1.

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 Court of Industrial Relations which came up with a decision which states that
although the practice of the company, according to the manifestations of counsel for said company, has been
to grant one day vacation with pay to every workingman who had worked for seven consecutive days including
Sundays, the Court considers justified the opposition presented 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. They argued that the Court of Industrial Relations is against the provision of section 4,
Commonwealth Act No. 444, which provides that 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,
That 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.

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.

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 to
work during Sundays and legal holidays, unless the former pays the latter 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 as supplying gas, electricity, power, water or providing means of
transportation or communication, from the prohibition established in 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 qualified prohibition 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.

The prohibition to compel a laborer or employee to work during those days is qualified by the clause
"unless he is paid an additional sum of at least twenty five per centum of his regular remuneration," which is
inseparable from the prohibition which they qualify and of which they are a part and parcel. The second portion
of section 1 is in reality an exception and not a proviso although it is introduced by the word "provided"; and it
is elemental that an exception takes out of an enactment something which would otherwise be part of the
subject matter of it.

Issue:

Whether or not the public utilities employers are entitled to an additional compensation for rendering
services on Sundays and legal holiday,

Held:

NO, Public utilities exempted from the prohibition set forth in the enactment clause of section 4,
Commonwealth Act No. 444, are required to perform a continuous service including Sundays andlegal holidays
to the public, since the public good so demands, and are not allowed to collect an extra charge for services
performed on those days; while the others are not required to do so and are free to operate or not their shops,
business, or industries on Sundays and legal holidays. If they operate and compel their laborers to work on
1
those days it is but just and natural that they should pay an extra compensation to them, because it is to be
presumed that they can make money or business by operating on those days even if they have to pay such
extra remuneration. It would be unfair for the law to compel public utilities like the appellant to pay an additional
or extra compensation to laborers whom they have to compel to work during Sundays and legal holidays, in
order to perform a continuous service to the public. To require public utilities performing service to do so, would
be tantamount to penalize them for performing public service during said days in compliance with the
requirement of the law and public interest.

It is evident that the principal purpose of the Legislature in enacting said section 4, is not only to restrict
the general power of the Court of Industrial Relations granted by Act No. 103, to fix the minimum additional
compensation which an employer may be required to pay a laborer compelled to work on those days, but
principally to exempt public utilities affected with public interest, from the payment of such additional
compensation. If it were the intention of the lawmakers in enacting section 4 of the Act No. 444 to fix the limit of
the minimum of additional compensation of laborers working on those days, without exempting the public
utilities, that is, leaving intact the general power of the court to require the public utilities to pay said additional
compensation, the law would have only provided, in substance, that all employers are prohibited from
compelling their laborers to work on Sundays and legal holidays without paying them an additional
compensation of not less than 50 per cent of their regular remuneration.
The intention of the Legislature is to exempt the public utilities under consideration from the prohibition set forth
in the enactment clause of section 4, Act No. 444, is supported by the provision of section 19 of Act No. 103.

2. 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:

This is a petition for Certiorari and Mandamus filed by petitioner against arbitrator Froilan M. Bacungan
and Mantrade Development Corporation arising from the decision of respondent arbitrator, the dispositive part
of which reads as follows:

Considering all the above, We rule that Mantrade Development Corporation is not under legal
obligation to pay holiday pay 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.

On the other hand, respondent corporation has raised procedural and substantive objections. It
contends that 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. 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. Article 262 of the Labor Code
making voluntary arbitration awards final, inappealable and executory, except where the money claims exceed
P100,000.00 or 40% of the paid-up capital of the employer or where there is abuse of discretion or gross
incompetence refers to appeals to the National Labor Relations Commission and not to judicial review.

Issue:

Whether or not 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 is entitled of holiday
pay.

Held:

YES, 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; (b)
The employer may require an employee to work on any holiday but such employee shall be paid
compensation equivalent to twice his regular rate; and (c) As used in this Article, "holiday" includes: New

2
Year’s Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of
July, the thirtieth of November, the twenty-fifth and the thirtieth of December, and the day designated by law for
holding a general election.

They appear to be excluded under Sec. 2, Rule IV, Book III of the Rules and Regulations implementing
said provision which reads; SEC. 2. Status of employees paid by the month. — 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.

Petitioner’s contention that Section 2, Rule IV, Book III of the implementing rules and Policy Instruction
No. 9, issued by the then Secretary of Labor are null and void since in the guise of clarifying the Labor Code’s
provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion

The coverage and scope of exclusion of the Labor Code’s holiday pay provisions is spelled out under
Article 82 thereof which reads: 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. 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.’

The questioned Sec. 2, Rule IV, Book III of the Integrated Rules and the Secretary’s Policy Instruction
No. 9 add another excluded group, namely ‘employees who are uniformly paid by the month.’ While the
additional exclusion is only in the form of a presumption that all monthly paid employees have already been
paid holiday pay, it constitutes a taking away or a deprivation which must be in the law if it is to be valid.

3. 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:

Trans-Asia Philippines Employees Association the duly-recognized collective bargaining agent of the
monthly-paid rank-and-file employees of Trans-Asia entered into a Collective Bargaining Agreement with their
employer. The CBA, provided for, 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.

Petitioner filed a complaint before the labor arbiter for the payment of their holiday pay in arrears.
Petitioner contended that their claim for holiday pay in arrears is based on the non-inclusion of the same in
their monthly pay. In this regard, petitioners cited certain circumstances which, according to them, would
support their claim for past due holiday pay. First, petitioners presented Trans-Asia's Employees' Manual which
requires, as a pre-condition for the payment of holiday pay, that the employee should have worked or was on
authorized leave with pay on the day immediately preceding the legal holiday. Second, petitioners proffered as
evidence their appointment papers which do not contain any stipulation on the inclusion of holiday pay in their
monthly salary. Third, petitioners noted the inclusion of a provision in the CBA for the payment of an amount
equivalent to 200% of the regular daily wage plus 60% premium pay to employees who are permitted to work
on a regular holiday. Petitioners claimed that this very generous provision was the remedy availed of by Trans-

3
Asia to allow its employees to recoup the holiday pay in arrears and, as such, is a tacit admission of the non-
payment of the same during the period prior to the current CBA. Finally, petitioners cited the current CBA
provision which obligates Trans-Asia to give holiday pay. Petitioners asserted that this provision is an
acknowledgment by Trans-Asia of its failure to pay the same in the past since, if it was already giving holiday
pay prior to the CBA, there was no need to stipulate on the said obligation in the current CBA.

As a response, Trans-Asia argued that with regard to the pre-condition for the payment of holiday pay
stated in the Employees' Manual and the absence of a stipulation on holiday pay in the employees'
appointment papers, Trans-Asia asserted that the above circumstances are not indicative of its non-payment of
holiday pay since 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. Trans-Asia explained that this divisor is arrived at
through the following formula:

52 x 44
———— = 286 days
8
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. 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. Furthermore,
Trans-Asia explained that the "286" days divisor is based on Republic Act No. 6640, 2 wherein the divisor of
262 days is used in computing for the monthly rate of workers who do not work and are not considered paid
on Saturdays and Sundays or rest days. According to Trans-Asia, if the additional 26 working Saturdays in a
year is factored-in to the divisor provided by Republic Act No. 6640, the resulting divisor would be "286" days.

Trans-Asia explained that this holiday pay rate was included in the CBA in order to comply with Section
4, Rule IV, Book III of the Omnibus Rules Implementing the Labor Code. The aforesaid provision reads: Sec. 4.
Compensation for holiday work. — Any employee who is permitted or suffered to work on any regular holiday,
not exceeding eight (8) hours, shall be paid at least two hundred percent (200%) of his regular daily wage. If
the holiday falls on the scheduled rest day of the employee, he shall be entitled to an additional premium pay
of at least 30% of his regular holiday rate of 200% based on his regular wage rate.

Issue:

Whether or not employees are entitled with holiday pay and entitled to adjust its divisor.

Held:

YES, 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. 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 divisors 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) 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.

The pre-condition stated in the Employees' Manual for entitlement to holiday pay, the absence of a
stipulation in the employees' appointment papers for the inclusion of holiday pay in their monthly salary, the
stipulation in the CBA recognizing the entitlement of the petitioners to holiday pay with a concomitant provision

4
for the granting of an "allegedly" very generous holiday pay rate, would appear to be merely inferences and
suppositions,

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

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:

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

Rate (EMR) 12
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 days)
————
262 days — Total equivalent number of days

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.

5
 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
—————————— = P334.49/day
287 days

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
—————————— = P335.66/day
286 days

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.

Therefore, Trans-Asia is hereby ordered to adjust its divisor to 287 days and pay the resulting holiday
pay in arrears.

4. WELLINGTON INVESTMENT AND MANUFACTURING CORPORATION, petitioner,

vs.
CRESENCIANO B. TRAJANO, Under-Secretary of Labor and Employment, ELMER ABADILLA, and
34 others, respondents.

Facts:

Labor Enforcement Officer conducted a routine inspection on the Wellington Flour Mills, an
establishment owned and operated by Wellington Investment and Manufacturing Corporation. The officer came
up with a report and a copy of which was explained to and received by Wellington's personnel manager, in
which he set forth his finding of non-payment of regular holidays falling on a Sunday for monthly-paid
employees.

Wellington sought reconsideration of the Labor Inspector's report in which they argued that the monthly
salary of the company's monthly-salaried employees already includes holiday pay for all regular holidays there
is no legal basis for the finding of alleged non-payment of regular holidays falling on a Sunday. It expounded
on this thesis in a position paper subsequently submitted to the Regional Director, asserting that it pays its
monthly-paid employees a fixed monthly compensation using the 314 factor which undeniably covers and
already includes payment for all the working days in a month as well as all the 10 unworked regular holidays
within a year.

The Labor Code provides that every worker should be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly employing less than ten workers. The regular
holidays include: "New Year's Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the
twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth of December, and the day
designated by law for holding a general election.

Particularly as regards employees who are uniformly paid by the month, the monthly minimum wage
shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve. This monthly

6
salary shall serve as compensation for all days in the month whether worked or not and irrespective of the
number of working days therein.

Apparently the monthly salary was fixed by Wellington to provide for compensation for every working
day of the year including the holidays specified by law and excluding only Sundays. In fixing the salary,
Wellington used the "314 factor;" that is to say, it simply deducted 51 Sundays from the 365 days normally
comprising a year and used the difference, 314, as basis for determining the monthly salary. The monthly
salary thus fixed actually covers payment for 314 days of the year, including regular and special holidays, as
well as days when no work is done by reason of fortuitous cause, as above specified, or causes not
attributable to the employees.

On the other hand, the Labor Undersecretary argued that: By using said 314 factor, the Wellington
assumes that all the regular holidays fell on ordinary days and never on a Sunday. Thus, the respondent failed
to consider the circumstance that whenever a regular holiday coincides with a Sunday, an additional working
day is created and left unpaid. In other words, while the said divisor may be utilized as proof evidencing
payment of 302 working days, 2 special days and the ten regular holidays in a calendar year, the same does
not cover or include payment of additional working days created as a result of some regular holidays falling on
Sundays. Wellington's 314 factor leaves no day unaccounted for it is paying for all the days of a year with the
exception only of 51 Sundays.

Issue:

Whether or not a monthly-paid employee, receiving a fixed monthly compensation, is entitled to an

additional pay aside from his usual holiday pay, whenever a regular holiday falls on a Sunday.

Held:

No, There is no provision of law requiring any employer to make such adjustments in the monthly salary
rate set by him to take account of legal holidays falling on Sundays in a given year, or, contrary to the legal
provisions bearing on the point, otherwise to reckon a year at more than 365 days.

What the law requires of employers opting to pay by the month is to assure that the monthly minimum
wage shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve, and to pay
that salary for all days in the month whether worked or not and irrespective of the number of working days
therein. That salary is due and payable regardless of the declaration of any special holiday in the entire country
or a particular place therein, or any fortuitous cause precluding work on any particular day or days such as
transportation strikes, riots, or typhoons or other natural calamities or cause not imputable to the worker.

The legal provisions governing monthly compensation are evidently intended precisely to avoid re-
computations and alterations in salary on account of the contingencies just mentioned, which, by the way, are
routinely made between employer and employees when the wages are paid on daily basis.

In the case, the respondents argument assumes that there are some "labor standards provisions of the
Code and the other labor legislations" imposing on employers the obligation to give additional compensation to
their monthly-paid employees in the event that a legal holiday should fall on a Sunday in a particular month
with which compliance may be commanded by the Regional Director when the existence of said provisions is
precisely the matter to be established.

The public respondents have attempted to legislate, or interpret legal provisions in such a manner as to create
obligations where none are intended. They have acted without authority, or at the very least, with grave abuse
of their discretion. Their acts must be nullified and set aside.

7
5. SAN MIGUEL CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS-FORMER THIRTEENTH DIVISION, HON.
UNDERSECRETARY JOSE M. ESPAOL, JR., Hon. CRESENCIANO B. TRAJANO, and HON.
REGIONAL DIRECTOR ALLAN M. MACARAYA, respondents.
Facts:
Department of Labor and Employment conducted a routine inspection in the premises of San Miguel
Corporation. In the course of the inspection, it was discovered that there was underpayment by SMC of regular
Muslim holiday pay to its employees. DOLE sent a copy of the inspection result to SMC and it was received by
and explained to its personnel officer Elena dela Puerta. SMC contested the findings and DOLE conducted
summary hearings, however SMC failed to submit proof that it was paying regular Muslim holiday pay to its
employees. As a result, Alan M. Macaraya, Director IV of DOLE issued a compliance order, directing SMC to
consider Muslim holidays as regular holidays and to pay both its Muslim and non-Muslim employees holiday
pay within thirty (30) days from the receipt of the order.
SMC went to Court of Appeals for relief via a petition for certiorari. The appellate court, modified the
Order Director Macaraya with regards the payment of Muslim holiday pay from 200% to 150% of the
employee's basic salary.
As a response, SMC filed a petition for certiorari before this Court, alleging that: public respondents
seriously erred and committed grave abuse of discretion when they granted Muslim holiday to non-Muslim
employees of SMC
Issue:
Whether or not Muslim holiday should also be granted to non-Muslim employees.

Held:

YES, Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of Presidential Decree
No. 108 otherwise known as the Code of Muslim Personal Laws, which states:

Art. 169. Official Muslim holidays. - The following are hereby recognized as legal Muslim holidays:

(a) Amun Jadīd (New Year), which falls on the first day of the first lunar month of Muharram;
(b) Maulid-un-Nabī (Birthday of the Prophet Muhammad), which falls on the twelfth day of the third
lunar month of Rabi-ul-Awwal;
(c) Lailatul Isrā Wal Mirāj (Nocturnal Journey and Ascension of the Prophet Muhammad), which falls
on the twenty-seventh day of the seventh lunar month of Rajab;
(d) Īd-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar month of Shawwal,
commemorating the end of the fasting season; and
(e) Īd-ūl-Adhā (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month of Dhūl-Hijja.

Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays shall be officially observed in
the Provinces of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North Cotabato, Iligan, Marawi,
Pagadian, and Zamboanga and in such other Muslim provinces and cities as may hereafter be created;

(2) Upon proclamation by the President of the Philippines, Muslim holidays may also be officially observed in
other provinces and cities.

The foregoing provisions should be read in conjunction with Article 94 of the Labor Code, which
provides:

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;

8
 (b) The employer may require an employee to work on any holiday but such employee shall be
paid a compensation equivalent to twice his regular rate; x x x.

There should be no distinction between Muslims and non-Muslims as regards payment of benefits for
Muslim holidays.
In addition, the 1999 Handbook on Workers Statutory Benefits, approved by then DOLE Secretary
Bienvenido E. Laguesma on 14 December 1999 categorically stated: Considering that all private corporations,
offices, agencies, and entities or establishments operating within the designated Muslim provinces and cities
are required to observe Muslim holidays, both Muslim and Christians working within the Muslim areas may not
report for work on the days designated by law as Muslim holidays

6. MAKATI HABERDASHERY, INC., JORGE LEDESMA and CECILIO G. INOCENCIO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA (Labor Arbiter, Department
of Labor and Employment, National Capital Region), SANDIGAN NG MANGGAGAWANG PILIPINO
(SANDIGAN)-TUCP and its members, JACINTO GARCIANO, ALFREDO C. BASCO, VICTORIO Y.
LAURETO, ESTER NARVAEZ, EUGENIO L. ROBLES, BELEN N. VISTA, ALEJANDRO A. ESTRABO,
VEVENCIO TIRO, CASIMIRO ZAPATA, GLORIA ESTRABO, LEONORA MENDOZA, MACARIA G.
DIMPAS, MERILYN A. VIRAY, LILY OPINA, JANET SANGDANG, JOSEFINA ALCOCEBA and MARIA
ANGELES, respondents.

