LABOR Digests 100215 1.
Whether or not the one retirement plan
Wesleyan v. Wesleyan
Metrobank v. NLRC
Sugue v. Triumph
Aklan Electric v. NLRC
Univ of Pangasinan Faculty v. Univ of Pang
Intl School Alliance v. Quisumbing
Legent Hotel v. Realuyo
Phil Fisheries v. NLRC
Iran v. NLRC
Millares v. NLRC
SLL INtl Cables v. NLRC
One Haus Realty v. Parien
WESLEYAN UNIVERSITY PHILS v WESLEYAN UNIVERSITY
PHILS. FACULTY AND STAFF ASSOCIATION
G.R. No. 181806; 12 Mar 2014; DEL CASTILLO, J.
Digest by Miguel
Doctrine: Art. 100 LC on non-diminution of benefits applies
when a benefit is expressly provided by company policy, in
the terms of a contract, or in cases where a practice has
been consistently and deliberately applied by an employer.
The exception to the rule on practice is when such is due to
error in the construction or application of a doubtful or
difficult question of law; in this case, the error must be
corrected immediately after its discovery, else Art. 100
would still apply.
I. Facts:
The petitioner and respondents signed a 5-
year CBA effective Jun 1, 2003 - May 31, 2008.
On Aug 16, 2005, the petitioner, through its
president, Atty. Maglaya, issued a memo on
the implementation of vacation and sick
leave credits, and vacation leave
commutation:
o as to the former, it stated that such credits
are not automatic-- they must be earned
at a rate of 1.25 days / month, with a
maximum of 15 days each;
o as to the latter, only vacation leave is
commuted or monetized to cash, after the
second year of continuous service.
This was questioned by the respondent's
President, who wrote a letter informing him
of these changes as violative of existing
practices and the CBA, where the vacation and
sick leave accrue automatically, and vacation leave
commutes upon the second year of service.
A Labor Management Committee was held during
which the respondent was advised to file a
grievance complaint.
In the same meeting, however, the petitioner
announced its plan of implementing a one-
retirement policy, which was unacceptable to
the respondent as they had two retirement
benefits, one from the PERAA and another from the
CBA, which was evidenced by the CBA and
affidavits.
The Voluntary Arbitrator held that both the
one-retirement policy and memorandum are
declared contrary to law. The CA affirmed this
decision.
II. Issues:
constitutes a diminution of benefits
proscribed by Art. 100 LC.
2. Whether or not the memorandum on
vacation and sick leave is valid.
III. Held/Ratio:
1. YES. The one retirement plan is void for
being contrary to the rule on non-
diminution of benefits, as their previous
two retirement plan had already ripened to
a company practice that may be protected
under Art. 100 LC.
The petitioners argue that the CBA and PERAA
Plans are one and the same.
o There is no established company practice
or policy of giving two retirement benefits
to its employees.
o Assuming that both were released, these
were done by oversight or mistake as
there was no Board Resolution authorizing
their release.
o As such, these cannot ripen into a
company practice or policy.
o The affidavits submitted were self-serving
declarations that should not be given
weight.
o As to the memorandum, it is valid because
it is in full accord with existing policy.
The Non-Diminution Rule in Art. 100 LC
prohibits employers from eliminating or
reducing the benefits received by their
employees.
o It applies only if the benefit is based
on an express policy, written
contract, or has ripened into a
practice.
o To be considered a ripened practice, it
must be consistently and deliberately
made by the employer over a long period
of time, except when the practice is due to
error in the construction or application of a
doubtful or difficult question of law; in this
case, the error must be corrected
immediately after its discovery, else Art.
100 would still apply.
The respondents were able to present
substantial evidence through the affidavits,
which showed that management consistently
gave two retirement benefits since 1997--
these went past unrefuted.
o The argument that the affidavits are self-
serving holds no water as the retired
employees have nothing to lose/gain as
they already received their benefits-- they
have no reason to perjure themelves, and
simply wanted to bring out the truth.
o Along with the affidavits of incumbent
employees, it shows that the granting of
two retirement benefits has already
ripened into a practice.
Further, the petitioners were unable to show
that there was only one retirement plan--
nothing in the CBA shows that the CBA and
PERAA plans are the same-- such doubt
should be resolved in favor of labor.
LABOR: Digests | 100215 | kb | 1
 o Further, if there was already a one-
retirement policy, why did the petitioner
have to make the announcement?
o Worse, there was a letter-memo prepared
by their legal counsel that sought
suggestions on how to justify the abolition
of the double retirement policy.
Hence, the two retirement policy is a benefit
protected by law. The company made a last-
ditch argument stating that the practice is illegal or
unauthorized, but this was not substantiated by
evidence.
2. NO. The memorandum is void for being
violative of the clear provisions of the CBA.
o The memorandum effectively limits the available
leave credits of an employee at the start of the
school year, from 15 to 5 (during the first four
months).
o It imposes a limitation that was not agreed upon by
the parties nor stated in the CBA.
o When the provisions in the CBA are clear, leaving
no doubt as to the intent of the parties, the literal
meaning of the stipulation shall govern, and in
case of doubt, resolve in favor of labor.
Metrobank v. NLRC
June 18, 2009; J. Leonardo-De Castro
Facts:
- Private Respondents: Felipe Patag and Bienvenido
Flora were former employees of Metrobank
o Availed of the banks compulsory
retirement plan
o As of Feb 1, 1998 (Time of Compulstory
Retirement): Patag was an Assistant
Manager with a monthly salary of PhP32k
o April 1, 1998 (Time of Compulsory
Retirement): Flora was a Senior Manager
with a monthly salary of PhP48.5k
o Both received their respective retirement
benefits at 185% of their gross monthly
salary for every year of service[Patag:
PhP 1.9M; Flora: PhP 3M]
- CBA for 1998-2000: Increased retirement
benefit from 185% to 200% of his gross monthly
salary for every year of service
o Effectivity to retroact to January
1,1998
o BUT, with the condition that the
benefits shall only be extended to
those who remain in service as of
June 15, 1998
- Patag (+Php 284k) and Flora (+448k) requested
that the new CBA be applied to their retirement
benefits, but DENIED by Metrobank.
- Respondents filed an action with the Labor Arbiter
against Petitioner for underpayment of retirement
benefits and damages
o LA: Dismissed
o NLRC: Partially granted (company practice:
no condition as to the increase)
o CA: Affirmed the NLRC
Issue: WON Respondents can still recover higher benefits
under the 1998 Officers Benefits Memorandum despite the
fact that they have compulsorily retired prior to the
issuance of said memorandum and did not meet the
condition therein requiring them to be employed as of June
15, 1998?
