G.R. No.

L-1206 October 30, 1947

THE MANILA ELECTRIC COMPANY, petitioner,
vs.
THE PUBLIC UTILITIES EMPLOYEES' ASSOCIATION, respondent.

Facts:
This is an appeal by certiorari under Rule 44 of the Rules of Court interposed by the petitioner
Manila Electric Company against the decision of July 15, 1946 of the Court of Industrial Relations,
which reads as follows:
Although the practice of the company, according to the manifestations of counsel for
said company, has been to grant one day vacationwith pay to every workingman who had
worked for seven consecutivedays including Sundays, the Court considers justified the
oppositionpresented by the workingmen to the effect that they need Sundays and holidays
for the observance of their religion and for rest. The Court, therefore, orders the respondent
company to pay 50 per cent increase for overtime work done on ordinary days and 50 per
cent increase for work done during Sundays and legal holidays irrespective of the number
of days they work during the week.
The appellant contends that the said decision of the Court of Industrial Relations is against the
provision of section 4, Commonwealth Act No. 444, which reads as follows:
No person, firm, or corporation, business establishment or place or center of labor
shall compel an employee or laborer to work during Sundays and legal holidays, unless he
is paid an additional sum of at least twenty-five per centum of his regular
remuneration: Provided, however, Thast this prohibition shall not apply to public utilities
performing some public service such as supplying gas, electricity, power, water, or
providing means of transportation or communication.

Issue:
W/N the employer engaged in providing public utility can compel its employees to work during
holidays or Sundays without paying them extra-compensation.

Ruling:
The decision of the Court of Industrial Relations is erroneous od contrary to the clear and express
provision of the above quoted provisions. The power of the Court to settle industrial disputes
between capital and labor, which include the fixing of wages of employees or laborers, granted by
the general provisions of section 1 of Commonwealth Act No. 103, has been restricted by the
above quoted special provisions of Commonwealth Act No. 444, in the sense that public utilities
supplying electricity, gas, power, water, or providing means of transportation or communication
may compel their employees or laborers to work during Sundays and legal holidays without paying
them an additional compensation of not less than 25 per cent of their regular remuneration on said
days.
Since the provisions of the above quoted section 4, are plain and unambiguous and convey a clear
and definite meaning, there is no need of resorting to the rules of statutory interpretation or
construction in order to determine the intention of the Legislature. Said section 1 consists of two
parts: the first, which is the enactment clause, prohibits a person, firm or corporation, business
establishment, or place or center of labor from compelling an employee or laborer towork during
Sundays and legal holidays, unless the former pays thelatter an additional sum of at least twenty
five per centum of his regular remuneration; and the second part, which is an exception,exempts
public utilities performing some public service, such assupplying gas, electricity, power, water or
providing means oftransportation or communication, from the prohibition establishedin the
enactment clause. As the appellant is a public utility that supplies the electricity and provides
means of transportation to the public, it is evident that the appellant is exempt from the
qualifiedprohibition established in the enactment clause, and may compel its employees or
laborers to work during Sundays and legal holidays without paying them said extra compensation.
[G.R. No. L-48437. September 30, 1986.]

MANTRADE/FMMC DIVISION EMPLOYEES AND WORKERS UNION (represented by

PHILIPPINE SOCIAL SECURITY LABOR UNION — PSSLU Fed. — TUCP), Petitioner, v.
ARBITRATOR FROILAN M. BACUNGAN and MANTRADE DEVELOPMENT
CORPORATION,Respondents.

Facts:
1. PetitonerMantrade Union files a petition for certiorari and mandamus against the
respondent Voluntary Arbitrator Bancungan and Mantrade Development.
2. The voluntary arbitrator ruled that “Mantrade Development Corporation is not under legal
obligation to pay holiday pay (as provided for in Article 94 of the Labor Code in the third
official Department of Labor edition) to its monthly paid employees who are uniformly paid
by the month, irrespective of the number of working days therein, with a salary of not less
than the statutory or established minimum wage.”
3. The respondent raised its objection that the petitioner is barred from pursuing the present
action in view of Article 263 of the Labor Code, which provides in part that "voluntary
arbitration awards or decisions shall be final, inappealable, and executory," as well as the
rules implementing the same; the pertinent provision of the Collective Bargaining
Agreement between petitioner and respondent corporation; and Article 2044 of the Civil
Code which provides that "any stipulation that the arbitrators’ award or decision shall be
final, is valid, without prejudice to Articles 2038, 2039, and 2040.." (Respondent corporation
further contends that the special civil action of certiorari does not lie because respondent
arbitrator is not an "officer exercising judicial functions" within the contemplation of Rule 65,
Section 1, of the Rules of Court; that the instant petition raises an error of judgment on the
part of respondent arbitrator and not an error of jurisdiction; that it prays for the annulment
of certain rules and regulations issued by the Department of Labor, not for the annulment of
the voluntary arbitration proceedings; and that appeal by certiorari under Section 29 of the
Arbitration Law, Republic Act No. 876, is not applicable to the case at bar because
arbitration in labor disputes is expressly excluded by Section 3 of said law.)

Issue: Whether or not Mantrade Development Corporation is under legal obligation to pay
holiday pay.

Held: Yes. Article 94 of the Labor Code, as amended by P.D. 850, provides:chanrob1es virtual
1aw library

‘Art. 94. Right to holiday pay. — (a) Every worker shall be paid his regular daily wage during
regular holidays, except in retail and service establishments regularly employing less than ten
(10) workers . . .’

"The coverage and scope of exclusion of the Labor Code’s holiday pay provisions is spelled
out under Article 82 thereof which reads:chanrob1es virtual 1aw library

‘Art. 82. Coverage. — The provision of this Title shall apply to employees in all establishments
and undertakings, whether for profit or not, but not to government employees, managerial
employees, field personnel, members of the family of the employer who are dependent on him
for support, domestic helpers, persons, in the personal service of another, and workers who
are paid by results as determined by the Secretary of Labor in appropriate regulations.’

From the above-cited provisions, it is clear that monthly paid employees are not excluded
from the benefits of holiday pay. However, the implementing rules on holiday pay promulgated
by the then Secretary of Labor excludes monthly paid employees from the said benefits by
inserting under Rule IV, Book III of the implementing rules, Section 2, which provides that:
‘employees who are uniformly paid by the month, irrespective of the number of working days
therein, with a salary of not less than the statutory or established minimum wage shall be
presumed to be paid for all days in the month whether worked or not.’"

WHEREFORE, the questioned decision of respondent arbitrator is SET ASIDE and

respondent corporation is ordered to GRANT holiday pay to its monthly salaried employees. No
costs.
G.R. No. 118289 December 13, 1999
TRANS-ASIA PHILS. EMPLOYEES ASSOCIATION (TAPEA) and ARNEL GALVEZ, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, TRANS-ASIA (PHILS.) and ERNESTO S. DE
CASTRO, respondents.
Facts:
On 7 July 1988, Trans-Asia Philippines Employees Association (TAPEA) entered into a Collective
Bargaining Agreement (“CBA”) with their employer. The CBA provided for, among others, the
payment of holiday pay with a stipulation that if an employee is permitted to work on a legal
holiday, the said employee will receive a salary equivalent to 200% of the regular daily wage plus a
60% premium pay.
Despite the conclusion of the CBA, however, an issue was still left unresolved with regard to the
claim of TAPEA for payment of holiday pay. Since the parties were not able to arrive at an
amicable settlement despite the conciliation meetings, TAPEA, led by its President, petitioner Arnie
Galvez, filed a complaint for the payment of their holiday pay in arrears. On 18 September 1988,
petitioners amended their complaint to include the payment of holiday pay for the duration of the
recently concluded CBA (from 1988 to 1991), unfair labor practice, damages and attorney’s fees.
In their Position Paper, TAPEA contended that their claim for holiday pay in arrears is based on the
non-inclusion of the same in their monthly pay.
In response, Trans-Asia contended that it has always honored the labor law provisions on holiday
pay by incorporating the same in the payment of the monthly salaries of its employees. In support
of this claim, Trans-Asia pointed out that it has long been the standing practice of the company to
use the divisor of “286” days in computing for its employees’ overtime pay and daily rate
deductions for absences.
52 x 44 / 8 = 286 days
Where: 52 = number of weeks in a year
44 = number of work hours per week
8 = number of work hours per day
Trans-Asia further clarified that the “286” days divisor already takes into account the ten (10)
regular holidays in a year since it only subtracts from the 365 calendar days the unworked and
unpaid 52 Sundays and 26 Saturdays (employees are required to work half-day during Saturdays).
Trans-Asia claimed that if the ten (10) regular holidays were not included in the computation of
their employees’ monthly salary, the divisor which they would have used would only be 277 days
which is arrived at by subtracting 52 Sundays, 26 Saturdays and the 10 legal holidays from 365
calendar days.
Labor Arbiter and NLRC: Dismissed the complaint for lack of merit.
Issue: Whether the Trans-Asia’s use of 286 days as divisor is invalid.
Held:
No, it is not in such a way that the Supreme Court adjusted the divisor.
Trans-Asia’s inclusion of holiday pay in petitioners’ monthly salary is clearly established by its
consistent use of the divisor of “286” days in the computation of its employees’ benefits and
deductions. The use by Trans-Asia of the “286” days divisor was never disputed by petitioners. A
simple application of mathematics would reveal that the ten (10) legal holidays in a year are
already accounted for with the use of the said divisor. As explained by Trans-Asia, if one is to
deduct the unworked 52 Sundays and 26 Saturdays (derived by dividing 52 Saturdays in half since
petitioners are required to work half-day on Saturdays) from the 365 calendar days in a year, the
resulting divisor would be 286 days (should actually be 287 days). Since the ten (10) legal holidays
were never included in subtracting the unworked and unpaid days in a calendar year, the only
logical conclusion would be that the payment for holiday pay is already incorporated into the said
divisor.
However, SC held that that there is a need to adjust the divisor used by Trans-Asia to 287 days,
instead of only 286 days, in order to properly account for the entirety of regular holidays and
special days in a year as prescribed by Executive Order No. 203 in relation to Section 6 of the
Rules Implementing Republic Act 6727.
Sec. 1 of Executive Order No. 203 provides:
Sec. 1. Unless otherwise modified by law, order or proclamation, the following regular holidays and
special days shall be observed in the country:
A. Regular Holidays
New Year’s Day — January 1
Maundy Thursday — Movable Date
Good Friday — Movable Date
Araw ng Kagitingan — April 9
(Bataan and Corregidor Day)
Labor Day — May 1
Independence Day — June 12
National Heroes Day — Last Sunday of August
Bonifacio Day — November 30
Christmas Day — December 25
Rizal Day — December 30
B. Nationwide Special Days
All Saints Day — November 1
Last Day of the Year — December 31
On the other hand, Section 6 of the Implementing Rules and Regulations of Republic Act No. 6727
provides:
Sec. 6. Suggested Formula in Determining the Equivalent Monthly Statutory Minimum Wage
Rates. — Without prejudice from existing company practices, agreements or policies, the following
formulas may be used as guides in determining the equivalent monthly statutory minimum wage
rates:
xxxxxxxxx
d) For those who do not work and are not considered paid on Saturdays and Sundays or rest days:
Equivalent Monthly = Average Daily Wage Rate x 262 days / 12 months
Where 262 days =
250 days — Ordinary working days
10 days — Regular holidays
2 days — Special days (If considered paid; if actually worked, this is equivalent to 2.6
Based on the above, the proper divisor that should be used for a situation wherein the
employees do not work and are not considered paid on Saturdays and Sundays or rest
days is 262 days. In the present case, since the employees of Trans-Asia are required to work
half-day on Saturdays, 26 days should be added to the divisor of 262 days, thus, resulting to 288
days. However, due to the fact that the rest days of petitioners fall on a Sunday, the number of
unworked but paid legal holidays should be reduced to nine (9), instead of ten (10), since one legal
holiday under E.O. No. 203 always falls on the last Sunday of August, National Heroes Day. Thus,
the divisor that should be used in the present case should be 287 days.
However, the Court notes that if the divisor is increased to 287 days, the resulting daily rate for
purposes of overtime pay, holiday pay and conversions of accumulated leaves would be
diminished. To illustrate, if an employee receives P8,000.00 as his monthly salary, his daily rate
would be P334.49, computed as follows:
P8,000.00 x 12 months / 287 days = P334.49/day
Whereas if the divisor used is only 286 days, the employee’s daily rate would be P335.66,
computed as follows:
P8,000.00 x 12 months / 286 days = P335.66/day
Clearly, this muddled situation would be violative of the proscription on the non-diminution of
benefits under Section 100 of the Labor Code. On the other hand, the use of the divisor of 287
days would be to the advantage of petitioners if it is used for purposes of computing for deductions
due to the employee’s absences. In view of this situation, the Court rules that the adjusted divisor
of 287 days should only be used by Trans-Asia for computations which would be advantageous to
petitioners (i.e., deductions for absences), and not for computations which would diminish the
existing benefits of the employees (i.e., overtime pay, holiday pay and leave conversions.)
SC Decision:
WHEREFORE, the Resolutions of the NLRC, dated 23 November 1993 and 13 September 1994,
are hereby AFFIRMED with the MODIFICATION that Trans-Asia is hereby ordered to adjust its
divisor to 287 days and pay the resulting holiday pay in arrears brought about by this adjustment
starting from 30 June 1987, the date of effectivity of E.O. No. 203.
DECEMBER 20, 2016 ~ VBDIAZ
G.R. No. 114698 July 3, 1995
Wellington Investment vs Trajano

Facts:
Upon an inspection of the Wellington Flour Mills, owned and operated by petitioner, the latter was
accused of non-payment of regular holidays falling on a Sunday for monthly-paid employees.
Petitioner’s Arguments:
1. Monthly salary of the monthly-paid employees already includes holiday pay for all the regular
holidays.
2. To pay for the extra days (regular holidays on a Sunday), as compelled by the Order of the
DOLE, it is in effect being compelled to pay for alleged extra working days.
DOLE’s Contentions:
1. Regular holidays falling on Sundays have precluded the enjoyment by the employees of a non-
working day and the employees consequently have to work for additional days.
2. When a regular holiday falls on a Sunday, an extra or additional working day is created and the
employer has the obligation to pay its employees for the extra day.
Issue: Whether or not a monthly-paid employee is entitled to an additional pay aside from his
usual holiday pay, whenever a regular holiday falls on a Sunday.
Held:
No.
To agree with DOLE’s theory would increase the number of days in a year, instead of 365 days, as
basis for computation of salary for monthly-paid employees. There is no provision of law requiring
employers to make adjustments in the monthly salary rate set by them to take account of the legal
holiday falling on Sundays or to reckon a year at more than 365 days.

DECEMBER 20, 2016 ~ VBDIAZ

G.R. No. 146775. January 30, 2002
San Miguel Corporation vs Court of Appeals

Facts:
Upon a routine inspection done by the Department of Labor and Employment in the premises of
San Miguel Corporation in Iligan City, it was discovered that there was underpayment by SMC of
regular Muslim Holiday pay to its employees. SMC received the inspection result which later on
contested such thus DOLE conducted summary hearings. Both DOLE Regional Office and
National Office ruled against SMC ordering the latter to consider Muslim Holidays as regular
holidays and to pay its Muslim and non-Muslim employees holiday pay.
Thus, this appeal.

Issue:
Whether or not the Muslim holiday pay is applicable to employees regardless of faith or religion

Held:
Yes.
Although Article 3 of Presidential Decree 1083 (Code of Muslim Personal Laws) provides that the
provisions of the code shall be applicable only to Muslims, on which the petitioner based its
defense, the same article provides further that nothing in the code shall be construed to the
prejudice of non-Muslims. The Supreme Court stated that there should be no distinction between
Muslims and non-Muslims as regards the payment of benefits for Muslim Holidays. The Court,
quoting the Court of Appeals, “assuming that the SMC is correct, then Muslims throughout the
Philippines are also not entitled to holiday pays on Christian holidays declared by law. We must
remind (SMC) that wages and other emoluments granted by law are determined not on the basis
of the worker’s faith or religion”, finds against the petitioner, and dismissed the petition.
MAKATI HABERDASHERY, INC vs NLRC
G.R. Nos. 83380-81
November 15, 1989
Petitioner(s): MAKATI HABERDASHERY, INC., JORGE LEDESMA and CECILIO G.
INOCENCIO
Respondent(s): NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA

(Service Incentive Leave)

Facts:
Individual complainants have been working for Makati Haberdashery Inc. as tailors, seamsters,
sewers, basters and plantsadoras. They were paid on a piece-rate basis except two who were paid
on a monthly basis. In addition to their piece-rate, they were given daily allowance of P3.00
provided they report for work before 9:30am everyday. They were required to work from or before
9:30am up to 6-7pm from Monday to Saturday and during peak periods even on Sundays and
holidays.

The Sandigan ng Manggagawang Pilipino filed a complaint for underpayment of the basic
wage, underpayment of living allowance, nonpayment of overtime work, nonpayment of holiday
pay and other money claims.

The Labor Arbiter rendered judgment in favor of complainants which the NLRC affirmed.
Petitioner urged that the NLRC erred in concluding that an employer-employee relationship
existed between the petitioners and the workers.

Issue: Whether or not employees paid on piece rate are entitled to service incentive pay.

Held: NO, fall under exceptions set forth in the implementing rules (this will be reexamined under
Article 101). As to the service incentive leave pay: as piece-rate workers being paid at a fixed
amount for performing work irrespective of time consumed in the performance thereof, they fall
under the exceptions stated in Sec1(d), Rule V, IRR, Book III, Labor Code.

Service Incentive Leave

SECTION 1. Coverage. — This rule shall apply to all employees except:
(d) Field personnel and other employees whose performance is unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those who
are paid a fixed amount for performing work irrespective of the time consumed in the performance
thereof;
Case Title: Labor Congress of the Philippines v NLRC, Empire Food Products et al.
GR No.: 123938
Date: May 21, 1998
Petitioner: LABOR CONGRESS OF THE PHILIPPINES (LCP) for and in behalf of its
members, ANA MARIE OCAMPO, MARY INTAL, ANNABEL CARESO,
MARLENE MELQIADES, IRENE JACINTO, NANCY GARCIA, IMELDA
SARMIENTO, LENITA VIRAY
Respondent: NATIONAL LABOR RELATIONS COMMISSION, EMPIRE FOOD PRODUCTS,
its Proprietor/President & Manager, MR. GONZALO KEHYENG and MRS.
EVELYN KEHYENG
Ponente: Davide Jr.
(Service Incentive Leave)

Facts:
The 99 petitioners in this case were rank-and-file employees of Empire Food Products. They
filed complaints for money claims and violations of Labor Standards Laws. They are paid on a
piece-rate basis, working as repackers, they were paid a certain amount for every thousand pieces
of cheese curls and other products repacked. They are seeking for backwages and other statutory
benefits from the respondent.

Issue:
Whether or not the Petitioners are entitled to service incentive leave.

Held: Yes. Petitioner employees are pakyao or piece workers does not imply that they are not
regular employees entitled to reinstatement. Private respondent Empire Food Products, Inc. is a
food and fruit processing company. Private respondents, moreover, in considering petitioners
employment to have been terminated by abandonment, violated their rights to security of tenure
and constitutional right to due process in not even serving them with a written notice of such
termination.[12] Section 2, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code
provides:

SEC. 2. Notice of Dismissal. - Any employer who seeks to dismiss a worker shall furnish him a
written notice stating the particular acts or omission constituting the grounds for his dismissal.In
cases of abandonment of work, the notice shall be served at the workers last known address.

Petitioners are therefore entitled to reinstatement with full back wages pursuant to Article 279
of the Labor Code, as amended by R.A. No. 6715.

The court declared that the petitioners are entitled to;

Holiday Pay
Premium Pay
13th Month Pay
Service Incentive Leave

Three (3) factors lead us to conclude that petitioners, although piece-rate workers, were regular
employees of private respondents. First, as to the nature of petitioners tasks, their job of repacking
snack food was necessary or desirable in the usual business of private respondents, who were
engaged in the manufacture and selling of such food products; second, petitioners worked for
private respondents throughout the year, their employment not having been dependent on a
specific project or season; and third, the length of time[16] that petitioners worked for private
respondents. Thus, while petitioners mode of compensation was on a per piece basis, the status
and nature of their employment was that of regular employees.
Sentinel Security Agency Inc. v. NLRC

Facts: The complainants were employees of Sentinel Security Agency. They were assigned to
render guard duty at the premises of Philippine American Life Insurance Company at Jones
Avenue, Cebu City. Philippine American Life Insurance Company, the Client, sent notice to replace
all the security guards in the company's offices at the cities of Cebu, Bacolod, Cagayan de Oro,
Dipolog and Ilagan. Agency issued a Relief and Transfer order replacing the complainants as
guards of the Client and for then to be re-assigned to other clients. As ordered, the complainants
reported, but were never given new assignments but instead they were told that they were
replaced because they are already old. The complainants prayed for payment of separation pay
and other labor standard benefits.