Facts:
The private respondents in this case have been working for Makati Haberdashery, Inc. as tailors,
seamstress, sewers, basters and plantsadoras. They are paid on a piece-rate basis except Maria Angeles and
Leonila Serafina who are paid on a monthly basis. In addition to their piece-rate, they are given a daily
allowance of three (P 3.00) pesos provided they report for work before 9:30 a.m. everyday. Private
respondents are required to work from or before 9:30 a.m. up to 6:00 or 7:00 p.m. from Monday to Saturday
and during peak periods even on Sundays and holidays.

Sandigan ng Manggagawang Pilipino, a labor organization of the respondent workers, filed a complaint
docketed as NLRC NCR Case No. 7-2603-84 for underpayment of the basic wage; underpayment of living
allowance; non-payment of overtime work; non-payment of holiday pay; non-payment of service incentive pay;
13th month pay; and benefits

Labor Arbiter Ceferina J. Diosana rendered judgment, the dispositive portion of which reads: the
complainants' claims for underpayment of violation of the minimum wage law is hereby ordered dismissed for
lack of merit. Respondents are hereby found to have violated the decrees on the cost of living allowance,
service incentive leave pay and the 13th Month Pay. In view thereof, the economic analyst of the Commission
is directed to compute the monetary awards due each complainant based on the available records of the
respondents retroactive as of three years prior to the filing of the instant case.

Based from the foregoing decision, petitioners filed the instant petition raising that the subject decisions
erroneously concluded that respondent workers are entitled to monetary claims specifically service incentive
leave.

Issue:

Whether or not the respondents are entitled with service incentive leave.

Held:

NO, respondents are not entitled to service incentive leave pay because as piece-rate workers being
paid at a fixed amount for performing work irrespective of time consumed in the performance thereof, they fall
under one of the exceptions stated in Section 1(d), Rule V, Implementing Regulations, Book III, Labor Code.
For the same reason private respondents cannot also claim holiday pay Section 1(e), Rule IV, Implementing
Regulations, Book III, Labor Code.

9
7. LABOR CONGRESS OF THE PHILIPPINES (LCP) petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, EMPIRE FOOD PRODUCTS, its Proprietor/President
& Manager, MR. GONZALO KEHYENG and MRS. EVELYN KEHYENG, respondents.
Facts:

The petitioners in this case were rank-and-file employees of respondent Empire Food Products, which
hired them on various dates Petitioners filed against private respondents a complaint for payment of money
claims and for violation of labor standards laws. The petitioners represented by LCP President Benigno B.
Navarro, Sr. and private respondents Gonzalo Kehyeng and Evelyn Kehyeng in behalf of Empire Food
Products, Inc. entered into a Memorandum of Agreement

Petitioners filed a complaint docketed against private respondents for unfair labor practice by way of
Illegal Lockout and/or Dismissal; Union busting thru Harassments threats, and interfering with the rights of
employees to self-organization; Violation of the Memorandum of Agreement dated October 23,
1990; Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as Wages promulgated
by the Regional Wage Board; Actual, Moral and Exemplary Damages

Complainants failed to present with definiteness and clarity the particular act or acts constitutive of
unfair labor practice. Also the complainants failed to specify what type of threats or intimidation was committed
and who committed the same.Insofar as violation of Memorandum of Agreement is concerned, both parties
agreed that: parties jointly and mutually agreed that the issues thereof shall be discussed by the parties and
resolved during the negotiation of the CBA.

The charge that there was underpayment of wages, the evidence points to the contrary. The
enumeration of complainants wages in their consolidated Affidavits of merit and position paper which implies
underpayment has no legal to stand on in the light of the fact that complainants admission that they are piece
workers or paid on a pakiao for example, a certain amount for every thousand pieces of cheese curls or other
products repacked. The only limitation for piece workers or pakiao workers is that they should receive
compensation no less than the minimum wage for an eight (8) hour. Finally, the claim for moral and exemplary
damages has no legal to stand on when no malice, bad faith or fraud was ever proven to have been
perpetuated by respondents.

On appeal, the NLRC sustained the Labor Arbiters findings that: (a) there was a dearth of evidence to
prove the existence of unfair labor practice and union busting on the part of private respondents; (b) the
agreement of 23 October 1990 could not be made the basis of an obligation within the ambit of the NLRCs
jurisdiction, as the provisions thereof, particularly Section 2, spoke of a resolutory condition which could or
could not happen; (c) the claims for underpayment of wages were without basis as complainants were
admittedly pakiao workers and paid on the basis of their output subject to the lone limitation that the payment
conformed to the minimum wage rate for an eight-hour workday; and (d) petitioners were not underpaid.
Hence, this petition.
Issue:
Whether or not the employers are entitled with service incentive leave provided that the employers are
pakiao or piece workers.
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. The work of merchandisers of processed food, who coordinate with grocery stores and
other outlets for the sale of the processed food is necessary in the day-to-day operation of the company. With
more reason, the work of processed food repackers is necessary in the day-to-day operation of respondent
Empire Food Products.
Petitioners, although piece-rate workers, were regular employees of private respondents. In the sense
that they comply the following requirements: First, as to the nature of petitioners tasks, their job of repacking

10
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.
The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as
nighttime pay, holiday pay, service incentive leave and 13th month pay. Field personnel and other employees
whose time and 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. However, petitioners as piece-rate workers do not fall within
this group. Not only did petitioners labor under the control of private respondents as their employer, likewise
did petitioners toil throughout the year with the fulfillment of their quota as supposed basis for
compensation. Furthermore, Section 8 (b), Rule IV, Book III which we quote hereunder, piece workers are
specifically mentioned as being entitled to holiday pay.

SEC. 8. Holiday pay of certain employees.-

(b) Where a covered employee is paid by results or output, such as payment on piece work, his holiday
pay shall not be less than his average daily earnings for the last seven (7) actual working days
preceding the regular holiday: Provided, however, that in no case shall the holiday pay be less than
the applicable statutory minimum wage rate.

In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, in view of the
modifications to P.D. No. 851[19] by Memorandum Order No. 28, clearly exclude the employer of piece rate
workers from those exempted from paying 13th month pay, to wit:

2. EXEMPTED EMPLOYERS

The following employers are still not covered by P.D. No. 851:

d. Employers of those who are paid on purely commission, boundary or task basis, and those who are
paid a fixed amount for performing specific work, irrespective of the time consumed in the
performance thereof, except where the workers are paid on piece-rate basis in which case the
employer shall grant the required 13th month pay to such workers.

The Revised Guidelines as well as the Rules and Regulations identify those workers who fall under the
piece-rate category as those who are paid a standard amount for every piece or unit of work produced that is
more or less regularly replicated, without regard to the time spent in producing the same.

8. SENTINEL SECURITY AGENCY, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, ADRIANO CABANO, JR., VERONICO C. ZAMBO,
HELCIAS ARROYO, RUSTICO ANDOY, and MAXIMO ORTIZ, respondents.

Facts:

The complainants were employees of Security Agency, Inc. The complainants were assigned to render
guard duty at the premises of Philippine American Life Insurance Company. Sometime in 1993 Philippine
American Life Insurance Company sent notice to all concerned that the Agency was again awarded the
contract of security services together with a request to replace all the security guards in the company’s
offices. In compliance therewith, he Agencyissued a Relief and Transfer Order replacing the complainants as
guards and for then to be re-assigned to other clients. The complainants reported but were never given new
assignments but instead they were told you were replaced because you are already old. As a response, the
complainants lost no time but filed the subject illegal dismissal cases on and prayed for payment of separation
pay and other labor standard benefits.

11
 The Client and the Agency maintained there was no dismissal on the part of the complainants,
constructive or otherwise, as they were protected by the contract of security services which allows the recall of
security guards from their assigned posts at the will of either party. It also advanced that the complainants
prematurely filed the subject cases without giving the Agency a chance to give them some assignments.

Respondent Commission ruled that the complainants were constructively dismissed, as the recall of the
complainants from their long time post without any good reason is a scheme to justify or camouflage illegal
dismissal.
In the present case, the complainants case, the complainants were told by the Agency that they lost
their assignment at the Clients premises because they were already old, and not because they had committed
any infraction or irregularity.

Issue:

Whether petitioner is jointly and severally liable with Sentinel Security Agency, Inc., in the payment of
backwages, 13th month pay and service incentive leave pay to its employees

Held:
YES, 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 for the
complainants service incentive leave pay. Notwithstanding the service contract between the client and the
security agency, the two are solidarily liable for the proper wages prescribed by the Labor Code, pursuant to
Article 106, 107 and 109 thereof, which we quote hereunder:

ART. 106. Contractor or subcontractor.Whenever an employer enters into a contract with another
person for the performance of the former[s] work, the employees of the contractor and of the latter[s]
subcontractor, if any, shall be paid in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance
with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such
employees to the extent of the work performed under the contract, in the same manner and extent that he is
liable to employees directly employed by him. The Secretary of Labor may, by appropriate regulations, restrict
or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so
prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job
contracting as well as differentiations within these types of contracting and determine who among the parties
involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention
of any provision of this Code.

In such cases labor-only contracting, the person or intermediary shall be considered merely as an
agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter
were directly employed by him.

ART. 107. Indirect employer. The provisions of the immediately preceding Article shall likewise apply to
any person, partnership, association or corporation which, not being an employer, contracts with an
independent contractor for the performance of any work, task, job or project.

ART. 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every
employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of
any provision of this Code. For purpose of determining the extent of their civil liability under this Chapter, they
shall be considered as direct employers.

Under these provisions, the indirect employer, who is the Client in the case at bar, 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 the
complainants 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.
The service incentive leave is expressly granted by these pertinent provisions of the Labor Code:
12
 ART. 95. Right to service incentive leave.(a) Every employee who has rendered at least one year of
service shall be entitled to a yearly service incentive leave of five days with pay. (b) This provision shall not
apply to those who are already enjoying the benefit herein provided, those enjoying vacation leave with pay of
at least five days and those employed in establishments regularly employing less than ten employees or in
establishments exempted from granting this benefit by the Secretary of Labor after considering the viability or
financial condition of such establishment. (c) The grant of benefit in excess of that provided herein shall not be
made a subject of arbitration or any court [or] admnistrative action.

Under the Implementing Rules and Regulations of the Labor Code, an unused service incentive leave
is commutable to its money equivalent, viz.:

Sec. 5. Treatment of Banefit. - The service incentive leave shall be commutable to its money equivalent
if not used or exhausted at the end of the year.

9. AUTO BUS TRANSPORT SYSTEMS, INC., petitioner,

vs.
ANTONIO BAUTISTA, respondent
Facts:
Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc. as driver-
conductor with travel routes Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila and Manila-Tabuk
via Baguio. Bautista was paid on commission basis, seven percent (7%) of the total gross income per travel,
on a twice a month basis.
On January 2000, while Bautista was driving Autobus No. 114 the bus he was driving accidentally
bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without
giving any warning.
Bautista argued that accident happened because he was compelled by the management to go back to
Roxas, Isabela, although he had not slept for almost twenty-four (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
respondents pleas for reconsideration, the same was ignored by management. After a month, management
sent him a letter of termination.
As a result, Bautista instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of
13th month pay and service incentive leave pay against Autobus.
Labor Arbiter Monroe C. Tabingan came up with a decision which dismissed the complaint for illegal
dismissal and ordered the respondent to pay Bautista’s 13th month pay from the date of his hiring to the date of
his dismissal, presently computed at P78,117.87 and his service incentive leave pay for all the years he had
been in service with the respondent, presently computed at P13,788.05.
Auto Bus Transport Systems, Inc appealed the decision to the NLRC which rendered its decision which
deleted the award of 13th month pay and affirmed the award of service incentive leave pay. Furthermore, the
Auto Bus Transport Systems, Inc sought the review of said decision with the Court of Appeals. Hence, the
instant petition.

Issue:
Whether or not respondent is entitled to service incentive leave;

Held:

YES, in this case Bautista is a regular employee not a field personnel. Thus, he must be entitled with
service incentive leave.

Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE

13
 (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay.

However, Book III, Rule V: 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 in a fixed amount for performing work irrespective of the time consumed in the
performance thereof; . . .

The grant of service incentive leave has been delimited by the Implementing Rules and Regulations of
the Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to
the Implementing Rules, Service Incentive Leave shall not apply to employees classified as field personnel.
The phrase other employees whose performance is unsupervised by the employer must not be understood as
a separate classification of employees to which service incentive leave shall not be granted. Rather, it serves
as an amplification of the interpretation of the definition of field personnel under the Labor Code as those
whose actual hours of work in the field cannot be determined with reasonable certainty.
The same is true with respect to the phrase those who are engaged on task or contract basis, purely
commission basis. Said phrase should be related with field personnel, applying the rule on ejusdem
generis that general and unlimited terms are restrained and limited by the particular terms that they follow.
Therefore, employees engaged on task or contract basis or paid on purely commission basis are not
automatically exempted from the grant of service incentive leave, unless, they fall under the classification of
field personnel.
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.

Field personnel are those who regularly perform their duties away from the principal place of business
of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.
Thus, in order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual
hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry
must be made as to whether or not the employees time and performance are constantly supervised by the
employer.

It is of judicial notice that along the routes that are plied by these bus companies, there are its
inspectors assigned at strategic places who board the bus and inspect the passengers, the punched tickets,
and the conductors reports. There is also the mandatory once-a-week car barn or shop day, where the bus is
regularly checked as to its mechanical, electrical, and hydraulic aspects, whether or not there are problems
thereon as reported by the driver and/or conductor. They too, must be at specific place as specified time, as
they generally observe prompt departure and arrival from their point of origin to their point of destination. In
each and every depot, there is always the Dispatcher whose function is precisely to see to it that the bus and
its crew leave the premises at specific times and arrive at the estimated proper time. These, are present in the
case at bar. The driver, was therefore under constant supervision while in the performance of this work. He
cannot be considered a field personnel.

14
10. PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY, Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, and ODIN SECURITY AGENCY, as representative of
its Security Guards, Respondents.

Facts:

Philippine Fisheries Development Authority is a government-owned or controlled corporation created by

P.D. No. 977. It entered into a contract with the Odin Security Agency for security services of its Iloilo Fishing
Port Complex in Iloilo City. The pertinent provision of the contract provides:

OBLIGATION OF THE FISHING PORT COMPLEX For and in consideration of the services to be rendered by
the AGENCY to the FISHING PORT COMPLEX, the latter shall pay to the former per month for eight (8) hours
work daily as follows: OUTSIDE METRO MANILA: Security Guard P1,990.00; Security Supervisor 2,090.00;
Det. Commander 2,190.00. The Security Group of the AGENCY will be headed by a detachment commander
whose main function shall consist of the administration and supervision control of the AGENCY’s personnel in
the FISHING PORT COMPLEX. There shall be one supervisor per shift who shall supervise the guards on duty
during a particular shift. The above schedule of compensation includes among others, the following: (a)
Minimum wage (Wage Order No. 5), (b) Rest Day Pay, (c) Night Differential Pay, (d) Incentive Leave Pay, (e)
13th Month Pay, (f) Emergency Cost of Living Allowance (up to Wage Order No. 5), (g) 4% Contractor’s Tax,
(h) Operational Expenses, (i) Overhead

The contract for security services also provided for a one year renewable period unless terminated by
either of the parties. During the effectivity of the said Security Agreement, the private respondent requested the
petitioner to adjust the contract rate in view of the implementation of Wage Order No.
The private respondent’s request for adjustment was anchored on the provision of Wage Order No. 6 which
provides that 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.

Requests for adjustment of the contract price were reiterated but were ignored by the petitioner. The
private respondent filed a complaint for unpaid amount of re-adjustment rate under Wage Order No. 6 together
with wage salary differentials arising from the integration of the cost of living allowance under Wage Order No.
1, 2, 3 and 5

Issue:

Whether or not security guards are entitled for the unpaid wages.

Held:

YES, Wage Orders are explicit that payment of the increases are to be borne by the principal or client. The
Wage Orders are statutory and mandatory and cannot be waived. The petitioner cannot escape liability since
the law provides the joint and solidary liability of the principal and the contractor for the protection of the
laborers. There can be no question that the security guards are entitled to wage adjustments. The computation
of the amount due to each individual guard can be made during the execution of the decision where hearings
can be held. Security personnel should not be deprived of what is lawfully due them, it bears emphasis that it
was the private respondent which first deprived the security personnel of their rightful wage under Wage Order
No. 6. Furthermore, the private respondent should also be faulted for the unpaid wage differentials of the
security guards. By filing the complaint in its own behalf and in behalf of the security guards, the private
respondent wishes to exculpate itself from liability. Therefore, the petitioner and the private respondent jointly
and severally liable to the security guards for the unpaid wage differentials under Wage Order No. 6.