It is Metrobanks position that the CA and the NLRC erred
when they recognized that there was an established
company practice or policy of granting improved
benefits to its officers effective January 1 of the year
and without any condition that the officers should remain
employees of Metrobank as of a certain date. Metrobank
argues that the same cannot be concluded to have ripened
into a company practice since the provisions of the
retirement plan itself and the law on retirement should be
controlling.
RULING AND RATIO: Decision of the CA affirmed.
Grant of improved benefits ripened into a company
practice which cannot be unilaterally withdrawn by
the employer without violating Art. 100 of the LC.
- To be considered a company practice, the giving of
the benefits 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.
- It was the NLRCs finding, as affirmed by the CA,
that there is a company practice of paying
improved benefits to petitioner banks officers
effective every January 1 of the same year the
improved benefits are granted to rank and file
employees in a CBA. We find that the NLRCs and
CAs factual conclusions were fully supported by
substantial evidence on record.
- Evidence presented: Previous 4 CBAs did not have
the condition that the benefits shall only be
extended to those who remain in service as of June
15, 1998
o Condition was imposed for the first time in
the 1998 CBA
o This shows that Metrobank consistently,
deliberately and voluntarily granted
improved benefits to its officers, after the
signing of each CBA with its rank and file
employees, retroactive to January 1st of the
same year as the grant of improved
benefits and without the condition that the
officers should remain employees as of a
certain date
o The court held, in these cases, that the
grant of benefits through time has
ripened into company practice which
CANNOT BE PREEMPTORILY
WITHDRAWN
Davao Fruits v Assoc. Labor Union:
Increase 13th month, maternity
leave pay and cash equivalent of
unused VL and SL [lasted for 6
years]
Tiangco v Leogardo : Fixed
monthly emergency allowance [3
years and 4 months]
Sevila Trading v Semana: Unused
SL and VL incorporated in the 13 th
month pay [2 years]
Common denominator: appears
to be the REGULARITY AND
DELIBERATENES OF THE GRANT
OF BENEIFTS OVER A SIGNIFICANT
PERIOD OF TIME.
LABOR: Digests | 100215 | kb | 2
 - In the case at bar, petitioner Metrobank favorably
adjusted its officers benefits, including retirement
benefits, after the approval of each CBA with the
rank and file employees, to be effective every
January 1st of the same year as the CBAs approval,
and without any condition regarding the date of
employment of the officer, from 1986 to 1997 or
for about eleven (11) years. This constitutes
voluntary employer practice which cannot be
unilaterally withdrawn or diminished by the
employer without violating the spirit and intent of
Art. 100 of the Labor Code
o Art. 100. Prohibition against elimination or
diminution of benefits. Nothing in this
Book shall be construed to eliminate or in
any way diminish supplements, or other
employee benefits being enjoyed at the
time of promulgation of this Code
o Volunteer employer practice = CANNOT BE
UNILATERALLY WITHDRAWN without
violating the above provision
Sugue v. Triumph International
G.R. No. 164804; 30 January 2009; Leonardo-De Castro, J.
Digest prepared by Ron San Juan
Facts:
Sugue was hired in May 1990 as Marketing Services
Manager; Valderrama was hired in April 1993 as Direct
Sales Manager. In October 1999, Triumphs top
management began to notice a sharp decline in the
sales of the company.
In 2000, in a separate case, Sugue and Valderrama
filed a complaint with the NLRC against Triumph for
payment of money claims arising from allegedly unpaid
vacation and sick leave credits, birthday leave and
14th month pay for the period 1999-2000 (the period
of the said decline in sales). Triumph charged as half-
day to their vacation leave credit their time attending
the preliminary conference of said case.
Thereafter, the applications of both Sugue and
Valderrama for leave credits were subjected to various
conditions.
o Sugue complained that the conditions imposed
upon her by the company before granting her
leaves (e.g. medical certificate in the case of
her applications for sick leave and the
submission of the companys marketing plan in
the case of her applications for vacation leave)
constituted harassment and discrimination
making her work unbearable and, thus,
prompting her to file a complaint with the
NLRC for constructive dismissal against
Triumph International.
o Valderramas case is similar to that of Sugues.
The cited complaints for constructive dismissal
was premised on their argument that they
were being singled out by the company
because of their earlier filing of money claims
before the NLRC against the company.
Issue:
1. Whether or not the conditions imposed by the company
for the granting of leave credits amounted to
discrimination or harassment, supporting the claim of
constructive dismissal. (NO)
2. Whether or not Triumph is justified in charging their
absence (due to attending the preliminary conference
in the NLRC) to their Vacation Leave (YES)
Held:
1. The conditions set by the company do not amount to
discrimination. In the grant of vacation and sick leave
privileges to an employee, the employer is given
leeway to impose conditions on the entitlement to the
same as the grant of vacation and sick leave is not a
standard of law, but a prerogative of management. It is
a mere concession or act of grace of the employer and
not a matter of right on the part of the employee. Thus,
it is well within the power and authority of an employer
to deny an employees application for leave and the
same cannot be perceived as discriminatory or
harassment. Triumph did not act with discrimination,
insensibility or disdain towards Sugue and Valderrama,
which foreclosed any choice on their part except to
forego their continued employment.
2. Triumph is justified in charging Sugue and Valderramas
half-day absence to their vacation leave credits. It is
fair and reasonable for Triumph to do so considering
that Sugue and Valderrama did not perform work for
one-half day on June 19, 2000.
The age-old rule governing the relation between labor and
capital or management and employee is that a fair days
wage for a fair days labor. If there is no work performed
by the employee there can be no wage or pay, unless of
course, the laborer was able, willing and ready to work but
was illegally locked out, dismissed or suspended. It is
hardly fair or just for an employee or laborer to fight or
litigate against his employer on the employers time.
In a case where a laborer absents himself from work
because of a strike or to attend a conference or hearing in
a case or incident between him and his employer, he might
seek reimbursement of his wages from his union which had
declared the strike or filed the case in the industrial court.
Or, in the present case, he might have his absence from his
work charged against his vacation leave.
Aklan Electric Cooperative Incorporated v NLRC
G.R. No. 121439, January, 25, 2000.