Issue: Can PHILAM be made liable for the payment of backwages and separation pay of the
illegally dismissed employees?

Ruling: Yes. Although an indirect employer should not be made liable without a finding that it had
committed or conspired in the illegal dismissal (Rosewood ruling), in the case at bar the
exoneration of PHILAM was not included in the DISPOSITIVE PORTION of the Court’s decision
despite the fact that it was clearly stated in the body of the decision that they were exonerated.
The decision did not completely exonerate PHILAM which, as an indirect employer is solidarily
liable with Sentinel for the complainants’ unpaid service incentive leave pursuant to Art. 106, 107
and 109 of the Labor Code. Should the contractor fail to pay the wages of its employees in
accordance with law, the indirect employer is jointly and severally liable with the contractor, but
such responsibility should be understood to be limited to the extent of work performed under the
contract, in the same manner and extent that he is liable to the employees directly employed by
him.

The transfer of an employee involves a lateral movement within the business or operation of the
employer without demotion in rank, diminution of benefits or, worse, suspension ofemployment
even if temporary. The recall an transfer of security guards require reassignment to another post
and are not equivalent to their placement on floating status. Off-detailing security guards for
a reasonable period of six months is justified only in bona fide cases of suspension of operation
business or undertaking.
The Client did not, as it could not illegally dismiss the complainants. Thus, it should not be held
liable for separation pay and back wages. But even if the Client is not responsible for the illegal
dismissal of the complainants, it is jointly and severally liable with the Agency forthe complainants'
service incentive leave pay.
As the indirect employer the Client is jointly and severally liable with the contractor for the workers'
wages in the same manner and extent that it is liable to its direct employees. This liability of the
Client covers the payment of the service incentive leave pay of thecomplainants during the time
they were posted at the Cebu branch of the Client. As service had been rendered the liability
accrued even if the complainants were eventually transferred or reassigned.
AUTO BUS TRANSPORT SYSTEM INC VS BAUTISTA
G.R. No. 156367
May 16, 2005
Petitioner(s): AUTO BUS TRANSPORT SYSTEMS, INC
Respondent(s): ANTONIO BAUTISTA
Ponente: J.CHICO-NAZARIO

Facts:
Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc.
(Autobus), as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio-
Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis,
7% of the total gross income per travel, on a twice a month basis. While he was driving he
accidentally bumped the rear portion of Autobus No. 124. Respondent averred that the accident
happened because he was compelled by the management to go back to Roxas, Isabela, although
he had not slept for almost 24 hours, as he had just arrived in Manila from Roxas, Isabela.
Respondent further alleged that he was not allowed to work until he fully paid the amount of
P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged buses and that
despite respondent’s pleas for reconsideration, the same was ignored by management. After a
month, management sent him a letter of termination. Bautista instituted a Complaint for Illegal
Dismissal with Money Claims for nonpayment of 13thmonth pay and service incentive leave pay
against Autobus.

Issue: Whether Bautista is entitled to the grant of service incentive leave pay.

Held:
Bautista is entitled to Service Incentive Leave. The Supreme Court emphasized that it does not
mean that just because an employee is paid on commission basis he is already barred to receive
service incentive leave pay.

The question actually boils down to whether or not Bautista is a field employee. According to
Article 82 of the Labor Code, ‘field personnel shall refer to non-agricultural employees who
regularly perform their duties away from the principal place of business or branch office of the
employer and whose actual hours of work in the field cannot be determined with reasonable
certainty.

As a general rule, field personnel are those whose performance of their job/service is not
supervised by the employer or his representative, the workplace being away from the principal
office and whose hours and days of work cannot be determined with reasonable certainty; hence,
they are paid specific amount for rendering specific service or performing specific work. If required
to be at specific places at specific times, employees including drivers cannot be said to be field
personnel despite the fact that they are performing work away from the principal office of the
employee.

Certainly, Bautista is not a field employee. He has a specific route to traverse as a bus driver and
that is a specific place that he needs to be at work. There are inspectors hired by Auto Bus to
constantly check him. There are inspectors in bus stops who inspects the passengers, the
punched tickets, and the driver. Therefore he is definitely supervised though he is away from the
Auto Bus main office.

PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY, petitioner vs. NATIONAL LABOR

RELATIONSCOMMISSION, and ODIN SECURITY AGENCE, respondents.

FACTS:
Petitioner is a government-owned and controlled corporation which entered into a contract withthe
Odin Security Agency for security services of its Iloilo Fishing Port Complex. During the effectivity
ofthe said security agreement, the private respondent requested the petitioner to adjust the
contract ratein view of the implementatioon of Wage Order No. 6. Several requests for the
adjustment have beenmade but all were ignored by the petitioner. Thus, private respondent led a
complaint for unpaidamount of re-adjustment rate under Wage Order No. 6 together with salary
differentials.
Petitioner leda motion to dismiss on the following grounds: The Commission has no jurisdiction
over the case; thesecurity guards have no legal personality to sue or be sued; and the action
involves interpretation ofcontract which it has no authority. The Labor Arbiter dismissed the
complaint stating that the petitioneris a government-owned and controlled corporation which would
be placed under the jurisdiction of theCivil Service Commission and not under the NLRC.
The NLRC, on appeal, set aside the order and entereda decision granting reliefs to the private
respondent.

ISSUE:
Whether an indirect employer is bound by the rulings of NLRC

HELD:
The guards are not employees of the petitioner as the contract of services explicitly states
such.Being no employer-employee relationship between the petitioner and the security
guards, thejurisdiction of the Civil Service Commission may not be invoked in this case. The
liabilities of thepetitioner, notwithstanding that it is a government agency, is joint and solidary with
that of thecontractor which the Labor Code specifically provides that the term employer includes
any person actingdirectly and indirectly in the interest of an employer in relation to an employee
and shall include theGovernment and all its branches, subdivisions, and instrumentalities. Settled
is the rule that in jobcontracting, the petitioner as principal is jointly and severally liable with the
contractor on the paymentof unpaid wages.

Chavez vs NLRC, Supreme Packaging Inc, and Alvin Lee

GR No. 146530 January 17, 2005
Facts:
 The respondent company, Supreme Packaging Inc., is in the business of manufacturing cartons
and other packaging materials for export and distribution.
 The petitioner, Pedro Chavez, was a truck driver (from October 25, 1984) tasked to deliver the
respondent company’s products to its various customers.
 The respondent furnished petitioner with a truck that all deliveries were made in accordance
with the routing slips issued by the respondent company indicating the order, time and urgency
of delivery.
 On 1992, the petitioner expressed his desire to avail the benefits that a regular employee were
receiving such as overtime pay, nightshift differential pay, and 13th month pay, among others
but nothing was complied.
 On February 20, 1995, petitioner filed a complaint for regularization with the Regional
Arbitration Branch No. III of NLRC in San Fernando, Pampanga. Before the case could be
heard, respondent terminated the services of the petitioner.
 Hence, the petitioner filed an amended complaint for illegal dismissal, unfair labor practice and
non-payment of overtime pay, nightshift differential, and 13th month pay, among others.

Issue: Whether there exists an employer-employee relationship?

Held:
 Yes an employer-employee do exist. The elements to determine the existence of an
employment relationship are: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the employer’s power to control the
employee’s conduct. The most important element is the employer’s control of the employee’s
conduct, not only as to the result of the work to be done, but also as to the means and methods
to accomplish it. First. Undeniably, it was the respondents who engaged the services of the
petitioner without the intervention of a third party. Second. Wages are defined as “remuneration
or earnings, however designated, capable of being expressed in terms of money, whether fixed
or ascertained on a time, task, piece or commission basis, or other method of calculating the
same, which is payable by an employer to an employee under a written or unwritten contract of
employment for work done or to be done, or for service rendered or to be rendered. The
petitioner is paid on a per trip basis is not significant. This is merely a method of computing
compensation. Third. The respondent’s power to dismiss the petitioner was inherent in the fact
that they engaged the services of the petitioner as truck driver. They exercised this power by
terminating the petitioner’s services albeit in the guise of severance of contractual relation due
allegedly to the latter’s breach of his contractual obligation. Fourth. Compared to an employee,
an independent contractor is one who carries on a distinct and independent business and
 undertakes to perform the job, work or service on its own account and under its own
responsibility according to its own manner and method, free from the control and direction of the
principal in all matters connected with the performance of the work except as to the results
thereof. Hence while an independent contractor enjoys independence and freedom from the
control and supervision of his principal. An employee is subject to the employer’s power to
control the means and methods by which the employee’s work is to be performed and
accomplished. A careful review of the records shows that the latter performed his work under
the respondents’ supervision and control. The existence of an employer-employee relationship
cannot be negated by expressly repudiating it in a contract and providing therein that the
employee is an independent contractor when the facts clearly show otherwise. Employment
status is defined by law and not by what the parties say it should be.

Aklan Electric Cooperative, Incorporated vs. NLRC, 323 SCRA 258 , January 25, 2000
FACTS:

January 22, 1991 by way of a resolution of the Board of Directors of AKELCO it allowed the
temporary holding of office at Amon Theater, Kalibo, Aklan upon the recommendation of Atty.
Leovigildo Mationg, then project supervisor, on the ground that the office at Lezo, Aklan was
dangerous and unsafe. Majority of the employees including the herein complainants, continued to
report for work at Lezo, Aklan and were paid of their salaries. The complainants claimed that
transfer of office from Lezo, Aklan to Kalibo, Aklan was illegal because it failed to comply with the
legal requirements under P.D. 269, thus the they remained and continued to work at the Lezo
Office until they were illegally locked out therefrom by the respondents. Despite the illegal lock out
however, complainants continued to report daily to the location of the Lezo Office, prepared to
continue in the performance of their regular duties. Complainants who continuously reported for
work at Lezo, Aklan were not paid their salaries from June 1992 up to March 18, 1993.

LA dismissed the complaints. NLRC reversed and set aside the LA’s decision and RULING that
private respondents are entitled to unpaid wages.
NLRC based its conclusion on the following: (a) the letter of Leyson, Office Manager of AKELCO
addressed to AKELCO’s General Manager, Atty. Mationg, requesting for the payment of private
respondents’ unpaid wages from June 16, 1992 to March18, 1993; (b) the memorandum of said
Atty. Mationg in answer to the letter request of Leyson where he made an assurance that he will
recommend such request; (c) the private respondents’ own computation of their unpaid wages.-

Petitioner AKELCO claims

– compensable service is best shown by timecards, payslips and other similar documents and it
was an error for public respondent to consider the computation of the claims for wages and
benefits submitted merely by private respondents as substantial evidence

ISSUE:

WON the refusal of private respondents to work under the lawful orders of AKELCO management
are covered by the “no work, no pay” principle (thus not entitled to the claim for unpaid wages)

RULING:

The above bases of the NLRC does not constitute substantial evidence to support the conclusion
that private respondents are entitled to the payment of wages from June 16, 1992 to March18,
1993. Substantial evidence is that amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion. These evidences relied upon by public respondent did
not establish the fact that private respondents actually rendered services in the Kalibo office during
the stated period.

It has been established that the petitioner’s business office was transferred to Kalibo and all its
equipments, records and facilities were transferred thereat and that it conducted its official
business in Kalibo during the period in question. It was incumbent upon private respondents to
prove that they indeed rendered services for petitioner, which they failed to do.

It would neither be fair nor just to allow private respondents to recover something they have not
earned and could not have earned because they did not render services at the Kalibo office during
the stated period.
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE) VS. HON. LEANDRO
QUISUMBING
ET. AL.
G.R. No. 128845
June 1, 2000
Petitioner: INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE)
Respondents: HON. LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor
and
Employment; HON. CRESENCIANO B. TRAJANO in his capacity as the Acting Secretary of
Labor
and Employment; DR. BRIAN MACCAULEY in his capacity as the Superintendent of
International
School-Manila; and INTERNATIONAL SCHOOL, INC.
Ponente: Kapunan, J.

Facts:

Private respondent International School, Inc. is a domestic educational institution established

primarily for dependents of foreign diplomatic personnel and other temporary residents. To enable
the School to continue carrying out its educational program and improve its standard of instruction,
Section 2(c) of the same decree authorizes the School to employ its own teaching and
management personnel selected by it either locally or abroad, from Philippine or other nationalities,
such personnel being exempt from otherwise applicable laws and regulations attending their
employment, except laws that have been or will be enacted for the protection of employees. The
School hires both foreign and local teachers as members of its faculty, classifying the same into
two: (1) foreign-hires and (2) local-hires. The School grants foreign-hires certain benefits not
accorded local-hires. These include housing, transportation, shipping costs, taxes, and home leave
travel allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%) more than
local-hires. The School justifies the difference on two "significant economic disadvantages" foreign-
hires have to endure, namely: (a) the "dislocation factor" and (b) limited tenure. Petitioner claims
that the point-of-hire classification employed by the School is discriminatory to Filipinos and that
the grant of higher salaries to foreign-hires constitutes racial discrimination. The Acting Secretary
of Labor found that these non-Filipino local-hires received the same benefits as the Filipino local-
hires. The Acting secretary upheld the point-of-hire classification for the distinction in salary rates.
A perusal of the parties' 1992-1995 CBA points us to the conditions and provisions for salary and
professional compensation wherein the parties agree as follows: All members of the bargaining
unit shall be compensated only in accordance with Appendix C hereof provided that the
Superintendent of the School has the discretion to recruit and hire expatriate teachers from
abroad, under terms and conditions that are consistent with accepted international practice.

Issue:

Whether there is difference in salary rates between foreign and local-hires

Held:

The petition is given due course. If an employer accords employees the same position and rank,
the presumption is that these employees perform equal work. There is no evidence here that
foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups have
similar functions and responsibilities, which they perform under similar working conditions.
The need of the School to attract foreign-hires is recognized, salaries should not be used as an
enticement to the prejudice of local-hires. The local-hires perform the same services as foreign-
hires and they ought to be paid the same salaries as the latter. For the same reason, the
"dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the
distinction in salary rates. The dislocation factor and limited tenure affecting foreign-hires are
adequately compensated by certain benefits accorded them which are not enjoyed by local-hires,
such as housing, transportation, shipping costs, taxes and home leave travel allowances.
The Constitution enjoins the State to "protect the rights of workers and promote their welfare,", "to
afford labor full protection." The State, therefore, has the right and duty to regulate the relations
between labor and capital. These relations are not merely contractual but are so impressed with
public interest that labor contracts, collective bargaining agreements included, must yield to the
common good. Should such contracts contain stipulations that are contrary to public policy, courts
will not hesitate to strike down these stipulations. In this case, we find the point-of-hire
classification employed by respondent School to justify the distinction in the salary rates of foreign-
hires and local hires to be an invalid classification. There is no reasonable distinction between the
services rendered by foreign-hires and local-hires.
Bankard Employees Union-Workers Alliance Trade Unions vs. National Labor Relations
Commission, 423 SCRA 148 , February 17, 2004

Facts:
Bankard, Inc. classifies its employees by levels: Level I, Level II, Level III, Level IV, and Level V.
On May 1993, its Board of Directors approved a New Salary Scale, made retroactive to April 1,
1993, for the purpose of making its hiring rate competitive in the industry’s labor market. The
NewSalary Scale increased the hiring rates of new employees, to wit: Levels I and V by one
thousand pesos (P1,000.00), and Levels II, III and IV by nine hundred pesos (P900.00).
Accordingly, the salaries of employees who fell below the new minimum rates were also adjusted
to reach such rates under their levels. This made Bankard Employees Union-WATU (petitioner),
the duly certified exclusive bargaining agent of the regular rank and file employees of Bankard, to
request for the increase in the salary of its old, regular employees. Bankard insisted that there was
no obligation on the part of the management to grant to all its employees the same increase in an
across-the-board manner. Petioner filed a notice of strike. The strike was averted when the dispute
was certified by the Secretary of Labor and Employment for compulsory arbitration. NLRC finding
no wage distortion dismissed the case for lack of merit. Petitioner’s motion for reconsideration of
the dismissal of the case was denied.

Issue:
Whether or not the unilateral adoption by an employer of an upgraded salary resulted in wage
distortion within the contemplation of Article 124 of the Labor Code.

Held:
NO. There exists a wage distortion but the Court will not interfere in the management prerogative
of the petitioner.
Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT, amending, among others,
Article 124 of the Labor Code), the term "wage distortion" was explicitly defined as... a situation
where an increase in prescribed wage rates 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.
In the case of Prubankers Association v. Prudential Bank and Trust Company, it laid down the four
elements of wage distortion, to wit: (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; and (4) The existence of the distortion in the same region of the country. Normally, a
company has a wage structure or method of determining the wages of its employees. In a problem
dealing with "wage distortion," the basic assumption is that there exists a grouping or classification
of employees that establishes distinctions among them on some relevant or legitimate bases.
Involved in the classification of employees are various factors such as the degrees of
responsibility, the skills and knowledge required, the complexity of the job, or other logical basis of
differentiation. The differing wage rate for each of the existing classes of employees reflects this
classification. Put differently, the entry of new employees to the company ipso facto places them
under any of the levels mentioned in the new salary scale which private respondent adopted
retroactive to April 1, 1993. While seniority may be a factor in determining the wages of
employees, it cannot be made the sole basis in cases where the nature of their work differs.
Moreover, for purposes of determining the existence of wage distortion, employees cannot create
their own independent classification and use it as a basis to demand an across-the-board increase
in salary. The wordings of Article 124 are clear. If it was the intention of the legislators to cover all
kinds of wage adjustments, then the language of the law should have been broad, not restrictive as
it is currently phrased: Article 124. Standards/Criteria for Minimum Wage Fixing. Where the
application of any prescribed wage increase by virtue of a law or Wage Order issued by any
Regional Board results in distortions of the wage structure within an establishment, the employer
and the union shall negotiate to correct the distortions. Any dispute arising from the wage
distortions shall beresolved through the grievance procedure under their collective bargaining
agreement and, if it remains unresolved, through voluntary arbitration. Article 124 is entitled
"Standards/Criteria for Minimum Wage Fixing." It is found in CHAPTER V on "WAGE STUDIES,
WAGE AGREEMENTS AND WAGE DETERMINATION" which principally deals with the fixing of
minimum wage. Article 124 should thus be construed and correlated in relation to minimum wage
fixing, the intention of the law being that in the event of an increase in minimum wage, the
distinctions embodied in the wage structure based on skills, length of service, or other logical
bases of differentiation will be preserved. If the compulsory mandate under Article 124 to correct
"wage distortion" is applied to voluntary and unilateral increases by the employer in fixing hiring
rates which is inherently a business judgment prerogative, then the hands of the employer would
be completely tied even in cases where an increase in wages of a particular group is justified due
to a re-evaluation of the high productivity of a particular group, or as in the present case, the need
to increase the competitiveness of Bankard’s hiring rate. An employer would be discouraged from
adjusting the salary rates of a particular group of employees for fear that it would result to a
demand by all employees for a similar increase, especially if the financial conditions of the
business cannot address an across-the-board increase. Wage distortion is a factual and economic
condition that may be brought about by different causes. The mere factual existence of wage
distortion does not, however, ipso facto result to an obligation to rectify it, absent a law or other
source of obligation which requires its rectification.

Arms Taxi v. NLRC, 219 SCRA 306 (1993)

Facts:
Taxi driver Culla was dismissed by forcing open his quartersand removing his personal belongings
found therein and bringing them to his residence. He is claiming reinstatement with back wages, plus
commission of 15% of the gross income of the taxi business which is the issue at bar.
Issue:Whether or not Culla can get the 15% commission
Held: No. He cannot get the 15% commission. If it were true that there had been an agreement
regarding the payment of a 15% commission to him, Culla would have not waitedalmost 6 years to
claim it. Considerably delay in asserting one’s right is strongly persuasive of the lack of merit of
one’s claim.
SOLGEN: Salary is different from a commission. The defense that the giving of salary is a partial
compliance to pay a commission of percentage. While a salary is a fixed compensation for regular
work or for continuous service rendered over a period of time, a commission is a percentage or
allowance made to a factor or agent for transacting business for another. Thus, before invoking the
exception to the Statute of Frauds, petitioner should have proven that he had received a
commission, or part of it, in the past.

Iran v. NLRC, 289 SCRA 433 (1998)

Facts:The case where the salesman and truck helpers received commission for cases sold. Then
there were irregularities and the respondents were prompted to report cash shortages. After a few
days, they stopped reporting for work, thus the conclusion of abandonment. Terminated without
notice.
On the other hand, complain for illegal dismissal, deduction, underpayment of wages, premium pay
for holiday and rest day, holiday pay, incentive pay, etc.
Issue:
WON commissions in the computation of wages must only be paid after the minimum wage has
been paid, thus excluding commissions in the computation for benefits which rely on wage.
Held: No.
The Court has taken judicial notice of the fact that some salesman do not receive any basic salary
but depend entirely on commissions and allowances or commissions alone, although an employer-
employee relationship exists. This salary structure is intended for the benefit of the corporation
establishing such, on the apparent assumption that thereby its salesmen would be moved to
greater enterprise and diligence and close more sales in the expectation of increasing their sales
commission. But this does not detract from the character of such commissions as part of the salary
or wage paid to each of its salesmen for rendering services to the corporation. There is no law
mandating that commissions be paid only after the minimum wage has been paid to the employee.
Verily, the establishment of a minimum wage only sets a floor below which an employee’s
remuneration cannot fall, not that commissions are excluded from wages in determining
compliance with the minimum wage law. In one case it was acknowledged that “drivers and
conductors who are compensated purely on a commission basis are automatically entitled to the
basic minimum pay mandated by law should said commission be less than their basic minimum for
eight hours work. It can thus be inferred that where said commissions equal to or even exceed the
minimum wage, the employer need not pay, in addition, the basic minimum pay prescribed by law.
It follows then that commissions are included in determining compliance with minimum wage
requirements.