15
11. AKLAN ELECTRIC COOPERATIVE INCORPORATED (AKELCO), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Fourth Division), RODOLFO M. RETISO and 165
OTHERS, respondents.

Facts:

These are consolidated cases/claims for non-payment of salaries and wages, 13th month pay, ECOLA
and other fringe benefits as rice, medical and clothing allowances, submitted by complainant Rodolfo M. Retiso
and 163 others, Lyn E. Banilla and Wilson B. Sallador against respondents Aklan Electric Cooperative, Inc.
(AKELCO), Atty. Leovigildo Mationg in his capacity as General Manager; Manuel Calizo, in his capacity as
Acting Board President, Board of Directors, AKELCO.

On January 22, 1992, by way of resolution of the Board of Directors of AKELCO allowed the temporary
transfer holding of office at Amon Theater, Kalibo, Aklan per information by their Project Supervisor, Atty.
Leovigildo Mationg, that their head office is closed and that it is dangerous to hold office thereat. Nevertheless,
majority of the employees including herein complainants continued to report for work at Lezo Aklan and were
paid of their salaries. The administrator of NEA, Rodrigo Cabrera, wrote a letter addressed to the Board of
AKELCO, that he is not interposing any objections to the action taken by respondent Mationg

On February 11, 1992, unnumbered resolution was passed by the Board of AKELCO withdrawing the
temporary designation of office at Kalibo, Aklan, and that the daily operations must be held again at the main
office of Lezo, Aklan. That complainants who were then reporting at the Lezo office from January 1992 up to
May 1992 were duly paid of their salaries, while in the meantime some of the employees through the
instigation of respondent Mationg continued to remain and work at Kalibo, Aklan. From June 1992 up to March
18, 1993 complainants who continuously reported for work at Lezo, Aklan in compliance with the
aforementioned resolution were not paid their salaries.

However, the respondent claims that these complainants voluntarily abandoned their respective
work/job assignments, without any justifiable reason and without notifying the management of the Aklan
Electric Cooperative, Inc. (AKELCO), hence the cooperative suffered damages and systems loss and that the
complainants herein wilfully and maliciously defied the lawful orders and other issuances by the General
Manager and the Board of Directors of the AKELCO as a protest for the appointment of respondent Mationg.

Labor Arbiter dismissed the complaints. On appeal, 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.

Issue:

Whether or not private respondents are entitled to compensation

Held:

No. The Supreme Court affirmed the LA’s finding that the complainants were requested to report to
work at the Kalibo office but despite these lawful orders of the General Manager, the complainants did not
follow such order; hence they are covered by the "no work, no pay" principle and are thus not entitled to the
claim for unpaid wages from June 16, 1992 to March 18, 1993.

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

16
incumbent upon private respondents to prove that they indeed rendered services for petitioner, which they
failed to do.

The age-old rule governing the relation between labor and capital, or management and employee of a
"fair days wage for a fair days labor" remains as the basic factor in determining employees wages. 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, suspended or dismissed, or otherwise illegally prevented
from working, a situation which is not present in the instant case. 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.

Hence, the Supreme Court reversed NLRC’s decision, and affirmed the Labor Arbiter’s decision.

12. INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner,

vs.
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., respondents.

Facts:

Private respondent International School, Inc. (the School, for short), pursuant to Presidential Decree
732, 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, the School hires both foreign and local teachers as members of its faculty,
classifying the same into two: (1) foreignhires 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.

When negotiations for a new collective bargaining agreement were held on June 1995, petitioner
International School Alliance of Educators, "a legitimate labor union and the collective bargaining
representative of all faculty members" of the School, contested the difference in salary rates between foreign
and local-hires Thereafter, petitioner filed a notice of strike. The failure of the National Conciliation and
Mediation Board to bring the parties to a compromise prompted the Department of Labor and Employment
(DOLE) to assume jurisdiction over the dispute. The DOLE Acting Secretary, Crescenciano B. Trajano, issued
an Order resolving the parity and representation issues in favor of the School which ruled that both groups
received the same benefits and that equal pay for equal work does not apply due to differences in culture. The
augmented salary is a form of enticement so that the school remains competitive in the international market
and a limited contract of employment for the foreign hires as compared to the security of tenure enjoyed by the
Local Hires

Then DOLE Secretary Leonardo A. Quisumbing subsequently denied petitioner's motion for
reconsideration.

Issue:

Whether or not equal work for equal pay applies in the case.

Held:

Yes. Public policy abhors inequality and discrimination is beyond contention. Our Constitution and laws
reflect the policy against these evils. 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. The very broad 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."
17
 International law, which springs from general principles of law, likewise proscribes discrimination.
General principles of law include principles of equity, i.e., the general principles of fairness and justice, based
on the test of what is reasonable. The Constitution 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.

The Constitution also directs the State to promote "equality of employment opportunities for all."
Similarly, the Labor Code provides that the State shall "ensure equal work opportunities regardless of sex, race
or creed." It would be an affront to both the spirit and letter of these provisions if the State, in spite of its
primordial obligation to promote and ensure equal employment opportunities, closes its eyes to unequal and
discriminatory terms and conditions of employment. Discrimination, particularly in terms of wages, is frowned
upon by the Labor Code. Article 135, for example, 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.

There is no evidence here that foreignhires 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 School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the
distinction in salary rates without violating the principle of equal work for equal pay. While we recognize the
need of the School to attract foreign-hires, 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.

13. BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and BANKARD, INC., respondents.

Facts:

Bankard, Inc. (Bankard) classifies its employees by levels I, II, III, IV, and V. On May 28, 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 New Salary 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.

As a result, the duly certified exclusive bargaining agent of the regular rank and file employees of
Bankard(Bankard Employees Union-WATU) pressed for the increase in the salary of its old, regular
employees. Bankard maintained 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.

A Notice of Strike was filed on the ground of discrimination and other acts of Unfair Labor Practice
(ULP). This was initially treated as a preventive mediation case on the ground that the issues raised were not
strikable. Petitioner filed another Notice of Strike on October 8, 1993 on the grounds of refusal to bargain,
discrimination, and other acts of ULP - union busting. The strike was averted, however, when the dispute was
certified by the Secretary of Labor and Employment for compulsory arbitration.

The Second Division of the NLRC, by Order of May 31, 1995, finding no wage distortion, dismissed the
case for lack of merit.

Issue:

Whether or not the wage scheme increase used by Bankard constitutes wage distortion.

18
Held:

NO. In Prubankers Association v. Prudential Bank and Trust Company, the court has 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. 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.

Absent any indication that the voluntary increase of salary rates by an employer was done arbitrarily
and illegally for the purpose of circumventing the laws or was devoid of any legitimate purpose other than to
discriminate against the regular employees, this Court will not step in to interfere with this management
prerogative.

Petitioner cannot make a contrary classification of private respondent’s employees without encroaching
upon recognized management prerogative of formulating a wage structure, in this case, one based on level.
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.

Apart from the findings of fact of the NLRC and the Court of Appeals that some of the elements of wage
distortion are absent, petitioner cannot legally obligate Bankard to correct the alleged "wage distortion" as the
increase in the wages and salaries of the newly-hired was not due to a prescribed law or wage order. 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.

Moreover, Bankard’s right to increase its hiring rate, to establish minimum salaries for specific jobs, and
to adjust the rates of employees affected thereby is embodied under Section 2, Article V (Salary and Cost of
Living Allowance) of the parties’ Collective Bargaining Agreement (CBA).
Petition is hereby DENIED.

14. ARMS TAXI v. NATIONAL LABOR RELATIONS COMMISSION

Facts:

The spouses Norberto and Dorothea Tanongon own and operate taxicabs under the names of "Arms
Taxi" and "Lin-lin Taxi." However, the taxicabs are registered under the "kabit" system in the name of Aida dela
Cruz who holds a certificate of public convenience to operate a taxicab service.

In the early part of 1980, Culla was hired by the Tanongon spouses to work as mechanic, shop
manager, garage caretaker, dispatcher, and liaison man in their taxi business, at a monthly salary of P5,000.00
plus commission on the daily or monthly gross income of the business in addition to the payment of his Social
Security System (SSS) premiums. On June 11, 1986, without Culla's consent, the Tanongon spouses asked
one of their taxi drivers to force open his quarters in the Tanongon compound at the St. Francis Subdivision in
Cainta, Rizal. They removed his personal belongings and brought them to his residence in Sta. Ana, Manila.

19
 Culla filed with the Arbitration Branch of the then Ministry of Labor and Employment, a complaint
alleging that his ejectment from his living quarters and dismissal from employment were illegal because there
was no prior investigation or written notice of the charges against him. His dismissal was allegedly due to his
demands "for the payment of the benefits, percentage and privileges and premiums to the SSS" He prayed for
reinstatement with backwages, plus his commission of fifteen percent (15%) of the gross income of the taxi
business, in the amount of P480.000.00 with legal interest, plus moral, nominal and exemplary damages in the
total sum of P300,000.00 and actual or compensatory damages and litigation expenses.

Tanongon spouses denied that they were the operators of the Arms Taxi and Lin-lin Taxi. They denied
the existence of an employer-employee relationship between them and Culla. They averred that Arms Taxi is
owned and operated by Aida dela Cruz. They also contend that they bought Lin-lin Taxi from one Jose Lim, but
its ownership has not yet been transferred to them as their application with the Land Transportation Office is
still pending. For her part, Aida dela Cruz admitted ownership and operation of a fleet of taxicabs under the
name Arms Taxi and that she had entered into an agreement with Dorothea Tanongon for the latter to manage
for a fee the operation of several of her taxi units. Denying that she hired Culla, Dela Cruz averred that at most.
Culla could be considered as an independent contractor paid on a piece-work basis and therefore, he was not
entitled to regular benefits, much less to the alleged 15% commission.

Labor Arbiter declared that Culla was illegally dismissed and an employee of the Tanongon spouses
making them solidary liable with Aida Dela Cruz the aggregate sum of ONE HUNDRED NINETY-FIVE
THOUSAND (P195,000.00) PESOS representing complainant's backwages for three (3) year: (P5,000.00/mo.
x 36 mos. plus P2,500.00/mo. (1/2 mo/yr. of service x 6 years) and separation pay computed at one-half (1/2)
for every year of service within ten (10) days from receipt of this decision. However, the Labor Arbiter also
denied Culla's claim for 15% commission on the gross earnings of the taxi business.

The parties appealed to the NLRC. Culla was dissatisfied with the monetary awards, because he was
not given full backwages nor the 15% commission, incentive leave pay, damages, and attorney's fees. NLRC
affirmed the decision of the Labor Arbiter

Issue:

Whether or not Culla is entitled to a commission as part of his wage and/or in addition to his basic pay.

Held:

No. He cannot claim the 15% commission. They ruled that there is nothing on record to substantiate
this claim. If, as complainant claims, he is entitled to a commission as part of his wage and/or in addition to his
basic pay, we cannot understand why he never made any claims therefor during his six years of service." Culla
argues in his petition that the payment to him of P5,000.00 a month for his services was in partial fulfillment of
Tanongon's promise to pay him a 15% commission removing said agreement from coverage of the Statute of
Frauds. Culla's reference to the Statute of Frauds under Art. 1403, par. 2 of the Civil Code is misplaced. An
agreement for compensation of services rendered is not one of the contracts mentioned in Art. 1403 which
must be in writing to be enforceable by action.

The payment of a P5,000.00 monthly salary to the petitioner for his services may not be considered as
partial compliance by his employers with the alleged agreement to pay him a commission or percentage of the
daily earnings of their taxi business because, as correctly pointed out by the Solicitor General a salary is
differrent from a commission. 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.

As petitioner's dismissal was effected without prior notice and investigation of the charges against him,
in violation of his right to due process, his employers should indemnify him for damages in the sum of One
Thousand Pesos (P1,000.00) pursuant to Rule XIV. Secs. 2, 5 and 6 of the rules implementing Batas Pamban-
sa Blg. 130.

20
15. IRAN vs. NLRC
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. Iran
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. The truck helpers assisted in the delivery of softdrinks to the different outlets
covered by the driver/salesmen. As part of their compensation, the driver/salesmen and truck helpers of
petitioner received commissions per case of softdrinks sold at a following rates.
Sometime in June 1991, Antonio Iran, while conducting an audit of his operations, discovered cash
shortages and irregularities allegedly committed by private respondents. Pending the investigation of
irregularities and settlement of the cash shortages, petitioner required private respondents to report for work
everyday. They were not allowed, however, to go on their respective routes. A few days thereafter, despite
aforesaid order, private respondents stopped reporting for work, prompting Antonio Iran to conclude that the
former had abandoned their employment. Consequently, petitioner terminated their services. He also filed on
November 7, 1991, a complaint for estafa against private respondents.
Furthermore, private respondents filed complaints against petitioner for illegal dismissal, illegal deduction,
underpayment of wages, premium pay for holiday and rest day, holiday pay, service incentive leave pay,
13th month pay, allowances, separation pay, recovery of cash bond, damages and attorney’s fees.
The labor arbiter found that petitioner had validly terminated private respondents, there being just cause for
the latter’s dismissal. Nevertheless, he also ruled that petitioner had not complied with minimum wage
requirements in compensating private respondents, and had failed to pay private respondents their 13th month
pay.
The NLRC, in its decision of December 21, 1994, affirmed the validity of private respondents dismissal, but
found that said dismissal did not comply with the procedural requirements for dismissing
employees. Furthermore, it corrected the labor arbiters award of wage differentials to Jesus Bandilao.
Issue:

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

Held:

Yes. The petition is with merit. 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.
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.

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

21
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 salesmans wage or salary.
Thus, the commissions earned by private respondents in selling softdrinks 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.
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 follow then that commissions are included in determining compliance with
minimum wage requirements.

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. This case is REMANDED to the Labor Arbiter for
a recomputation of the alleged deficiencies. For non-observance of procedural due process in effecting the
dismissal of private respondents, said decision is MODIFIED by increasing the award of nominal damages to
private respondents from P1,000.00 to P5,000.00 each. No costs.

16. MILLARES vs. NATIONAL LABOR RELATIONS COMMISSION, 305 SCRA 500 (1999)
Facts:

Petitioners numbering one hundred sixteen (116)[1] occupied the positions of Technical Staff, Unit
Manager, Section Manager, Department Manager, Division Manager and Vice President in the mill site of
respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur. In 1992 PICOP
suffered a major financial setback allegedly brought about by the joint impact of restrictive government
regulations on logging and the economic crisis. To avert further losses, it undertook a retrenchment program
and terminated the services of petitioners. Accordingly, petitioners received separation pay computed at the
rate of one (1) month basic pay for every year of service. Believing however that the allowances they allegedly
regularly received on a monthly basis during their employment should have been included in the computation
thereof they lodged a complaint for separation pay differentials.

PICOP provides for the petitioners a staff allowance/managers allowance to those who live in rented
houses near the mill site which ceases whenever a vacancy occurs in the company’s free housing facilities.
They also provided transportation allowance in the form of advances for actual transportation expenses subject
to liquidation is given to key officers and managers who use their own vehicles in the performance of their
duties. This privilege is discontinued when the conditions no longer obtain. Lastly, bislig allowance is given to
managers and officers on account of the hostile environment prevailing therein. Once the recipient is
transferred elsewhere, the allowance ceases.

Applying Art. 97, par (f) of the Labor Code which defines “wage”, the Executive Labor Arbiter opined
that the subject allowances, being customarily furnished by respondent PICOP and regularly received by
petitioners, formed part of the latter’s wage.

However, the NLRC decreed that the allowances did not form part of the salary base used in computing
separation pay since the same were contingency-based.

22
Issue:

Whether or not the allowances in question are considered facilities customarily furnished.

Held:

No. “Customary” is founded on long established and constant practice connoting regularity. The receipt
of allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary
because the nature of the grant is a factor worth considering.

In this petition for certiorari, petitioners submit that their allowances are included in the definition of
"facilities" in Art. 97, par. (f), of the Labor Code, being necessary and indispensable for their existence and
subsistence. Furthermore they claim that their availment of the monetary equivalent of those "facilities" on a
monthly basis was characterized by permanency, regularity and customariness. And to fortify their arguments
they insist on the applicability of Santos,[8] Soriano,[9] The Insular Life Assurance Company,[10] Planters
Products, Inc.[11] and Songco[12] which are all against the NLRC holding that the salary base in computing
separation pay includes not just the basic salary but also the regular allowances.