Ponente: Gonzaga- Reyes, J. Digester: Roxas
Facts
Petitioner: Aklan Electric Cooperative Incorportated
(AKELCO)
Respondents: NLRC, Retiso and 165 other AKELCO
employees
Timeline
Date Event
January 22, 1992 AKELCO temporarily transfers holding of
office from main office in Lezo, Aklan
(Lezo) to Amon theater, Kalibo, Aklan
(Kalibo) on the ground that the office at
Lezo was dangerous and unsafe.
*it was not explicitly stated what made
the area dangerous and unsafe, but it
seems like it had something to do with
military insurgents
January 31, 1992 Respondents and other workers of
AKELCO engaged in illegal strikes and
refused to report for work in Kalibo, but
continuously reported for work in Lezo.
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Date Event
Feb 6, 1992 NEA administrator wrote a letter to the
Provincial police chief of Kalibo Aklan,
requesting for military assistance to aid
AKELCOs team in retrieving equipment
and facilities, and its transfer from Lezo
to Kalibo and to maintain peace and
order in the covered area.
NEA administrator wrote to AKELCO
board saying that he is not interposing
any objections to the transfer of office.
Feb 11, 1992 Respondent workers, claim that the
board passed an unumbered resolution
withdrawing the temporary designation
of office at Kalibo and returning daily
operations to Lezo.
- SC found that this resolution was
inexistent, as it was contrary to the
subsequent resolutions passed.
Sept 9, 1992 Resolution #411. AKELCO board
dismissed all employees including
respondents who were on illegal strike,
and refused to report for work at Kalibo
office, since January 31, 1992, despite
NEA directive.
March 1993 AKELCO returns operations to main
office in Lezo.
March 10, 1993 Resolution #477 AKELCO allows
Respondent workers who were
dismissed in the previous resolution to
return to the company out of
compassion, reconciliation, Christian
values and humanitarian reason, subject
to the condition of no work, no pay
June, 1993 Respondent workers,demanded for the
payment of back wages from June 1992
- March 1993.
June 4, 1993 Resolution #496 AKELCO rejects the
demands of respondent workers for
unpaid wages from June 16, 1992 -
March 1993.
- Following the timeline, respondent workers, were
not working in AKELCO, Kalibo from January 31, 1992 until
the time they were allowed to return to the company in
March 10, 1993.
- They are however, only claiming that the company
failed to pay them for services rendered from June 1992-
March 1993.
- Respondents are not claiming wages for the period
from January 1992 - May 1992.
Ruling of the lower courts:
LA: Respondent workers refused to work under lawful
orders of AKELCO, hence they are covered by the no work,
no pay principle and are not entitled to claim for unpaid
wages from June 1992- March 1993.
NLRC: Reversed findings of the LA. Ordered AKELCO to pay
wages.
AKELCO is now appealing the decision of the NLRC, alleging
grave abuse of discretion under rule 65.
Issue:
1. WON respondent workers refused to work under
the lawful orders of petitioner AKELCO. Yes, workers
refused lawful orders.
2. WON respondent workers are covered by the no
work, no pay principle and are not entitled to unpaid
wages from June 1992 - March 1993. Yes, not entitled to
wages.
Held:
Respondents unjustly refused to render services from June -
March 1993, thus, they are not entitled to payment of
wages for that period.
Ratio:
Transfer of office from Lezo to Kalibo justified.
Office was unsafe and posed a serious and
imminent threat to AKELCO officials and employees
o Transfer of office was done upon
recommendation of Atty. Mationg, the
project supervisor, on the ground that Lezo
was unsafe.
o The transfer was then approved by NEA
administrator. Who subsequently
requested for military assistance from the
provincial police chief.
o Obviously the operation of business in
Lezo posed a serious and imminent threat.
Transfer of office was done in the exersice of a
management perogative
o It is withint the right of
management to move its operations.
o In the absence of evidence showing that
the transfer is unjustified, it is presumed a
valid exersice of management perogative.
NLRC wrongly found that respondent workers rendered
services from June to March.
NLRCs finding that respondent workers had
rendered services from June to March was based
on:
1. Letter of Leyson, office manager of
AKELCO requesting for payment of
respondents unpaid wages.
2. Memorandum of Atty. Mationg, in answer
to the aforementioned letter of Leyson,
assuring Leyson that his request for
payment of wages would be recommended
to the board.
3. Respondent workers own computation of
their unpaid wages.
The aforementioned evidence is not substantial
enough. It did not establish that they in fact
rendered services in the Kalibo office during said
period.
1. Leyson, although admittedly an office
manager, is one of the respondent
claiming unpaid wages. His request in
behalf of the others is thus biased and self
serving
2. Atty. Mationg did not approved or assure
payment of wages. He merely said that he
would recommend payment, further
subject to the approval of the board of
directors, if the funds were available.
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Feb 11, 1992 unumbered resolution was not a valid act of
AKELCOs legitimate board, considering the subsequent
actions taken by the board.
Respondents did not work during the period in question
Having established that the office was validly UNIVERSITY refused, though it did grant a 5.86% salary
transfered it was incumbent upon respondent
workers to prove that they had rendered services,
its a basic rule that each party must prove their
affirmative allegations.
o Respondents merely relied on their own
computations as evidence. There must be
competent proof such as time cards or
office records to show that they actually
rendered office service.
o It is impossible that they were able to work
in the Lezo office, since all the equipment
of AKELCO was moved to the Kalibo office.
Respondents had been dismissed from January 31,
1992 March 1993 and yet only claimed
backwages for June March.
o Respondents claim that they had
been paid for services rendered by them in
the Lezo office from January June, 1992.
o They were not however able to rebut
petitioners claim that respodents illegally
collected fees and charges legally due to
AKELCO and appropriated the collections
among themselves to satisfy their salaries
from January to June 1992.
No work no pay principle
the age-old rule governing the relation between
labor and management of a fair days wage for a
fair days labor remains the basic factor in
determining employees wages.
If there is no work performed by the employee,
there can be no wage or pay, unless the laborer
was willing and able but was illegally locked out or
dimissed.
Such exception, is not present in this case.
It would not be fair nor just to allow respondent
workers to reconver something they did not near
and could not have earned because they did not
render services at Kalibo during the stated period.
