the Wage Order No. RO2-02-A is not valid.

"ART. 123. Wage Order. -- Whenever conditions in the region so warrant, the Regional Board shall
investigate and study all pertinent facts, and, based on the standards and criteria herein prescribed, shall
proceed to determine whether a Wage Order should be issued. Any such Wage Order shall take effect
after fifteen (15) days from its complete publication in at least one (1) newspaper of general circulation in the
region.

"In the performance of its wage-determining functions, the Regional Board shall conduct public
hearings/consultations, giving notices to employees' and employers' groups and other interested parties.

The record shows that there was no prior public consultation or hearings and newspaper publication
insofar as Wage Order No. RO2-02-A is concerned. In fact, these allegations were not denied by public
respondents in their Comment. To begin with, there was no ambiguity in the provision of Wage Order RO2-02
as it provided in clear and categorical terms for an increase in statutory minimum wage of workers in the
region. Hence, the subsequent passage of RO2-02-A providing instead for an across the board increase in
wages did not clarify the earlier Order but amended the same. In truth, it changed the essence of the original
Order.
Petitioner clearly complied with Wage Order RO2-02 which provided for an increase in statutory minimum
wage rates for employees in Region II. It is not just to expect petitioner to interpret Wage RO2-02 to mean that
it granted an across the board increase as such interpretation is not sustained by its text. Indeed, the Regional
Wage Board had to amend Wage Order RO2-02 to clarify this alleged intent.
In sum, we hold that RO2-02-A is invalid for lack of public consultations and hearings and non-publication
in a newspaper of general circulation, in violation of Article 123 of the Labor Code. We likewise find that public
respondent Secretary of Labor committed grave abuse of discretion in upholding the findings of Regional
Director Ricardo S. Martinez, Sr. that petitioner violated Wage Order RO2-02.
26.
PRUBANKERS ASSOCIATION, petitioner, vs. PRUDENTIAL BANK & TRUST
COMPANY, respondent.
FACTS: On November 18, 1993, the Regional Tripartite Wages and Productivity Board of Region V issued
Wage Order No. RB 05-03 which provided for a Cost of Living Allowance (COLA) to workers in the private
sector who ha[d] rendered service for at least three (3) months before its effectivity, and for the same period
[t]hereafter, in the following categories: SEVENTEEN PESOS AND FIFTY CENTAVOS (P17.50) in the cities of
Naga and Legaspi;FIFTEEN PESOS AND FIFTY CENTAVOS (P15.50) in the municipalities of Tabaco,
Daraga, Pili and the city of Iriga; and TEN PESOS (P10.00) for all other areas in the Bicol Region.

Subsequently on November 23, 1993, the Regional Tripartite Wages and Productivity Board of Region
VII issued Wage Order No. RB VII-03, which directed the integration of the COLA mandated pursuant to Wage
Order No. RO VII-02-A into the basic pay of all workers. It also established an increase in the minimum wage
rates for all workers and employees in the private sector as follows: by Ten Pesos (P10.00) in the cities of
Cebu, Mandaue and Lapulapu; Five Pesos (P5.00) in the municipalities of Compostela, Liloan, Consolacion,
Cordova, Talisay, Minglanilla, Naga and the cities of Davao, Toledo, Dumaguete, Bais, Canlaon, and
Tagbilaran.

The petitioner then granted a COLA of P17.50 to its employees at its Naga Branch, the only branch
covered by Wage Order No. RB 5-03, and integrated the P150.00 per month COLA into the basic pay of its
rank-and-file employees at its Cebu, Mabolo and P. del Rosario branches, the branches covered by Wage
Order No. RB VII-03.