We correlate Art. 283 with Art. 97 of the same Code on definition of terms. "Pay" is not defined therein
but "wage." In Songco the Court explained that both words (as well as salary) generally refer to one and the
same meaning, i.e., a reward or recompense for services performed. Specifically, "wage" is defined in letter (f)
as 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.

The subject allowances were temporarily, not regularly received by petitioners because once the
conditions for the availment ceased to exist, the allowance reached the cutoff point. The petitioners’ continuous
enjoyment of the disputed allowances was based on contingencies the occurrence of which wrote finis to such
enjoyment.

In the case of the housing allowance, once a vacancy occurs in the company-provided housing
accommodations, the employee concerned transfers to the company premises and his housing allowance is
discontinued. On the other hand, the transportation allowance is in the form of advances for actual
transportation expenses subject to liquidation given only to employees who have personal cars. The Bislig
allowance is given to Division Managers and corporate officers assigned in Bislig, Surigao del Norte. Once the
officer is transferred outside Bislig, the allowance stops.

The Staff /Manager's allowance may fall under "lodging" but the transportation and Bislig allowances
are not embraced in "facilities" on the main consideration that they are granted as well as the Staff/Manager's
allowance for respondent PICOP's benefit and convenience, i.e., to insure that petitioners render quality
performance.

Board and lodging allowances furnished to an employee not in excess of the latter's needs and given
free of charge, constitute income to the latter except if such allowances or benefits are furnished to the
employee for the convenience of the employer and as necessary incident to proper performance of his duties
in which case such benefits or allowances do not constitute taxable income.

The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules Implementing
the Labor Code may from time to time fix in appropriate issuances the "fair and reasonable value of board,
lodging and other facilities customarily furnished by an employer to his employees." Petitioners' allowances do
not represent such fair and reasonable value as determined by the proper authority simply because the
Staff/Manager's allowance and transportation allowance were amounts given by respondent company in lieu of
actual provisions for housing and transportation needs whereas the Bislig allowance was given in
consideration of being assigned to the hostile environment then prevailing in Bislig.
The inevitable conclusion is that, as reached by the NLRC, subject allowances did not form part of
petitioners' wages

23
 WHEREFORE, the petition is DISMISSED. The resolution of public respondent National Labor
Relations Commission dated 7 October 1994 holding that the Staff /Manager's, transportation and Bislig
allowances did not form part of the salary base used in computing the separation pay of petitioners, as well as
its resolution dated 26 September 1995 denying reconsideration, is AFFIRMED. No costs.

17. SONGCO vs. NLRC (1990)

Facts:

F.E. Zuellig (M), Inc., filed with the Department of Labor an application seeking clearance to terminate
the services of Jose Songco, Romeo Cipres, and Amancio Manuel allegedly on the ground of retrenchment
due to financial losses. This application was seasonably opposed by the employees alleging that the company
is not suffering from any losses. Songco, Cipres and Manile alleged that they are being dismissed because of
their membership in the union. At the last hearing of the case, they manifested that they are no longer
contesting their dismissal. However, they argued that they should receive separation pay.

Under the employment contract, each of the dismissed employees receive a monthly salary of P40,000
plus commissions for every sale they made. On the other hand, the CBA entered between Zuellig and the
union contained the provision that an employee who is permanent lay-off, should receive an amount equivalent
to one month's salary per year of service. On the other hand, Article 284 of the Labor Code and Implementing
Rules provide that the retrenched employees should receive a separation pay equivalent to one month pay or
at least one-half month pay for every year of service, whichever is higher.

The dismissed employees alleged that their earned sales commission should be included in their
monthly salary for the purpose of computation of their separation pay. In defense, Zuellig argued that if it were
really the intention of the Labor Code to include commission in the computation of separation pay, it could have
explicitly said so in clear and unequivocal terms. Furthermore, in the definition of the term "wage",
"commission" is used only as one of the features or designations attached to the word remuneration or
earnings.

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 the Labor Arbiter’s decision
was sustained. 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
Songco, et al. for the purpose of computing their separation pay.

Held:

Petition is granted. In the computation of backwages and separation pay, account must be taken not
only of the basic salary of the employee, but also of the transportation and emergency living allowances.

Article 97(f) of the Labor Code is explicit that commission is included in the definition of the term
"wage". It has been repeatedly declared that where the law speaks in clear and categorical language, there is
no room for interpretation or construction but only for application.
The words “salary” and “wage” are generally refer to one and the same meaning, that is, a reward or
recompense for services performed. Likewise, "pay" is the synonym of "wages" and "salary". Since the words
"wages", "pay" and "salary" have the same meaning, and commission is included in the definition of "wage", it
only follows that in the computation of the separation pay, the salary base should also include the earned sales
commissions.

Even if the commissions were in the form of incentives or encouragement, so that the salesman would
be inspired to put a little more industry on jobs particularly assigned to them, still these commissions are direct
remunerations for services rendered which contributed to the increase of income of the
employee. Commission is the recompense compensation or reward of an agent, salesman, executor, trustee,

24
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 that commissions are part of Songco, et al's wage or
salary.

The Court takes judicial notice of the fact that some salesmen do not receive any basic salary, but
depend on commissions and allowances or commissions alone, although an employer-employee relationships
exists.

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.

18. BOIE-TAKEDA CHEMICALS v. DIONISIO C. DE LA SERNA

Facts:

A routine inspection was conducted in the premises of petitioner Boie-Takeda Chemicals Inc. by
Labor and Development officer Reynaldo B. Ramos . Finding that petitioner had not been including the
commissions earned by its medical representatives in the computation of their 1-month pay, a Notice of
Inspection Result was served on petitioner to effect restitution or correction of “the underpayment of 13-month
pay for the years, 1986 to 1988 of Medical representatives. Petitioner wrote the Labor Department contesting
the Notice of Inspection Results, and expressing the view that the commission paid to its medical
representatives are not to be included in the computation of the 13-moth pay since the law and its
implementing rules speak of REGULAR or BASIC salary and therefore exclude all remunerations which are not
part of the REGULAR salary.
Regional Dir. Luna Piezas issued an order for the payment of underpaid 13-month pay for the years
1986, 1987 and 1988. A motion for reconsideration was filed and the then Acting labor Secretary Dionisio de la
Serna affirmed the order with modification that the sales commission earned of medical representatives before
August 13, 1989 (effectivity date of MO 28 and its implementing guidelines) shall be excluded in the
computation of the 13-month pay.
Similar routine inspection was conducted in the premises of Phil. Fuji Xerox where it was found there
was underpayment of 13th month pay since commissions were not included. In their almost identically-worded
petitioner, petitioners, through common counsel, attribute grave abuse of discretion to respondent labor
officials Hon. Dionisio dela Serna and Undersecretary Cresenciano B. Trajano.

Issue:
Whether or not commissions are included in the computation of 13-month pay.

Held:
No. The Supreme Court said that, 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.

Contrary to respondent’s contention, M.O No. 28 did not repeal, supersede or abrogate P.D. 851. As
may be gleaned from the language of MO No. 28, it merely “modified” Section 1 of the decree by removing the
P 1,000.00 salary ceiling. The concept of 13th Month pay as envisioned, defined and implemented under P.D.
851 remained unaltered, and while entitlement to said benefit was no longer limited to employees receiving a
monthly basic salary of not more than P 1,000.00 said benefit was, and still is, to be computed on the basic
salary of the employee-recipient as provided under P.D. 851.

25
 Thus, the interpretation given to the term “basic salary” was defined in PD 851 applies equally to “basic
salary” under M.O. No. 28. The term “basic salary” is to be understood in its common, generally accepted
meaning, i.e., as a rate of pay for a standard work period exclusive of such additional payments as bonuses
and overtime. In remunerative schemes consists 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 of other related transactions.
They are, as such, additional pay, which the SC has made clear do not from part of the “basic salary.”

19. PHILIPPINE DUPLICATORS, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE DUPLICATORS EMPLOYEES UNION
- TUPAS, respondents.

Facts:
Petitioner Corporation pays its salesmen a small fixed or guaranteed wage; the greater part of the
latter’s wages or salaries being composed of the sales or incentive commissions earned on actual sales of
duplicating machines closed by them. Thus the sales commissions received for every duplicating machine sold
constituted part of the basic compensation or remuneration of the salesmen of the Philippine Duplicators for
doing their job.

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.

The Labor Arbiter directed Petitioner Duplicators to pay 13th month pay to private respondent
employees computed on the basis of their fixed wages plus sales commission. Sec. 4 of the Supplementary
Rules and Regulations Implementing PD No. 851 (Revised Guidelines Implementing 13th Month Pay) provides
that overtime pay, earning and other remuneration which are not part of the basic salary shall not be included
in the computation of the 13th month pay.

On 17 November 1987, acting upon a request for opinion submitted by respondent union, Director
Augusto G. Sanchez of the Bureau of Working Conditions, MOLE, rendered an opinion to respondent union
declaring applicable the provisions of Explanatory Bulletin No. 86-12, Item No. 5 (a): Since the salesmen of
Philippine Duplicators are receiving a fixed basic wage plus commission on sales and not purely on
commission basis, they are entitled to receive 13th month pay provided they worked at least one (1) month
during the calendar year. May we add at this point that in computing such 13th month pay, the total
commissions of said salesmen for the calendar year shall be divided by twelve.

Petitioner Corporation contends that their sales commission should not be included in the computation
of the 13th month pay invoking the consolidated cases of Boie-Takeda Chemicals, Inc. vs Hon. Dionisio dela
Serna and Philippine Fuji Xerox Corp. vs Hon. Crecencio Trajano, were the so-called commissions of medical
representatives of Boie-Takeda Chemicals and rank-and-file employees of Fuji Xerox Co. were not included in
the term “basic salary” in computing the 13th month pay.

Issue:

Whether or not sales commission is included in the coverage of basic salary for purposes of computing
13th month pay.

Held:

Yes. These commission which are an integral part of the basic salary structure of the Philippine
Duplicator’s employees-salesmen, are not overtime payments, nor profit-sharing payments nor any other fringe
benefit. Thus, salesmen’s commissions comprising a pre-determined percent of the selling price of the goods
were properly included in the term “basic salary” for purposes of computing the 13th month pay.

“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

26
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. “Fair and reasonable value”
shall not include any profit to the employer or to any person affiliated with the employer.

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.

No doubt this particular salary structure was intended for the benefit of petitioner corporation, 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 commissions. This, however, 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 petitioner corporation.

Commissions of medical representatives of Boie-Takeda Chemicals and rank-and-file employees of

Fuji Xerox Co. were not included in the term “basic salary” because these were paid as “productivity bonuses”
which is not included in the computation of 13th month pay.

20. PEDRO CHAVEZ, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, SUPREME PACKAGING, INC. and ALVIN LEE, Plant
Manager, respondents.
Facts:

The respondent company, Supreme Packaging, Inc., is in the business of manufacturing cartons and
other packaging materials for export and distribution. It engaged the services of the petitioner, Pedro Chavez,
as truck driver on October 25, 1984. As such, the petitioner was tasked to deliver the respondent companys
products from its factory in Mariveles, Bataan, to its various customers, mostly in Metro Manila. The
respondent company furnished the petitioner with a truck. Most of the petitioners delivery trips were made at
nighttime, commencing at 6:00 p.m. from Mariveles, and returning thereto in the afternoon two or three days
after. The deliveries were made in accordance with the routing slips issued by respondent company indicating
the order, time and urgency of delivery. Initially, the petitioner was paid the sum of P350.00 per trip. This was
later adjusted to P480.00 per trip and, at the time of his alleged dismissal, the petitioner was receiving P900.00
per trip.

The petitioner expressed to respondent Alvin Lee, respondent company’s plant manager, his desire to
avail himself of the benefits that the regular employees were receiving such as overtime pay, nightshift
differential pay, and 13th month pay, among others. Although he promised to extend these benefits to the
petitioner, respondent Lee failed to actually do so. Petitioner filed a complaint for regularization with the
Regional Arbitration Branch. Before the case could be heard, respondent company terminated the services of
the petitioner. Consequently, the petitioner filed an amended complaint against the respondents for illegal
dismissal, unfair labor practice and non-payment of overtime pay, nightshift differential pay, and 13th month
pay, among others. The respondents, for their part, denied the existence of an employer-employee relationship
between the respondent company and the petitioner. They averred that the petitioner was an independent
contractor as evidenced by the contract of service which he and the respondent company entered into. The
relationship of the respondent company and the petitioner was allegedly governed by this contract of service.

The respondents insisted that the petitioner had the sole control over the means and methods by which
his work was accomplished. He paid the wages of his helpers and exercised control over them. As such, the
petitioner was not entitled to regularization because he was not an employee of the respondent company. The
respondents, likewise, maintained that they did not dismiss the petitioner. Rather, the severance of his
contractual relation with the respondent company was due to his violation of the terms and conditions of
their contract. 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.
27
 Labor Arbiter rendered the Decision dated February 3, 1997, finding the respondents guilty of illegal
dismissal. The Labor Arbiter declared that the petitioner was a regular employee of the respondent company
as he was performing a service that was necessary and desirable to the latters business. Moreover, it was
noted that the petitioner had discharged his duties as truck driver for the respondent company for a continuous
and uninterrupted period of more than ten years. The respondents seasonably interposed an appeal with the
NLRC in which the latter affirmed the decision of Labor Arbiter. However, NLRC rendered another decision
reversing its earlier decision and, this time, holding that no employer-employee relationship existed between
the respondent company and the petitioner. Court of Appeals upheld the contract of service between the
petitioner and the respondent company and reinstated the decision of NLRC dismissing the petitioner’s
complaint for illegal dismissal. Hence, the recourse to this Court by the petitioner.

Issue:
Whether Chavez is a regular employee thus subject to certain benefits.

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.

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. That the petitioner was
paid on a per trip basis is not significant. This is merely a method of computing compensation and not a basis
for determining the existence or absence of employer-employee relationship. One may be paid on the basis of
results or time expended on the work, and may or may not acquire an employment status, depending on
whether the elements of an employer-employee relationship are present or not. In this case, it cannot be
gainsaid that the petitioner received compensation from the respondent company for the services that he
rendered to the latter.
Moreover, under the Rules Implementing the Labor Code, every employer is required to pay his
employees by means of payroll. The payroll should show, among other things, the employees rate of pay,
deductions made, and the amount actually paid to the employee. Interestingly, the respondents did not present
the payroll to support their claim that the petitioner was not their employee, raising speculations whether this
omission proves that its presentation would be adverse to their case.
The Court agrees with the following findings and conclusion of the Labor Arbiter that complainant in his
right senses will not just abandon for that reason alone his work especially so that it is only his job where he
depends chiefly his existence and support for his family if he was not aggrieved by the respondent when he
was told that his services as driver will be terminated on February 23, 1995.
Thus, the lack of a valid and just cause in terminating the services of the petitioner renders his
dismissal illegal. Under Article 279 of the Labor Code, an employee who is unjustly dismissed is entitled to
reinstatement, without loss of seniority rights and other privileges, and to the payment of full backwages,
inclusive of allowances, and other benefits or their monetary equivalent, computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.[29] However, as found by the
Labor Arbiter, the circumstances obtaining in this case do not warrant the petitioners reinstatement. A more
equitable disposition, as held by the Labor Arbiter, would be an award of separation pay equivalent to one
month for every year of service from the time of his illegal dismissal up to the finality of this judgment in
addition to his full backwages, allowances and other benefits.
WHEREFORE, the instant petition is GRANTED. The Resolution dated December 15, 2000 of the
Court of Appeals reversing its Decision dated April 28, 2000 in CA-G.R. SP No. 52485 is REVERSED and SET
ASIDE. The Decision dated February 3, 1997 of the Labor Arbiter in NLRC Case No. RAB-III-02-6181-5,
finding the respondents guilty of illegally terminating the employment of petitioner Pedro Chavez, is
REINSTATED.

28
21. PLASTIC TOWN CENTER CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND NAGKAKAISANG LAKAS NG MANGGAGAWA
(NLM)-KATIPUNAN, respondents.

Facts:

On September 7,1984, the respondent Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan filed a

complaint dated August 30, 1984 charging the petitioner with:

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

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

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

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

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

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

Issue:

Whether or not there is a violation of age order No.5 on the part of the respondent by crediting the
p1.00 per day increase in the CBA and a violation of the CBA by giving only 26 days as gratuity pay for
resigning employees?

Held:

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

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

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

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

In the case at bar, the petitioner alleges that on May 1, 1984, it granted a Pl.00 increase pursuant to
Wage Order No. 4 which in consonance with Section 3 of the CBA was to be credited to the July 1, 1984
increase under the CBA. It was, therefore, a July increase. Section 3 of the CBA, however, clearly states that
29
CBA granted increases shall be credited against future allowances or wage orders. Thus, the CBA increase to
be effected on July 1, 1984 can not be retroactively applied to mean compliance with Wage Order No. 4 which
took effect on May 1, 1984. The words of the contract are plain and readily understandable so we find no need
for any further construction or interpretation petition.