Case Title: MILLARES VS. NLRC

G.R. No.: G.R. No. 110524
Date: July 29, 2002
Petitioner: Douglas Millares and Rogelio Lagda
Respondent: National Labor Relations Commission, Trans-Global Maritime Agency, Inc.
and
Esso International Shipping Co., Ltd.
Ponente: Kapunan, J.

Facts:

Douglas Millares was employed by ESSO International through its local manning agency, Trans-
Global, in 1968 as a machinist. In 1975, he was promoted as Chief Engineer which position he
occupied until he opted to retire in 1989. In 1989, petitioner Millares filed a leave of absence and
applied for optional retirement plan under the Consecutive Enlistment Incentive Plan (CEIP)
considering that he had already rendered more than twenty years of continuous service. ESSO
International denied Millares’ request for optional retirement on the following grounds, to wit:
1) he was employed on a contractual basis
2) his contract of enlistment (COE) did not provide for retirement before the age of sixty years;
3) he did not comply with the requirement for claiming benefits under the CEIP, i.e., to submit a
written advice to the company of his intention to terminate his employment within thirty days from
his last disembarkation date.

Subsequently, after failing to return to work after the expiration of his leave of absence, Millares
was dropped from the roster of crew members effective September 1, 1989. On the other hand,
petitioner Lagda was employed by ESSO International as wiper/oiler in 1969. He was promoted as
Chief Engineer in 1980, a position he continued to occupy until his last COE expired in 1989. In
1989, Lagda likewise filed a leave of absence and applied to avail of the optional early retirement
plan in view of his twenty years continuous service in the company. Trans-global similarly denied
Lagda’s request for availment of the optional early retirement scheme on the same grounds upon
which Millares request was denied. Unable to return for contractual sea service after his leave of
absence expire, Lagda was also dropped from the roster of crew members effective September 1,
1989.

Millares and Lagda filed a complaint-affidavit for illegal dismissal and non-payment of employee
benefits against private respondents ESSO International and Trans-Global before the POEA. The
POEA rendered a decision dismissing the complaint for lack of merit. On appeal, NLRC affirmed
the decision of the POEA dismissing the complaint. NLRC rationcinated that Millares and Lagda,
as seamen and overseas contract workers are not covered by the term “regular employment” as
defined under Article 280 of the Labor Code. The POEA, which is tasked with protecting the rights
of the Filipino workers for overseas employment to fair and equitable recruitment and employment
practices and to ensure their welfare, prescribes a standard employment contract for seamen on
board ocean-going vessels for a fixed period but in no case to exceed twelve months.

Issue:

Whether or not Millares and Lagda are entitled for employment benefits such as allowances.

Held:
No, It is for the mutual interest of both the seafarer and the employer why the employment status
must be contractual only or for a certain period of time. Quoting Brent School Inc. v. Zamora,
1990, and Pablo Coyoca v. NLRC, 1995, the Supreme Court ruled that seafarers are considered
contractual employees. They can not be considered as regular employees under Article 280 of the
Labor Code. Their employment is governed by the contracts they sign everytime they are rehired
and their employment is terminated when the contract expires. Their employment is contractually
fixed for a certain period of time. They fall under the exception of Article 280 whose employment
has been fixed for a specific project or undertaking the completion or termination of which has
been determined at the time of engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.

As ruled in Brent case, there are certain forms of employment which also require the performance
of usual and desirable functions and which exceed one year but do not necessarily attain regular
employment status under Article 280. Overseas workers including seafarers fall under this type of
employment which are governed by the mutual agreements of the parties. And as stated in the
Coyoca case, Filipino seamen are governed by the Rules and Regulations of the POEA. The
Standard Employment Contract governing the employment of All Filipino seamen on Board Ocean-
Going Vessels of the POEA, particularly in Part I, Sec. C specifically provides that the contract of
seamen shall be for a fixed period. And in no case should the contract of seamen be longer than
12 months. Moreover, the Court held that it is an accepted maritime industry practice that
employment of seafarers are for a fixed period only. Constrained by the nature of their employment
which is quite peculiar and unique in itself, it is for the mutual interest of both the seafarer and the
employer why the employment status must be contractual only or for a certain period of time.
Seafarers spend most of their time at sea and understandably, they can not stay for a long and an
indefinite period of time at sea. Limited access to shore society during the employment will have an
adverse impact on the seafarer. The national, cultural and lingual diversity among the crew during
the COE is a reality that necessitates the limitation of its period.

Case title: JOSE SONGCO VS. NLRC (FIRST DIVISION)

G.R. number: G.R. No. L-50999
Date: March 23, 1990
Petitioner: Jose Songco, Romeo Cipres and Amancio Manuel
Respondent: National Labor Relations Commission (First Division), Labor Arbiter Flavio
Aguas, and
F.E. Zuellig (M), Inc.
Ponente: Medialdea, J.

Facts:
Zuellig (M) Inc. filed with the Department of Labor (Regional Office No. 4) a clearance to
terminate the services of petitioners Jose Songco, Romeo Cipres and Amancio Manuel due to
alleged financial losses. However, the petitioners argued that the company is not suffering any
losses and the real reason for their termination was their membership in the union. At the last
hearing of the case, the petitioner manifested that they no longer contesting their dismissal,
however, they argued that they should be granted a separation pay. Each of the petitioners was
receiving a monthly salary of P40, 000.00 plus commissions for every sale they made. Under the
CBA entered by the Zuellig Inc. and the petitioners, in Article XIV, Section 1(a), Any employee,
who is separated from employment due to old age, sickness, death or permanent lay-off not due to
the fault of said employee shall receive from the company a retirement gratuity in an amount
equivalent to one month’s salary per year of service. One month of salary as used in this
paragraph shall be deemed equivalent to the salary at date of retirement; years of service shall be
deemed equivalent to total service credits, a fraction of at least six months being considered one
year, including probationary employment. Other basis for petitioners’ contention are Article 284 of
the Labor Code with regards to reduction of personnel and Sections 9(b) and 10 of Rule 1, Book VI
of the Rules Implementing the Labor Code. The Labor Arbiter rendered his decision directing the
company to pay the complainants separation pay equivalent to their one month salary (exclusive
of commissions, allowances, etc.) for every year of service that they have worked with the
company. The petitioners appealed to the NLRC but it was denied. Petitioner Romeo Cipres filed a
Notice of Voluntary Abandonment and Withdrawal of petition contending that he had received, to
his full and complete satisfaction, his separation pay. Hence, this petition.

Issue:
Whether or not earned sales commissions and allowances should be included in the monthly
salary of petitioners for the purpose of computation of their separation pay.
Held:
The petition is granted. Petitioners’ contention that in arriving at the correct and legal amount of
separation pay due to them, whether under the Labor Code or the CBA, their basic salary, earned
sales commissions and allowances should be added together. Insofar as whether the allowances
should be included in the monthly salary of petitioners for the purpose of computation of their
separation pay is concerned, this has been settled in the case of Santos vs. NLRC, 76721, in the
computation of backwages and separation pay, account must be taken not only of the basic salary
of petitioner but also of her transportation and emergency living allowances. In the issue of
whether commission should be included in the computation of their separation pay, it is proper to
define first commission. Black’s Law Dictionary defined commission as the recompensed,
compensation or reward of an agent, salesman, executor, trustees, receiver, factor, broker or
bailee, when the same is calculated as a percentage on the amount of his transactions or on the
profit to the principal. The nature of the work of a salesman and the reason for such type of
remuneration for services rendered demonstrate clearly that the commission are
part of petitioners’ wage and salary. Some salesmen do not receive any basic salary but depend
on commission and allowances or commissions alone, are part of petitioners’ wage and salary.
Some salesman do not received any basic salary but depend on commission and allowances or
commissions alone, although an employer-employee relationship exist. In Soriano v. NLRC, it is
ruled then that, the commissions also claimed by petitioner (override commission plus net deposit
incentive) are not properly includible in such base figure since such commissions must be earned
by actual market transactions attributable to petitioner. Applying this by analogy, since the
commissions in the present case were earned by actual market transactions attributable to
petitioners, these should be included in their separation pay. In the computation thereof, what
should be taken into account is the average commissions earned during their last year of
employment.

PHILIPPINE DUPLICATORS, INC., petitioner, vs.NATIONAL LABOR RELATIONS

COMMISSION and
PHILIPPINE DUPLICATORS EMPLOYEES UNION - TUPAS, respondents.

FACTS: Petitioner Philippine Duplicators, Inc. is a domestic corporation engaged in the distribution
of foreign-made copying machines and related consumables. In petitioner's employ are salesmen
who are paid a fixed or guaranteed salary plus commissions, which commissions are computed on
the selling price of the duplicating machines sold by the respective salesmen. Private respondent
union, for and on behalf of its member-salesmen, asked petitioner corporation for payment of 13th
month pay computed on the basis of the salesmen's fixed or guaranteed wages plus commissions.
Petitioner corporation refused the union's request. Respondent, union thereupon instituted a
complaint against petitioner corporation for payment of the demand of its salesmen-members for
13th month pay. After submission of the parties' respective position papers, the Labor Arbiter
rendered a decision dated 24 October 1989 directing petitioner corporation to pay 13th month pay
to its salesmen computed in accordance with the requirements of Explanatory Bulletin No. 86-12.

ISSUE: Whether or not the appropriate mode of computation of the 13th month pay of the
employees who receive a fixed or guaranteed salary plus sales commissions?

HELD: In the instant case, there is no question that the sales commissions earned by salesmen
who make or close a sale of duplicating machines distributed by petitioner corporation constitute
part of the compensation or remuneration paid to salesmen for serving as salesmen, and hence as
part of the "wage" or "salary" of petitioner's salesmen. Indeed, it appears that petitioner pays its
salesmen a small fixed or guaranteed wage; the greater part of the salesmen's wages or salaries
being composed of the sales or incentive commissions earned on actual sales closed by them. To
recapitulate, the 13th month pay of employees paid a fixed or guaranteed wage plus sales
commission must be equivalent to one-twelfth (1/12) of the total earnings (fixed or guaranteed
wage-cum-sales commissions) during the calendar year. Considering that petitioner has excluded
from the computation of the 13th month pay the sales commissions earned by its individual
salesmen, we believe and so hold that petitioner must be held liable to pay for the deficiency.
WHEREFORE, petitioner failed to show any grave abuse of discretion on the part of the National
Labor Relations Commission in rendering its decision dated 17 November 1992,
the petition for Certiorari is hereby DISMISSED for lack of merit. Costs against the petitioner.
G.R. No. 81176 April 19, 1989
PLASTIC TOWN CENTER CORPORATION, petitioner,
vs.

NATIONAL LABOR RELATIONS COMMISSION AND NAGKAKAISANG LAKAS NG

MANGGAGAWA (NLM)-KATIPUNAN, respondents.

Facts:
On September 1984, respondent Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan filed a
complaint against petitioner Plastic Town Center Corporation with:

– violation of CBA by crediting the P1 per day increase in gratuity pay to resigning employees
instead of 30 days equivalent to one month
– unfair labor practice by giving only 26 days pay instead of 30 days equivalent to one month as
gratuity pay to resigning employees.

In the CBA, it was provided that:

Company agreed to grant regular workers who rendered at least one year of continuous service of
P1 per worked day.
Company to grant gratuity pay to a resigning employee or laborer amounting to, among others,
one month salary for those who rendered two to five years of service.

Plastic Town Center Corporation maintained 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.

Labor Arbiter: Ruled in favor of NLM Union. As daily wage earner, there would be no instance that
the worker would work for 30 days a month since work does not include Sunday or rest days.

NLRC: Reversed the decision of Labor Arbiter and held that PTC should grant gratuity pay
equivalent of thirty days salary.

Issue:
Whether the Plastic Town Center’s contention that the gratuity pay should be computed on the
basis of 26 days for one month salary instead of 30 days is valid.

Held:
No, PTC’s contention does not hold merit in this case.

Gratuity pay is 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.”

While it may be enforced once it forms part of a contractual undertaking, the grant of such benefit
is not mandatory so as to be considered a part of labor standard law unlike salary, which are
covered in Labor Code. Nowhere has it ever been stated that gratuity pay should be based on
actual number of days worked over the period of years forming its basis. Court saw no point in
counting the number of days worked over a ten-year period to determine the meaning of “two and
one- half months’ gratuity.”

Moreover any doubts or ambiguity in the contract between management and the union members
should be resolved in favor of the laborer. When months are not designated by name, a month is
understood to be 30 days.

As such, NLRC did not act with grave abuse of discretion when it decided that the gratuity pay
should be equivalent to 30 days.

WHEREFORE, the petition is hereby DISMISSED for lack of merit.

G.R. No. 85073 August 24, 1993

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 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. 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 or not NLRC acted a grave abuse of discretion in affirming the decision of
Associated Labor Unions.

Held: No. The "Supplementary Rules and Regulations Implementing P.D. No. 851," which put to
rest all doubts in the computation of the thirteenth month pay, was issued by the Secretary of
Labor as early as January 16, 1976, barely one month after the effectivity of P.D. No. 851 and its
Implementing Rules. And yet, petitioner computed and paid the thirteenth month pay, without
excluding the subject items therein until 1981.

A company practice favorable to the employees had indeed been established and the payments
made pursuant thereto, ripened into benefits enjoyed by them. And any benefit and supplement
being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the
employer, by virtue of Section 10 of the Rules and Regulations Implementing P.D. No. 851, and
Article 100 of the labor of the Philippines, which prohibit the diminution or elimination by the
employer of the employees' existing benefits

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.

[G.R. No. 113097. April 27, 1998]

NASIPIT LUMBER COMPANY, INC., and PHILIPPINE WALLBOARD

CORPORATION, petitioners, vs. NATIONAL WAGES AND PRODUCTIVITY
COMMISSION, WESTERN AGUSAN WORKERS UNION (WAWU-ULGWP LOCAL 101),
TUNGAO LUMBER WORKERS UNION (TULWU-ULGWP LOCAL 102) and UNITED
WORKERS UNION (UWU-ULGWP LOCAL 103), respondents.
Facts:

On October 20, 1990, the Region X [Tripartite Wages and Productivity] Board issued Wage Order
No. RX-01 which provides as follows:

Section 1. Upon the effectivity of this Wage Order, the increase in minimum wage rates applicable
to workers and employees in the private sector in Northern Mindanao (Region X).

Subsequently, a supplementary Wage Order No. RX-01-A was issued by the Board on November
6, 1990 which provides as follows:

Section 1. Upon the effectivity of the original Wage Order RX-01, all workers and employees in the
private sector in Region X already receiving wages above the statutory minimum wage rates up to
one hundred and twenty pesos (P120.00) per day shall also receive an increase of P13, P11, P9
per day, as provided for under Wage Order No. RX-01;
Applicants/appellees Nasipit Lumber Company, Inc. (NALCO), Philippine Wallboard Corporation
(PWC), and Anakan Lumber Company (ALCO), claiming to be separate and distinct from each
other but for expediency and practical purposes, jointly filed an application for exemption from the
above-mentioned Wage Orders as distressed establishments under Guidelines No. 3, issued by
the herein Board on November 26, 1990, specifically Sec. 3(2) thereof which, among others,
provides:

A. For purposes of this Guidelines the following criteria to determine whether the applicant-
firm is actually distressed shall be used.

Applicants/appellees aver that they are engaged in logging and integrated wood processing
industry but are distressed due to conditions beyond their control. On the other hand,
oppositor/appellant Unions jointly opposed the application for exemption on the ground that said
companies are not distressed establishments since their capitalization has not been impaired by
25%.

Citing liquidity problems and business decline in the wood-processing industry, the RTWPB
approved the applicants joint application for exemption. Dissatisfied with the RTWPBs Decision,
the private respondents lodged an appeal with the NWPC, which affirmed ALCOs application but
reversed the applications of herein petitioners, NALCO and PWC. The NWPC reasoned:

The Guidelines No. 3 dated November 26, 1990, issued by the herein Board cannot be used as
valid basis for granting applicants/appellees application for exemption since it did not pass the
approval of this Commission.

Issue: Whether or not a guideline issued by an RTWPB without the approval of or, worse, contrary
to the guidelines promulgated by the NWPC is valid.

Held: No. Petitioners contend that the NWPC gravely abused its discretion in overturning the
RTWPBs approval of their application for exemption from Wage Orders RX-01 and RX-01-A. They
argue that under Art. 122 (e) of the Labor Code, the RTWPB has the power [t]o receive, process
and act on applications for exemption from prescribed wage rates as may be provided by law or
any wage order.[10] They also maintain that no law expressly requires the approval of the NWPC for
the effectivity of the RTWPBs Guideline No. 3. Assuming arguendo that the approval of the NWPC
was legally necessary, petitioners should not be prejudiced by their observance of the guideline,
pointing out that the NWCPs own guidelines[11] took effect only on March 18, 1991 long after
Guideline No. 3 was issued on November 26, 1990.[12] Lastly, they posit that the NWPC guidelines
cannot be given retroactive effect as [they] will affect or change the petitioners vested rights.

To justify the exemption of a distressed establishment from effects of wage orders, the
NWPC requires the applicant, if a stock corporation like petitioners, to prove that its accumulated
losses impaired its paid-up capital by at least 25 percent in the last full accounting period
preceding the application[27] or the effectivity of the order.[28] In the case at bar, it is undisputed that
during the relevant accounting period, NALCO, ALCO and PWC sustained capital impairments of
1.89, 28.72, and 5.03 percent, respectively.[29] Clearly, it was only ALCO which met the exemption
standard. Hence, the NWPC did not commit grave abuse of discretion in approving the application
only of ALCO and in denying those of petitioners. Indeed, the NWPC acted within the ambit of its
administrative prerogative when it set guidelines for the exemption of a distressed
establishment. Absent any grave abuse of discretion, NWPCs actions will not be subject to judicial
review.[30] Accordingly, we deem the appealed Decisions to be consistent with law.
ECOP VS. NWPC
G.R. No. 96169
September 24, 1991
Petitioner: EMPLOYERS CONFEDERATION OF THE PHILIPPINES
Respondents: NATIONAL WAGES AND PRODUCTIVITY COMMISSION AND REGIONAL
TRIPARTITE WAGES AND PRODUCTIVITY BOARD-NCR, TRADE UNION
CONGRESS OF THE PHILIPPINES
Ponente: J . SARMIENTO

Facts: 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.
The Trade Union Congress of the Philippines (TUCP) moved for reconsideration, so did the
Personnel Management Association of the Philippines (PMAP). ECOP opposed.
On October 23, 1990, the Board issued Wage Order No. NCR-01-A amending Wage Order No.
NCR-01, as follows:
Section 1. Upon the effectivity of this Wage Order, all workers and employees in the
private sector in the National Capital Region already receiving wages above the statutory
minimum wage rates up to one hundred and twenty-five pesos (P125.00) per day shall
also receive an increase of seventeen pesos (P17.00) per day.
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.

Issue: 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.

Held: The Commission noted that the increasing trend is toward the salary-cap method, which has
reduced disputes arising from wage distortions (brought about, apparently, by the floor-wage
method). Precisely, 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. The Court is of the opinion that Congress meant the boards to be creative
in resolving the annual question of wages without labor and management knocking on the
legislature's door at every turn.
The petition is DENIED.

CAGAYAN SUGAR MILLING CO., VS. SECRETARY OF LABOR, ET.AL.

G.R. No. 128399
January 15, 1998
Petitioner: CAGAYAN SUGAR MILLING COMPANY
Respondents: SECRETARY OF LABOR AND EMPLOYMENT, DIRECTOR RICARDO S.
MARTINEZ, SR., and CARSUMCO EMPLOYEES UNION
Ponente: J . PUNO

Facts: 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.

During 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.

On January 6, 1995, 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,
amending the earlier wage order.

On October 8, 1996, the Secretary of Labor dismissed petitioner's appeal and affirmed the Order
of Regional Director Martinez, Sr. Petitioner's motion for reconsideration was likewise denied. On
February 12, 1997, private respondent CARSUMCO EMPLOYEES UNION moved for execution of
the December 16, 1994 Order. Regional Director Martinez, Sr. granted the motion and issued the
writ of execution. On March 4, 1997, petitioner moved for reconsideration to set aside the writ of
execution. On March 5, 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.