UNIVERSITY OF PANGASINAN FACULTY UNION
(UNION) v. UNIVERSITY OF PANGASINAN
(UNIVERSITY)
20 February 1984; Gutierrez, J. | Digest Prepared by Hans
Santos
FACTS
UNION is a labor union composed of faculty members of
UNIVERSITY. UNION filed acomplaint, though its President,
Miss Abad, against the UNIVERSITY for (a) payment of
Emergency Cost of Living Allowances (ECOLA) for 7
November to 5 December 1981, the semestral break
(sembreak); (b) salary increases from the 60% of
incremental proceeds of increased tuition fees; and (c)
payment of salaries for extra loads.
UNION members are full-time professors, instructors and
teachers of UNIVERSITY. The teachers in the college level
teach for a normal duration of 10 mos in a school year,
excluding 2 months of summer vacation. During the
sembreak, they were paid their monthly salaries but not
the ECOLA. UNIVERSITY claims they are not entitled on the
grounds that the break is not an integral part of the school
year and there were no actual services rendered during the
break.
During AY 1981-82, UNIVERSITY was authorized by the
Ministry of Education and Culture to collect a 15% increase
of tuition fees. UNION members demanded a salary
increase to be taken from 60% of the incremental proceeds.
increase during the pendency of the proceedings.
Some UNION members were also given extra loads to
handle in the said school year but were unable to teach on
21 September 1981 due to said day being proclaimed a
working holiday by the President. Those with teaching loads
claimed they were not paid salaries while UNIVERSITY
claimed they were paid.
The case does not disclose how the lower tribunals ruled.
ISSUES-HELD-RATIO
WON UNION members are entitled to ECOLA during the
sembreak: YES
Presidential Decrees providing for ECOLA (Nos.
1614, 1634, 1678, and 1713) provide that
employees shall be paid monthly allowance if they
incur no absences such that absence without pay
shall result in deductions in the allowance while
leave with pay will not.
The sembreak, being in the nature of a work
interruption beyond the employees control, cannot
be considered as absences within the meaning of
the law.
The no work, no pay principle does not apply
here as this contemplates a situation where the
employees voluntarily absent themselves. In this
case, UNION member faculty do not voluntarily
absent themselves but re constrained to take
mandatory leave from work.
UNIVERSITY contends that fact receiving salary, as
UNION members in fact did during the sembreak,
should not be basis for recovery of ECOLA. The
Court disagreed, citing Section 5 of the IRRs for
Wage Order No. 1 which provides that all covered
employees are entitled to daily living allowance
when paid their basic wage. Hence, there is the
principle of no pay, no ECOLA the converse of
which is applicable in the present case.
The payment of full wages during sembreak is a
tacit recognition that teachers are nevertheless,
burdened with work consisting of papers to correct,
students to evaluate, deadlines to meet, and
grades to submit. Teachers must keep abreast of
developments,
Furthermore, applying the Omnibus Rules
Implementing the Labor Code, the time during
which the employee is inactive by reason of work
interruption is considered time worked if the
internal is too brief to be utilized effectively and
gainfully for the employees own interest.
WON 60% of proceeds are to be devoted to salary increase:
YES
The Court here is called to interpret Section 3 of PD
451, to wit:
SEC. 3. Limitations. - The increase in tuition or other
school fees or other charges as well as the new fees or
charges authorized under the next preceding section shall
be subject to the following conditions:
a) That no increase in tuition or other school fees or
charges shall be approved unless sixty (60%) per
LABOR: Digests | 100215 | kb | 5
 centum of the proceeds is allocated for increase in
salaries or wages of the members of the faculty
and all other employees of the school concerned,
and the balance for institutional development,
student assistance and extension services, and
return to investments: Provided, That in no case
shall the return to investments exceed twelve
(12%) per centum of the incremental proceeds; x x
x"
The Court had earlier ruled in University of the
East v. UE Faculty Association that the increase in
salaries or wages shall not include allowances and
benefits which may be taken from the return on
investment. Return on investment is fixed at a
maximum of 12% but without any minimum.
UNIVERSITY contends that this earlier decision
disregards the spirit of the law as the PDs whereas
clauses make references to salary and other
benefits, allegedly implying that the latter is
included in the former. The Court disregarded this
saying that it is an elementary principle of
statutory construction that the whereas clauses
cannot prevail over the statements in the law itself.
The law is clear that the 60% incremental proceeds shall be
devoted entirely to increases in basic salary. To charge
other benefits to these proceeds would reduce the increase
in basic salary intended to help the teachers.
The Court is not guilty of usurpation of legislative
functions as it merely interpreted the meaning of
the law within its provisions. The ruling in
University of the East was merely to answer the
query of where to charge the said benefits.
WON payment of salary for 21 September 1981 was proven
by substantial evidence: YES
As found by respondent NLRC, the faculty
members have been paid for the extra loads. This
is a question of fact within the competence of the
NLRC to pass upon.
Assuming that these have not been paid, faculty
members are not entitled thereto applying the no
work, no pay principle. These are not regular
loads for which faculty members are paid regular
monthly salaries regardless of working days or
hours. These are extra loads which should only be
pad when work is actually performed. Since there
was no work on 21 September 1981, faculty
members should not be granted extra wages for
that day.
Petition is GRANTED. UNIVERSITY ordered to pay ECOLA
and undistributed balance 60% incremental proceeds as
salary increases. NLRC decision SUSTAINED in denying
payment of salary for 21 September.
Intl School Alliance of Educators v. Quisumbing (DOLE)
G.R. No. 128845, 1 June 2000; Kapunan, J.
Digest prepared by Jethro Koon
Doctrine
In ruling for the teachers, the Court used many
international conventions and covenants. All embody the
general principle against discrimination, the very antithesis
of fairness and justice. The Philippines, through its
Constitution, has incorporated this principle as part of its
national laws.
I. Facts
International School, Inc. (the School, for short), pursuant to
Presidential Decree 732, is a domestic educational
institution established primarily for families of foreign
diplomatic personnel and other temporary residents.
It hires both foreign and local teachers, the determination
being a hire's answers to their four way test. 1 A single
answer to any of those questions being the Philippines
makes that hire classified as a local hire.
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.
The School also argued that there was no
discrimination/equal protection issue here because if a
foreigner living in the Philippines was hired, he would be
entitled to the same compensation as Filipino local hires.
This difference was brought up during negotiations for new
collective bargaining agreement. Short story: talks broke
down, there was a strike, and the DOLE ruled in favour of
the School (adopting the School's argument that it needs to
use these incentives to be a competitive employer).