RespondentPrubankers Association wrote the petitioner requesting that the Labor Management
Committee be immediately convened to discuss and resolve the alleged wage distortion created in the salary
structure upon the implementation of the said wage orders. Respondent Association then demanded in the
Labor Management Committee meetings that the petitioner extend the application of the wage orders to its
employees outside Regions V and VII, claiming that the regional implementation of the said orders created a
wage distortion in the wage rates of petitioners employees nationwide. As the grievance could not be settled in
the said meetings, the parties agreed to submit the matter to voluntary arbitration. The Arbitration Committee
formed for that purpose was composed of the following: public respondent Froilan M. Bacungan as Chairman,
with Attys. Domingo T. Anonuevo and Emerico O. de Guzman as members. The issue presented before the
Committee was whether or not the banks separate and regional implementation of Wage Order No. 5-03 at its
Naga Branch and Wage Order No. VII-03 at its Cebu, Mabolo and P. del Rosario branches, created a wage
distortion in the bank nationwide.

ISSUE: Whether or not there exists a wage distortion within a region.

RULING: No, there was no wage distortion.

The law provides in Art. 124 in the Labor Code that wage distortion shall mean a situation where an
increase in prescribed wage results in the elimination or severe contraction of intentional quantitative
differences in wage or salary rates between and among employee groups in an establishment as to effectively
obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical
bases of differentiation.Wage distortion involves four elements:
1. An existing hierarchy of positions with corresponding salary rates
2. A significant change in the salary rate of a lower pay class without a concomitant increase in the
salary rate of a higher one
3. The elimination of the distinction between the two levels
4. The existence of the distortion in the same region of the country.
In the present case, it is clear that no wage distortion resulted when respondent implemented the subject
Wage Orders in the covered branches. In the said branches, there was an increase in the salary rates
of all pay classes.Furthermore, the hierarchy of positions based on skills, length of service and other logical
bases of differentiation was preserved. In other words, the quantitative difference in compensation between
different pay classes remained the same in all branches in the affected region. Petitioner argues that a wage
distortion exists because the implementation of the two Wage Orders has resulted in the discrepancy in the
compensation of employees of similar pay classification in different regions. Hence, petitioner maintains that,
as a result of the two Wage Orders, the employees in the affected regions have higher compensation than their
counterparts of the same level in other regions. Several tables are presented by petitioner to illustrate that the
employees in the regions covered by the Wage Orders are receiving more than their counterparts in the same
pay scale in other regions.Contrary to petitioners postulation, a disparity in wages between employees holding
similar positions but in different regions does not constitute wage distortion as contemplated by law. As
previously enunciated, it is the hierarchy of positions and the disparity of their corresponding wages and other
emoluments that are sought to be preserved by the concept of wage distortion. Put differently, a wage
distortion arises when a wage order engenders wage parity between employees in different rungs of the
organizational ladder of the same establishment. It bears emphasis that wage distortion involves a parity in the
salary rates of different pay classes which, as a result, eliminates the distinction between the different ranks in
the same region.

27. DOMINICO C. CONGSON, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION
FACTS: Petitioner is the registered owner of Southern Fishing Industry. Private respondents were hired on
various dates 3 by petition'er 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.
Furthermore, respondent company, per the petitioners request, were entitled to retrieve the tuna intestines and
liver as part of their compensation. 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. The petitioners resisted to the said deductions. The following week, the
respondents have replaced them with another new set of workers.

On 15 June 1990, private respondents filed a case against petitioner before the NLRC Sub-Regional
Arbitration Branch No. XI in General Santos City 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).

The labor arbiter rendered a decision assailing that the petitioners are illegally dismissed the respondents to be
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 P
502,865.00. The claims for overtime pay, holiday pay and rest day pay are, however, dismissed for lack of
factual basis and for reasons aforecited.

On appeal by petitioner, respondent NLRC found petitioner guilty of illegal dismissal. Hence, the present
recourse by petitioner.

ISSUE: Whether or not the retrieving the tuna intestines and liver is part of compensation.

RULING: No, it is not a part of the compensation.

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 as specified in appropriate
 regulations to be issued by the Secretary of Labor or as stipulated in a collective bargaining
agreement.

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 above cited provision of the
LaborCode. 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 informs 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.

28. EUFROCIO BERMISO, ET AL., petitioners, vs. HIJOS DE F. ESCAO, INC., ET AL., respondents.

FACTS: The Hijos de F. Escao, Inc., hereafter referred to as Escao or Company, is a domestic engaged in
the business of carrying or transporting passengers and goods by water for compensation within the
Philippines . .