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

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

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

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

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

22. DAVAO FRUITS CORPORATION, petitioner,

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

Facts:

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

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

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

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

Issue:

Whether in the computation of the thirteenth month pay given by employers to their employees under
P.D. No. 851, payments for sick, vacation and maternity leaves, premiums for work done on rest days and

30
special holidays, and pay for regular holidays may be excluded in the computation and payment thereof,
regardless of long-standing company practice?

Held:

NO. Presidential Decree No. 851, promulgated on December 16, 1975, mandates all employers to pay
their employees a thirteenth month pay. How this pay shall be computed is set forth in Section 2 of the "Rules
and Regulations Implementing Presidential Decree No. 851," thus:

SECTION 2. . . .(a) "Thirteenth month pay" shall mean one twelfth (1/12) of the basic salary of an employee
within a calendar year.

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

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

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

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

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

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

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

23. NASIPIT LUMBER COMPANY, INC. vs. NLRC

Facts:

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

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

31
 On January 29, 1996, the officers of respondent NOWM, WAWU-ALU-TUCP, representatives of the
Department of Labor and Employment (DOLE) and the National Conciliation Mediation Board (NCMB) met and
discussed the complaint. The NOWM demanded for the balance of the health bonus of its members for the
year 1994, 13th month-pay, and the remaining backlog payables amounting to P1,800.000.00. Although no
agreement was arrived at by the conferees, the petitioners granted financial assistance to their rank-and-file
employees, security guards and company staff.

On February 18, 1996, the General Membership of WAWU-ALU-TUCP, approved and issued
Resolution No. 02-96 in which it was stated that except for the rank-and-file workers assigned to the St.
Christopher Hospital, the thirty (30) members of respondent NOWM would not report for work effective
February 19, 1996. .

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

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

Issue:

Whether or not there is an illegal cessation on the part of the petitioners and is liable to private
respondent of separation fee?

Held:

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

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

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

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

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

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

32
 Closure or suspension of operations for economic reasons is, therefore, recognized as a valid exercise
of management prerogative. The determination to cease or suspend operations is a prerogative of
management, which the State does not usually interfere with as no business or undertaking is required to
continue operating at a loss simply because it has to maintain its workers in employment. Such an act would
be tantamount to a taking of property without due process of law.27

However, the burden of proving, with sufficient and convincing evidence, that such closure or
suspension is bona fide falls upon the employer.

In the present case, the petitioners failed to prove with convincing evidence a bona fide suspension of
their operations in 1994, 1995 and even in January 1996 due to acute economic losses in their operations.

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

24. EMPLOYERS CONFEDERATION OF THE PHILIPPINES, petitioner,

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

Facts:

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

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

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

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

Issue:

Whether or not Regional Tripartite Wages and Productivity Board, National Capital Region, has the
power to promulgate R.A. 6727? YES.

Held:

The Court is inclined to agree with the Government

33
Republic Act No. 6727 was intended to rationalize wages, first, by providing for full-time boards to police wages
round-the-clock, and second, by giving the boards enough powers to achieve this objective.

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

(a) The demand for living wages;

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

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

(d) The needs of workers and their families;

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

(f) Improvements in standards of living;

(g) The prevailing wage levels;

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

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

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

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

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

25. CAGAYAN SUGAR MILLING COMPANY, petitioner,

vs.
SECRETARY OF LABOR AND EMPLOYMENT, DIRECTOR RICARDO S. MARTINEZ,
SR., and CARSUMCO EMPLOYEES UNION, respondents.
Facts:
On November 16, 1993, Regional Wage Order No. RO2-02[1] was issued by the Regional Tripartite
Wage and Productivity Board, Regional Office No. II of the Department of Labor and Employment (DOLE). It
provided, inter alia, that:

34
 "Section 1. Upon effectivity of this Wage Order, the statutory minimum wage rates applicable to
workers and employees in the private sector in Region II shall be increased as follows: xxx 1.2 P14.00
per day .... Cagayan xxx

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

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

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

The record shows that there was no prior public consultation or hearings and newspaper publication
insofar as Wage Order No. RO2-02-A is concerned. In fact, these allegations were not denied by public
respondents in their Comment. To begin with, there was no ambiguity in the provision of Wage Order RO2-02
as it provided in clear and categorical terms for an increase in statutory minimum wage of workers in the
region. Hence, the subsequent passage of RO2-02-A providing instead for an across the board increase in
wages did not clarify the earlier Order but amended the same. In truth, it changed the essence of the original
Order.
Petitioner clearly complied with Wage Order RO2-02 which provided for an increase in statutory
minimum wage rates for employees in Region II. It is not just to expect petitioner to interpret Wage RO2-02 to
mean that it granted an across the board increase as such interpretation is not sustained by its text. Indeed,
the Regional Wage Board had to amend Wage Order RO2-02 to clarify this alleged intent.
In sum, we hold that RO2-02-A is invalid for lack of public consultations and hearings and non-
publication in a newspaper of general circulation, in violation of Article 123 of the Labor Code. We likewise find

35
that public respondent Secretary of Labor committed grave abuse of discretion in upholding the findings of
Regional Director Ricardo S. Martinez, Sr. that petitioner violated Wage Order RO2-02.

26. PRUBANKERS ASSOCIATION, petitioner,

vs.
PRUDENTIAL BANK & TRUST COMPANY, respondent.

Facts:

On November 18, 1993, the Regional Tripartite Wages and Productivity Board of Region V issued
Wage Order No. RB 05-03 which provided for a Cost of Living Allowance (COLA) to workers in the private
sector who ha[d] rendered service for at least three (3) months before its effectivity, and for the same period
[t]hereafter, in the following categories: SEVENTEEN PESOS AND FIFTY CENTAVOS (P17.50) in the cities of
Naga and Legaspi;FIFTEEN PESOS AND FIFTY CENTAVOS (P15.50) in the municipalities of Tabaco,
Daraga, Pili and the city of Iriga; and TEN PESOS (P10.00) for all other areas in the Bicol Region.

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

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

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

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

Held:
No, there was no wage distortion.
The law provides in Art. 124 in the Labor Code that wage distortion shall mean a situation where an
increase in prescribed wage results in the elimination or severe contraction of intentional quantitative
differences in wage or salary rates between and among employee groups in an establishment as to effectively
obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical
bases of differentiation.Wage distortion involves four elements:
1. An existing hierarchy of positions with corresponding salary rates

36
 2. A significant change in the salary rate of a lower pay class without a concomitant increase in the
salary rate of a higher one
3. The elimination of the distinction between the two levels
4. The existence of the distortion in the same region of the country.

In the present case, it is clear that no wage distortion resulted when respondent implemented the
subject Wage Orders in the covered branches. In the said branches, there was an increase in the salary rates
of all pay classes.Furthermore, the hierarchy of positions based on skills, length of service and other logical
bases of differentiation was preserved. In other words, the quantitative difference in compensation between
different pay classes remained the same in all branches in the affected region. Petitioner argues that a wage
distortion exists because the implementation of the two Wage Orders has resulted in the discrepancy in the
compensation of employees of similar pay classification in different regions. Hence, petitioner maintains that,
as a result of the two Wage Orders, the employees in the affected regions have higher compensation than their
counterparts of the same level in other regions. Several tables are presented by petitioner to illustrate that the
employees in the regions covered by the Wage Orders are receiving more than their counterparts in the same
pay scale in other regions.Contrary to petitioners postulation, a disparity in wages between employees holding
similar positions but in different regions does not constitute wage distortion as contemplated by law. As
previously enunciated, it is the hierarchy of positions and the disparity of their corresponding wages and other
emoluments that are sought to be preserved by the concept of wage distortion. Put differently, a wage
distortion arises when a wage order engenders wage parity between employees in different rungs of the
organizational ladder of the same establishment. It bears emphasis that wage distortion involves a parity in the
salary rates of different pay classes which, as a result, eliminates the distinction between the different ranks in
the same region.

27. DOMINICO C. CONGSON, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION

Facts:
Petitioner is the registered owner of Southern Fishing Industry. Private respondents were hired on
various dates 3 by petition'er as regular piece-rate workers. They were uniformly paid at a rate of P1.00 per
tuna weighing thirty (30) to eighty (80) kilos per movement, that is — from the fishing boats down to petitioner's
storage plant at a load/unload cycle of work until the tuna catch reached its final shipment/destination. They did
the work of unloading tuna from fishing boats to truck haulers; unloading them again at petitioner's cold storage
plant for filing, storing, cleaning, and maintenance; and finally loading the processed tuna for shipment.
Furthermore, respondent company, per the petitioner’s request, were entitled to retrieve the tuna intestines and
liver as part of their compensation. They worked seven (7) days a week.

During the first week of June 1990, petitioner notified his workers of his proposal to reduce the rate-per-
tuna movement due to the scarcity of tuna. The petitioners resisted to the said deductions. The following week,
the respondents have replaced them with another new set of workers.

On 15 June 1990, private respondents filed a case against petitioner before the NLRC Sub-Regional
Arbitration Branch No. XI in General Santos City and non-payment of overtime pay, 13th month pay, holiday
pay, rest day pay, and five (5)-day service incentive leave pay; and for constructive dismissal. With respect to
their monetary claims, private respondents charged petitioner with violation of the minimum wage law, alleging
that with petitioner's rates and the scarcity of tuna catches, private respondents' average monthly earnings
each did not exceed ONE THOUSAND PESOS (P1,000.00).

The labor arbiter rendered a decision assailing that the petitioners are illegally dismissed the
respondents to be directed to pay, jointly and severally, their respective separation pay and monetary claims
for salary differentials, 13th month pay and service incentive leave pay, as computed above, in the total sum of
P 502,865.00. The claims for overtime pay, holiday pay and rest day pay are, however, dismissed for lack of
factual basis and for reasons aforecited.

37
 On appeal by petitioner, respondent NLRC found petitioner guilty of illegal dismissal. Hence, the
present recourse by petitioner.

Issue:

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

Held:

No, it is not a part of the compensation.

The Labor Code expressly provides:

Article 102.Forms of Payment. —No. employer shall pay the wages of an employee by means
of, promissory notes, vouchers, coupons, tokens tickets, chits, or any object other than legal
tender, even when expressly requested by the employee.

Payment of wages by check or money order shall be allowed when such manner of payment is
customary on the date of effectivity of this Code, or is necessary as specified in appropriate
regulations to be issued by the Secretary of Labor or as stipulated in a collective bargaining
agreement.

Undoubtedly, petitioner's practice of paying the private respondents the minimum wage by means of
legal tender combined with tuna liver and intestines runs counter to the above cited provision of the Labor
Code. The fact that said method of paying the minimum wage was not only agreed upon by both parties in the
employment agreement but even expressly requested by private respondents, does not shield petitioner.
Article 102 of the Labor Code is clear. Wages shall be paid only by means of legal tender. The only instance
when an employer is permitted to pay wages informs other than legal tender, that is, by checks or money
order, is when the circumstances prescribed in the second paragraph of Article 102 are present.

28. EUFROCIO BERMISO, ET AL., petitioners,

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

Facts:

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

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

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

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

38
 Aside from Sabay, the group has a collector, a timekeeper, a paymaster, and several capataces and
subcapataces. In the hauling of the cargo, checkers or agents of the shippers and consignees accompany
them and look over their work.

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

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

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

Issue:

Whether or not claimants are entitle to reinstatement, overtime pay, wage differentials, vacation and
sick leave, free hospitalization, accident insurance?

Held:

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

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

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

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

39
29. ERNESTO M. APODACA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, JOSE M. MIRASOL and INTRANS PHILS.,
INC., respondents.

Facts:

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

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

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

Hence, the instant petition.

Issue:

Whether or not the National Labor Relations Commission (NLRC) have jurisdiction to resolve a claim
for non-payment of stock subscriptions to a corporation? Assuming that it has, can an obligation arising
therefrom be offset against a money claim of an employee against the employer?

Held:

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

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

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

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

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

(b) For union dues, in cases where the right of the worker or his union to checkoff has been recognized by the
employer or authorized in writing by the individual worker concerned; and
40
 4
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.

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

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

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

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

On June 26, 1985, the private respondents filed a Complaint with the arbitration branch of the
respondent National Labor Relations Commission (NLRC) against the petitioners for, among others, illegal
dismissal and violation of Presidential Decree No. 851.1 They were originally joined by another employee, one
Raymundo Labarda, who later withdrew his Complaint.

At first, they only sought the payment of their 13th month pay under Presidential Decree No. 851 as
well as their separation pay, and the refund of the cash bond they filed with the company at the start of their
employment. Later on, they sought their reinstatement as well as the payment of their 13th month pay and
service incentive leave pay, and separation pay in the event that they are not reinstated.

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

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

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

Premises considered, judgment is hereby rendered ordering respondents to reinstate complainants to

their former positions, without backwages and to pay them the following amounts;

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

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

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

Issue:

Whether or not respondents are entitled to refund of the cash bonds as it is prohibited under art. 114 of
labor code?
41
Held:

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

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

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

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

The petitioners have not satisfactorily disputed the applicability of this provision of the Labor Code to
the case at bar. Considering further that the petitioners failed to show that the company is authorized by law to
require the private respondents to file the cash bond in question, the refund thereof is in order.

The allegation of the petitioners to the effect that the proceeds of the cash bond had already been given
to a certain carinderia to pay for the accounts of the private respondents therein does not merit serious
consideration. As correctly observed by the Solicitor General, no evidence or receipt has been shown to prove
such payment.

31. 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 2 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.

42
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.

Issue:
Whether or not an employee may be made to make deposits to defray for losses and damages?

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 equipment 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.

On the matter of the car wash payments, the labor arbiter had this to say in his decision: "anent the
issue of illegal deductions, there is no dispute that as a matter of practice in the taxi industry, after a tour of
duty, it is incumbent upon the driver to restore the unit he has driven to the same clean condition when he took
it out, and as claimed by the respondents (petitioners in the present case), complainant(s) (private respondents
herein) were made to shoulder the expenses for washing, the amount doled out was paid directly to the person
who washed the unit, thus we find nothing illegal in this practice, much more (sic) to consider the amount paid
by the driver as illegal deduction in the context of the law."
Consequently, private respondents are not entitled to the refund of the p20.00 car wash payments they made.
It will be noted that there was nothing to prevent private respondents from cleaning the taxi units themselves, if
they wanted to save their p20.00. Also, as the solicitor general correctly noted, car washing after a tour of duty
is a practice in the taxi industry, and is, in fact, dictated by fair play

32. SOUTH MOTORISTS ENTERPRISES, petitioner,

vs.
ROQUE TOSOC, ET AL., AND HON. SECRETARY OF LABOR AND EMPLOYMENT, respondents.

Facts:
Sometime in January of 1983, complaints for non-payment of emergency cost of living allowances were
filed by 46 workers, Tosoc, et als., against south motorists before the Naga City district office of regional office
no. 5 of the then Ministry Of Labor. On 10 January 1983 a special order was issued by the district labor officer
43
directing its labor regulation officers to conduct an inspection and verification of South Motorists' employment
records.

On the date of the inspection and verification, 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 to 8 February 1983 upon the request of south motorists to
enable it to present all the employment records on such date. However, on 7 February 1983 south motorists
asked for another deferment to 16 February 1983 due to its lawyer's tight schedule. On 16 February 1983,
south motorists again requested for a resetting to 3 March 1983 because of the alleged voluminous records it
had to locate and its desire to submit a memorandum regarding complainants' claims. 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.

The court resolved to give due course to the petition and to decide the case.

Issue:
Whether or not the employment records of the employees may be kept in a place other than the
workplace?

Held:
No. 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.

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:

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.

33. ROSARIO A. GAA, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, EUROPHIL INDUSTRIES CORPORATION, AND CESAR R.
ROXAS, DEPUTY SHERIFF OF MANILA, respondents.

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. Gaawas then the building administrator. On
December 12, 1973, Europhil Industries commenced an action (civil case no. 92744) 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" (p. 87 rollo). 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.

44
 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 in an order dated November 7, 1975. A motion for
reconsideration of said order was likewise denied, and on January 26, 1976 petitioner filed with the court of
appeals a petition for certiorari against filed with the court of appeals a petition for certiorari against said order
of November 7, 1975.

On March 30, 1976, the court of appeals dismissed the petition for certiorari. 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." it also held that the term "wages" means the pay given" as hire or
reward to artisans, mechanics, domestics or menial servants, and laborers employed in manufactories,
agriculture, mines, and other manual occupation and usually employed to distinguish the sums paid to persons
hired to perform manual labor, skilled or unskilled, paid at stated times, and measured by the day, week,
month, or season," citing 67 c.j. 285, which is the ordinary acceptation of the said term, and that "wages" in
spanish is "jornal" and one who receives a wage is a "jornalero."