On April 3, 1997, this Court issued a TRO enjoining respondents from enforcing the writ of
execution. On July 16, upon petitioner's motion, the TRO was amended by also enjoining
respondents from enforcing the Decision of the Secretary of Labor and conducting further
proceedings until further orders from this Court.

Issue: Wage Order RO2-02 is null and void for having been issued in violation of the procedure
provided by law and in violation of petitioner's right to due process of law.

Held: 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 (15) days from its complete publication in at least one (1) newspaper of
general circulation in the region.

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. Public respondents' position is that there was no
need to comply with the legal requirements of consultation and newspaper publication as Wage
order No. RO2-02-A LABOR STANDARDS AND SOCIAL LEGISLATION merely clarified the
ambiguous provision of the original wage order.

Public respondents insist that despite the wording of Wage Order RO2-02 providing for a
statutory increase in minimum wage, the real intention of the Regional Board was to provide for an
across the board increase. Hence, they urge that petitioner is liable for merely providing an
increase in the statutory minimum wage rates of its employees.

The contention is absurd. 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.

The petition is GRANTED. The Decision of the Secretary of Labor, dated October 8, 1996, is set
aside for lack of merit.

[G.R. No. 131247. January 25, 1999]

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.

On June 7, 1994, respondent Prubankers 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.

The Arbitration Committee on June 18, 1996 rendered the questioned decision

Issue: Whether or not the Court of Appeals departed from the usual course of judicial procedure
when it disregarded the factual findings of the Voluntary Arbitration Committee as to the existence
of wage distortion.
Held: The statutory definition of wage distortion is found in Article 124 of the Labor Code, as
amended by Republic Act No. 6727, which reads:

Article 124. Standards/Criteria for Minimum Wage Fixing - xxx

As used herein, a 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.

Elaborating on this statutory definition, this Court ruled: Wage distortion presupposes a
classification of positions and ranking of these positions at various levels. One visualizes a
hierarchy of positions with corresponding ranks basically in terms of wages and other
emoluments. Where a significant change occurs at the lowest level of positions in terms of basic
wage without a corresponding change in the other level in the hierarchy of positions, negating as a
result thereof the distinction between one level of position from the next higher level, and resulting
in a parity between the lowest level and the next higher level or rank, between new entrants and
old hires, there exists a wage distortion. xxx. The concept of wage distortion assumes an existing
grouping or classification of employees which establishes distinctions among such employees on
some relevant or legitimate basis. This classification is reflected in a differing wage rate for each of
the existing classes of employees[11]
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. Put differently, the distinction between Pay Class 1 and Pay Class 2, for example,
was not eliminated as a result of the implementation of the two Wage Orders in the said
region. Hence, it cannot be said that there was a wage distortion.
DOMINICO C. CONGSON, Petitioner, -versus- G.R. No. 114250 April 5, 1995 NATIONAL
LABOR RELATIONS COMMISSION, NOE BARGO, ROGER HIMENO, RAYMUNDO
BADAGOS, PATRICIO SALVADOR, SR., NEHIL BARGO, JOEL MENDOZA, and EMMANUEL
CALIXIHAN, Respondents

Facts: The case was originally filed by herein respondents Bargo et al against Congson, the former
being hired as piece-rate workers responsible for the loading/unloading of tuna catch for Southern
Fishing Industry owned by the latter.

In 1990, the piece-rate workers were replaced with a new set of workers because of their alleged
refusal/resistance to the proposed reduction of their piece-rate payment per tuna (the former rate
was P1.00 per tuna movement. The reduction was proposed because of the decrease in the
volume of tuna catch). They filed for underpayment of wages, contending that their average
monthly rate did not exceed P1000, plus non-payment of overtime pay, 13th month pay, service
incentive leave pay, and separation pay.

The labor arbiter decided in favor of the workers and directed Congson to pay the monetary claims
for salary differentials, 13th month pay, service incentive leave pay, and separation pay.

On appeal, the NLRC affirmed the decision of the Labor Arbiter, in toto, thus the instant petition.
Issue: W/N THE COMPUTATION OF WAGES SHOULD INCLUDE THE VALUE OF TUNA LIVER
AND INTESTINES THAT WERE TAKEN BY THE REPONDENT WORKERS AS PART OF THEIR
COMPENSATION.
Held: NO. Article 102 par.1 of the Labor Code states that: 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.
Thus, the computation made by the labor arbiter in arriving at the money claims is correct.

G.R. No. L-11606 February 28, 1959

EUFROCIO BERMISO, ET AL., petitioners,

vs.
HIJOS DE F. ESCAÑO, INC., ET AL., respondents.

Facts:

APODACA VS. NLRC

G.R. No. 80039
April 18, 1989
Petitioner: ERNESTO M. APODACA
Respondents: NATIONAL LABOR RELATIONS COMMISSION, JOSE M. MIRASOL and
INTRANS PHILS., INC.
Ponente: J . GANCAYCO

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.

Issue: Whether or not an obligation arising for non-payment of stock subscriptions to a corporation
be offset against a money claim of an employee against the employer.

Held:
NO. 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 the petitioner. Article 113 of the
Labor LABOR STANDARDS AND SOCIAL LEGISLATION 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

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

The petition is GRANTED and the questioned decision of the NLRC dated September 18, 1987 is
set aside and another judgment is 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 on
December 19, 1986, with costs against private respondents.

An obligation arising from non-payment of stock subscriptions to a corporation cannot be offset

against a money claim of an Employee against an Employer.

DENTECH MANUFACTURING V NLRC (MARBELLA) 172 SCRA 588 GANCAYCO; April 19,
1989

FACTS:
Dentech Manufacturing Corporation is a domestic corporation organized under Philippine laws
owned and managed by the petitioner Jacinto Ledesma. The firm is engaged in the manufacture
and sale of dental equipment and supplies. - Private respondents Benjamin Marbella, Armando
Torno, Juanito Tajan, Jr. and Joel Torno are members of the Confederation of Citizens Labor
Union (CCLU), a labor organization registered with the DOLE. They used to be the employees of
Dentech, working 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. - They filed a Complaint with the NLRC against Dentech and Ledesma for,
among others, illegal dismissal and violation of PD 851. 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 PD 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. It is alleged that they were dismissed
from the firm for pursuing union activities. - Dentech argued that they are not entitled to a 13th
month pay. They maintained that each of the private respondents receive a total monthly
compensation of more that P1,000 and that under Section 1 of PD 851, such employees are not
entitled to receive a 13th month pay. Also, the company is in bad financial shape and that pursuant
to Section 3, the firm is exempted from complying with the provisions of the Decree. Dentech also
contended that the refund of the cash bond filed by the Marbella, et al., is improper inasmuch as
the proceeds of the same had already been given to a certain carinderia to pay for their
outstanding accounts.

ISSUES:
Whether or not the refund of the cash bond is proper.

HELD:
YES.
The refund of the cash bond is in order. Article 114 of the Labor Code prohibits an employer from
requiring his employees to file a cash bond or to make deposits, subject to certain exceptions. -
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. - Dentech has not satisfactorily disputed the applicability of this
provision to the case at bar. Considering further that it failed to show that it is authorized by law to
require Marbella, et al., to file the cash bond in question, the refund is in order. - The allegation that
the proceeds of the cash bond had already been given to a certain carinderia to pay for the
accounts of the private respondents does not merit serious consideration. No evidence or receipt
has been shown to prove such payment. Disposition Petition is hereby DISMISSED for lack of
merit.

G.R. No. 111474 August 22, 1994

FIVE J TAXI and/or JUAN S. ARMAMENTO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, DOMINGO MALDIGAN and GILBERTO
SABSALON, respondents.

FACTS:

Private respondents Domingo Maldigan and Gilberto Sabsalon were hired by the petitioners as taxi
drivers and, as such, they worked for 4 days weekly on a 24-hour shifting schedule. Aside from the
daily "boundary" of P700.00 for air-conditioned taxi or P450.00 for non-air-conditioned taxi, they
were also required to pay P20.00 for car washing, and to further make a P15.00 deposit to answer
for any deficiency in their "boundary," for every actual working day.

In less than 4 months after Maldigan was hired as an extra driver by the petitioners, he already
failed to report for work for unknown reasons. Later, petitioners learned that he was working for
"Mine of Gold" Taxi Company. With respect to Sabsalon, while driving a taxicab of petitioners on
September 6, 1983, he was held up by his armed passenger who took all his money and thereafter
stabbed him. He was hospitalized and after his discharge, he went to his home province to
recuperate.

In January, 1987, Sabsalon was re-admitted by petitioners as a taxi driver under the same terms
and conditions as when he was first employed, but his working schedule was made on an
"alternative basis," that is, he drove only every other day. However, on several occasions, he failed
to report for work during his schedule.
On September 22, 1991, Sabsalon failed to remit his "boundary" of P700.00 for the previous day.
Also, he abandoned his taxicab in Makati without fuel refill worth P300.00. Despite repeated
requests of petitioners for him to report for work, he adamantly refused. Afterwards it was revealed
that he was driving a taxi for "Bulaklak Company."

Sometime in 1989, Maldigan requested petitioners for the reimbursement of his daily cash deposits
for 2 years, but herein petitioners told him that not a single centavo was left of his deposits as
these were not even enough to cover the amount spent for the repairs of the taxi he was driving.
This was allegedly the practice adopted by petitioners to recoup the expenses incurred in the
repair of their taxicab units. When Maldigan insisted on the refund of his deposit, petitioners
terminated his services. Sabsalon, on his part, claimed that his termination from employment was
effected when he refused to pay for the washing of his taxi seat covers.

On November 27, 1991, private respondents filed a complaint with the Manila Arbitration Office of
the National Labor Relations Commission charging petitioners with illegal dismissal and illegal
deductions. That complaint was dismissed, the labor arbiter holding that it took private respondents
two years to file the same and such unreasonable delay was not consistent with the natural
reaction of a person who claimed to be unjustly treated, hence the filing of the case could be
interpreted as a mere afterthought.

ISSUE:

Whether or not the deposit made by the private respondents proper.

HELD:

No. Respondent NLRC held that the P15.00 daily deposits made by respondents to defray any
shortage in their "boundary" is covered by the general prohibition in Article 114 of the Labor Code
against requiring employees to make deposits, and that there is no showing that the Secretary of
Labor has recognized the same as a "practice" in the taxi industry. Consequently, the deposits
made were illegal and the respondents must be refunded therefor.

Article 114 of the Labor Code provides as follows:

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 deposits is a recognized one, or is necessary or desirable as
determined by the Secretary of Labor in appropriate rules and regulations.

It can be deduced therefrom that the said article provides the rule on deposits for loss or damage
to tools, materials or equipments supplied by the employer. Clearly, the same does not apply to or
permit deposits to defray any deficiency which the taxi driver may incur in the remittance of his
"boundary." Also, when private respondents stopped working for petitioners, the alleged purpose
for which petitioners required such unauthorized deposits no longer existed. In other case, any
balance due to private respondents after proper accounting must be returned to them with legal
interest.
 SOUTH MOTORISTS ENTERPRISES, petitioner, vs. ROQUE TOSOC, ET AL. ( employees in
total), and HON. SECRETARY OF LABOR AND EMPLOYMENT, respondents.
January 23, 1990

WAGE PROHIBITIONS: Prohibition against keeping of employee’s records in a place other

than the workplace

FACTS

In January of 1983, complaints for non-payment of emergency cost of living allowances were filed
by 46 workers, Tosoc, et al., against SOUTH MOTORISTS before the NagaCity District Office of
Regional Office No. 5 of the then Ministry of Labor.

The Labor Regulation Officers were ordered by the District Labor Officer to conduct an inspection
and verification of SOUTH MOTORISTS' employment records. However, SOUTH MOTORISTS
was unable to present its employment records on the allegation that they had been sent to the
main office in Manila
.
The case was then set for conference on 25 January 1983 but had to be reset 3 times: 1st to
enable SOUTH MOTORISTS to present all its employment records; 2nd because of its lawyer's
tight schedule; and 3rd because of the alleged voluminous records it had to locate and its desire to
submit a memorandum regarding complainants' claims. However, on 2 March 1983, SOUTH
MOTORISTS once again requested an extension of 30 days on the ground that the documents
were still being prepared and collated and that a formal manifestation or motion would follow.
Nothing did.

On 7 March 1983, the assigned Labor Regulation Officers submitted an Inspection Report on the
basis of which an Order dated 14 April 1983 was issued by Labor OfficerDomingo Reyes directing
SOUTH MOTORISTS to pay Tosoc, et al., the total amount of P184,689.12 representing the
latter's corresponding emergency cost of livingallowances. SOUTH MOTORISTS moved for
reconsideration of the Order, which was denied.

The Secretary of Labor and Employment affirmed the appealed Order. SOUTH MOTORISTS
moved for reconsideration but this proved unsuccessful. A Second Motion forReconsideration was
filed, which was likewise denied in an Order dated 7 March 1989. Hence, this certiorari.

Petition questioning the monetary award by the Regional Director and, in general, his jurisdiction to
validly award money claims.

SOUTH MOTORISTS maintains that said officials are bereft of authority to act on such claims as
this falls under the original and exclusive jurisdiction of Labor Arbiters. Respondents maintain
otherwise.

ISSUES:

1. WON the Regional Director has jurisdiction to try this case on money claims2.

2.WON the Secretary of Labor and Employment erred in affirming the award based on a mere
Inspection Report

RULING

As to the matter that the respondent Secretary of Labor and Employment erred in affirming the
award based on a mere Inspection Report, we see no reason for SOUTH MOTORISTS to
complain as it was afforded ample opportunity to present its side. It failed to present employment
records giving as an excuse that they were sent to the main office in Manila, in violation of Section
11 of Rule X, Book II of the Omnibus Rules Implementing the Labor Code providing that:

All employment records of the employees of the employer shall be kept and maintained in or about
the premises of the workplace. The premises of a workplace shall be understood to mean the main
or branch office or establishment, if any, depending., upon where the employees are regularly
assigned. The keeping of the employee's records in another place is prohibited.
SOUTH MOTORISTS also caused the resettings of all subsequent hearings—from 25 January
1983 to 8 February 1983, then to 16 February 1983, then to 3 March and finally, again requested
for another 30-day-extension on the ground that the documents, were still being prepared and
collated. Having been given the opportunity to put forth its case, SOUTH MOTORISTS has only
itself to blame for having failed to avail of the same (Adamson and Adamson, Inc. vs. Judge
Amores, G.R. No. 58292, 23 July 1987,152 SCRA 237). What is more, its repeated failure to
attend the hearings, and to submit any motion as manifested may be construed as a waiver of its
right to adduce evidence to controvert the worker's claims.

Gaa vs Court of Appeals (1985) 140 SCRA 304

Facts:

It appears that respondent Europhil Industries Corporation was formerly one of the tenants
in Trinity Building at T.M. Kalaw Street, Manila, while petitioner Rosario A. Gaa was then the
building administrator.

On December 12, 1973, Europhil Industries commenced an action (in the Court of First Instance of
Manila for damages against petitioner for having perpetrated certain acts that Europhil Industries
considered a trespass upon its rights, namely, cutting of its electricity, and removing its
name from the building directory and gate passes of its officials and employees", On June 28,
1974, said court rendered judgment in favor of respondent Europhil Industries, ordering petitioner
to pay the former the sum of P10,000.00 as actual damages, P5,000.00 as moral damages,
P5,000.00 as exemplary damages and to pay the costs.

The said decision having become final and executory, a writ of garnishment was issued pursuant
to which Deputy Sheriff Cesar A. Roxas on August 1, 1975 served a Notice of Garnishment
upon El Grande Hotel, where petitioner was then employed, garnishing her "salary,
commission and/or remuneration." Petitioner then filed with the Court of First Instance of Manila a
motion to lift said garnishment on the ground that her "salaries, commission and or
remuneration" are exempted from execution under Article 1708 of the New Civil Code. Said
motion was denied by the lower Court.

Court of Appeals dismissed the petition. In dismissing the petition, the Court of Appeals held that
petitioner is not a mere laborer as contemplated under Article 1708 as the term laborer does not
apply to one who holds a managerial or supervisory position like that of petitioner, but
only to those laborers occupying the lower strata.

Issue:

WON the Petitioner is covered by Article 1708 of the New Civil Code.

Held:

Petitioner is not covered by Article 1708 since she does not fall within the criteria of
laborer.
Article 1708 of the Civil Code provides: “The laborer's wage shall not be subject to execution or
attachment, except for debts incurred for food, shelter, clothing and medical attendance."
It is beyond dispute that petitioner is not an ordinary or rank and file laborer but a
responsibly place employee, of El Grande Hotel, responsible for planning, directing,
controlling, and coordinating the activities of all housekeeping personnel so as to ensure
the cleanliness, maintenance and orderliness of all guest rooms, function rooms, public
areas, and the surroundings of the hotel. Considering the importance of petitioner's function in El
Grande Hotel, it is undeniable that petitioner is occupying a position equivalent to that of a
managerial or supervisory position.

We do not think that the legislature intended the exemption in Article 1708 of the New Civil Code to
operate in favor of any but those who are laboring men or women in the sense that their work is
manual. Persons belonging to this class usually look to the reward of a day's labor for immediate or
present support, and such persons are more in need of the exemption than any others.

Petitioner is definitely not within that class.

HONORABLE E.L. PERALTA, PRESIDING JUDGE OF THE COURT OF FIRST INSTANCE OF

MANILA, BRANCH XVII, QUALITY TABACCO CORPORATION, FRANCISCO, FEDERACION
OBRERO DE LA INDUSTRIA TABAQUERA Y OTROS TRABAJADORES DE FILIPINAS
(FOITAF) USTC EMPLOYEES ASSOCIATION WORKERS UNION-PTGWO, respondents.

FACTS:

The Republic of the Philippines seeks the review on certiorari of the Order dated 17 November
1980 of the Court of First Instance of Manila in its Civil Case No. 108395 entitled "In the Matter of
Voluntary Insolvency of Quality Tobacco Corporation, Quality Tobacco Corporation, Petitioner,"
and of the Order dated 19 January 1981 of the same court denying the motion for reconsideration
of the earlier Order filed by the Bureau of Internal Revenue and the Bureau of Customs for the
Republic.

In the voluntary insolvency proceedings commenced in May 1977 by private respondent Quality
Tobacco Corporation (the "Insolvent"), the following claims of creditors were filed:

(i) P2,806,729.92, by the USTC Association of Employees and workers Union-PTGWO USTC as
separation pay for their members. This amount plus an additional sum of P280,672.99 as
attorney's fees had been awarded by the National Labor Relations Commission in NLRC Case No.
RB-IV-9775-77. 1

(ii) P53,805.05 by the Federacion de la Industria Tabaquera y Otros Trabajadores de Filipinas

("FOITAF), as separation pay for their members, an amount similarly awarded by the NLRC in the
same NLRC Case.

(iii) P1,085,188.22 by the Bureau of Internal Revenue for tobacco inspection fees covering the
period 1 October 1967 to 28 February 1973;

(iv) P276,161.00 by the Bureau of Customs for customs duties and taxes payable on various
importations by the Insolvent. These obligations appear to be secured by surety bonds. 2 Some of
these imported items are apparently still in customs custody so far as the record before this Court
goes.

In its questioned Order of 17 November 1980, the trial court held that the above-enumerated
claims of USTC and FOITAF (hereafter collectively referred to as the "Unions") for separation pay
of their respective members embodied in final awards of the National Labor Relations Commission
were to be preferred over the claims of the Bureau of Customs and the Bureau of Internal
Revenue. The trial court, in so ruling, relied primarily upon Article 110 of the Labor Code.

The Solicitor General, in seeking the reversal of the questioned Orders, argues that Article 110 of
the Labor Code is not applicable as it speaks of "wages," a term which he asserts does not include
the separation pay claimed by the Unions. "Separation pay," the Solicitor General contends, is
given to a laborer for a separation from employment computed on the basis of the number of years
the laborer was employed by the employer; it is a form of penalty or damage against the employer
in favor of the employee for the latter's dismissal or separation from service.

ISSUE:
WON separation pay of their respective members embodied in final awards of the NLRC were to be preferred
over the claims of the Bureau of Customs and the BIR.

HELD:

The resolution of the issue of priority among the several claims filed in the insolvency proceedings
instituted by the Insolvent cannot, however, rest on a reading of Article 110 of the labor Code
alone.

Article 110 of the Labor Code, in determining the reach of its terms, cannot be viewed in isolation.
Rather, Article 110 must be read in relation to the provisions of the Civil Code concerning the
classification, concurrence and preference of credits, which provisions find particular application in
insolvency proceedings where the claims of all creditors, preferred or non-preferred, may be
adjudicated in a binding manner. It is thus important to begin by outlining the scheme constituted
by the provisions of the Civil Code on this subject.

Those provisions may be seen to classify credits against a particular insolvent into three general
categories, namely:

(a) special preferred credits listed in Articles 2241 and 2242,

(b) ordinary preferred credits listed in Article 2244; and

(c) common credits under Article 2245.