The Katubsanan sa Mamumuo, hereafter called the Union or simply Katubsanan, is a labor organization duly
registered with the Department of Labor and with office address in Cebu City. It is composed mainly of laborers
from the Visayas and Mindanao and has respondent Jose Muaa and Vitaliano Sabay as its general president
and general treasurer, respectively.

The Sabay group was organized in 1947. Its members generally perform work similar to that done by laborers
of stevedoring and arrastre firms. They load and unload vessels in the port of Cebu and haul or transport
discharged cargo.

One of the carriers for whom the Sabay men regularly serve as stevedores is the Escao. Their relation had its
inception in 1947 when, through the representation made by Muaa and Sabay, Salvador Sala, general
manager of said carrier, permitted the Sabay group to do the work of loading and unloading its vessels to the
exclusion of all other persons. From the beginning the Company has not directly paid Muaa, Sabay or the
group any compensation for the loading or unloading services rendered by Sabay men. Neither has it received
any payment for the exclusive privilege enjoyed by the group.

Aside from Sabay, the group has a collector, a timekeeper, a paymaster, and several capataces and
subcapataces. In the hauling of the cargo, checkers or agents of the shippers and consignees accompany
them and look over their work.

Generally, only Sabay men are permitted to take part in this work. But when it is voluminous, the group, to
avoid delay, enlists the services of non-members. These recruits are treated as casual laborers and paid on
daily basis.

The amount collected from the shippers and consignees is considered as the gross income of the group. The
net income is then divided into equal shares in accordance with the sharing plan under which each common
laborers is entitled to one share depending on the lenght of membership and importance of the position held in
the group. This division of the group's income is done every Saturday and the shares received by the
participating members constitute their wages for the week.

Before the Minimum Wage Law (R. A. No. 602) went into effect, the number of hours each laborers worked
was not taken into account by the group. Even members who did not actually render any service were given
shares if their failure to work was found to have been due a reasonable cause. Certain records were made of
the disposition of the group's income but they, together with some payrolls, were destroyed by water when
Cebu was visited by a strong typhoon in 1951. After August 4, 1951, the share was given a fixed value: P0.39,
at first P0.40, later, and, finally, P0.50 per hour of work or service. Under this modified plan, if the computation
would result in wages falling short of the legal minimum because there were many laborers who worked, the
group collected additional charges from the shippers and consignees. If further payment was refused for the
reason that the work was delayed by the workers, the group covered the deficit from its so-called sinking fund
which was accumulated from the small undivided or invisible amounts remaining after each distribution of net
income.

ISSUE: W/N claimants are entitle to reinstatement, overtime pay, wage differentials, vacation and sick leave,
free hospitalization, accident insurance?

HELD: The court below also found that the claimants failed to establish any reasonable basis for all their
claims except that for their reinstatement and, therefore, denied them for lack of merit. Claims for overtime pay,
wage differentials, maximum load of 50 kilos, minimum wage of P5.00 a day were dismissed. So were the
claims for vacation and sick leave, free hospitalization, accident insurance.

There is no question that the work of stevedoring was undertaken by the laborers, not in their individual
capacities, but as a group. The leadership must be paid for and it was not shown that the head of the groups
got the lion's share of the cost of the service rendered. Under the circumstances we are not prepared to say
that the provision of law on direct payment of wages has been violated. The lower court did not find sufficient
evidence to show that racketeering was employed by the leaders. If any existed the remedy can not be found
in this court; it is for the group or organize into a closely knitted union which would secure the privileges that
the selves who would not exploit them.

Lastly, the respondent Hijos de F. Escao did not pay for the stevedoring charges. These were collected by the
group from the shippers themselves, without the intervention of the respondent Escao.