II. Issues
1. Is the difference in compensation fair?
2. Do foreign-hires belong in the same bargaining unit as
local hires?
III. Held
1. No. There exists in this jurisdiction the legal truism of
"equal pay for equal work." Persons who work with
substantially equal qualifications, skill, effort and
responsibility, under similar conditions, should be paid
similar salaries.
2. No. To include foreign-hires who have distinct benefits in
a bargaining unit with local-hires would not assure either
group the exercise of their respective collective bargaining
rights.
IV. Ratio
1. The Court makes a shopping list of laws that prohibit the
practice in question (along the argument that it is
discrimination):
a. The Constitution in the Article on Social Justice and
Human Rights exhorts Congress to "give highest priority to
the enactment of measures that protect and enhance the
right of all people to human dignity, reduce social,
economic, and political inequalities."
b. Article 19 of the Civil Code requires every person, "in the
exercise of his rights and in the performance of his duties,
[to] act with justice, give everyone his due, and observe
honesty and good faith.
1a. What is one's domicile? b. Where is one's home
economy?
c. To which country does one owe economic
allegiance?
d. Was the individual hired abroad specifically to
work in the School and was the School responsible for
bringing that individual to the Philippines?
LABOR: Digests | 100215 | kb | 6
c. The Universal Declaration of Human Rights
d. International Covenant on Economic, Social, and Cultural
Rights (Article 7) provides:
- (i) Fair wages and equal remuneration for work of
equal value without distinction of any kind, in particular
women being guaranteed conditions of work not inferior
to those enjoyed by men, with equal pay for equal work;
e. International Convention on the Elimination of All Forms
of Racial Discrimination
f. Convention against Discrimination in Education
g. Convention (No. 111) Concerning Discrimination in
Respect of Employment and Occupation
h. The Constitution (Article XIII, Section 3) specifically
provides that labor is entitled to "humane conditions of
work."
These conditions are not restricted to the physical
workplace the factory, the office or the field but
include as well the manner by which employers treat their
employees.
i. The Constitution (Article XIII, Section 3) also directs the
State to promote "equality of employment opportunities for
all."
j. The Labor Code (Article III) provides that the State shall
"ensure equal work opportunities regardless of sex, race or
creed."
k. The Labor Code (Article 135) prohibits and penalizes the
payment of lesser compensation to a female employee as
against a male employee for work of equal value. Article
248 declares it an unfair labor practice for an employer to
discriminate in regard to wages in order to encourage or
discourage membership in any labor organization. These
show that discrimination in the form of wages is frowned
upon by the Labor Code.
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.
2. A bargaining unit is "a group of employees of a given
employer, comprised of all or less than all of the entire
body of employees, consistent with equity to the employer,
indicate to be the best suited to serve the reciprocal rights
and duties of the parties under the collective bargaining
provisions of the law."
The factors in determining the appropriate collective
bargaining unit are (1) the will of the employees (Globe
Doctrine); (2) affinity and unity of the employees' interest,
such as substantial similarity of work and duties,
or similarity of compensation and working conditions
(Substantial Mutual Interests Rule); (3) prior collective
bargaining history; and (4) similarity of employment status.
The basic test of an asserted bargaining unit's acceptability
is whether or not it is fundamentally the combination which
will best assure to all employees the exercise of their
collective bargaining rights. Foreign-hires have indicated
no intention to be grouped together with local-hires, nor
have they been grouped together in the past. The fact that
they receive distinct benefits justify their exclusion from the
other.
Legend Hotel v. Hernani Realuyo
G.R. No. 153511; July 18, 2012; Bersamin, J.
Digest prepared by Paolo Tamase
(Heavily borrows, with permission, from Hanss digest)
A. Facts
1. REALUYO, under his stage name Joey R. Roa, had
been engaged as a pianist in the Legend Hotels
Tanglaw Restaurant since September 1992.
a. He was paid P400.00 per three hours of
performance from 7:00-10:00 pm, 3-6
nights a week. His rate was later increased
to P750.00.
2. July 9, 1999, the MANAGEMENT notified REALUYO
that because they had to cut costs his services
were no longer required effective July 30, 1999.
3. REALUYO filed complaint for illegal dismissal,
questioning the grounds of his dismissal since the
company was then earning lucratively.
a. But LEGEND raised the defense that there
was no employer-employee
relationship since REALUYO was only
engaged as talent.
4. The LABOR ARBITER ruled in favor of LEGEND
HOTEL, since REALUYO had admitted in a letter
that (1) the amounts he was receiving was talent
fee; and (2) that he was paid nightly and not bi-
monthly like employees of the restaurant. The
NLRC affirmed.
5. The CA reversed and ruled in favor of REALUYO,
holding that the four elements of an employer-
employee relationship had been met.
6. LEGEND HOTEL filed a petition for review on
certiorari, arguing inter alia that talent fees were
not included in wage under the Labor Code, and
hence were the consideration for their service
contract.
B. Issues
1. WON the petition for certiorari filed with the CA
was the proper recourse. YES
2. WON there was an employer-employee
relationship. YES
3. WON ROA was validly terminated. NO
C. Held: Petition DENIED, decision of the CA AFFIRMED
with MODIFICATION that if reinstatement is no longer
possible, LEGEND HOTEL shall pay backwages and
separation pay (computed from Sept. 1992).
1. YES, the CA is empowered to receive evidence on
factual issues.
2. YES, the four-fold test has been met; albeit
denominated as talent fees, REALUYOs
remuneration is included in the term wage in
the context of the Labor Code.
3. NO, the COMPANY was not able to prove that the
retrenchment was justified.
D. Ratio
1. Certiorari was a proper course. A petition for
certiorari brought to the CA to assail the decision of the
NLRC may raise factual issues.
2. There was an employer-employee relationship.
The power of selection is firmly evidenced by the
express written recommendation (dated Jan. 12,
1998) by the restaurant manager for an increase in
REALUYOs remuneration.
o LEGEND cannot hide behind the service
contract. The law defines the relationship.
His remuneration falls under wages in the
sense and context of the Labor Code,
regardless of how petitioner chose to
designate the remuneration.
o Art. 97(f) of the Labor Code clearly states
that wage is any remuneration or
earnings, however designated, capable of
being expressed in terms of money,
whether fixed or ascertained on a time,
LABOR: Digests | 100215 | kb | 7
 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
xxx
o LEGEND did not present is payroll to
bolster its claim that REALUYO is not its
employee.
o That REALUYO worked for less than 8
hours a day was of no consequence;
the Labor Code only set a maximum of 8
hours, but did not prohibit work for less
than that.