Issue:
Whether or not the respondent's wage shall not be subject to execution or attachment as provided in
Article 1708?

Held:
No, the court opined 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 Rosario A. Gaa is definitely
not within that class.

The court found and so hold that the trial court did not err in denying in its order of November 7, 1975 the
motion of petitioner to lift the notice of garnishment against her salaries, commission and other remuneration
from El Grande Hotel since said salaries, commission and other remuneration due her from the El Grande
Hotel do not constitute wages due a laborer which, under article 1708 of the civil code, are not subject to
execution or attachment.

Art. 1708. 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" (p. 95, rollo) 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.

In its broadest sense, the word "laborer" includes everyone who performs any kind of mental or physical labor,
but as commonly and customarily used and understood, it only applies to one engaged in some form of manual
or physical labor. That is the sense in which the courts generally apply the term as applied in exemption acts,
since persons of that class usually look to the reward of a day's labor for immediate or present support and so
are more in need of the exemption than are other. Article 1708 used the word "wages" and not "salary" in
relation to "laborer" when it declared what are to be exempted from attachment and execution. The term
"wages" as distinguished from "salary", applies to the compensation for manual labor, skilled or unskilled, paid
at stated times, and measured by the day, week, month, or season, while "salary" denotes a higher degree of

45
employment, or a superior grade of services, and implies a position of office: by contrast, the term wages "
indicates considerable pay for a lower and less responsible character of employment, while "salary" is
suggestive of a larger and more important service (35 am. Jur. 496).

The distinction between wages and salary was adverted to in Bell Vs. Indian Livestock Co. (tex. Sup.), 11 S.W.
344, wherein it was said: "'wages' are the compensation given to a hired person for service, and the same is
true of 'salary'. The words seem to be synonymous, convertible terms, though we believe that use and general
acceptation have given to the word 'salary' a significance somewhat different from the word 'wages' in this: that
the former is understood to relate to position of office, to be the compensation given for official or other service,
as distinguished from 'wages', the compensation for labor." annotation 102 am. St. Rep. 81, 95. There are
many cases holding that contractors, consulting or assistant engineers, agents, superintendents, secretaries of
corporations and livery stable keepers, do not come within the meaning of the term.

34. REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE BUREAU OF CUSTOMS AND THE
BUREAU OF INTERNAL REVENUE, petitioner,
VS.
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:
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.

Issue:

Whether or not the 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?

Held:
No, Article 110. Worker preference in case of bankruptcy — in the event of bankruptcy or liquidation of
an employer's business, his workers shall enjoy first preference as regards wages due them for services
rendered during the period prior to the bankruptcy or liquidation, any provision of law to the contrary
notwithstanding. Union paid wages shall be paid in full before other creditors may establish any claim to a
share in the assets of the employer.
46
 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.

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.

It follows that the claim of the bureau of internal revenue for unpaid tobacco inspection fees constitutes
a claim for unpaid internal revenue taxes 18 which gives rise to a tax lien upon all the properties and assets,
movable and immovable, of the insolvent as taxpayer. Clearly, under articles 2241 no. 1, 2242 no. 1, and
2246-2249 of the civil code, this tax claim must be given preference over any other claim of any other creditor,
in respect of any and all properties of the insolvent.

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.

Accordingly, and by way of recapitulating the application of civil code and labor code provisions to the
facts herein, the trial court should inventory the properties of the insolvent so as to determine specifically: (a)
whether the assets of the insolvent before the trial court includes stocks of processed or manufactured tobacco
products; and (b) whether the bureau of customs still has in its custody or control articles imported by the
insolvent and subject to the lien of the government for unpaid customs duties and taxes.

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.

`Turning to (b), should the bureau of customs no longer have any importations by the insolvent still
within customs custody or control, or should the importations still held by the bureau of customs be or have
become insufficient in value for the purpose, customs duties and taxes remaining unpaid would have only ninth
priority by virtue of article 2244, number 9. In respect therefore of the insolvent's "free property, " the claims of
47
the unions will enjoy first priority under article 2244 as modified and will be paid ahead of the claims of the
bureau of customs for any customs duties and taxes still remaining unsatisfied.

35. THE MANILA BANKING CORPORATION (MANILABANK) AND ARNULFO B. AURELLANO IN HIS
CAPACITY AS STATUTORY RECEIVER OF MANILABANK, petitioners,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, VICTOR L. MENDOZA, RODOLFO VE. TIMBOL,
RUBEN G. ASEDILLO, FLORINDA S. DAYRIT, AND 19 OTHER SENIOR OFFICERS SIMILARLY
SITUATED; HORACE REYES AND 14 OTHER SENIOR MANAGERS SIMILARLY SITUATED; AURORA
VILLACERAN AND 34 OTHER ASSISTANT MANAGERS SIMILARLY SITUATED; CONSUELO
RIZARRI, EMERENCIANA SAMSON, BRENDA C. BERMUDEZ, FLORYPEE ABRIGO, EMMA
BALDERAMA, AND 211 OTHER JUNIOR OFFICERS SIMILARLY SITUATED, respondents.

Facts:

The 343 private respondents who had already been duly paid separation pay and/or retirement benefits
upon termination of their employment upon the insolvency of Manila Banking Corporation (Manilabank). They
further claim P193,338,212.33 consisting of:

1. Wage increase of 25% of gross monthly wage from January 1985 to December 1988;

2. Christmas bonus of one and one-half (1-1/2) months pay from December 1985 to December 1987;

3. Mid-year bonus of one (1) month pay from 1985 to 1988, inclusive;

4. Profit sharing of 5% of net profit for 1985 and 1986;

5. Differentials on accrued leaves, retirement benefits and Christmas and mid-year bonuses;

6. Longevity pay, loyalty bonus and medical, dental and optical benefits;

7. Uniform allowance of P600.00 per year from January 1985 to January 1988, inclusive;

8. One-half (1/2) month pay 1987 Christmas bonus which was deducted from the retirement benefit of each
complainant;

9. Travel plan and car plan with respect to the 23 complainants senior officers; and

10. Car plan and gasoline allowance benefits with respect to the 15 complainants, senior managers and 54
assistant managers.

Issue:

Whether or not the 343 employees have a preferred right of such money claims to an insolvent manila
banking corporation?

Held:
No, as a rule, a bonus is an amount granted and paid to an employee for his industry and loyalty which
contributed to the success of the employers business and made possible the realization of profits. It is an act of
generosity of the employer for which the employee ought to be thankful and grateful. It is also granted by an
enlightened employer to spur the employee to greater efforts for the success of the business and realization of
bigger profits. Xxx from the legal point of view, a bonus is not a demandable and enforceable obligation. It is so
when it is made part of the wage or salary or compensation. In such a case the latter would be fixed amount
and the former would be a contingent one dependent upon the realization of profits.

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?

48
 Records bear out that petitioner manilabank was already in dire financial straits in the mid-80s. 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 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 (enumerated at page 3)
which represent additional benefits, they having already been paid separation and retirement benefits, we rule
as follows:

First. The award of 5% profit sharing of petitioner banks net profits for the years 1985 and 1986 is
deleted as there were clearly no profits to share during that period given the banks financial status in 1985 and
1986 when it was operating on net losses.

Second. The award of wage increases and christmas and mid-year bonuses from 1985 to 1988, being
in the nature of gratuities and dependent as they on the petitioners liberality and capability to give, is likewise
deleted for same reasons above stated.

Third. The award of differentials on accrued leaves, retirement benefits and christmas and mid-year
bonuses is also deleted as a necessary and logical consequence of the denial of the wage increases and
christmas and mid-year bonuses.

Fourth. The award of medical, dental and optical benefits is well-taken and, therefore, affirmed.

Fifth. The claim for travel plans for 23 senior officers, and car plans and gasoline allowances for 23
senior officers, 15 senior managers and 54 assistant managers may only be granted to those officers who
have not yet availed of the said benefit subject to the proper determination by the labor arbiter.

Sixth and last. Claims for longevity pay, loyalty bonuses and uniform allowance of p600.00 for 1985
may be granted given the apparent loyalty and allegiance shown by herein private respondents to petitioner
bank despite rough sailing during the said period of time.

36. CIRINEO BOWLING PLAZA, INC., petitioner,

vs.
GERRY SENSING, BELEN FERNANDEZ, MIRASOL DIAZ, MARGARITA ABRIL, DARIO BENITEZ,
MANUEL BENITEZ, RONILLO TANDOC, EDGAR DIZON, JOVELYN QUINTO, KAREN REMORAN,
JENIFFER RINGOR, DEPARTMENT OF LABOR AND EMPLOYMENT AND COURT OF APPEALS,
respondents.
Facts:

On November 27, 1995, Eligio Paolo, Jr., an employee of petitioner, filed a letter complaint with the
Department Of Labor And Employment (DOLE), 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 petitioners establishment the
following day. In his inspection report, labor and employment officer iii, Crisanto Rey Dingle, found that

49
petitioner has thirteen 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 petitioners officer-in-charge, Ma. Fe Boquiren, who signed the same.

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 distributed as follows:

Name and amount

1. GERRY SENSING P 9,505.68
2. BELEN FERNANDEZ 14,258.52
3. MIRASOL DIAZ 12,458.52
4. MARGARITA ABRIL 31,557.12
5. LAMBERTO SOLANO 53,151.12
6. DARIO BENITEZ 53,151.12
7. MANUEL BENITEZ 53,151.12
8. RONILLO TANDOC 36,951.12
9. EDGAR DIZON 14,637.78
10. JOVELYN QUINTO 22,769.88
11. KAREN REMORAN 21,387.78
12. JENNIFER RINGOR 37,304.82
13. ELIGIO PAOLO, JR. 12,810.00
TOTAL P 373,094.58

Issue:

Whether or not the Secretary of Labor and Employment has jurisdiction over such money claims of the
case exceeding P5,000.00?

Held:
Yes, while it is true that under articles 129 and 217 of the labor code, the labor arbiter has jurisdiction to
hear and decide cases where the aggregate money claims of each employee exceeds p5,000.00, said
provisions of law do not contemplate nor cover the visitorial and enforcement powers of the secretary of labor
or his duly authorized representatives.

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 of which reads:

Rather, said powers are defined and set forth in article 128 of the labor code (as amended by R.A. No. 7730)
thus:

Art. 128. Visitorial and enforcement power.

(a) the secretary of labor or his duly authorized representatives, including labor regulation officers, shall have
access to employers records and premises at any time of the day or night whenever work is being undertaken
therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter
which may be necessary to determine violations or which may aid in the enforcement of this code and of any
labor law, wage order or rules and regulations issued pursuant thereto.

(b) notwithstanding the provisions of articles 129 and 217 of this code to the contrary, and in cases where the
relationship of employer-employee exists, the secretary of labor and employment or his duly authorized
representatives shall have the power 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. The secretary or his duly authorized
representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders,

50
except in cases where the employer contests the finding of the labor employment and enforcement officer and
raises issues supported by documentary proofs which were not considered in the course of inspection.

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 petitioners
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.

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 enforce compliance with the provisions of the code with respect to the payment of proper
wages. Hence, petitioners claim of lack of jurisdiction on the part of public respondent is bereft of merit.

37. FRANCISCO GUICO, JR., DOING BUSINESS UNDER THE NAME AND STYLE OF COPYLANDIA
SERVICES & TRADING, petitioner,
vs.
THE HON. SECRETARY OF LABOR & EMPLOYMENT LEONARDO A. QUISUMBING, THE OFFICE OF
REGIONAL DIRECTOR OF REGION I, DEP'T OF LABOR & EMPLOYMENT, ROSALINA CARRERA,
ET. AL., respondents.
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 letter-complaint 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.

51
 Wherefore, premises considered and pursuant to the rules on the disposition of labor standards cases
in the regional offices issued by the secretary of labor and employment on 16 September 1987, respondent
Copylandia services and trading thru its owner/manager Mr. Francisco Guico, is hereby ordered to pay the
employees the amount of one million eighty one thousand seven hundred fifty six pesos and seventy centavos
(P1,081,756.70) representing their backwages, distributed as follows:

1. ROSALINA CARRERA - P 68,010.91

2. JOANNA VENTURA - 28,568.10
3. MERCELITA PAREDES - 68,010.91
4. AIDA LICUANAN - 68,010.91
5. GEMMA GALES - 68,010.91
6. CLOTILDA ZARATA - 27,808.33
7. CONSOLACION MIGUEL - 65,708.28
8. GEMMA MACALALAY - 68,010.91
9. WANDY AQUINO - 19,559.58
10. LAURETA CLAUNA - 68,010.91
11. JOSEPHINE VALDEZ - 27,808.33
12. LEILANI BERROZO - 27,808.33
13. MAJESTINA RAYMUNDO - 68,010.91
14. THERESA ROSARIO - 68,010.91
15. EDELYN MARAMBA - 68,010.91
16. YOLLY DIMABAYAO - 40,380.60
17. VILMA CALAGUIN - 68,010.91
18. MAILA BALOLONG - 40,380.60
19. CLARISSA VILLENA - 27,808.33
20. MARYANN GALINATO - 68,010.91
21. DESIREE CABASAG - 27,808.33

TOTAL P 1,081,756.70

Issue:

Whether or not the regional director has jurisdiction over the complaint of the 21 employees since their
individual monetary claims exceed the P5,000.00 limit?

Held:

Yes, 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, viz:

Article 128 (b) - notwithstanding the provisions of articles 129 and 217 of this code to the contrary, and
in cases where the relationship of employer-employee still exists, the secretary of labor and employment or his
duly authorized representatives shall have the power to issue compliance orders to give effect to the labor
standards provisions of the code and other labor legislation based on the findings of the labor employment and
enforcement officers or industrial safety engineers made in the course of inspection. The secretary or his duly
authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of
their orders, except in cases where the employer contests the findings of the labor employment and
enforcement officer and raises issues supported by documentary proofs which were not considered in the
course of inspection.

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 involves 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 order appealed from.

52
 The records of the house of representativesshow 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 petitioner's reliance on Servando is thus untenable.

38. DENTECH MANUFACTURING CORPORATION AND JACINTO LEDESMA IN HIS CAPACITY AS

GENERAL MANAGER, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, CCLU, BENJAMIN MARBELLA, ARMANDO TORNO,
JUANITO TAJAN, JR. AND JOEL TORNO, respondents.

Facts:

The herein petitioner dentech manufacturing corporation is a domestic corporation organized under
Philippine laws. Before the firm became a corporate entity, it was known as the J.L. Ledesma Enterprises, a
sole proprietorship owned by the herein petitioner Jacinto Ledesma. At present, he is the president and
general manager of the corporation as well as the owner of the controlling interest thereof. The firm is engaged
in the manufacture and sale of dental equipment and supplies.

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

On June 26, 1985, the private respondents filed a complaint with the arbitration branch of the
respondent National Labor Relations Commission (NLRC) against the petitioners for, among others, illegal
dismissal and violation of Presidential Decree No. 851.1 they were originally joined by another employee, one
Raymundo Labarda, who later withdrew his complaint.

At first, they only sought the payment of their 13th month pay under presidential decree no. 851 as well
as their separation pay, and the refund of the cash bond they filed with the company at the start of their
employment. Later on, they sought their reinstatement as well as the payment of their 13th month pay and
service incentive leave pay, and separation pay in the event that they are not reinstated. It is alleged in the
complaint and position paper accompanying the same that they were dismissed from the firm for pursuing
union activities.

The petitioners also argued that the private respondents are not entitled to a 13th month pay. They
maintained that each of the private respondents receive a total monthly compensation of more that Pl,000.00
and that under section 1 of Presidential Decree No. 851, such employees are not entitled to receive a 13th
month pay. The petitioners likewise alleged that the company is in bad financial shape and that pursuant to
section 3 of the decree, the firm is exempted from complying with the provisions of the decree

Issue:

Whether or not the private respondents are entitled as a matter of right to a 13th month pay.

Held:
Yes, Presidential Decree No. 851 was signed into law in 1975 by then President Ferdinand Marcos.
Under the original provisions of section 1 thereof, all employers are required to pay all their employees
receiving a basic salary of not more than Pl,000.00 a month, regardless of the nature of their employment, a
13th month pay not later than December 24 of every year. Under section 3 of the rules and regulations
implementing said presidential decree financially distressed employers, i., e., those currently incurring
substantial losses, are not covered by the decree. Section 7 thereof requires, however, that such distressed
employers must obtain the prior authorization of the secretary of labor and employment before they may qualify
for such exemption.
53
 On May 1, 1978, Presidential Decree No. 1364 was signed into law. The decree enjoined the
department of labor and employment to stop accepting applications for exemption under, inter alia, presidential
decree no. 851.