We also find no ground for requiring the respondent Hijos de F. Escao to pay back wages. The latter
respondent did not deal with the petitioners individually, entering into a contract of employment with them. Said
respondent dealt with the group thru its leaders. If the group, thru its leaders, did not allow the petitioners to
work and share in the price paid therefor, the one responsible is not the respondent Escao but the leader thru
whom the group itself made the contract for work and apportioned the time of work for each member and the
pay therefor.

29. ERNESTO M. APODACA, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, JOSE M. MIRASOL and INTRANS PHILS.,
INC., respondents.

FACTS: Petitioner was employed in respondent corporation. On August 28, 1985, respondent Jose M. Mirasol
persuaded petitioner to subscribe to 1,500 shares of respondent corporation at P100.00 per share or a total of
P150,000.00. He made an initial payment of P37,500.00. On September 1, 1975, petitioner was appointed
President and General Manager of the respondent corporation. However, on January 2, 1986, he resigned.

On December 19, 1986, petitioner instituted with the NLRC a complaint against private respondents for the
payment of his unpaid wages, his cost of living allowance, the balance of his gasoline and representation
expenses and his bonus compensation for 1986. Petitioner and private respondents submitted their position
papers to the labor arbiter. Private respondents admitted that there is due to petitioner the amount of
P17,060.07 but this was applied to the unpaid balance of his subscription in the amount of P95,439.93.
Petitioner questioned the set-off alleging that there was no call or notice for the payment of the unpaid
subscription and that, accordingly, the alleged obligation is not enforceable.

In a decision dated April 28, 1987, the labor arbiter sustained the claim of petitioner for P17,060.07 on the
ground that the employer has no right to withhold payment of wages already earned under Article 103 of the
Labor Code. Upon the appeal of the private respondents to public respondent NLRC, the decision of the labor
arbiter was reversed in a decision dated September 18, 1987. The NLRC held that a stockholder who fails to
pay his unpaid subscription on call becomes a debtor of the corporation and that the set-off of said obligation
against the wages and others due to petitioner is not contrary to law, morals and public policy.
Hence, the instant petition.

ISSUE: W/N Does the National Labor Relations Commission (NLRC) have jurisdiction to resolve a claim for
non-payment of stock subscriptions to a corporation? Assuming that it has, can an obligation arising therefrom
be offset against a money claim of an employee against the employer?

HELD: Firstly, the NLRC has no jurisdiction to determine such intra-corporate dispute between the stockholder
and the corporation as in the matter of unpaid subscriptions. This controversy is within the exclusive jurisdiction
of the Securities and Exchange Commission. 1

Secondly, assuming arguendo that the NLRC may exercise jurisdiction over the said subject matter under the
circumstances of this case, the unpaid subscriptions are not due and payable until a call is made by the
corporation for payment. 2 Private respondents have not presented a resolution of the board of directors of
respondent corporation calling for the payment of the unpaid subscriptions. It does not even appear that a
notice of such call has been sent to petitioner by the respondent corporation.

Lastly, assuming further that there was a call for payment of the unpaid subscription, the NLRC cannot validly
set it off against the wages and other benefits due petitioner. Article 113 of the Labor Code allows such a
deduction from the wages of the employees by the employer, only in three instances, to wit:

ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make any
deduction from the wages of his employees, except:

(a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense
the employer for the amount paid by him as premium on the insurance;

(b) For union dues, in cases where the right of the worker or his union to checkoff has been recognized by the
employer or authorized in writing by the individual worker concerned; and

4
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.

Judgment is hereby rendered ordering private respondents to pay petitioner the amount of P17,060.07 plus
legal interest computed from the time of the filing of the complaint.

30. DENTECH MANUFACTURING CORPORATION and JACINTO LEDESMA in his capacity as General
Manager, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, CCLU, BENJAMIN MARBELLA, ARMANDO TORNO,
JUANITO TAJAN, JR. and JOEL TORNO, respondents.

FACTS: The herein petitioner Dentech Manufacturing Corporation is a domestic corporation organized under
Philippine laws. Before the firm became a corporate entity, it was known as the J.L. Ledesma Enterprises.