The employer exercises the power of control.
o (a) REALUYO could not choose the time of
his performance.
o (b) He could not choose the place of his
performance.
o (c) He had to conform to the motif by
playing Tagalog songs only, or wearing a
barong.
o (d) He was subjected to the rules on
employees representation check and
chits.
o It is suffice that the employer has the right
to wield that power.
LEGEND had the power to dismiss. While LEGEND
claimed that the power to terminate the
relationship (at will, and with or without cause) was
mutually vested on both parties, the
memorandum informing REALUYO that he has
been fired because of the financial condition of the
company showed that it had the power to dismiss.
3. The termination was invalid.
Retrenchment is an authorized cause under art.
283 to avoid or minimize business losses, but
LEGEND did not present evidence to prove the
losses to its business and the economic havoc it
would sustain.
Not every loss can justify a retrenchment. The loss
must be (a) substantial and (b) reasonably
imminent; (3) the retrenchment must be
reasonably necessary and likely to effectively
prevent expected losses; and (4) the alleged losses
must be proved by sufficient and convincing
evidence.
Philippine Fisheries Development Authority v. NLRC
and Odin Security Agency
G.R. No. 94825; September 4, 1992; Gutierrez Jr., J.
Digest prepared by Carlo Roman
I. Facts
- 11/11/85: Petitioner Philippine Fisheries
Development Authority (PFDA), a GOCC
created under PD No. 977, entered into a
Security Agreement with private respondent
Odin Security Agency for security services of
its Iloilo Fishing Port Complex in Iloilo City.
In exchange of Odins services, PFDA
obligated itself to pay to the former
per month for 8 hours of work daily
the following rates:
Security Guard: 1990.00
Security Supervisor: 2090.00
Detachment Commander:
2190.00
Such compensation was to include,
among others, the following: minimum
wage (Wage Order No. 5), rest day
pay, night differential pay, incentive
leave pay, 13th month pay, emergency
cost of living allowance (up to Wage
Order No. 5), 4% contracts tax,
operational expenses, and overhead.
The agreement was also provided for
a one-year renewable period.
- 10/24/87: During the effectivity of said
Security Agreement, Odin requested the PFDA
to adjust the contract rate in view of Wage
Order No. 6, which took effect 11/1/84 (note
that said wage order had already taken effect
even before the Security Agreement was
entered into). This was in line with Sec. 7(c)
of the Security Agreement, which calls for
an automatic escalation of the rate per
guard in case of wage increase. Wage Order
No. 6 provides:
SECTION 9. In the case of contracts for construction
projects and for security, janitorial and similar services, the
increases in the minimum wage and allowance rates
of the workers shall be borne by the principal or
client of the construction/service contractor and the
contracts shall be deemed amended accordingly,
subject to the provisions of Section 3(c) of this Order.
(emphasis supplied)
- This and subsequent requests for adjustment
of the contract price were ignored by PFDA.
- 6/7/88: Odin filed with the Office of the Sub-
Regional Arbitrator a complaint for unpaid
amount of readjustment rate.
- 8/19/88: The Labor Arbiter, upon motion of
PFDA, dismissed Odins complaint, stating that
PFDA was a GOCC under the scope and
jurisdiction of the Civil Service
Commission, and not the NLRC.
- 1/17/89: On appeal, the NLRC set aside the
Labor Arbiters order and granted the reliefs
requested by Odin.
- After the denial of PFDAs motion for
reconsideration, the instant petition was
brought to the SC.
II. Issues/Ratio
1. W/N the jurisdiction of the Civil Service
Commission may be invoked in this case.
NO.
PFDA is a GOCC with a special charter,
placing it under the scope of the civil
service. However, the guards are
not employees of PFDA, it being
explicitly stated in the Security
Agreement that security guards are
not considered employees of the
petitioner. Civil Service Commission
jurisdiction thus cannot be invoked.
PFDA is therefore an indirect
employer of the security guards.
2. W/N an indirect employer is bound by the
rulings of the NLRC. YES.
Notwithstanding that PFDA is a
government agency, its joint and
solidary liability with the
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 contractor (Odin) is provided for
in Articles 106, 107, and 109 of
the Labor Code placing PFDAs
liabilities under the scope of the NLRC,
in line with the definition of an
employer under Art. 97(b) of the
same Code.
3. Who must then carry the burden of the wage
increases? BOTH PFDA and Odin are jointly
and severally liable for the unpaid wage
differentials.
Liability under Wage Order No. 6 was
sufficiently explained in Eagle Security
v. NLRC, which reiterated the
solidary liability of both principal
employer and job contractor for
employees money claims arising
from provisions of a Wage Order.
According to Eagle Security,
such solidary liability does not
preclude the payors right of
reimbursement from the
solidary co-debtor.
The security guards
contractual relationship is
with the immediate employer
(in this case, Odin); the
guards immediate
recourse for payment of
wages is thus with the
immediate employer, who
is tasked to pay their wages.
However, in order for the
security agency to comply
with the new wage and
allowance rates it must pay to
the security guards, the Wage
Order made specific
provision to amend existing
contracts by allowing the
adjustment of
consideration paid by the
principal to the security
agency.
In the end, ultimate liability
for payment of the increases
rests with the principal.
Additionally, the contract was entered
into when Wage Order No. 6 was
already in force. The wage rates in the
Security Agreement were thus
stipulated without consideration of
the increases mandated by the Wage
Order.
Private respondent Odin must
therefore also be held
equally guilty for being first
to deprive the security guards
of their rightful wage under
Wage Order No. 6.
As employer of the security
guards, the security agency is
charged with knowledge of
labor laws and the adequacy
of the compensation that it
demands.
Odin cannot exculpate itself from
liability by filing the complaint in its
own behalf and that of the security
guards, in spite of Eagle Securitys
mandate that ultimate liability rests
with the principal. Employees must be
guaranteed payment of wages due
them.
III. Held
- NLRC resolution is AFFIRMED, with the
modification that BOTH PFDA and Odin are
held jointly and severally liable to the security
guards for the unpaid wage differentials under
Wage Order No. 6, without prejudice to the
right of reimbursement for one-half of the
amount which either the petitioner or private
respondent may have to pay to the security
guards.
Iran v. NLRC
G.R. No. 121927; 22 April 1998; Romero, J.