Turning first to special preferred credits under Articles 2241 and 2242, it should be noted at once
that these credits constitute liens or encumbrances on the specific movable or immovable property
to which they relate. Article 2243 makes clear that these credits "shall be considered as mortgages
or pledges of real or personal property, or liens within the purview of legal provisions governing
insolvency." It should be emphasized in this connection that "duties, taxes and fees due [on
specific movable property of the insolvent] to the State or any subdivision thereof" (Article 2241 [1])
and "taxes due upon the [insolvent's] land or building (2242 [1])"stand first in preference in respect
of the particular movable or immovable property to which the tax liens have attached. Article 2243
is quite explicit: "[T]axes mentioned in number 1, Article 2241 and number 1, Article 2242 shall first
be satisfied. " The claims listed in numbers 2 to 13 in Article 2241 and in numbers 2 to 10 in
Articles 2242, all come after taxes in order of precedence; such claims enjoy their privileged
character as liens and may be paid only to the extent that taxes have been paid from the proceeds
of the specific property involved (or from any other sources) and only in respect of the remaining
balance of such proceeds. What is more, these other (non-tax) credits, although constituting liens
attaching to particular property, are not preferred one over another inter se. Provided tax liens shall
have been satisfied, non-tax liens or special preferred credits which subsist in respect of specific
movable or immovable property are to be treated on an equal basis and to be satisfied
concurrently and proportionately. Put succintly, Articles 2241 and 2242 jointly with Articles 2246 to
2249 establish a two-tier order of preference. The first tier includes only taxes, duties and fees due
on specific movable or immovable property. All other special preferred credits stand on the
same second tier to be satisfied, pari passu and pro rata, out of any residual value of the specific
property to which such other credits relate.

Credits which are specially preferred because they constitute liens (tax or non-tax) in turn, take
precedence over ordinary preferred credits so far as concerns the property to which the liens have
attached. The specially preferred credits must be discharged first out of the proceeds of the
property to which they relate, before ordinary preferred creditors may lay claim to any part of such
proceeds.

In contrast with Articles 2241 and 2242, Article 2244 creates no liens on determinate property
which follow such property. What Article 2244 creates are simply rights in favor of certain creditors
to have the cash and other assets of the insolvent applied in a certain sequence or order of
priority. 11

Only in respect of the insolvent's "free property" is an order of priority established by Article 2244.
In this sequence, certain taxes and assessments also figure but these do not have the same kind
of overriding preference that Articles 2241 No. 1 and 2242 No. I create for taxes which constituted
liens on the taxpayer's property. Under Article 2244,

(a) taxes and assessments due to the national government, excluding those which
result in tax liens under Articles 2241 No. 1 and 2242 No. 1 but including the
balance thereof not satisfied out of the movable or immovable property to which
such liens attached, are ninth in priority;

(b) taxes and assessments due any province, excluding those impressed as tax
liens under Articles 2241 No. 1 and 2242 No. 1, but including the balance thereof
not satisfied out of the movable or immovable property to which such liens attached,
are tenth in priority; and

(c) taxes and assessments due any city or municipality, excluding those impressed
as tax liens under Articles 2241 No. I and 2242 No. 2 but including the balance
thereof not satisfied out of the movable or immovable property to which such liens
attached, are eleventh in priority.

It is within the framework of the foregoing rules of the Civil Code that the question of the relative
priority of the claims of the Bureau of Customs and the Bureau of Internal Revenue, on the one
hand, and of the claims of the Unions for separation pay of their members, on the other hand, is to
be resolved. A related vital issue is what impact Article 110 of the labor Code has had on those
provisions of the Civil Code.

A. Claim of the Bureau of Customs for Unpaid Customs Duties and Taxes-

Under Section 1204 of the Tariff and Customs Code, 12 the liability of an importer

for duties, taxes and fees and other charges attaching on importation constitute a personal debt
due from the importer to the government which can be discharged only by payment in full of all
duties, taxes, fees and other charges legally accruing It also constitutes a lien upon the articles
imported which may be enforced while such articles are in the custody or subject to the control of
the government. (emphasis supplied)

Clearly, the claim of the Bureau of Customs for unpaid customs duties and taxes enjoys the status
of a specially preferred credit under Article 2241, No. 1, of the Civil Code. only in respect of the
articles importation of which by the Insolvent resulted in the assessment of the unpaid taxes and
duties, and which are still in the custody or subject to the control of the Bureau of Customs. The
goods imported on one occasion are not subject to a lien for customs duties and taxes assessed
upon other importations though also effected by the Insolvent. Customs duties and taxes which
remain unsatisfied after levy upon the imported articles on which such duties and taxes are due,
would have to be paid out of the Insolvent's "free property" in accordance with the order of
preference embodied in Article 2244 of the Civil Code. Such unsatisfied customs duties and taxes
would fall within Article 2244, No. 9, of the Civil Code and hence would be ninth in priority.

Article 110 of the Labor Code does not purport to create a lien in favor of workers or employees for
unpaid wages either upon all of the properties or upon any particular property owned by their
employer. Claims for unpaid wages do not therefore fall at all within the category of specially
preferred claims established under Articles 2241 and 2242 of the Civil Code, except to the extent
that such claims for unpaid wages are already covered by Article 2241, number 6. "claims for
laborers' wages, on the goods manufactured or the work done;" or by Article 2242, number 3:
"claims of laborers and other workers engaged in the construction, reconstruction or repair of
buildings, canals and other works, upon said buildings, canals or other works." To the extent that
claims for unpaid wages fall outside the scope of Article 2241, number 6 and 2242, number 3, they
would come within the ambit of the category of ordinary preferred credits under Article 2244.
Applying Article 2241, number 6 to the instant case, the claims of the Unions for separation pay of
their members constitute liens attaching to the processed leaf tobacco, cigars and cigarettes and
other products produced or manufactured by the Insolvent, but not to other assets owned by the
Insolvent. And even in respect of such tobacco and tobacco products produced by the Insolvent,
the claims of the Unions may be given effect only after the Bureau of Internal Revenue's claim for
unpaid tobacco inspection fees shall have been satisfied out of the products so manufactured by
the Insolvent.

Article 2242, number 3, also creates a lien or encumbrance upon a building or other real property
of the Insolvent in favor of workmen who constructed or repaired such building or other real
property. Article 2242, number 3, does not however appear relevant in the instant case, since the
members of the Unions to whom separation pay is due rendered services to the Insolvent not (so
far as the record of this case would show) in the construction or repair of buildings or other real
property, but rather, in the regular course of the manufacturing operations of the Insolvent. The
Unions' claims do not therefore constitute a lien or encumbrance upon any immovable property
owned by the Insolvent, but rather, as already indicated, upon the Insolvent's existing inventory (if
any of processed tobacco and tobacco products.

Bearing in mind the overriding precedence given to taxes, duties and fees by the Civil Code and
the fact that the Labor Code does not impress any lien on the property of an employer, the use of
the phrase "first preference" in Article 110 indicates that what Article 110 intended to modify is the
order of preference found in Article 2244, which order relates, as we have seen, to property of the
Insolvent that is not burdened with the liens or encumbrances created or recognized by Articles
2241 and 2242. We have noted that Article 2244, number 2, establishes second priority for claims
for wages for services rendered by employees or laborers of the Insolvent "for one year preceding
the commencement of the proceedings in insolvency." Article 110 of the Labor Code establishes
"first preference" for services rendered "during the period prior to the bankruptcy or liquidation, " a
period not limited to the year immediately prior to the bankruptcy or liquidation. Thus, very
substantial effect may be given to the provisions of Article 110 without grievously distorting the
framework established in the Civil Code by holding, as we so hold, that Article 110 of the Labor
Code has modified Article 2244 of the Civil Code in two respects: (a) firstly, by removing the one
year limitation found in Article 2244, number 2; and (b) secondly, by moving up claims for unpaid
wages of laborers or workers of the Insolvent from second priority to first priority in the order of
preference established by Article 2244.

In respect of (a), if the Insolvent has inventories of processed or manufactured tobacco products,
such inventories must be subjected firstly to the claim of the Bureau of Internal Revenue for unpaid
tobacco inspection fees. The remaining value of such inventories after satisfaction of such fees (or
should such inspection fees be satisfied out of other properties of the Insolvent) will be subject to a
lien in favor of the Unions by virtue of Article 2241, number 6. In case, upon the other hand, the
Insolvent no longer has any inventory of processed or manufactured product, then the claim of the
Unions for separation pay would have to be satisfied out of the "free property" of the Insolvent
under Article 2244 of the Civil Code. as modified by Article 110 of the Labor Code.

35.
Manila Banking Corporation v. NLRC THE MANILA BANKING CORPORATION V.THE
NATIONAL LABOR RELATIONS COMMISSION GR 107487 & 107902, SEPTEMBER 29, 1997
FACTS
On June 5, 1984, petitioner Manila Banking Corporation (Manilabank) was placed under
comptrollership by then Central Bank in view of the bank's financial distress. . On May 22, 1987,
the Monetary Board issued Resolution No. 505 prohibiting Manila bank from doing business in the
Philippines. Feliciano Miranda, Jr. was designated as receiver. He immediately took charge of the
bank's assets and liabilities. He likewise terminated the employment of about 343 officers and top
managers of the bank. All these officers and top managers, who are private respondents herein,
were paid whatever separation and/or retirement benefits were due them. 4. Private respondents
filed a complaint against Manila bank and its statutory receiver with. the arbitration branch of the
National Labor Relations Commission (NLRC) claiming entitlement to the following additional
benefits alleged to have accrued from 1984 to their effective dates of termination, viz: (a) Wage
increases; (b) Christmas bonuses; (c) Mid-year bonuses; (d) Profit sharing; (e) Car and travel
plans; (f) Gasoline allowances; (g) Differentials on accrued leaves, retirement and other bonuses;
(h) Longevity pay and loyalty pay; (i) Medical, dental and optical benefits; and (j) Uniform
allowances. 5. Such claim to entitlement of the foregoing benefits was based on Manila bank's
alleged practice, policy and tradition of awarding said benefits. They contended that the policy has
ripened into vested property rights in their favor. 6. On November 14, 1989, Labor Arbiter Felipe
Pati rendered his decision ordering Manila bank and its statutory receiver to pay in full all the
claims of private respondents amounting to P193,338,212. 33.
ISSUE
Whether or not private respondents are entitled to receive bonus despite the financial distress of
the company?
HELD:
NO. By definition, a "bonus" is a gratuity or act of liberality of the giver which the recipient has no
right to demand as a matter of right. It is something given in addition to what is ordinarily received
by or strictly due the recipient. The granting of a bonus is basically a management prerogative
which cannot be forced upon the employer who may not be obliged to assume the onerous burden
of granting bonuses or other benefits aside from the employee's basic salaries or wages,
especially so if it is incapable of doing so. Clearly then, a bonus is an amount given ex gratia to an
employee by an employer on account of success in business or realization of profits. How then can
an employer be made liable to pay additional benefits in the nature of bonuses to its employees
when it has been operating on considerable net losses for a given period of time? Records bear
out that petitioner Manilabank was already in dire financial straits in the mid-80's. As early as 1984,
the Central Bank found that Manilabank had been suffering financial losses. Presumably the
problems commenced even before their discovery in 1984. As earlier chronicled, the Central Bank
placed petitioner bank under comptrollership in 1984 because of liquidity problems and excessive
interbank borrowings. In 1987, it was placed under receivership and was ordered to close
operation. In 1988, it was ordered liquidated. It is evident, therefore, that petitioner bank was
operating on net losses from the years 1984, 1985 and 1986, thus, resulting to its eventual closure
in 1987 and liquidation in 1988. Clearly, there was no success in business or realization of profits
to speak of that would warrant the conferment of additional benefits sought by private respondents.
No company should be compelled to act liberally and confer upon its employees additional benefits
over That in all things, God may be glorified. CSB DIGESTS LABOR STANDARDS LAW - 41 - and
above those mandated by law when it is plagued by economic difficulties and financial losses. No
act of enlightened generosity and self-interest can be exacted from near empty, if not empty,
coffers. Consequently, on the ten (10) items awarded to herein private respondents which
represent additional benefits, they having already been paid separation and retirement benefits.

36.

CIRINEO BOWLING PLAZA, INC., petitioner,

vs.
GERRY SENSING, et al, DEPARTMENT OF LABOR AND EMPLOYMENT and COURT of
APPEALS, respondents.

Before us is a special civil action for certiorari filed by petitioner assailing the Resolution of the
Court of Appeals (CA) which dismissed petitioner’s petition for certiorari; and the Resolution which
denied petitioner’s motion for reconsideration.

FACTS:

Eligio Paolo, Jr., an employee of petitioner, filed a letter complaint with the Department of Labor
and Employment (DOLE for short), Dagupan District Office, Dagupan City, requesting for the
inspection/investigation of petitioner for various labor law violations like underpayment of wages,
13th month pay, non-payment of rest day pay, overtime pay, holiday pay and service incentive
leave pay. Pursuant to the visitorial and enforcement powers of the Secretary of Labor and
Employment, his duly authorized representative under Article 128 of the Labor Code, as amended,
conducted inspections on petitioner’s establishment the following day. In his inspection
report,Labor and Employment Officer III, Crisanto Rey Dingle, found that petitioner has thirteen5
employees and had committed the following violations: underpayment of minimum wage, 13th
month pay, holiday premiums, overtime premiums, and non-payment of rest day. The findings in
the inspection report were explained to petitioner’s officer-in-charge, Ma. Fe Boquiren, who signed
the same.

An Order was issued by the DOLE Regional Office, the dispositive portion of which reads:

WHEREFORE, premises considered and considering further that the amount computed constitutes
part of the lawful remunerations of thirteen affected employees, respondent is hereby ordered to
pay them the total amount of THREE HUNDRED SEVENTY SEVEN THOUSAND FIVE
HUNDRED PESOS AND 58/100. (P377,500.58), representing their unpaid/underpaid wages, 13th
month pay, holiday premiums, rest day pay and overtime premiums.

And to submit the proof of payment to this Office within ten (10) days from receipt hereof.
Otherwise, a Writ of Execution will be issued to enforce this order.
Respondent is further ORDERED to adjust the salaries of its employees to the applicable daily
minimum wages and to submit the proof thereof within the same period.

Petitioner’s representative, Carmen Zapata, appeared before the DOLE Regional Office and
submitted the quitclaims, waivers and releases of employees-awardees, Lamberto Solano, Jovelyn
Quinto, Manuel Benitez, Edgar Dizon, Ronillo Tandoc, Eligio Paolo, Jr., and Dario Benitez. Later,
however, Benitez, Tandoc, Quinto and Dizon wrote DOLE a letter denying having received any
amount from petitioner. Thus, DOLE’s inspector Dingle went to petitioner’s establishment to
confirm the authenticity of the quitclaims and releases and talked to the employees concerned who
stated that they signed the document without knowing its contents but they are willing to settle if
they will be given the amount computed by DOLE.
Luisito Cirineo and a certain Fe Cirineo Octaviano, owner of Esperanza Seafoods Kitchenette
stationed in petitioner’s establishment, wrote DOLE a letter requesting that the case be endorsed
to the National Labor Relations Commission since the resolution of the case required evidentiary
matters not disclosed or verified in the normal course of inspection. They also submitted
documents to show that petitioner and Esperanza Seafoods Kitchenette are separate and
distinct business entities and that some of the employees-awardees are actually employees
of the Esperanza Seafoods Kitchenette.

DOLE issued its Order stating among others:

Records show that respondent, Luisito Cirineo and his representative appeared before this Office
during the summary investigation of this instant case but they never once mentioned the issue of
separate juridical personalities. Respondent had always been bent on settling the respective
claims of all thirteen (13) concerned employees. In the process, however, he acknowledged being
their employer. He cannot at this juncture therefore say, that some of the awardees in our ORDER
are employees of another business entity. This being the case, we cannot grant his request for
indorsement to the NLRC.

WHEREFORE, premises considered, the case of employees Eligio Paolo, Jr. and Lamberto
Solano whose respective claims had been settled by respondent is hereby DISMISSED. The
ORDER for the payment of the monetary claims of the eleven (11) other cash awardees STANDS.
Let execution follow immediately.

DOLE Regional Director Maximo B. Lim issued a writ of execution. Petitioner filed a motion to
quash the writ of execution.

In an Order, DOLE Regional Director Lim denied petitioner’s motion to quash the writ of execution.

Petitioner filed its Memorandum of Appeal to the Secretary of Labor and Employment who
dismissed the appeal on the ground that same was filed out of time. On motion for reconsideration,
the appeal was granted and the appeal was given due course.
DOLE Undersecretary Jose Español dismissed the appeal and affirmed the order of the
DOLE Regional Director.

In support thereof, respondent alleges that it had only eight (8) employees as the “other claimants
of labor benefits . . . are employees of Fe Esperanza Octaviano doing business under the name
and style “Esperanza Seafoods Kitchenette.” Thus, it points out that:
Hence, under the Labor Code, Article 94 thereof the employees of the appellant are not entitled to
holiday pay and holiday premium pay.

Under Republic Act 6727 and its Implementing Rules, Chapter 1, Section 1 thereof, establishments
employing less than ten (10) employees are exempted from compliance with minimum wage rates.
Hence, the wages given to respondents do not constitute under payments. As to their claims for
overtime pay and rest day pay, there is no proof that respondents rendered overtime or restday
work, hence they are not entitled to the same.
We do not agree.

The records show that during the summary investigation respondent never refuted the findings of
the labor inspector particularly the identity of the thirteen (13) concerned employees nor raised the
issue of separate juridical personalities of respondent Cirineo and Esperanza Seafoods
Kitchenette.
The documents submitted to this Office by respondent could be interpreted as a desperate attempt
to mislead this Office and to evade liability.
On the issue of jurisdiction, we rule that the Regional Director has jurisdiction over the
instant case.

The old rule limiting the jurisdiction of the Secretary of Labor and Employment or his duly
authorized representatives to money claims not exceeding P5,000.00 has been repealed by the
passage of R.A. No. 7730, Section 1.

Pursuant to R.A. 7730, the jurisdictional limitations imposed by Article 129 on the visitorial and
enforcement powers of this Office under Article 128 of the Labor Code, have been repealed. The
phrase “notwithstanding the provision of Articles 129 and 217 of the Labor Code to the contrary,”
erases all doubts as to the amendatory nature of R.A. No. 7730. The amendment, in effect,
overturned the rulings in the Aboitiz and Servandos cases insofar as the restrictive effect of Article
129 on the use of the power under Article 128 is concerned.

Petitioner’s motion for reconsideration was denied in a Resolution dated April 18, 2000.
Petitioner filed a petition for certiorari with prayer for the issuance of temporary restraining order
with the CA.

The CA dismissed the petition for failure of petitioner to (1) attach a copy of the letter complaint
filed by petitioner’s employees and the Order dated February 7, 1997 of the DOLE Regional
Director and (2) state the material date when the assailed Orders/Resolutions were received
pursuant to Section 1 of Rule 65 and Section 3 of Rule 46 of the 1997 Rules of Civil Procedure.
Petitioner filed a motion for reconsideration which was also denied by the CA.

ISSUE:

WHETHER PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT DISMISSED
THE INSTANT PETITION AND OUTRIGHT DISMISSAL OF PETITIONER’S MOTION FOR
RECONSIDERATION DUE TO MERE TECHNICALITIES.

HELD:

We dismiss the petition.

We find no grave abuse of discretion committed by the CA in issuing the assailed resolutions. The
CA dismissed the petition for certiorari for failure of petitioner to attach certain documents and to
state the material date. Section 3. Contents and filing of petition; effect of non-compliance with
requirements.-

In actions filed under Rule 65, the petition shall further indicate the material dates showing when
the notice of the judgment or final order or resolution subject thereof was received, when a motion
for new trial or reconsideration, if any, was filed and when notice of the denial thereof was
received.

The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient
ground for the dismissal of the petition.

It bears stressing that the timely perfection of an appeal is a mandatory requirement, which cannot
be trifled with as a “mere technicality” to suit the interest of a party.

Even if we disregard technicality, we find the arguments raised by petitioner without merit. As
correctly held by the DOLE Regional Director and sustained by the DOLE Undersecretary, records
show that petitioner never refuted the findings of the labor inspector as to the identity of the
thirteen employees nor raised the issue of separate juridical personalities of petitioner Cirineo and
Esperanza Seafoods Kitchenette during the investigation and on the hearings conducted.

Likewise, we sustain the jurisdiction of the DOLE Regional Director. The visitorial and enforcement
powers of the DOLE Regional Director to order and enforce compliance with labor standard laws
can be exercised even where the individual claim exceeds P5,000.00
(Art. 128. Visitorial and enforcement power is cited)

An order issued by the duly authorized representative of the Secretary of Labor and Employment
under this article may be appealed to the latter. In case said order involved a monetary award, an
appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by
a reputable bonding company duly accredited by the Secretary of Labor and Employment in the
amount equivalent to the monetary award in the order appealed from.