The herein private respondents Benjamin Marbella, Armando Torno, Juanito Tajan, Jr. and Joel Torno are
members of the Confederation of Citizens Labor Union, a labor organization registered with the Department of
Labor and Employment. They used to be the employees of the petitioner firm, working therein as welders,
upholsterers and painters. They were already employed with the company when it was still a sole
proprietorship. They were dismissed from the firm beginning February 14, 1985.

On June 26, 1985, the private respondents filed a Complaint with the arbitration branch of the respondent
National Labor Relations Commission (NLRC) against the petitioners for, among others, illegal dismissal and
violation of Presidential Decree No. 851.1 They were originally joined by another employee, one Raymundo
Labarda, who later withdrew his Complaint.
At first, they only sought the payment of their 13th month pay under Presidential Decree No. 851 as well as
their separation pay, and the refund of the cash bond they filed with the company at the start of their
employment. Later on, they sought their reinstatement as well as the payment of their 13th month pay and
service incentive leave pay, and separation pay in the event that they are not reinstated.

On the other hand, the petitioners alleged that the private respondents abandoned their work without informing
the company about their reasons for doing so and that, accordingly, the private respondents are not entitled to
service incentive leave pay and separation pay.

The petitioners also argued that the private respondents are not entitled to a 13th month pay.

Thereafter, the labor arbiter assigned to the case rendered a Decision hereby orderING the reinstatement of
complainants and complainants are entitled to receive from respondents at least the unprescribed 13th month
pay for the last three years based on their uncontroverted pleadings. This order includes the money value of
the service incentive leave pay of complainants and the cash bond ... .

Premises considered, judgment is hereby rendered ordering respondents to reinstate complainants to their
former positions, without backwages and to pay them the following amounts

1. Benjamin Marbella - P3,921.00; 2. Armando Torno - 3,828.00; 3. Juanito Tajan Jr. - 3,270.00; 4. Joel Torno -
878.00= P1 1,897.00

Both parties filed their respective appeals with the NLRC. In a Resolution dated November 4,1987, the Third
Division of the NLRC affirmed the Decision of the labor arbiter.

On January 29, 1988, the petitioners elevated the case to this Court by way of the instant Petition.

ISSUE: W/N RESPONDENTS ARE ENTITLED TO REFUND OF THE CASH BONDS AS IT IS PROHIBITED
UNDER ART. 114 OF LABOR CODE? YES.

HELD: Presidential Decree No. 851 was signed into law in 1975 by then President Ferdinand Marcos. Under
the original provisions of Section 1 thereof, all employers are required to pay all their employees receiving
a basic salary of not more than Pl,000.00 a month, regardless of the nature of their employment, a 13th month
pay not later than December 24 of every year. Under Section 3 of the rules and regulations implementing said
Presidential Decree financially distressed employers, i., e., those currently incurring substantial losses, are not
covered by the Decree. Section 7 thereof requires, however, that such distressed employers must obtain the
prior authorization of the Secretary of Labor and Employment before they may qualify for such exemption.

From the foregoing, it clearly appears that the petitioners have no basis to claim that the company is exempted
from complying with the pertinent provisions of the law relating to the payment of 13th month compensation.

The refund of the cash bond filed by the private respondents is in order. Article 114 of the Labor Code prohibits
an employer from requiting his employees to file a cash bond or to make deposits, subject to certain
exceptions, to wit-

Art. 114. Deposits for loss or damage.- No employer shall require his worker to make deposits from which
deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment
supplied by the employer, except when the employer is engaged in such trades, occupations or business
where the practice of making deductions or requiring deposits is a recognized one, or is necessary or desirable
as determined by the Secretary of Labor in appropriate rules and regulations.

The petitioners have not satisfactorily disputed the applicability of this provision of the Labor Code to the case
at bar. Considering further that the petitioners failed to show that the company is authorized by law to require
the private respondents to file the cash bond in question, the refund thereof is in order.
The allegation of the petitioners to the effect that the proceeds of the cash bond had already been given to a
certain carinderia to pay for the accounts of the private respondents therein does not merit serious
consideration. As correctly observed by the Solicitor General, no evidence or receipt has been shown to prove
such payment.