Digest prepared by Glenn Agbayani (from Paola Vargas
digest)
I. Facts
Petitioner is engaged in softdrinks merchandising
and distribution in Mandaue City, Cebu.
Private respondents were employed as
drivers/salesmen and truck helpers of petitioner.
As part of their compensation, they received
commissions per case of softdrinks sold.
In June 1991, petitioner discovered cash shortages
and irregularities allegedly committed by the
private respondents. Pending investigation of their
case, petitioner required them to report for work.
Despite the return to work order, the private
respondents stopped reporting for work, and their
act was construed as abandonment by the
petitioner, who terminated their services.
Private respondents filed complaints for illegal
dismissals, illegal deduction, underpayment of
wages, premium pay for holiday and rest day,
holiday pay, service incentive leave, 13th month
pay, allowances, separation pay, recovery cash
bond, damages and attorneys fees. Said cases
where consolidated and assigned to labor arbiter
Ernesto Carreon.
The labor arbiter ruled that there was no illegal
dismissal but petitioner failed to comply with the
minimum wage requirements and the 13 th month
pay.
Both parties appealed to the NLRC. Petitioner
argued that the labor arbiter erred in not including
the commissions paid to the private respondents in
determining their minimum wage. He likewise
presented for the first time on appeal vouchers
for 13th month pay signed by the private
respondents.
The NLRC disregarded the vouchers presented by
Iran as proof of payment of 13th month pay
because it was only raised on appeal.
On the issue of dismissal, the NLRC ruled that
private respondents were validly dismissed but the
petitioner failed to comply with the procedural
requirements for dismissing employees for which
they should be indemnify.
On the issue of wages, the NLRC held that in
computing the minimum wage, the commission
paid to the private respondents must not be
included because commission is an incentive for an
employee to work harder for a better production
LABOR: Digests | 100215 | kb | 9
 that will benefit both the employer and the
employee. To include the commission in the
computation of wage in order to comply with labor
standard laws is to negate the practice that a
commission is granted after an employee has
already earned the minimum wage or even beyond
it.
II. Issue
WON commissions are included in determining compliance
with the minimum wage requirement
III. RATIO
On 13th Month Pay
NLRC should have admitted the vouchers proving
payment of 13th month pay as evidence even if it
was submitted only on appeal. In labor cases,
technical rules of evidence are not binding. Labor
officials should use all reasonable means to
ascertain facts speedily and objectively without
regard to technicalities of procedure.
The vouchers presented by Iran covers only a
particular year. It does not cover amounts for other
years claimed by private respondents. Only the
amounts for covered by the vouchers for that
particular year will be credited.
On Minimum Wage
The decision of the NLRC is modified insofar as it
excludes the commissions received by the private
respondents in the determination of petitioners
compliance with the minimum wage. The case is
remanded to the labor arbiter for recomputation.
The definition of wage in Art. 97(f) of the Labor
Code includes commissions as part of wages.
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, xxx.
While commissions are incentives or forms of
encouragement to inspire employees to put a little
more industry on the jobs assigned to them, still
they are direct remunerations for services
rendered. Commissions are 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 shows that
commissions are part of a salesmans wage or
salary.
Moreover, there is no law requiring that
commissions be paid only after the minimum wage
has been paid. The establishment of a minimum
wage only sets the floor below which an
employees remuneration cannot fall.
Were the commissions equal to or even exceed the
minimum wage, the employer need not pay, in
addition, the basis minimum pay prescribed by law.
On the issue of non-compliance with the procedural
requirements in dismissal, the Court agrees with
NLRC. Settled is the rule in termination of EEs that
the ER must furnish the EE with 2 written notices
before the latter can be legally terminated: (a)
notice apprising the EE of the particular acts or
omissions for which his dismissal is sought, and (b)
subsequent notice informing the EE of the ERs
decision to dismiss him. In the instant case, per
admission of the petitioner, in giving the report to
work to the respondents, he was not intending to
dismiss them but only to recover the
misappropriated funds.
The twin requirements of notice and hearing
constitute the essential elements of due process,
and neither of these elements can be disregarded
without running afoul of the constitutional
guarantee. Not being mere technicalities but the
very essence of due process, to which every EE is
entitled so as to ensure that the ERs prerogative
to dismiss is not exercised arbitrarily, these
requisites must be complied with strictly. For non-
compliance, private respondents were awarded
nominal damages.
Millares v NLRC
G.R. No. 122827, March 29, 1999, J. Bellosillo
Digest Prepared by Leigh
FACTS:
Paper Industries Corporation of the Philippines
(PICOP; private respondent) suffered a financial
setback due to government regulations on logging,
and the economic crisis
o Undertook a retrenchment program.
Terminated the services of the petitioners.
o 116 petitioners Technical staff, unit
manager, section manager, department
manager, division manager and vice
president in the mill site of the respondent
o Petitioners were paid separation pay (1
month basic pay for every year of service)
Complaint filed for payment of separation pay
differentials because they believed that their
monthly allowances should be included in the
computation of their separation pay
o These allowances included:
Staff/Managers allowance
(housing allowance)
Transportation allowance
Bislig allowance
Labor Arbiter applied Art 97 (f). Allowances
should be part of the wages because they were
customarily paid by the respondent and received
by the petitioners
o Santos v NLRC and Soriano v NLRC:
computation of separation pay should
include the basic salary and the regular
allowances received by the employee
o Ordered PICOP to pay separation pay
differentials plus 10% as attorneys fees
NLRC set aside LA decision; allowances not part
of the salary base used to compute separation pay
o The cases relied on by the LA involved
illegal dismissal, where separation pay was
granted in lieu of reinstatement
o Estate of the late Eugene Kneebone v
NLRC representation and transportation
allowances not part of the salary, therefore
excluded from separation pay computation
LABOR: Digests | 100215 | kb | 10
 o Allowances enjoyed by the petitioners
were contingency based, thus not included
in the salaries
Petitioners Arguments
o Allowances are included in the definition of
facilities in Art 97 (f) because they are
necessary and indispensable for their
existence and subsistence
o Availment of the monetary equivalent of
those facilities was characterized by
permanency, regularity and customariness
ISSUES/HELD/RATIO
1. W/N the allowances should be included in computation of
the separation pay for retrenched personnel YES
in
PETITION DISMISSED .
SLL International Cables v. NLRC
G.R. No. 172161; 02 March 2011; Mendoza, J.