The aforequoted provision explicitly excludes from its coverage Articles 129 and 217 of the Labor
Code by the phrase “(N)otwithstanding the provisions of Articles 129 and 217 of this Code to the
contrary . . .” thereby retaining and further strengthening the power of the Secretary of Labor or his
duly authorized representative to issue compliance orders to give effect to the labor standards
provisions of said Code and other labor legislation based on the findings of labor employment and
enforcement officers or industrial safety engineers made in the course of inspection.

In the case at bar, the Office of respondent Regional Director conducted inspection visits at
petitioner’s establishment on February 9 and 14, 1995 in accordance with the above-mentioned
provision of law. In the course of said inspection, several violations of the labor standard provisions
of the Labor Code were discovered and reported by Senior Labor Enforcement Officer Eduvigis A.
Acero in his Notice of Inspection Results. It was on the bases of the aforesaid findings (which
petitioner did not contest), that respondent Regional Director issued the assailed Order for
petitioner to pay private respondents the respective wage differentials due them.

Clearly, as the duly authorized representative of respondent Secretary of Labor, and in the
lawful exercise of the Secretary’s visitorial and enforcement powers under Article 128 of the
Labor Code, respondent Regional Director had jurisdiction to issue his impugned Order.

We dismiss the petition. Pursuant to Section 1 of Republic Act 7730 [Approved on June 2, 1994]
which amended Article 128 (b) of the Labor Code, the Secretary of Labor and Employment or his
duly authorized representative, in the exercise of their visitorial and enforcement powers, are now
authorized to issue compliance orders to give effect to the labor standards provisions of this Code
and other labor legislation based on the findings of labor employment and enforcement officers or
industrial safety engineers made in the course of inspection, sans any restriction with respect to
the jurisdictional amount of P5,000.00 provided under Article 129 and Article 217 of the Code.

The instant case therefore falls squarely within the coverage of the aforecited amendment as the
assailed order was issued to en nn orce compliance with the provisions of the Code with
respect to the payment of proper wages. Hence, petitioner’s claim of lack of jurisdiction on the part
of public respondent is bereft of merit.
WHEREFORE, the instant petition is DISMISSED for lack of merit.

37.

FRANCISCO GUICO vs. HON. LEONARDO QUISIMBING et. al. G.R. No. 131750. November
16, 1998
Facts:
The case started when the Office of the Regional Director, Department of Labor and Employment
(DOLE), Region I, San Fernando, La Union, received a lettercomplaint dated April 25, 1995,
requesting for an investigation of petitioner's establishment, Copylandia Services & Trading, for
violation of labor standards laws. Pursuant to the visitorial and enforcement powers of the
Secretary of Labor and Employment or his duly authorized representative under Article 128 of the
Labor Code, as amended, inspections were conducted at Copylandia's outlets on April 27 and May
2, 1995. The inspections yielded the following violations involving twenty-one (21) employees who
are copier operators: (1) underpayment of wages; (2) underpayment of 13th month pay; and (3) no
service incentive leave with pay.
Issue:
Whether or not the Regional Director has jurisdiction over the labor standards case.
Ruling:
The petition was dismissed. The Court sustained the jurisdiction of the respondent Secretary. As
the respondent correctly pointed out, this Court's ruling in Servando case that the visitorial power
of the Secretary of Labor to order and enforce compliance with labor standard laws cannot be
exercised where the individual claim exceeds P5,000.00, can no longer be applied in view of the
enactment of R.A. No. 7730 amending Article 128(b) of the Labor Code. Moreover, the records of
the House of Representatives show that Congressmen Alberto S. Veloso and Eriberto V. Loreto
sponsored the law. In his sponsorship speech, Congressman Veloso categorically declared that
"this bill seeks to do away with the jurisdictional limitations imposed through said ruling (referring to
Servando) and to finally settle any lingering doubts on the visitorial and enforcement powers of the
Secretary of Labor and Employment." Thus, petitioner's reliance on Servando is untenable.

38.
DENTECH MANUFACTURING V NLRC (MARBELLA) 172 SCRA 588 GANCAYCO; April 19,
1989

FACTS:
Dentech Manufacturing Corporation is a domestic corporation organized under Philippine laws
owned and managed by the petitioner Jacinto Ledesma. The firm is engaged in the manufacture
and sale of dental equipment and supplies. - Private respondents Benjamin Marbella, Armando
Torno, Juanito Tajan, Jr. and Joel Torno are members of the Confederation of Citizens Labor
Union (CCLU), a labor organization registered with the DOLE. They used to be the employees of
Dentech, working 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. - They filed a Complaint with the NLRC against Dentech and Ledesma for,
among others, illegal dismissal and violation of PD 851. 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 PD 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. It is alleged that they were dismissed
from the firm for pursuing union activities. - Dentech argued that they are not entitled to a 13th
month pay. They maintained that each of the private respondents receive a total monthly
compensation of more that P1,000 and that under Section 1 of PD 851, such employees are not
entitled to receive a 13th month pay. Also, the company is in bad financial shape and that pursuant
to Section 3, the firm is exempted from complying with the provisions of the Decree. Dentech also
contended that the refund of the cash bond filed by the Marbella, et al., is improper inasmuch as
the proceeds of the same had already been given to a certain carinderia to pay for their
outstanding accounts.

ISSUES:
1. WON the private respondents are entitled as a matter of right to a 13th month pay
2. WON the refund of the cash bond is proper

HELD:
1. YES.

PD 851 was signed into law in 1975 by then President Ferdinand Marcos. Under the original
provisions of Section 1, all employers are required to pay all their employees receiving a basic
salary of not more than P1,000 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 Labor Law
1 A2010 - 159 - Disini regulations implementing PD 851, financially distressed employers, i.,e.,
those currently incurring substantial losses, are not covered by the Decree. Section 7 requires,
however, that such distressed employers must obtain the prior authorization of the Secretary of
Labor before they may qualify for such exemption. - On May 1, 1978, PD 1364 was signed into
law. The Decree enjoined the DOLE to stop accepting applications for exemption under PD 851.
On August 13, 1986, President Corazon Aquino issued Memorandum Order No. 28 which modified
Section 1 of PD 851. The said issuance eliminated the P1,000 salary ceiling. - It clearly appears
that Dentech has no basis to claim that it is exempted from complying with the provisions of the
law relating to the 13th month pay. The P1,000 salary ceiling provided in PD 851 pertains to basic
salary, not total monthly compensation. Dentech admits that Marbella, at al., work only five days a
week and that they each receive a basic daily wage of P40 only. A simple computation of the basic
daily wage multiplied by the number of working days in a month results in an amount of less than
P1,000. Thus, there is no basis for the contention that the company is exempted from the provision
of PD 851 which mandated the payment of 13th month compensation to employees receiving less
than P1,000 a month. [NOTE: Cory’s Memo (1986) is not yet applicable as of the time Marbella, et
al., were dismissed (1985).] - Even assuming, arguendo, that Marbella, et al., are each paid a
monthly salary of over P1,000, Dentech is still not in a position to claim exemption. The rules and
regulations implementing PD 851 provide that a distressed employer shall qualify for exemption
from the requirements of the Decree only upon prior authorization from the Secretary of Labor. No
such prior authorization had been obtained by Dentech.
2. YES.

The refund of the cash bond is in order. Article 114 of the Labor Code prohibits an employer from
requiring his employees to file a cash bond or to make deposits, subject to certain exceptions. -
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. - Dentech has not satisfactorily disputed the applicability of this
provision to the case at bar. Considering further that it failed to show that it is authorized by law to
require Marbella, et al., to file the cash bond in question, the refund is in order. - The allegation that
the proceeds of the cash bond had already been given to a certain carinderia to pay for the
accounts of the private respondents does not merit serious consideration. No evidence or receipt
has been shown to prove such payment. Disposition Petition is hereby DISMISSED for lack of
merit.

39.
TERMINATED EMPLOYEES
ARCHILLES MANUFACTURING CORP V NLRC (MANUEL, ET AL) 244 SCRA 750
BELLOSILLO; June 2, 1995 NATURE Appeal on certiorari
FACTS:
Private respondents Geronimo Manuel, Arnulfo Diaz, Jaime Carunungan and Benjamin Rindon
were employed by Archilles Manufacturing Corporation, (Alberto Yu - Chairman) and (Adrian Yu-
VP) as laborers in its steel factory located in Bulacan, each receiving a daily wage of P96.00. -
ARCHILLES was maintaining a bunkhouse in the work area which served as resting place for its
workers. In 1988 a mauling incident nearly took place involving a relative of an employee. As a
result, ARCHILLES prohibited its workers from bringing any member of their family to the
bunkhouse. But despite this prohibition, private respondents continued to bring their respective
families to the bunkhouse, causing annoyance and discomfort to the other workers. This was
brought to the attention of ARCHILLES. - The management ordered private respondent to remove
their families from the bunkhouse and to explain their violation of the company rule. Private
respondents removed their families from the premises but failed to report to the management as
required; instead, they absented themselves from 14 to 18 May 1990. Consequently, ARCHILLES
terminated their employment for abandonment and for violation of the company rule regarding the
use of the bunkhouse. 3 - Private respondents filed a complaint for illegal dismissal. The Labor
Arbiter found the dismissal of private respondents illegal and ordered their reinstatement as well as
the payment to them the backwages, proportionate 13th month pay for the year 1990 and
attorney'sfees. ARCHILLES appealed. - NLRC set aside the decision of the LA and ruled that the
dismissal of private respondents was valid. However, it ordered ARCHILLES to pay private
respondents their "withheld" salaries from 19 September 1991and to pay their proportionate 13th
month pay for 1990.
ISSUE
WON dismissal for cause results in the forfeiture of the employee's right to a 13th month pay HELD
NO - Paragraph 6 of the Revised Guidelines on the Implementation of the 13th Month Pay Law (P.
D. 851) provides that "an employee who has resigned or whose services were terminated at any
time before the payment of the 13th month pay is entitled to this monetary benefit in proportion to
the length of time he worked during the year, reckoned from the time he started working during the
calendar year up to the time of his resignation or termination from the service . . . The payment of
the 13th month pay may be demanded by the employee upon the cessation of employer-employee
relationship. This is consistent with the principle of equity that as the employer can require the
employee to clear himself of all liabilities and property accountability, so can the employee demand
the payment of all benefits due him upon the termination of the relationship." - Furthermore, Sec. 4
of the original Implementing Rules of P.D. 851 mandates employers to pay their employees a 13th
month pay not later than the 24th of December every year provided that they have worked for at
least one (1) month during a calendar year. In effect, this statutory benefit is automatically vested
in the employee who has at least worked for one month during the calendar year. As correctly
stated by the Solicitor General, such benefit may not be lost or forfeited even in the event of the
employee's subsequent dismissal for cause without violating his property rights.

40.
Ultra Villa Food Haus v. Geniston, 309 SCRA 17 (1999)
FACTS:
This special civil action for certiorari arises from an illegal dismissal complaint filed by
private respondent Geniston. He claims to have been an “all-around worker” of Ultra Villa Food
Haus Restaurant. He was employed from March 1, 1989 until May 13, 1992. As Geniston served
acted as NUCD Poll Watcher in the 1992 elections, he did not report for work on May 11-12, 1992.
He alleged that his employer told his mother that he was dismissed from work and his pleas for
reinstatement failed.
Petitioner Tio maintains that Geniston was her personal driver and not an employee of Ultra
Villa. His responsibility was to drive her to and from her Office. Although May 12, 1992 was a
holiday, she asked him to report for work, but was told that he was doing election duties. Hence
she had to hire a substitute driver, as Respondent returned to work a week after and only to collect
his salary.
ISSUE: Whether or not Geniston is entitled to OT, premium pay, SIL pay and 13th month pay
HELD:
The Labor Arbiter ruled that Geniston was Petitioner’s personal driver and therefore not
entitled to OT, premium pay, SIL pay and 13th month pay. He was also deemed not entitled to
salary differentials or separation pay. However, Petitioner was ordered to indemnify private
Respondent the amount of P1,000.00 for failure of employer to observe procedural due process.
On appeal, the NLRC ordered petitioner to reinstate Geniston and pay backwages,
OT,Holiday pay, premium pay, 13th month pay and SIL. On Motion for Reconsideration, the NLRC
ordered payment of separation pay in lieu of reinstatement (due to closure of the business) but
denied Geniston’s prayer for damages and attorney’s fees. It denied petitioner’s MR, ruling that
Gensiton was an employee of Ultravilla Food Haus.
The Supreme Court found Geniston was the personal driver of petitioner, not of Ultra Villa
Food Haus, as shown by the submitted evidence and admissions of the respondent that he was
petitioner’s personal driver. The criterion of househelper under Art. 141 have been met: “ Domestic
or household service shall mean services in the employers home which is usually necessary or
desirable for the maintenance and enjoyment therefore and includes ministering to the personal
comfort and convenience of the members of the employers’ household, including services of family
drivers.” Book III, Title 1 of the Labor Code and Article 82, expressly excludes domestic helpers
from its coverage, and as such, petitioner is not required to grant OT, holiday pay, premium pay
and SIL. While PD851 excludes househelpers from the coverage of 13th month pay, petitioner was
required to pay such considering that it has been its practice to give its employees 13th Month
Pay.
The Court found, however, that respondent did not abandon his job, as the two requisites (
failure to report to work without valid reason, and a clear intention to sever the employer-employee
relationship) were not met. Petitioner failed to prove abandonment. It is quite unbelievable that
private respondent would leave a stable and relatively well-paying job as petitioner’s family driver
to work as an election worker, the functions of which are seasonal and temporary in nature. He
was unjustly dismissed from work, and is entitled to indemnity as provided for under Art. 149 of the
Labor Code. "compensation already earned plus that for fifteen days by way of indemnity.” Further,
because of failure to comply with die process in dismissing private respondent, petitioner was also
ordered to pay an additional indemnity of P1,000.00.
 41.

BOIE TAKEDA V DELA SERNA 228 SCRA 329 NARVASA; December 10, 1993
NATURE Petition for review via certiorari and for issuance of writ of prohibition
(consolidated)

FACTS:
(HISTORY OF 13TH MONTH PAY – PD 851) - Initially, PD 851 ordered the payment of 13th
month pay to workers receiving basic salary of not more than P1,000.00 a month, regardless of the
nature of the employment. - DECEMBER 22, 1975: Rules and Regulations Implementing P.D. 851
promulgated by Labor Minister Ople, defined 13th month pay, and basic salary as including “all
remunerations 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;” and exempted employers of those who
are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for
performing a specific work from payment of 13th month pay - Supplementary Rules and
Regulations implementing P.D. 851 were subsequently issued by Minister Ople, which enumerated
items not included in the computation of the 13th month pay: overtime pay, earnings and other
remunerations which are not part of the basic salary - AUGUST 13, 1986: President Corazon C.
Aquino promulgated Memorandum Order No. 28 which modified PD 851 by removing the salary
ceiling of P1,000.00 a month set by the latter, - NOVEMBER 16, 1987: Revised Guidelines on the
Implementation of the 13th Month Pay Law were promulgated by Sec. Drilon which, among other
things, enumerated remunerative items not embraced in the concept of 13th month pay
(allowances and monetary benefits which are not considered or integrated as part of the regular or
basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime,
premium, night differential and holiday pay, and cost-of-living allowances), and specifically dealt
with employees who are paid a fixed or guaranteed wage plus commission (Employees who are
paid a fixed or guaranteed wage plus commission are also entitled to the mandated 13th month
pay based on their total earnings during the calendar year, i.e., on both their fixed or guaranteed
wage and commission) - DOLE conducted a routine inspection in the premises of both Boie
Takeda and Philippine Fuji Xerox Corp. It was found that both companies failed to pay the 13th
month pay of their employees for the years 1986, 1987, and 1988. Both companies were ordered
to restitute the said underpayment within 5-10 days. Both companies appealed but were denied. -
BASIC CONTENTION OF THE PETITIONERS: commissions should not be included in the
computation of the basic salary as basis for the 13th month pay - BASIC CONTENTION OF THE
RESPONDENTS: Commissions are now included in the computation for the 13th month pay, as
clarified by the Revised Guidelines issued by Sec. Drilon.
ISSUE:
WON the Revised Guidelines on the Implementation of the 13th Month Pay Law issued by Labor
Sec. Drilon should be declared null and void as being violative of the law said Guidelines were
issued to implement, hence issued with grave abuse of discretion correctible by the writ of
prohibition and certiorari (Thus, commissions should not be included in the computation for basic
salary as basis for 13th month pay).
HELD:
YES - In including commissions in the computation of the 13th month pay, the second paragraph
of Section 5(a) of the Revised Guidelines on the Implementation of the 13th Month Pay Law unduly
expanded the concept of "basic salary" as defined in P.D. 851. It is a fundamental rule that
implementing rules cannot add to or detract from the provisions of the law it is designed to
implement. Administrative regulations adopted under legislative authority by a particular
department must be in harmony with the provisions of the law they are intended to carry into effect.
They cannot widen its scope. An administrative agency cannot amend an act of Congress. Ratio.
In remunerative schemes consisting of a fixed or guaranteed wage plus commission, the fixed or
guaranteed wage is patently the "basic salary" for this is what the employee receives for a
standard work period. Commissions are given for extra efforts exerted in consummating sales or
other related transactions. They are, as such, additional pay, which this Court has made clear do
not form part of the "basic salary." Reasoning - San Miguel Corp. vs. Inciong discussion on history
of 13th Month Pay Law. The exclusion of all allowances and monetary benefits such as profit-
sharing payments, COLA, overtime pay, premiums for special holiday, and the like indicate the
intention to strip basic salary of other payments, and any and all additions which may be in the
form of allowances or “fringe” benefits. If they were not excluded, it is hard to find any “earnings
and other remunerations” (exclusionary phrase) expressly excluded in the computation of the 13th
month pay. Then the exclusionary provision would prove to be idle and with no purpose.
Disposition the consolidated petitions are hereby GRANTED. The second paragraph of Section 5
(a) of the Revised Guidelines on the Implementation of the 13th Month Pay Law issued on
November 126, 1987 by then Labor Secretary Franklin M. Drilon is declared null and void as being
violative of the law said Guidelines were issued to implement, hence issued with grave abuse of
discretion correctible by the writ of prohibition and certiorari. The assailed Orders of January 17,
1990 and October 10, 1991 based thereon are SET ASIDE. SO ORDERED

42.

(Topic: Basic Wage/Commission)

[G.r. No. 121927. April 22, 1998]

ANTONIO W. IRAN, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION

FACTS:

Petitioner Antonio Iran is engaged in softdrinks merchandising and distribution in Mandaue City,
Cebu, employing truck drivers who double as salesmen, truck helpers, and non-field personnel in
pursuit thereof. Petitioner hired private respondents Godofredo Petralba, Moreno Cadalso, Celso
Labiaga and Fernando Colina as drivers/salesmen while private respondents Pepito Tecson,
Apolinario Gimena, Jesus Bandilao, Edwin Martin and Diosdado Gonzalgo were hired as truck
helpers. Drivers/salesmen drove petitioner’s delivery trucks and promoted, sold and delivered
softdrinks to various outlets in Mandaue City.
As part of their compensation, the driver/salesmen and truck helpers of petitioner received
commissions per case of softdrinks sold
Both parties seasonably appealed to the NLRC, with petitioner contesting the labor arbiter’s refusal
to include the commissions he paid to private respondents in determining compliance with the
minimum wage requirement.

ISSUE:

Whether or not commissions are included in determining compliance with the minimum wage
requirement.

HELD:

Yes, commissions are included in determining compliance with the minimum wage requirement.

Article 97(f) of the Labor Code defines wage as follows: Art. 97(f) Wage paid to any employee shall
mean the remuneration or earnings, however designated, capable of being expressed in terms of
money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method
of calculating the same, which is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or for services rendered or to be
rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of
board, lodging, or other facilities customarily furnished by the employer to the employee.

While commissions are, indeed, incentives or forms of encouragement to inspire employees to put
a little more industry on the jobs particularly assigned to them, still these commissions are direct
remunerations for services rendered. In fact, commissions have been defined as the recompense,
compensation or reward of an agent, salesman, executor, trustee, receiver, factor, broker or
bailee, when the same is calculated as a percentage on the amount of his transactions or on the
profit to the principal. The nature of the work of a salesman and the reason for such type of
remuneration for services rendered demonstrate clearly that commissions are part of a salesman’s
wage or salary.

Thus, the commissions earned by private respondents in selling soft drinks constitute part of the
compensation or remuneration paid to drivers/salesmen and truck helpers for serving as such, and
hence, must be considered part of the wages paid them.
Likewise, there is no law mandating that commissions be paid only after the minimum wage has
been paid to the employee. Verily, the establishment of a minimum wage only sets a floor below
which an employee’s remuneration cannot fall, not that commissions are excluded from wages in
determining compliance with the minimum wage law.