On August 13, 1986, President Corazon C. Aquino issued memorandum order no. 28 which modified
section 1 of presidential decree no. 851. The said issuance eliminated the Pl,000.00 salary ceiling.

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

The Pl,000.00 salary ceiling provided in presidential decree no. 851 pertains to basic salary, not total
monthly compensation. The petitioners admit that the private respondents work only five days a week and that
they each receive a basic daily wage of P40.00 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 Pl,000.00. Thus, there is no basis
for the contention that the company is exempted from the provision of presidential decree no. 851 which
mandated the payment of 13th month compensation to employees receiving less than P1,000.00 a month.

Even assuming, arguendo, that the private respondents are each paid a monthly salary of over
Pl,000.00, the company is still not in a position to claim exemption. The rules and regulations implementing
presidential decree no. 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 and employment. As
correctly pointed out by the solicitor general, no such prior authorization had been obtained by the petitioner
firm.

At any rate the simple assertion of the respondent that it is in financial distress and thus exempt from
payment of 13th month pay to the complainants is not in itself sufficient to evade payment of the 13th month
pay to which complainants were entitled prior to the commencement of the respondent's financial problems.

39. ARCHILLES MANUFACTURING CORPORATION, ALBERTO YU AND ADRIAN YU, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, GERONIMO MANUEL, ARNULFO DIAZ, JAIME
CARUNUNGAN AND BENJAMIN RINDON, respondents.

Facts:

Archilles Manufacturing Corporation (Archilles), Alberto Yu and Adrian Yu are the petitioners, the latter
two (2) being the chairman and the vice-president of Archilles, respectively. Private respondents Geronimo
Manuel, Arnulfo Diaz, Jaime Carunungan and Benjamin Rindon were employed by Archilles as laborers in its
steel factory located in Barangay Pandayan, Meycauayan, 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
including private respondents. 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. 2 this was brought to the attention of Archilles.

On 11 may 1990 the management ordered private respondent to remove their families from the
bunkhouse and to explain their violation of the company rule. Private respondents remove 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, on 18 may 1990, Archilles terminated their employment for abandonment and for
violation of the company rule regarding the use of the bunkhouse.

54
Issue:

Whether or not dismissal for cause results in the forfeiture of the employee's right to a 13th month pay?

Held:
Yes, the propriety of the award of a 13th month pay, paragraph 6 of the revised guidelines on the
implementation of the 13th month pay law (P. D. 851) provides that "(a)n 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, AND/OR ROSIE TIO petitioners,

vs.
RENATO GENISTON, NATIONAL LABOR RELATIONS COMMISSION PRESIDING COMMISSIONER
(4TH DIVISION), respondents.

Facts:
This case stemmed from a complaint for illegal dismissal filed by Renato Geniston, private respondent herein,
against the Ultra Villa Food Haus Restaurant and/or its alleged owner Rosie Tio. Private respondent alleged
that he was employed as a do it all guy, acting as waiter, driver, and maintenance man, in said restaurant. His
employment therein spanned from March 1, 1989 until he was dismissed on May 13, 1992. For his services,
private respondent was paid P60.00 in 1989, P70.00 in 1990, P80.00 in 1991 and P90.00 when he was
dismissed in 1992.

During the elections of May 11, 1992, private respondent acted as a poll watcher for the National Union Of
Christian Democrats. The counting of votes lasted until 3:00 p.m. The next day, may 12. Private respondent
did not report for work on both days on account of his poll-watching.

Upon arriving home on May 12, private respondent discovered that Tio had phoned his mother that morning.
Tio allegedly gave his mother an inscrutable verbal lashing, and informed the latter that private respondent was
dismissed from work. On may 13, 1992, private respondent went to Tios residence to plead his case only to be
subjected to a brow beating by Tio who even attempted to force him to sign a resignation letter.

Private respondent prayed that the labor arbiter order petitioner Tio to pay him overtime pay, premium pay,
holiday pay, service incentive leave pay, salary differential and 13th month pay. He likewise prayed for
reinstatement plus backwages or, in the alternative, separation pay, as well as moral damages, exemplary
damages and attorneys fees.

Petitioner Rosie Tio, on the other hand, maintained that private respondent was her personal driver, not an
employee of the Ultra Villa Food Haus. As petitioners personal driver, private respondent was required to
report for work at 7:00 a.m. To drive petitioner to Mandaue City where petitioner worked as the manager of the
CFC Corporation. Accordingly, private respondent was paid P65.00 a day in 1989 which was gradually
increased to P70.00 then to P90.00. Private respondent was likewise given free meals as well as 13th month
pay at the end of the year. Petitioner denied dismissing private respondent whom she claimed abandoned his
job.

55
Though well aware that May 12, 1992 was a holiday, petitioner called up private respondent that day to ask
him to report for work as she had some important matters to attend to. Private respondents wife, however,
coldly told petitioner that private respondent was helping in the counting of ballots. Petitioner was thus forced
to hire another driver to replace private respondent. Private respondent came back a week after but only to
collect his salary.

Issue:
A. Whether or not respondent was validly dismissed?
B. Whether or not respondent is entitled to a thirteenth month pay?

Held:

A. No, the dismissal of private respondent to be without a valid cause and without due process.
Petitioner’s contention of abandonment is bereft of merit. To constitute abandonment, two requisites must
concur: (1) the failure to report to work or absence without valid or justifiable reason, and (2) a clear intention to
sever the employer-employee relationship as manifested by some overt acts, with the second requisite as the
more determinative factor. The burden of proving abandonment as a just cause for dismissal is on the
employer. Petitioner failed to discharge this burden.

B. Yes, respondent is entitled to a thirteenth month pay to be computed in accordance with the rules and
regulations, and the revised guidelines, implementing presidential decree no. 851;

The labor arbiter thus ruled that private respondent was petitioners personal driver and not an employee of the
subject establishment.

Accordingly, the terms and conditions of private respondents employment are governed by chapter iii, title iii,
book iii of the labor code[12] as well as by the pertinent provisions of the civil code.[13] thus, article 141 of the
labor code provides:

Art. 141. Coverage. - this chapter shall apply to all persons rendering services in households for compensation.

Domestic or household service shall mean services in the employers home which is usually necessary or
desirable for the maintenance and enjoyment thereof and includes ministering to the personal comfort and
convenience of the members of the employers household, including services of family drivers.

Chapter iii, title iii, book iii, however, is silent on the grant of overtime pay, holiday pay, premium pay and
service incentive leave to those engaged in the domestic or household service.

Moreover, the specific provisions mandating these benefits are found in book iii, title i of the labor code and
article 82, which defines the scope of the application of these provisions, expressly excludes domestic helpers
from its coverage:

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.

The limitations set out in the above article are echoed in book iii of the omnibus rules implementing the labor
code.[15]

Clearly then, petitioner is not obliged by law to grant private respondent any of these benefits.

Employing the same line of analysis, it would seem that private respondent is not entitled to13 month pay. The
revised guidelines on the implementation of the 13th month pay law also excludes employers of household
helpers from the coverage of presidential decree no. 851, thus:

2. Exempted employers

56
The following employers are still not covered by P.D. No. 851:

B. Employers of household helpers x x x;

The court deemed it just to award private respondent 13th month pay in view of petitioners practice of
according private respondent such benefit. Indeed, petitioner admitted that she gave private respondent 13th
month pay every December.

41. BOIE-TAKEDA CHEMICALS, INC.,

vs.
Hon. Dionisio De La Serna, Acting Secretary of the Department of Labor and Employment

Philippine Fuji Xerox Corp.,

vs.
Cresenciano B. Trajano, Undersecretary of the Department of Labor and Employment, and
Philippine Fuji Xerox Employees Union

Facts:

A routine inspection was conducted on May 2, 1989 in the premises of petitioner Boie-Takeda
Chemicals, Inc. by Labor and Development Officer Reynaldo B. Ramos under Inspection Authority No. 4-209-
89. Finding that Boie-Takeda had not been including the commissions earned by its medical representatives in
the computation of their 13th month pay, Ramos served a Notice of Inspection Results on Boie-Takeda
through its president, Mr. Benito Araneta, requiring Boie-Takeda within 10 calendar days from notice to effect
restitution or correction of "the underpayment of 13th month pay for the years 1986, 1987 and 1988 of med rep
(revised guidelines on the implementation of 13th month pay # 5) in the total amount of Php558,810.89."

Boie-Takeda wrote the Labor Department contesting the Notice of Inspection Results, and expressing
the view "that the commission paid to our medical representatives are not to be included in the computation of
the 13th month pay . . . since the law and its implementing rules speak of regular or basic salary and therefore
exclude all other remunerations which are not part of the regular salary." it pointed out that, "if no sales is made
under the effort of a particular representative, there is no commission during the period when no sale was
transacted, so that commissions are not and cannot be legally defined as regular in nature.

Regional Director Luna C. Piezas directed Boie-Takeda to appear before his office on June 9 and 16,
1989. On the appointed dates, however, and despite due notice, no one appeared for Boie-Takeda, and the
matter had perforce to be resolved on the basis of the evidence at hand. On July 24, 1989, Director Piezas
issued an order directing Boie-Takeda:

. . . to pay . . . its medical representatives and its managers the total amount of Php565,746.47
representing underpayment of 13th month pay for the years 1986, 1987, 1988, inclusive, pursuant to
the . . . revised guidelines within ten (10) days from receipt of this order.

A motion for reconsideration was seasonably filed by Boie-Takeda on August 3, 1989. Treated as an
appeal, it was resolved on January 17, 1990 by then acting Labor Secretary Dionisio deLa Serna, who affirmed
the July 24, 1989 order with modification that the sales commissions earned by Boie-Takeda's medical
representatives before August 13, 1989, the effectivity date of Memorandum Order No. 28 and its
implementing guidelines, shall be excluded in the computation of their 13th month pay. Hence, the petition.

A similar routine inspection was conducted in the premises of Philippine Fuji Xerox Corp. on September
7, 1989 pursuant to Routine Inspection Authority No. NCR-lSED-RI-494-89. In his notice of inspection results,
addressed to the manager, Mr. Nicolas O. Katigbak, Senior Labor and Employment Officer Nicanor M. Torres
noted underpayment of 13th month pay of 62 employees, more or less — pursuant to Revised Guidelines on
the Implementation of the 13th Month Pay Law for the period covering 1986, 1987 and 1988.

Philippine Fuji Xerox was requested to effect rectification and/or restitution of the noted violation within
5 working days from notice. No action having been taken thereon by Philippine Fuji Xerox, Mr. Eduardo G.
Gonzales, president of the Philxerox Employee Union, wrote then Labor Secretary Franklin Drilon requesting a

57
follow-up of the inspection findings. Messrs. Nicolas and Gonzales were summoned to appear before Labor
Employment and Development Officer Mario F. Santos for a conciliation conference. When no amicable
settlement was reached, the parties were required to file their position papers.

Subsequently, Regional Director Luna C. Piezas issued an order dated August 23, 1990, ordering
Philippine Fuji Xerox to restitute to its salesmen the portion of the 13th month pay which arose out of the non-
implementation of the said revised guidelines, 10 days from receipt hereof, otherwise, Mr. Nicanor Torres, the
senior labor employment officer is hereby ordered to proceed to the premises of the respondent for the
purpose of computing the said deficiency should respondent fail to heed his order.

Philippine Fuji Xerox appealed the aforequoted order to the office of the Secretary of Labor. In an order
dated October 120, 1991, Undersecretary Cresenciano B. Trajano denied the appeal for lack of merit. Hence,
the petition in GR. No. 102552, which was ordered consolidated with GR. No. 92174 as involving the same
issue.

In their almost identically-worded petition, petitioners, through common counsel, attribute grave abuse
of discretion to respondent labor officials in issuing the questioned orders of January 17, 1990 and October 10,
1991, respectively. They maintain that under P.D. 851, the 13th month pay is based solely on basic salary. as
defined by the law itself and clarified by the implementing and supplementary rules as well as by the Supreme
Court in a long line of decisions, remunerations which do not form part of the basic or regular salary of an
employee, such as commissions, should not be considered in the computation of the 13th month pay. This
being the case, the Revised Guidelines on the Implementation of the 13th month pay law issued by then
Secretary Drilon providing for the inclusion of commissions in the 13th month pay, were issued in excess of the
statutory authority conferred by PD 851.

According to petitioners, this conclusion becomes even more evident when considered in light of the
opinion rendered by Labor Secretary Drilon himself in "In re: Labor dispute at the Philippine Long Distance
Telephone Company" which affirmed the contemporaneous interpretation by then Secretary Ople that
commissions are excluded from the basic salary. Petitioners further contend that assuming that Secretary
Drilon did not exceed the statutory authority conferred by PD 851, still the Revised Guidelines are null and void
as they violate the equal protection of the law clause.

Issue:

Whether Or Not 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 wherein 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.

Contrary to respondents' contention, Memorandum Order No. 28 did not repeal, supersede or abrogate
PD 851. As may be gleaned from the language of the Memorandum Order No. 28, it merely "modified" Section
1 of the decree by removing the p1,000.00 salary ceiling. The concept of 13th month pay as envisioned,
defined and implemented under PD 851 remained unaltered, and while entitlement to said benefit was no
longer limited to employees receiving a monthly basic salary of not more than p1,000.00, said benefit was, and
still is, to be computed on the basic salary of the employee-recipient as provided under PD 851. Thus, the
interpretation given to the term "basic salary" as defined in PD 851 applies equally to "basic salary" under
Memorandum Order No. 28.

58
 In the case of San Miguel Corp. vs. Inciong, 103 SCRA 139, the Supreme Court delineated the
coverage of the term "basic salary" as used in PD 851and its implementing rules, that the basic salary of an
employee is used as the basis in the determination of his 13th month pay. Any compensations or
remunerations which are deemed not part of the basic pay is excluded as basis in the computation of the
mandatory bonus.

Under the rules and regulations implementing presidential decree 851, the following compensations are
deemed not part of the basic salary:

(A) cost-of-living allowances granted pursuant to presidential decree 525 and letter of instructions no. 174;
(B) profit-sharing payments;
(C) all allowances and monetary benefits which are not considered or integrated as part of the regular basic
salary of the employee at the time of the promulgation of the decree on december 16, 1975.

Under a later set of supplementary rules and regulations implementing Presidential Decree 851 issued
by then Labor Secretary Blas Ople, overtime pay, earnings and other remunerations are excluded as part of
the basic salary and in the computation of the 13th month pay.

The exclusion of the cost-of-living allowances and profit-sharing payments indicate the intention to strip
basic salary of other payments which are properly considered as "fringe" benefits. Likewise, the catch-all
exclusionary phrase "all allowances and monetary benefits which are not considered or integrated as part of
the basic salary" shows also the intention to strip basic salary of any and all additions which may be in the form
of allowances or "fringe" benefits.

Moreover, the supplementary rules and regulations implementing Presidential Decree 851 is even more
emphatic in declaring that earnings and other remunerations which are not part of the basic salary shall not be
included in the computation of the 13th-month pay.

A cursory perusal of the two sets of rules indicates that what has hitherto been the subject of a broad
inclusion is now a subject of broad exclusion. The supplementary rules and regulations cure the seeming
tendency of the former rules to include all remunerations and earnings within the definition of basic salary.

The all-embracing phrase "earnings and other remunerations" which are deemed not part of the basic
salary includes within its meaning payments for sick, vacation, or maternity leaves, premium for works
performed on rest days and special holidays, pays for regular holidays and night differentials. As such they are
deemed not part of the basic salary and shall not be considered in the computation of the 13th-month pay. If
they were not excluded, it is hard to find any "earnings and other remunerations" expressly excluded in the
computation of the 13th month pay. Then the exclusionary provision would prove to be idle and with no
purpose.

This conclusion finds strong support under the labor code of the Philippines. To cite a few provisions:

Art. 87. Overtime Work. Work may be performed beyond eight (8) hours a day provided that the employee is
paid for the overtime work, additional compensation equivalent to his regular wage plus at least twenty-five
(25%) percent thereof.

It is clear that overtime pay is an additional compensation other than and added to the regular wage or
basic salary, for reason of which such is categorically excluded from the definition of basic salary under the
supplementary rules and regulations implementing Presidential Decree 851.

In Article 93 of the same code, paragraph

c) Work performed on any special holiday shall be paid an additional compensation of at least thirty percent
(30%) of the regular wage of the employee.

It is likewise clear the premiums for special holiday which is at least 30% of the regular wage is an
additional pay other than and added to the regular wage or basic salary. For similar reason, it shall not be
considered in the computation of the 13th month pay.