Digest prepared by Jeane Yaneza
Doctrine
Supplement - The benefit or privilege given to the
employee which constitutes an extra remuneration above
and over his basic or ordinary earning or wage
Facility The benefit or privilege is part of the laborers'
basic wages

It is the obligation of the employer to pay a I. Facts

retrenched employee the whole amount of his
salaries plus all other benefits, bonuses and
general increases to which he would have been
normally entitled had he not been retrenched.
2. W/N the allowances received by the petitioners were
regularly received -- NO
In cases of retrenchment to prevent losses, Art 283
applies.
o Separation pay to be given to affected
employees, equivalent of 1 month pay or
at least month pay for every year of
service, whichever is higher
The term pay and wage in Art 97 refer to the
same thing reward or recompense for services
performed
Based on the definition of wages in Art 97(f), three
things must be taken note of:
Term Definition
Customary Long established, constant
practice; regularity
Lopez, Caete, and Zuiga were hired by SLL International
Cables as apprentices or trainee cable/lineman. They were
paid full minimum wage. They did not have to report to
work regularly since they were only trainees. They were
substitutes to the regular workers or in undertakings that
needed extra workers to expedite completion of work.
After their training period, Lopez, et al were engaged as
project employees in several projects. After the completion
of each project, their employment was terminated.
March - December 1997 (Islacom project in Bohol)
Received P145.00 which was the minimum
prescribed daily wage in Region VII
July: Regional Wage Board increased the minimum
prescribed daily wage to P150.00
Oct: Minimum prescribed daily wage increased to
P155.00
March 1998 - September 1998 (PLDT Antipolo, Rizal
project)
Received P145.00 only
Prescribed minimum wage in Rizal was P160.00

November 1998 - March 1999 (Racitelcom project in

Bulacan)
Received P145.00 only

May 1999 - Feb 2000 (Furukawa Corporation project

Board, lodging or other
facilities
Fair and reasonable value
as determined by the SOLE
facilities articles or services
for the benefit of the employee or
his family but excluding tools of
the trade or articles or service
primarily for the benefit of the
employer or necessary to the
conduct of the employers
business
in Camarin, Caloocan City)
May - Dec: Received P145.00 only
Prescribed minimum wage in Manila was P198.00
Jan - Feb: Received P165.00 only
Prescribed minimum wage in Manila was P213.00
For reasons of delay on the delivery of imported materials
from Furukawa Corporation, the Camarin project was not
completed on the scheduled date of completion. Lagon,
manager of SLL International Cables was constrained to cut
down the overtime work of its workers including Lopez, et
al. Thus, when Lopez, et al requested to work overtime,
Lagon refused and told them that if they insist, they would
have to go home at their own expense and that they would
not be given anymore time nor allowed to stay in the
quarters.
This prompted Lopez, et al to leave their work and return
home to Cebu. They filed a complaint for illegal dismissal,
non- payment of wages, holiday pay, 13th month pay for
1997 and 1998 and service incentive leave pay as well as
damages and attorney's fees.
LABOR: Digests | 100215 | kb | 11

SLLs Arguments: Lopez, et al were only project
employees. Their services were merely engaged for a
specific project or undertaking and the same were covered
by contracts duly signed by them. The food allowance of
P63.00 per day, their allowance for lodging house,
transportation, electricity, water and snacks allowance
should be added to their basic pay. Thus, they received a
higher wage rate than that prescribed in Rizal and Manila.
LA: Lopez, et al were underpaid. The free board and
lodging, electricity, water, and food enjoyed by Lopez, et al
could not be included in the computation of their wages
because these were given without their written consent.
However, there was no illegal dismissal.
NLRC and CA: Affirmed LA
II. Issues/Held
1. Whether or not Lopez et al are entitled to minimum
wage YES
2. Whether or not the value of facilities that Lopez,
et al enjoyed should be included in the
computation of wages NO. The Court clarified
that the benefits they received were supplements
and not facilities.
III. Ratio
1. Whether or not Lopez et al are entitled to
minimum wage - YES
The burden of proving payment of monetary claims rests on
the employer, the rationale being that the pertinent
personnel files, payrolls, records, remittances and other
similar documents -- which will show that overtime,
differentials, service incentive leave and other claims of
workers have been paid -- are not in the possession of the
worker but in the custody and absolute control of the
employer. In this case, SLL, aside from bare allegations that
Lopez et al received wages higher than the prescribed
minimum, failed to present any evidence to support their
defense of payment.
Lopez, et al are entitled to be paid the minimum wage,
whether they are regular or non-regular employees. Section
3, Rule VII of the IRR of the Labor specifically enumerates
those who are not covered by the payment of minimum
wage. Project employees are not among them.
2. Whether or not the value of facilities that
Lopez, et al enjoyed should be included in the
computation of wages
Section 1 of DOLE Memorandum Circular No. 2
An employer may provide subsidized meals and snacks to
his employees provided that the subsidy shall not be less
that 30% of the fair and reasonable value of such facilities.
In such cases, the employer may deduct from the wages of
the employees not more than 70% of the value of the
meals and snacks enjoyed by the latter, provided that such
deduction is with the written authorization of the
employees concerned.
Before the value of facilities can be deducted from the
employees' wages, the following must be met:
Proof must be shown that such facilities are
customarily furnished by the trade
The provision of deductible facilities must be
voluntarily accepted in writing by the employee
The facilities must be charged at reasonable value
These requirements have not been met in this case.
SLL failed to present any company policy or guideline
showing that provisions for meals and lodging were
part of the employee's salaries.
It also failed to provide proof of the employees' written
authorization or how they arrived at their valuations.
It is not even clear whether Lopez et al actually
enjoyed said facilities.
There is also a distinction between "facilities" and
"supplements." The food and lodging, or the electricity and
water allegedly consumed by Lopez et al in this case were
not facilities but supplements. In the case of Atok-Big
Wedge Assn. v. Atok-Big Wedge Co., the two terms were
distinguished from one another:
Supplements therefore, constitute extra remuneration or Facilities
special privileges or benefits given to or received by the laborer's
laborers over and above their ordinary earnings or that by e
wages the wag
deductib
the labo
same.
The distinction lies not so much in the kind of benefit or
item (food, lodging, bonus or sick leave) given, but in the
purpose for which it is given. In the case at bar, the items
provided were given freely by SLL for the purpose of
maintaining the efficiency and health of its workers while
they were working at their respective projects.
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