WHEREFORE, in view of the foregoing, the decision of the NLRC dated July 31, 1995, insofar as
it excludes the commissions received by private respondents in the determination of petitioners
compliance with the minimum wage law, as well as its exclusion of the particular amounts received
by private respondents as part of their 13th month pay is REVERSED and SET ASIDE.

43.

(Topic: Basic Wage/Commission)

[G.R. No. 145561 June 15, 2005]
HONDA PHILS., INC., PETITIONER, VS. SAMAHAN NG MALAYANG MANGGAGAWA SA
HONDA, RESPONDENT.

FACTS:

The case stems from the collective bargaining agreement between Honda and the respondent
union that it granted the computation of 14th month pay as the same as 13th month pay. Honda
continues the practice of granting financial assistance covered every December each year of not
less than 100% of the basic salary. In the latter part of 1998, the parties started to re-negotiate for
the fourth and fifth years of the CBA. The union filed a notice of strike on the ground of unfair labor
practice for deadlock. DOLE assumed jurisdiction over the case and certified it to the NLRC for
compulsory arbitration. The striking employees were ordered to return to work and management to
accept them back under the same terms prior to the strike staged. Honda issued a memorandum
of the new computation of the 13th month and 14th month pay to be granted to all its employees
whereby the 31 long strikes shall be considered unworked days for purpose of computing the said
benefits. The amount equivalent to ½ of the employee’s basic salary shall be deducted from these
bonuses, with a commitment that in the event that the strike is declared legal, Honda shall pay the
amount. The respondent union opposed the pro-rated computation of bonuses. This issue was
submitted to voluntary arbitration where it ruled that the company’s implementation of the pro-rated
computation is invalid.

Issue:

WON the pro-rated computation of the 13th and 14th month pays and other bonuses in question
are valid and lawful.

Held:

No. The pro-rated computation is invalid. The pro-rated computation of Honda as a company policy
has not ripened into a company practice and it was the first time they implemented such practice.
The payment of the 13th month pay in full month payment by Honda has become an established
practice. The length of time where it should be considered in practice is not being laid down by
jurisprudence. The voluntary act of the employer cannot be unilaterally withdrawn without violating
Article 100 of the Labor Code. The court also rules that the withdrawal of the benefit of paying a full
month salary for 13th month pay shall constitute a violation of Article 100 of the Labor Code.

44.
 [G.r. No. 72616-17 march 8, 1989]

FRAMANLIS FARMS, INC., ELOISA SYCIP AND LINCOLN SYCIP, petitioners

vs.
HON. MINISTER OF LABOR, MANILA, PAFLU SEPTEMBER CONVENTION, ZOILO
ESTANISLAO, ET AL, respondents.

FACTS:

In April 1980, petitioners filed against their employer, and the other petitioners two labor standard
cases which were docketed in the regional office of the ministry of labor in Bacolod city as fad
cases nos. 179180 and 0792-80 ("paflu september convention vs. Framanlis farms"), alleging that
in 1977 to 1979 they were not paid emergency cost of living allowance (ecola) minimum wage,
13th month pay, holiday pay, and service incentive leave pay.

With regard to the 13th month pay, petitioners admitted that they failed to pay their workers 13th
month pay in 1978 and 1979. However, they argued that they substantially complied with the law
by giving their workers a yearly bonus and other non-monetary benefits amounting to not less than
1/12th of their basic salary, in the form of a weekly subsidy of choice pork meat for only P9.00 per
kilo and later increased to P11 per kilo in march 1980, instead of the market price of P10 to P15
per kilo, Free choice pork meat in may and December of every year; and free light or electricity. All
of which were allegedly "the equivalent" of the 13th month pay.

ISSUE:

Whether or not 13th month pay can be substituted with foods and electricity.

HELD:

No, 13th month pay cannot be substituted with foods and electricity, under section 3 of PD
No. 851, such benefits in the form of food or free electricity, assuming they were given, were not a
proper substitute for the 13th month pay required by law.

Wherefore, the petition for certiorari is dismissed with costs against the petitioners.

45.

KAMAYA POINT HOTEL, PETITIONER,

VS.
NATIONAL LABOR RELATIONS COMMISSION, FEDERATION OF FREE WORKERS AND
MEMIA QUIAMBAO, RESPONDENTS.

FACTS:

Respondent Memia Quiambao with thirty others who are members of private respondent
federation of free workers (FFW) were employed by petitioner as hotel crew. On the basis of the
profitability of the company's business operations, management granted a 14th month pay to its
employees starting in 1979. In January 1982, operations ceased to give way to the hotel's
conversion into a training center for Libyan scholars. However, due to technical and financing
problems, the Libyans pre-terminated the program on July 7, 1982, leaving petitioner without any
business, aside from the fact that it was not paid for the use of the hotel premises and in addition
had to undertake repairs of the premises damaged by the Libyan students. All in all petitioner
allegedly suffered losses amounting to P2 million.

Although petitioner reopened the hotel premises to the public, it was not able to pick-up its lost
patronage. In a couple of months it affected a retrenchment program until finally on January 7,
1984, it totally closed its business.

On april 18, 1983, private respondent federation of free workers (ffw); a legitimate labor
organization, filed with the ministry of labor and employment, bataan provincial office, bataan
export processing zone, mariveles, bataan, a complaint against petitioner for illegal suspension,
violation of the cba and non-payment of the 14th month pay. Records however show that the case
was submitted for decision on the sole issue of alleged non-payment of the 14th month pay for the
year 1982.

After the hearing, executive labor arbiter Francisco M Jose, Jr. rendered a decision dated May 31,
1984, the dispositive portion ordering the respondent Kamaya point hotel to pay the 14th month
pay for 1982 of all its rank and file employees.

Petitioner now seeks to reverse the decision of the NLRC arguing that the latter tribunal committed
grave abuse of discretion when it adopted the labor arbiter's decision saying that the 14th month
pay cannot be withdrawn without violating article 100 of the labor code.

ISSUE:

Whether or not respondents are entitled of 14th month pay for the year 1982.

HELD:

Yes, the respondents are entitled of 14th month pay. The SC held that despite their
admission that the 14th month pay has no contractual or legal basis, still chose to rule in favor of
private respondents. It is patently obvious that article 100 is clearly without applicability. The date
of effectivity of the labor code is May 1, 1974.

In the case at bar, petitioner extended its 14th month pay beginning 1979 until 1981. What is
demanded is payment of the 14th month pay for 1982. Indubitably from these facts alone, article
100 of the labor code cannot apply.

Moreover, there is no law that mandates the payment of the 14th month pay. This is emphasized in
the grant of exemption under Presidential Decree 851 (13th month pay law) which states:
"employers already paying their employees a 13th month pay or its equivalent are not covered by
this decree." necessarily then, only the 13th month pay is mandated. Having enjoyed the additional
income in the form of the 13th month pay, private respondents' insistence on the 14th month pay
for 1982 is already an unwarranted expansion of the liberality of the law.

Also contractually, as gleaned from the collective bargaining agreement between management and
the union, there is no stipulation as to such extra remuneration. Evidently, this omission is an
acknowledgment that such benefit is entirely contilagent or dependent on the profitability of the
company's operations.

Verily, a 14th month pay is a misnomer because it is basically a bonus and, therefore, gratuitous in
nature. The granting of the 14th month pay is a management prerogative which cannot be forced
upon the employer. It is something given in addition to what is ordinarily received by or strictly due
the recipient. It is a gratuity to which the recipient has no right to make a demand.

This court is not prepared to compel petitioner to grant the 14th month pay solely because it has
allegedly ripened into a company practice" as the labor arbiter has put it. Having lost its catering
business derived from Libyan students, Kamaya hotel should not be penalized for its previous
liberality.

An employer may not be obliged to assume a "double burden" of paying the 13th month pay in
addition to bonuses or other benefits aside from the employee's basic salaries or wages. Restated
differently, we rule that an employer may not be obliged to assume the onerous burden of granting
bonuses or other benefits aside from the employee's basic salaries or wages in addition to the
required 13th month pay.

Wherefore, the petition is hereby granted. The portion of the decision of the national labor relations
commission dated june 25, 1986 ordering the payment of 14th month pay to private respondents is
set aside.

46.

(Topic: Diminution)
[G.R. No. 85073 August 24, 1993]

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:

This is a petition for certiorari to set aside the resolution of the national labor relations commission
(NLRC), dismissing for lack of merit petitioner's appeal from the decision of the labor arbiter in
NLRC case no. 1791-MC-X1-82.

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 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.

ISSUE:

Whether or not respondents can recover 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.

HELD:

Yes, respondents can recover the thirteenth month pay differential. The SC held that a company
practice favorable to the employees had indeed been established and the payments made
pursuant thereto, ripened into benefits enjoyed by them. And any benefit and supplement being
enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the
employer, by virtue of section 10 of the rules and regulations implementing P.D. No. 851, and
article 100 of the labor of the Philippines, which prohibit the diminution or elimination by the
employer of the employees' existing benefits (Tiangco v. Leogardo, Jr., 122 scra 267, [1983]).

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.

47.

[G.R. No. 110068 February 15, 1995]

PHILIPPINE DUPLICATORS, INC., PETITIONER,

VS.
NATIONAL LABOR RELATIONS COMMISSION AND PHILIPPINE DUPLICATORS
EMPLOYEES UNION-TUPAS, RESPONDENTS.

(Topic: Bonus – Nature)

FACTS:

In Boie-Takeda the so-called commissions "paid to or received by medical representatives of boie-

takeda chemicals or by the rank and file employees of philippine fuji xerox co.," were excluded
from the term "basic salary" because these were paid to the medical representatives and rank-and-
file employees as "productivity bonuses." the second division characterized these payments as
additional monetary benefits not properly included in the term "basic salary" in computing their 13th
month pay. We note that productivity bonuses are generally tied to the productivity, or capacity for
revenue production, of a corporation; such bonuses closely resemble profit-sharing payments and
have no clear director necessary relation to the amount of work actually done by each individual
employee. More generally, a bonus is an amount granted and paid ex gratia to the employee; its
payment constitutes an act of enlightened generosity and self-interest on the part of the employer,
rather than as a demandable or enforceable obligation.

ISSUE:
Whether or not a bonus shall be considered as part of wages in 13th month pay.

HELD:

No.P r o d u c t i v i t y b o n u s e s a r e g e n e r a l l y t i e d t o t h e p r o d u c t i v i
t o r capacity for revenue production, of a corporation; such bonuses closely
resemble profit-sharing payments and have no clear director n e c e s s a r y r e l a t i o n t o t h e
a m o u n t o f w o r k a c t u a l l y d o n e b y e a c h individual employee. More generally, a bonus is
an amount granted and paid ex gratia to the employee; its payment constitutes an
acto f e n l i g h t e n e d g e n e r o s i t y a n d s e l f -
i n t e r e s t o n t h e p a r t o f t h e employer, rather than as a demandable or enforceable
obligation.
S i n c e p r o d u c t i v i t y b o n u s i s n o t d e m a n d a b l e , t h e n i t c a n n o t b e considered part
of basic salary when time comes to compute 13 th month pay.
Additional payments made to employees,t o t h e e x t e n t t h e y partake
o f t h e n a t u r e o f p r o f i t s h a r i n g p a y m e n t s , a r e p r o p e r l y excluded from the ambit
of the term "basic salary" for purposes of computing the 13th month pay due to
employees. Such additional payments are not”commissions" within the meaning of the second
paragraph of Section 5 (a) of the Revised Guidelines Implementing 13th month pay. The
Supplementary Rules and Regulations Implementing P.D. No.851 subsequently issued
by former Labor Minister Ople sought to clarify the scope of items excluded in the
computation of the 13 t h month pay;
viz .:S e c . 4 . O v e r t i m e p a y , e a r n i n g s a n d o t h e r r e m u n e r a t i o n s which are not part
of the basic salary shall not be included in the computation of the 13th month pay.

48.

MARCOS VS NLRC, 248 SCRA 146 (1995)

Facts:

Petitioners were regular employees of private respondent Insular Life Assurance Co. Ltd. but they
were dismissed on November 1, 1990 when their positions were declared redundant. A special
redundancy benefit was paid to them" which included payment of accrued vacation leave and fifty
percent of unused current sick leave, special redundancy benefit, equivalent to three months
salary for every year of service; and additional cash benefits in lieu of other benefits provided by
the company or required by law.

Before the termination of their services, all of the petitioners had been in the employees of private
respondent for more than twenty years.

Petitioners" particularly Baltarza J. Lopez sent a letter dated October 23, 1990 to respondent
company questioning the redundancy package. She claimed that
they should receive their respective service awards and other prorated bonuses which they had
earned at the time they were dismissed. In addition, Lopez argued that “the cash service awards
have already been budgeted in a fund distinct and apart from redundancy fund.

Thereafter, private respondent required petitioners to execute a “Release and quitclaim", and
petitioners complied but with a written protest reiterating their previous demand that they were
nonetheless entitled to receive their service awards.

Issue:
Whether or not respondent NLRC committed reversible error or grave abuse of discretion in
affirming the validity of the “Release and quitclaim” and, consequently, that petitioners are not
entitled to payment of service awards and other bonuses.

Held:

Yes. Under prevailing Jurisprudence, the fact that an employee has signed a satisfaction receipt
for his claims does not necessarily result in the waiver thereof. The law does not consider as valid
any agreement whereby a worker agrees to receive less compensation than what he is entitled to
recover. A deed of release or quitclaim cannot bar an employee from remaining $enefits to which
he is legally entitled.

We have heretofore explained that the reason why quitclaims commonly frowned upon as contrary
to public policy, and why they are held to be ineffective to bar claims for the full measure of the
workers’ legal rights, is the fact that the employer and the employee obviously do not stand on the
same footing. The employer drove the employee to the wall. The latter must have harsh
necessities of life. He thus found himself in no position to resist money proffered. His, then, is a
case of adherence, not of choice. One thing sure, however, is that petitioners did not relent on their
claim. They pressed it. They are deemed not have waived any of their rights.

Along this line, we have more trenchantly declared that quitclaims and/or complete releases
executed by the employees do not estop them from pursuing their claims arising from unfair labor
practices of the employer. The basic reason for this is that such quitclaims and/or complete
releases are against public policy and, therefore, null and void. The acceptance of termination
does not divest a laborer of the right to prosecute his employer for unfair labor practice acts.

49.

Businessday Information Systems and Services, Inc. v. NLRC

Facts:

Businessday Information Systems and Services Inc. (BSSI) and its President/Manager Paul Locsin
sought to annul an NLRC decision which affirmed the finding that BSSI is liable to pay the
respondents separation pay differentials and mid-year bonus.

BSSI was engaged in the manufacture and sale of computer forms. Due to financial reverses, its
creditors namely the FBP and the Asset Privatization Trust (APT) took possession of BSSI’s
assets including its manufacturing plant in Marilao, Bulacan. Due to the action of its creditors, BSSI
had to lay off some plant employees, after prior noti$e, as a retrenchment measure. They were
provided separation pay equivalent to 1/2 month pay for every year of service. Upon receipt, they
signed individual releases and quitclaims in favor of BSSI. Not all employees were laid off as some
were retained in an attempt to rehabilitate the company.

Unfortunately 2 and 1/2 months later, the remaining employees were also laid off when the
company decided to end the business altogether. Unlike he first batch of laid employees, this batch
received separation pay equivalent to a full month’s salary for every year of service plus mid-year
bonus.
Due to this obvious discrimination, the first batch of laid employees filed a protest against BSSI
and Paul Locsin.

During the conciliation proceedings with the Labor Arbiter, BSSI denied that there was unlawful
discrimination in the payment of separation benefits to the first batch of laid workers. BSSI argued
that they were paid “retrenchment” benefits mandated by law, while the remaining employees were
granted higher “separation” benefits because their termination was on account of the closure of the
business.

The Labor Arbiter decided in favour of the first batch of laid employees which was subsequently
affirmed by the NLRC.

Issue:

Whether or not BBSI is liable for pay separation differentials and mid-year bonus to the first batch
of laid employees.

Ruling:

Yes. BSSI is liable to pay separation differentials to the employees. However, mid-year bonus is
deleted and set aside.

While the law recognizes BBSI’s right to terminate its employees on account of retrenchment to
prevent losses or closure of business operations, it may not pay separation benefits unequally for
such discrimination breeds resentment and ill-will among those who have been treated less
generously.

The NLRC observed that the business climate did not improve during the small gaps in between
the retrenchment.

There was obviously discrimination against the first batch of employees. The law requires an
employer to extend equal treatment to its employees. It may not, in the guise of exercising
management prerogatives, grant greater benefits to some and less to others. Management
prerogatives are not absolute prerogatives but are subject to legal limits, collective bargaining
agreements, or general principles of fair play and justice. Article 283 of the Labor Code protects
workers whose employment is terminated because of closure of the establishment or reduction of
personnel.

In so far as the mid-year bonus, it is settled doctrine that the grant of a bonus is a prerogative, not
an obligation, of the employer. The matter of giving a bonus over and above the worker’s lawful
salaries and allowances is entirely dependent on the financial capability of the employer to give it.
The fact that the BBSI was no longer profitable and that the workers did not work up to the middle
of the year were valid reasons for not granting them a mid-year bonus.

50.

Philippine Appliance Corporation (PHILCOR) vs. Court of Appeals

G.R. No.149434
June 3, 2004
Facts:

Petitioner is a domestic corporation engaged in the business of manufacturing refrigerators,

freezers and washing machines. Respondent United Philacor Workers Union-NAFLU is the duly
elected collective bargaining representative of the rank-and-file employees of petitioner.

During the collective bargaining negotiations between petitioner and respondent union in 1997,
petitioner offered the amount of P4, 000.00 to each employee as an “early conclusion bonus”.
Petitioner claims that this bonus was promised as a unilateral incentive for the speeding up of
negotiations between the parties and to encourage respondent union to exert their best efforts to
conclude a CBA. Upon conclusion of the CBA negotiations, petitioner accordingly gave this early
signing bonus.

In view of the expiration of this CBA, respondent union sent notice to petitioner of its desire to
negotiate a new CBA. Petitioner and respondent union began their negotiations. On October 22,
1999, after eleven meetings, respondent union expressed dissatisfaction at the outcome of the
negotiations and declared a deadlock. A few days later, on October 26, 1999, respondent union
filed a Notice of Strike with the NCMB, Region IV in Calamba, Laguna, due to the bargaining
deadlock.

The conciliation meetings started with eighteen unresolved items between petitioner and
respondent union. At the meeting, respondent union accepted petitioner’s proposals on fourteen
items, leaving the following items unresolved: wages, rice subsidy, signing, and retroactive bonus.

Petitioner and respondent union failed to arrive at an agreement concerning these four remaining
items. On January 2000, respondent union went on strike at the petitioner’s plant. The strike lasted
for eleven days and resulted in the stoppage of manufacturing operations as well as losses for
petitioner, which constrained it to file a petition before the Department of Labor and Employment.
Labor Secretary assumed jurisdiction over the dispute and, on January 2000, ordered the striking
workers to return to work within twenty-four hours from notice and directed petitioner to accept
back the said employees. It rendered decision fixing the amount of wage increase and directed to
conclude a CBA to include the items granted in the conference. Petitioner contested on the
awarding of signing bonus.

Issue:

Whether the signing bonus is covered under the maintenance of existing benefits.

Ruling:

The payment of signing bonus is not covered under the existing benefits. The Court has
consistently ruled that a bonus is not a demandable and enforceable obligation. True, it may
nevertheless be granted on equitable considerations as when the giving of such bonus has been
the company’s long and regular practice.
To be considered a “regular practice,” however, the giving of the bonus should have been done
over a long period of time, and must be shown to have been consistent and deliberate. The test or
rationale of this rule on long practice requires an indubitable showing that the employer agreed to
continue giving the benefits knowing fully well that said employees are not covered by the law
requiring payment thereof.

Respondent does not contest the fact that petitioner initially offered a signing bonus only during the
previous CBA negotiation. Previous to that, there is no evidence on record that petitioner ever
offered the same or that the parties included a signing bonus among the items to be resolved in
the CBA negotiation. Hence, the giving of such bonus cannot be deemed as an established
practice considering that the same was given only once, that is, during the 1997 CBA negotiation.

51.

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS VS. DRILON

G.R. NO. L-81958 JUNE 30, 1988

FACTS:

The Philippine Association of Service Exporters, Inc. (PASEI) challenges the Constitutional validity
of Department Order No. 1, Series of 1988, of the Department of Labor and Employment, in the
character of "GUIDELINES GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT
OF FILIPINO DOMESTIC AND HOUSEHOLD WORKERS," in this petition for certiorari and
prohibition. Specifically, the measure is assailed for "discrimination against males or females;" that
it "does not apply to all Filipino workers but only to domestic helpers and females with similar
skills;" and that it is violative of the right to travel. It is held likewise to be an invalid exercise of the
lawmaking power, police power being legislative, and not executive, in character.

In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the Constitution,
providing for worker participation "in policy and decision-making processes affecting their rights
and benefits as may be provided by law." Department Order No. 1, it is contended, was passed in
the absence of prior consultations. It is claimed, finally, to be in violation of the Charter's non-
impairment clause, in addition to the "great and irreparable injury" that PASEI members face
should the Order be further enforced.

ISSUE:

Whether or not the Department Order No. 1 in nature of the police power is valid under the
Constitution?

HELD:

In the light of the foregoing, the petition must be dismissed.

As a general rule, official acts enjoy a presumed validity. In the absence of clear and convincing
evidence to the contrary, the presumption logically stands.

The petitioner has shown no satisfactory reason why the contested measure should be nullified.
There is no question that Department Order No. 1 applies only to "female contract workers," but it
does not thereby make an undue discrimination between the sexes. It is well-settled that "equality
before the law" under the Constitution does not import a perfect Identity of rights among all men
and women. It admits of classifications, provided that (1) such classifications rest on substantial
distinctions; (2) they are germane to the purposes of the law; (3) they are not confined to existing
conditions; and (4) they apply equally to all members of the same class.

The Court is well aware of the unhappy plight that has befallen our female labor force abroad,
especially domestic servants, amid exploitative working conditions marked by physical and
personal abuse. As precisely the caretaker of Constitutional rights, the Court is called upon to
protect victims of exploitation. In fulfilling that duty, the Court sustains the Government's efforts.

The same, however, cannot be said of our male workers. In the first place, there is no evidence
that, except perhaps for isolated instances, our men abroad have been afflicted with an identical
predicament. Suffice it to state, then, that insofar as classifications are concerned, this Court is
content that distinctions are borne by the evidence. Discrimination in this case is justified.

There is likewise no doubt that such a classification is germane to the purpose behind the
measure. Unquestionably, it is the avowed objective of Department Order No. 1 to "enhance the
protection for Filipino female overseas workers" this Court has no quarrel that in the midst of the
terrible mistreatment Filipina workers have suffered abroad, a ban on deployment will be for their
own good and welfare.

The Order does not narrowly apply to existing conditions. Rather, it is intended to apply indefinitely
so long as those conditions exist. This is clear from the Order itself ("Pending review of the
administrative and legal measures, in the Philippines and in the host countries . . ."), meaning to
say that should the authorities arrive at a means impressed with a greater degree of permanency,
the ban shall be lifted.

It is incorrect to say that Department Order No. 1 prescribes a total ban on overseas deployment.
From scattered provisions of the Order, it is evident that such a total ban has not been
contemplated.

The consequence the deployment ban has on the right to travel does not impair the right. The right
to travel is subject, among other things, to the requirements of "public safety," "as may be provided
by law. Neither is there merit in the contention that Department Order No. 1 constitutes an invalid
exercise of legislative power. It is true that police power is the domain of the legislature, but it does
not mean that such an authority may not be lawfully delegated. As we have mentioned, the Labor
Code itself vests the Department of Labor and Employment with rule-making powers in the
enforcement whereof.

The non-impairment clause of the Constitution, invoked by the petitioner, must yield to the loftier
purposes targeted by the Government. Freedom of contract and enterprise, like all other freedoms,
is not free from restrictions, more so in this jurisdiction, where laissez faire has never been fully
accepted as a controlling economic way of life.

This Court understands the grave implications the questioned Order has on the business of
recruitment. The concern of the Government, however, is not necessarily to maintain profits of
business firms. In the ordinary sequence of events, it is profits that suffer as a result of
Government regulation. The interest of the State is to provide a decent living to its citizens. The
Government has convinced the Court in this case that this is its intent. We do not find the
impugned Order to be tainted with a grave abuse of discretion to warrant the extraordinary relief
prayed for.

52.

PT&T vs. NLRC and Grace de Guzman G.R. No. 118978, May 23, 1997

FACTS:

Grace de Guzman was hired by PT&T as a Supernumerary Project Worker for a fixed period from
November 21, 1990 until April 20, 1991 as reliever for C.F. Tenorio who went on maternity
leave. Under the Reliever Agreement signed by Grace, her employment was to be immediately
terminated upon expiration of the agreed period. From June 10, 1991 to July 1, 1991, and from
July 19, 1991 to August 8, 1991, PT&T again engaged the services of Grace as reliever for Erlinda
F. Dizon who went on leave during both periods.
On September 2, 1991, Grace was asked to join petitioner company as a probationary employee.
In the job application form furnished to Grace, she indicated in the civil status that she was single
although she had in fact contracted marriage on May 26, 1991. This meant she was not single, as
she had represented herself, when she signed the reliever agreements on June 10, 1991 and July
8, 1991.
Petitioner dismissed Grace from the company after learning about Grace’s real civil status and
being unconvinced of Grace’s explanation for the discrepancy. Grace immediately filed a complaint
for illegal dismissal coupled with a claim for non-payment of cost of living allowances (COLA),
before the Regional Arbitration Branch of the National Labor Relations Commission (NLRC) in
Baguio City.
At the preliminary conference, Grace volunteered the information that she had failed to remit the
amount of P2,380.75 of her collections, and executed a promissory note for that amount in favor of
petitioner.
The Labor Arbiter handed down a decision declaring that private respondent, who had already
gained the status of a regular employee, was illegally dismissed by petitioner and ordered her
reinstatement plus payment of the corresponding back wages and COLA.
On appeal, the NLRC upheld the Labor Arbiter but modified the Labor Arbiter’s decision with the
qualification that Grace de Guzman deserved to be suspended for three months due to the
dishonest nature of her acts which should not be condoned..

ISSUES:

o Whether or not the company policy of not accepting married women for employment
was discriminatory
o Whether or not Grace’s act of concealment amounted to dishonesty, leading to loss
of confidence
o Whether or not Grace was illegally dismissed

HELD:

There was discrimination.

Article 136 of the Labor Code explicitly prohibits discrimination merely by reason of the marriage of
a female employee.

Petitioner’s policy of not accepting or considering as disqualified from work any woman worker who
contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all
women workers by our labor laws and by no less than the Constitution. Contrary to petitioner’s
assertion that it dismissed private respondent from employment on account of her dishonesty, the
record discloses clearly that her ties with the company were dissolved principally because of the
company’s policy that married women are not qualified for employment in PT&T, and not merely
because of her supposed acts of dishonesty.

Concealment did not amount to willful dishonesty.

Verily, private respondent’s act of concealing the true nature of her status from PT&T could not be
properly characterized as willful or in bad faith as she was moved to act the way she did mainly
because she wanted to retain a permanent job in a stable company. In other words, she was
practically forced by that very same illegal company policy into misrepresenting her civil status for
fear of being disqualified from work. While loss of confidence is a just cause for termination of
employment, it should not be simulated. It must rest on an actual breach of duty committed by the
employee and not on the employer’s caprices. Furthermore, it should never be used as a
subterfuge for causes which are improper, illegal, or unjustified.

However, SC nevertheless ruled that Grace did commit an act of dishonesty, which should be
sanctioned and therefore agreed with the NLRC’s decision that the dishonesty warranted
temporary suspension of Grace from work.

Grace attained regular status as an employee.

Private respondent, it must be observed, had gained regular status at the time of her dismissal.
When she was served her walking papers on Jan. 29, 1992, she was about to complete the
probationary period of 150 days as she was contracted as a probationary employee on September
2, 1991. That her dismissal would be effected just when her probationary period was winding down
clearly raises the plausible conclusion that it was done in order to prevent her from earning security
of tenure.

There was illegal dismissal.

As an employee who had therefore gained regular status, and as she had been dismissed without
just cause, she is entitled to reinstatement without loss of seniority rights and other privileges and
to full back wages, inclusive of allowances and other benefits or their monetary equivalent.
.
On Stipulation against Marriage

In the final reckoning, the danger of PT&T’s policy against marriage is that it strikes at the very
essence, ideals and purpose of marriage as an inviolable social institution and, ultimately, of the
family as the foundation of the nation.

Petition dismissed.

53.

Libres v NLRC G.R. No. 123737. May 28, 1999

Facts:

Petitioner Carlos G. Libres, an electrical engineer, was holding a managerial position with National
Steel Corporation (NSC) as Assistant Manager. He was then asked to comment regarding the
charge of sexual harrassment filed against him by the VP's secretary Capiral. This was included
with a waiver of his right tobe heard once he didn't comment.

On 14 August 1993 petitioner submitted his written explanation denying the accusation against him
and offering to submit himself for clarificatory interrogation.
The Management Evaluation Committee said that "touching a female subordinate's hand and
shoulder, caressing her nape and telling other people that Capiral was the one who hugged and
kissed or that she responded to the sexual advances are unauthorized acts that damaged her
honor." They suspended Libres for 30 days without pay.

He filed charges against the corporation in the Labor Arbiter, but the latter held that the company
acted with due process and that his punishment was only mild.

Moreover, he assailed the NLRC decision as without basis due to the massaging of her
shoulders never “discriminated against her continued employment,” “impaired her rights and
privileges under the Labor Code,” or “created a hostile, intimidating or offensive environment.”

He claimed that he wasn't guaranteed due process because he wasn't given the right be heard.
This was due to his demand for personal confrontation not being recognized by the MEC.

In the Supreme Court, petitioner assailed the failure of the NLRC to strictly apply RA No. 7877 or
the law against sexual harassment to the instant case. Moreover, petitioner also contends that
public respondent’s reliance on Villarama v. NLRC and Golden Donuts was misplaced. He draws
attention to victim Divina Gonzaga’s immediate filing of her letter of resignation in
the Villarama case as opposed to the one year delay of Capiral in filing her complaint against him.
He now surmises that the filing of the case against him was merely an afterthought and not borne
out of a valid complaint, hence, the Villarama case should have no bearing on the instant case.

Issue: Was Libres accorded due process when the MEC denied his request for personal
confrontatiom?

Held: Yes. Petition denied.

On not strictly applying RA 7877- Republic Act No. 7877 was not yet in effect at the time of the
occurrence of the act complained of. It was still being deliberated upon in Congress when
petitioner’s case was decided by the Labor Arbiter. As a rule, laws shall have no retroactive effect
unless otherwise provided, or except in a criminal case when their application will favor the
accused. Hence, the Labor Arbiter have to rely on the MEC report and the common connotation of
sexual harassment as it is generally understood by the public. Faced with the same predicament,
the NLRC had to agree with the Labor Arbiter. In so doing, the NLRC did not commit any abuse of
discretion in affirming the decision of the Labor Arbiter.

On the Villarama afterthought-it was both fitting and appropriate since it singularly addressed the
issue of a managerial employee committing sexual harassment on a subordinate. The disparity in
the periods of filing the complaints in the two (2) cases did not in any way reduce this case into
insignificance. On the contrary, it even invited the attention of the Court to focus on sexual
harassment as a just and valid cause for termination. Whereas petitioner Libres was only meted a
30-day suspension by the NLRC, Villarama, in the other case was penalized with termination. As a
managerial employee, petitioner is bound by more exacting work ethics. He failed to live up to his
higher standard of responsibility when he succumbed to his moral perversity. And when such
moral perversity is perpetrated against his subordinate, he provides a justifiable ground for his
dismissal for lack of trust and confidence.

“It is the the duty of every employer to protect his employees from oversexed
superiors.” Public respondent therefore is correct in its observation that the Labor Arbiter was in
fact lenient in his application of the law and jurisprudence for which petitioner must be grateful for.
As pointed out by the Solicitor General, it could be expected since Libres was Capiral’s immediate
superior. Fear of retaliation and backlash, not to forget the social humiliation and embarrassment
that victims of this human frailty usually suffer, are all realities that Capiral had to contend with.
Moreover, the delay did not detract from the truth derived from the facts. Petitioner Libres never
questioned the veracity of Capiral’s allegations. In fact his narration even corroborated the latter’s
assertion in several material points. He only raised issue on the complaint’s protracted filing.

On the question of due process- Requirements were sufficiently complied with. Due process as a
constitutional precept does not always and in all situations require a trial type proceeding. Due
process is satisfied when a person is notified of the charge against him and given an opportunity to
explain or defend himself. The essence of due process is simply to be heard, or as applied to
administrative proceedings, an opportunity to explain one’s side, or an opportunity to seek a
reconsideration of the action or ruling complained of.

It is undeniable that petitioner was given a Notice of Investigation informing him of the charge of
sexual harassment as well as advising him to submit a written explanation regarding the matter;
that he submitted his written explanation to his superior. The VP further allowed him to air his
grievance in a private session He was given more than adequate opportunity to explain his side
and air his grievances.

54.
Philippine Aeolus Automotive United Corporatoin v. NLRC

Facts:

Private respondent was a company nurse for the Philippine Aelous United Corporation. A
memorandum was issued by the personnel manager of petitioner corporation to respondent Cortez
asking her to explain why no action should be taken against her for (1) throwing a stapler at plant
manager William Chua; (2) for losing the amount of Php 1,488 entrusted to her; (3) for asking a co-
employee to punch in her time card one morning when she was not there. She was then placed on
preventive suspension. Another memorandum was sent to her asking her to explain why she failed
to process the ATM applications of her co-employees. She submitted a written explanation as to
the loss of Php 1,488 and the punching in of her time card. A third memorandum was sent to her
informing her of her termination from service for gross and habitual neglect of duties, serious
misconduct, and fraud or willful breach of trust.

ISSUES:

1. Whether or not petitioner was illegally dismissed.

2. If such dismissal was illegal, whether or not petitioner should be entitled to damages.

HELD:

1. Yes. The grounds by which an employer may validly terminate the services of an employee
must be strictly construed. As to the first charge, respondent claims that plant manager William
Chua had been making sexual advances on her since her first year of employment and that when
she would not accede to his requests, he threatened that he would cause her termination from
service. As to the second charge, the money entrusted to her was not lost, but given to the
personnel-in-charge for proper transmittal as evidence by a receipt signed by the latter. As to the
third charge, she explains that she asked someone to punch in her card as she was doing an
errand for one of the company’s officers and with the permission of William Chua. As to the fourth
charge, she asserts that she had no knowledge thereof. To constitute serious misconduct to justify
dismissal, the acts must be done in relation to the performance of her duties as would show her to
be unfit to continue working for her employer. The acts of did not pertain to her duties as a nurse
nor did they constitute serious misconduct. However due to the strained relations, in lieu of
reinstatement, she is to be awarded separation pay of one month for every year of service until
finality of this judgment.

2. Yes. Private respondent admittedly allowed four years to pass before coming out with her
employer’s sexual impositions; but the time to do such varies depending upon the needs,
circumstances and emotional threshold of the employee. It is clear that respondent has suffered
anxiety, sleepless nights, besmirched reputation and social humiliation by reason of the act
complained of. Thus, she should be entitled to moral and exemplary damages for the oppressive
manner with which petitioner’s effected her dismissal and to serve as a warming to officers who
take advantage of their ascendancy over their employees.

55.

APEX MINING CO., INC. versus NLRC

FACTS:

Private respondent Sinclita Candida was employed by petitioner Apex Mining Company, Inc to
perform laundry services at its staff house. On December 18, 1987, while she was attending to her
assigned task and she was hanging her laundry, she accidentally slipped and hit her back on a
stone. As a result of the accident she was not able to continue with her work. She was permitted to
go on leave for medication.
De la Rosa offered her the amount of P 2,000.00 which was eventually increased to P5,000.00 to
persuade her to quit her job, but she refused the offer and preferred to return to work. However,
petitioner company did not allow her to return to work and dismissed her on February 4, 1988.
Private respondent filed a request for assistance with the Department of Labor and Employment,
which the latter rendered its Decision by ordering the Apex Mining Co. to pay Candida the total
amount of P55,161.42 for salary differential, emergency living allowance, 13th month pay
differential and separation pay.
Petitioner appealed the case before the NLRC, which was subsequently dismissed for lack of
merit.

ISSUE:
 Whether or not the private respondent should be treated as househelper or domestic
servant or a regular employee.

HELD:
Under Rule XIII, Section l(b), Book 3 of the Labor Code, as amended, the term "househelper" as
used herein is synonymous to the term "domestic servant" and shall refer to any person, whether
male or female, who renders services in and about the employer's home and which services are
usually necessary or desirable for the maintenance and enjoyment thereof, and ministers
exclusively to the personal comfort and enjoyment of the employer's family.
The definition cannot be interpreted to include househelper or laundrywomen working in
staffhouses of a company, like private respondent who attends to the needs of the company's
guest and other persons availing of said facilities.
The mere fact that the househelper or domestic servant is working within the premises of the
business of the employer and in relation to or in connection with its business, as in its staffhouses
for its guest or even for its officers and employees, warrants the conclusion that such househelper
or domestic servant is and should be considered as a regular employee.

WHEREFORE, the petition is DISMISSED and the appealed decision and resolution of public
respondent NLRC are hereby AFFIRMED. No pronouncement as to costs.
REY RYAN B. APOR
LABOR LAW 1

LISTS OF DIGESTED CASES

• Manila Electric Co. v. Public Utilities Employees’ Assn, 79 Phil. 409

• Mantrade/FMMC Division Employees and Workers Union v. Bacungan, 144 SCRA 510 (1986)

• Trans-Asia Phil. Employees Association v. NLRC, 320 SCRA 347 (1999)

• Wellington Investment Inc. v. Trajano, 245 SCRA 561 (1995)

• San Miguel Corp. v. Court of Appeals, 375 SCRA 311 (2002)

• Makati Haberdashery Inc. N. NLRC, 179 SCRA 449 (1989)

• Labor Congress v. NLRC, supra

• Sentinel Security Agency, Inc. v. NLRC, 295 SCRA 123 1998)

• Auto Bus Transport Systems, Inc. v. Bautista, supra

• Philippine Fisheries Development Authority v. NLRC, 213 SCRA 621 (1992)

• Chavez v. NLRC, supra

• Aklan Electric Corp., Inc. v. NLRC, 323 SCRA 259 (2000)

• International School Alliance of Educators v. Quisumbing, supra

• Bankard Employers Union-WATU v. NLRC, 423 SCRA 148 (2004)

• Arms Taxi v. NLRC, 219 SCRA 306 (1993)

• Iran v. NLRC, 289 SCRA 433 (1998)

• Millares v. NLRC & PICOP, 305 SCRA 500 (1999)

• Songco v. NLRC, 183 SCRA 610 (1990)

• Boie Takeda v. De la Serna, 228 SCRA 329 (1993)
• Philippine Duplicators v. NLRC, 241 SCRA 380 (1995)

• Plastic Town Center Corp. v. NLRC, 172 SCRA 580

• Davao Fruits Corporation v. Associated Labor Union, supra

• Nasipit Lumber Company, Inc. v. NLRC, 289 SCRA 667 (1998)

• Employers Confederation of the Phils. V. National Wage

and Productivity Commission, 201 SCRA 759 (1991)
• Cagayan Sugar Milling Co. v. Secretary of Labor and Employment, 284 SCRA 150 (1998)

• Prubankers Association v. Prudential Bank & Trust Co., 302 SCRA 74 (1999)
• Congson v. NLRC, 243 SCRA 260 (1995)

• Bermiso v. Escano, Inc., 105 Phil. 231 (1959)

• Apodaca v. NLRC, 172 SCRA 442 (1989)
• Dentech Manufacturing Corp. NLRC, 172 SCRA 588
(1989)

• Five J Taxi v. NLRC, 235 SCRA 556 (1994)

• South Motorists Enterprises v. Tosoc, 181 SCRA 386 (1990)

• GAA v. Court of Appeals, 140 SCRA 304 (1985)

• Republic v. Peralta, 150 SCRA 37 (1987)

• Manila Banking Corp. v. NLRC, 279 SCRA 602, 621-642 (1997)
• Cirineo Bowling Plaza v. Gerry Sensing, supra
• Guico Jr. v. Sec. of Labor, 298 SCRA 667 (1998)

• Dentech Mfg. Corp. v. NLRC, supra

• Archilles Manufacturing Corp. v, NLRC, 244 SCRA 750 (1995)

• Ultra Villa Food Haus v. Geniston, 309 SCRA 17 (1999)

• Boie Takeda v. Dela Serna, Supra

• Iran v. NLRC, supra
• Honda Phils. Inc. v. Samahan ng Malayang Manggagawa sa Honda, 460 SCRA 186 (2005)

• Framanlis Farms, Inc. v. NLRC, 171 SCRA 87 (1989)

• Kamaya Port Hotel v. NLRC, 177 SCRA 160 (1989)

• Philippine Duplicators Inc. v. NLRC, supra

• Marcos v. NLRC, 248 SCRA 146 (1995)

• Business Information Systems and Services, Inc. v. NLRC, 221 SCRA 9 (1993)
• Philippine Appliance Corp. v. Court of Appeals, 430 SCRA 525 (2004)

• Philippine Association of Service Exporters v. Drilon, 163 SCRA 386 (1988)

• Phil. Telegraph and Telephone Co. v. NLRC, 272 SCRA 596 (1997)

• Libres v. NLRC, 307 SCRA 675 (1999)

• Philippine Aelous Automotive United Corp. v. NLRC, 331SCRA 237 (2000)

• Apex Mining Co. NLRC, 196 SCRA 251 (1991)