Quite obvious from the foregoing is that the term "basic salary" is to be understood in its common,
generally-accepted meaning, i.e., as a rate of pay for a standard work period exclusive of such additional
payments as bonuses and overtime.

59
 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."

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. ANTONIO W. IRAN

vs.
NATIONAL LABOR RELATIONS COMMISSION (4TH DIVISION), GODOFREDO O. PETRALBA,
MORENO CADALSO, PEPITO TECSON, APOLINARIO GOTHONG GEMINA, JESUS BANDILAO,
EDWIN MARTIN, CELSO LABIAGA, DIOSDADO GONZALGO, FERNANDO M. COLINA
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. He
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 petitioners delivery trucks and
promoted, sold and delivered softdrinks to various outlets in mandaue city. the truck helpers assisted in the
delivery of softdrinks to the different outlets covered by the driver/salesmen. As part of their compensation, the
driver/salesmen and truck helpers of petitioner received commissions per case of softdrinks sold.

Sometime in June 1991, Iran, while conducting an audit of his operations, discovered cash shortages
and irregularities allegedly committed by private respondents. Pending the investigation of irregularities and
settlement of the cash shortages, petitioner required private respondents to report for work everyday. They
were not allowed, however, to go on their respective routes. A few days thereafter, despite aforesaid order,
private respondents stopped reporting for work, prompting petitioner to conclude that the former had
abandoned their employment. Consequently, petitioner terminated their services. He also filed on November 7,
1991, a complaint for Estafa against private respondents.

On the other hand, private respondents, on December 5, 1991, filed complaints against petitioner for
illegal dismissal, illegal deduction, underpayment of wages, premium pay for holiday and rest day, holiday pay,
service incentive leave pay, 13th month pay, allowances, separation pay, recovery of cash bond, damages and
attorney’s fees. Said complaints were consolidated, docketed, and assigned to labor arbiter Ernesto F.
Carreon.

The labor arbiter found that petitioner had validly terminated private respondents, there being just
cause for the latters dismissal. Nevertheless, he also ruled that petitioner had not complied with minimum
wage requirements in compensating private respondents, and had failed to pay private respondents their 13th
month pay. The labor arbiter, thus, rendered a decision on February 18, 1993, the dispositive portion of which
reads:

Wherefore, premises considered, judgment is hereby rendered ordering the respondent Antonio W. Iran
to pay the complainants the following:

1. Celso Labiaga Php10,033.10

2. Godofredo Petralba 1,250.00
3. Fernando Colina 11,753.10
4. Moreno Cadalso 11,753.10
5. Diosdado Gonzalgo 7,159.04
60
 6. Apolinario Gimena 8,312.24
7. Jesus Bandilao 14,729.50
8. Pepito Tecson 9,126.55
---------------
74,116.63
Attorneys fees (10%)
of the gross award Php7,411.66
-------------
Grand Total Award Php81,528.29
========
The other claims are dismissed for lack of merit. So ordered.

Both parties seasonably appealed to the NLC, with petitioner contesting the labor arbiters refusal to
include the commissions he paid to private respondents in determining compliance with the minimum wage
requirement. He also presented, for the first time on appeal, vouchers denominated as 13th month pay signed
by private respondents, as proof that petitioner had already paid the latter their 13th month pay.

Private respondents, on the other hand, contested the findings of the labor arbiter holding that they had
not been illegally dismissed, as well as mathematical errors in computing Jesus Bandilao’s wage differentials.
The NLRC, in its decision of December 21, 1994, affirmed the validity of private respondents dismissal, but
found that said dismissal did not comply with the procedural requirements for dismissing employees.
Furthermore, it corrected the labor arbiters award of wage differentials to Jesus Bandila from Php154.00 to
Php4,550.00. in addition to all the monetary claim originally awarded by the labor arbiter a quo, Php1,000.00 is
hereby granted to each complainants as indemnity fee for failure of respondents to observe procedural due
process.

Petitioners motion for reconsideration of said decision was denied on July 31, 1995, prompting him to
elevate this case to this court.

Issues:

1) Whether Or Not commissions are included in determining compliance with the minimum wage
requirement
2) Whether Or Not Iran is guilty of procedural lapses in terminating private respondents.
If yes, Whether Or Not Php1,000.00 indemnity fee to each of the private respondents is proper.
3) Whether Or Not the advance amount received by private respondents should be credited as part of
their 13th month pay.

Held:

1. YES. 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.

Article 97(f), LC explicitly includes commissions as part of wages. 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.

“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.

SC has taken judicial notice of the fact that some salesmen do not receive any basic salary but depend
entirely on commissions and allowances or commissions alone, although an employer-employee relationship
exists. Undoubtedly, 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 commissions. This, however, 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.

61
 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 Philippine Agricultural Commercial and Industrial Workers Union vs. NLRC: drivers and conductors
who are compensated purely on a commission basis are automatically entitled to the basic minimum pay
mandated by law should said commissions be less than their basic minimum for eight hours work. Were said
commissions equal to or even exceed the minimum wage, the employer need not pay, in addition, the basic
minimum pay prescribed by law.

2. YES. In terminating employees, the employer must furnish the worker with two written notices before the
latter can be legally terminated: (a) a notice which apprises the employee of the particular acts or omissions for
which his dismissal is sought, and (b) the subsequent notice which informs the employee of the employer’s
decision to dismiss him.

First notice informing the employee that his dismissal is being sought is absent in the present case.
This makes the termination of private respondents defective, for which Iran must be sanctioned for his non-
compliance with the requirements of or for failure to observe due process.

Section 2 of Book V, Rule XIV of the Omnibus Rules Implementing the Labor Code requires that in
cases of abandonment of work, notice should be sent to the worker’s last known address. If indeed private
respondents had abandoned their jobs, it was incumbent upon Iran to comply with this requirement. This, Iran
failed to do, entitling respondents to nominal damages in the amount of P5,000.00 each, in accord with recent
jurisprudence, to vindicate or recognize their right to procedural due process which was violated by Iran.

3. YES. Iran is entitled to credit only the amounts paid for the particular year covered by said vouchers. While it
is true that the vouchers evidencing payments of 13th month pay were submitted only on appeal, it would have
been more in keeping with the directive of Article 221 of the Labor Code for the NLRC to have taken the same
into account.

In labor cases, technical rules of evidence are not binding. Labor officials should use every and all
reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities
of law or procedure.

The intent of P.D. No. 851 is the granting of additional income in the form of 13th month pay to
employees not as yet receiving the same and not that a double burden should be imposed on the employer
who is already paying his employees a 13th month pay or its equivalent. An employer who pays less than 1/12th
of the employees basic salary as their 13th month pay is only required to pay the difference.

43. HONDA PHILS. INC.,

vs.
SAMAHAN NG MALAYANG MANGGAGAWA SA HONDA
Facts:

A Collective Bargaining Agreement (CBA) was forged between petitioner Honda and respondent union
Samahan ng Malayang Manggagawa sa Honda (respondent union). Among others, the CBA provides that the
Company will maintain the present practice in the implementation of the 13th month pay, shall grant a 14th
Month Pay, computed on the same basis as computation of 13th Month Pay and shall continue the practice of
granting, in its discretion, financial assistance to covered employees in December of each year, of not less
than 100% of basic pay. This CBA is effective until year 2000.

In 1998, the two parties started re-negotiations for the 4th and 5th years of their CBA (meaning for yr
1999 to 2000). However, the talks bogged down. The union filed a Notice of Strike on the ground of
bargaining deadlock. Thereafter, Honda filed a Notice of Lockout. DOLE intervened and ordered the parties to
cease and desist from committing acts that would aggravate the situation. Both parties complied accordingly.

On May 11, 1999, however, respondent union filed a second Notice of Strike on the ground of unfair
labor practice alleging that Honda illegally contracted out work to the detriment of the workers. The DOLE

62
again intervened and the striking employees were ordered to return to work and the management accepted
them back under the same terms prior to the strike staged.

On November 22, 1999, the management of Honda issued a memorandum announcing its new
computation of the 13th and 14th month pay to be granted to all its employees whereby the thirty-one (31)-day
long strike shall be considered unworked days for purposes of computing said benefits. As per the company’s
new formula, the amount equivalent to 1/12 of the employees’ basic salary shall be deducted from these
bonuses, with a commitment however that in the event that the strike is declared legal, Honda shall pay the
amount deducted. In effect, this enabled them to devise a formula using 11/12 of the total annual salary as
base amount for computation instead of the entire amount for a 12-month period.

The union opposed the pro-rated computation of the bonuses.

Issue:

Whether Or Not the pro-rated computation of the 13th month pay and the other bonuses in question is
valid and lawful.

Held:

NO. The said pro-rated computation is violative of the provisions of the CBA. A collective bargaining
agreement refers to the negotiated contract between a legitimate labor organization and the employer
concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. As in
all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may
deem convenient provided these are not contrary to law, morals, good customs, public order or public policy.
Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and compliance
therewith is mandated by the express policy of the law.

It is violative of the provision of P.D. No. 851 which, provided that the minimum 13 th month pay required
by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a
calendar year.

The act has ripened into a practice and therefore can no longer be withdrawn, reduced, diminished,
discontinued or eliminated. Honda did not adduce evidence to show that the 13th month, 14th month and
financial assistance benefits were previously subject to deductions or pro-rating or that these were dependent
upon the company’s financial standing.

It is more in keeping with the underlying principle for the grant of this benefit. It is primarily given to
alleviate the plight of workers and to help them cope with the exorbitant increases in the cost of living. To allow
the pro-ration of the 13th month pay in this case is to undermine the wisdom behind the law and the mandate
that the workingman’s welfare should be the primordial and paramount consideration.

To rule otherwise inevitably results to dissuasion, if not a deterrent, for workers from the free exercise
of their constitutional rights to self-organization and to strike in accordance with law.

The instant petition is Denied. The decision and the resolution of the Court of Appeals affirming the
decision rendered by the voluntary arbitrator on May 2, 2000 are hereby affirmed in toto.

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

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

Facts:

Employees of the petitioners filed against their employer and the other petitioners two labor standard
cases in the RTC alleging that they were not paid emergency cost of living allowance (ECOLA), minimum
wage 13th month pay, holiday pay, and service incentive leave pay.

Petitioners, in an answer to the amended complaint, alleged that (1) the private respondents were not
regular workers, but were migratory (sacadas) or pakyaw workers who were hired seasonally, or only during
63
the milling season, to so piece-of work on the farms, hence they were not entitled to benefits being claimed, (2)
they applied for an exception to pay for the living allowance although the MOLE has no ruling yet.

The claims for holiday pay, service incentive pay, social amelioration bonus and underpayment fo
minimum wage were not controverted. On the other claims, the petitioners submitted only random payrolls
which showed that the women workers were, although the male workers received P10 more or less, per day.

In an Order, the Minister of Labor (MOLE), through Assistant Regional Director Dante Ardivilla,
adopting the recommendations of the Chief of the Labor Regulation Section, Bacolod District Office, directed
the respondents (now petitioners) to pay: (1) deficiency payments under PD 925,PD 1614 , under Ministry
Order No. 5, under PD 1678, service incentive leave pay, holiday pay and social amelioration bonus and 13th
month pay and emergency living allowance under PD 1123

Upon the petitioners' appeal of that Order, the Deputy MOLE modified it ordering the employer to all
non-pakyaw workers their claim for holiday and incentive leave pay, their 13th month pay, pay differentials and
ECOLA excluding the pakyaw workers from holiday and service incentive leave pay

Framanlis filed for MFR, which was denied hence, this petition for certiorari

Issues:

(1) Whether Or Not Minister erred in requiring the petitioners to pay wage differentials to their pakyaw
workers who worked for at least eight hours daily.

(2) Whether Or Not benefits in form of food and electricity are equivalent to the 13th month pay.

Held:

1. NO. In 1976, PD No. 928 fixed a minimum wage for agricultural workers in any plantation or agricultural
enterprise irrespective of whether or not the worker was paid on a piece-rate basis. However, effective July 1,
1978, the minimum wage was increased (Sec. 1, PD 1389). Subsequently, PD 1614 provided for another
increase in the daily wage of all workers effective April 1, 1979. The petitioners admit that those were the
minimum rates prevailing then. Therefore, the respondent Minister did not err in requiring the petitioners to pay
wage differentials to their pakyaw workers who worked for at least eight hours daily and earned less than
P8.00 per day in 1978 to 1979.

2. NO. With regard to the 13th month pay, petitioners admitted that they failed to pay their workers 13th month
pay. 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 weekly subsidy of
choice pork meat, free choice pork meat and free light or electricity which were allegedly "the equivalent" of
the 13th month pay.

Under Section 3 of PD No. 8511, 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.

Neither may year-end rewards for loyalty and service be considered in lieu of 13th month pay according to
Section 10 of the Rules and Regulations Implementing Presidential Decree No.

The failure of the Minister's decision to identify the pakyaw and non-pakyaw workers does not render said
decision invalid. The workers may be identified or determined in the proceedings for execution of the judgment.

64
45. KAMAYA PORT HOTEL
vs.
NLRC, FEDERATION OF FREE WORKERS, AND MEMIA QUIAMBAO
Facts:

Respondent Memia Quiambao with thirty others who are members of the Federation of Free Workers
(FFW) were employed by Kamaya 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, the
hotel converted into a training center for Libyan scholars. However, the Libyans pre-terminated their program
leaving Kamaya without any business, aside from the fact that it was not paid for the use of the hotel premises.
All in all Kamayan allegedly suffered losses amounting to P2 million.

Although Kamayan reopened the hotel premises to the public, it was not able to pick-up its lost
patronage. In a couple of months it effected a retrenchment program until finally, it totally closed its business.

FFW then filed with the Ministry of Labor and Employment 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.

The Labor Arbiter rendered a decision ordering Kamaya to pay the 14th month pay. On appeal, the
NLRC affirmed the grant of the 14th month pay on the ground that the granting of this 14th month pay has
already ripened into a company practice which respondent company cannot withdraw unilaterally. This 14th
month pay is now an existing benefit which cannot be withdrawn without violating article 100 of the Labor
Code. To allow its withdrawal now would certainly amount to a diminution of existing benefits which
complainants are presently enjoying.

Issue:

Whether Or Not 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.

Held:

YES. Art. 100 of the Labor Code states: 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.

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.

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.

65
 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.

46. DAVAO FRUITS CORPORATION

vs.
ASSOCIATED LABOR UNIONS (ALU) FOR AND IN BEHALF OF ALL THE RANK-AND-FILE
WORKERS/EMPLOYEES OF DAVAO FRUITS CORPORATION AND NLRC

Facts:

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

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

A decision was rendered on March 7, 1984 favoring ALU. That ordered Davao Fruits Corporation to pay
the 1982 — 13th month pay differential to all its rank-and-file workers/employees herein represented by
complainant Union. 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 the Supreme
Court.

Issue:

Whether Or Not the computation of the thirteenth month pay given by employers to their employees
under P.D. No. 851, payments for sick, vacation and maternity leaves, premiums for work done on rest days
and special holidays, and pay for regular holidays may be excluded in the computation and payment thereof,
regardless of long-standing company practice

Held:

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. Petitioner
continued its practice in December 1981, after promulgation of the afore-quoted San Miguel decision on
February 24, 1981, when petitioner purportedly "discovered" its mistake. From 1975 to 1981, petitioner had
freely, voluntarily and continuously included in the computation of its employees' thirteenth month pay, the
payments for sick, vacation and maternity leaves, premiums for work done on rest days and special holidays,
and pay for regular holidays. The considerable length of time the questioned items had been included by
petitioner indicates a unilateral and voluntary act on its part, sufficient in itself to negate any claim of mistake.

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]).

66
 Petitioner cannot invoke the principle of solutio indebiti which is a civil law concept that is not applicable
in Labor Law. Besides, in solutio indebiti, the obligee is required to return to the obligor whatever he received
from the latter (Civil Code of the Philippines, Arts. 2154 and 2155). Petitioner in the instant case, does not
demand the return of what it paid respondent ALU from 1975 until 1981; it merely wants to "rectify" the error it
made over these years by excluding unilaterally from the thirteenth month pay in 1982 the items subject of
litigation. Solutio indebiti, therefore, is not applicable to the instant case.

47. PHILIPPINE DUPLICATORS, INC.

vs.
NLRC AND PHILIPPINE DUPLICATORS EMPLOYEES UNION-TUPAS

Facts:

The Court rendered a decision dismissing a petition for certiorari by Phil. Duplicators, Inc (PDI). The
Court upheld the decision of public respondent NLRC ordering PDI to pay 13th month pay to private
respondent employees computed on the basis of their fixed wages plus sales commissions.

PDI filed a Motion for Reconsideration, invoking the decisions in the 2 consolidated cases of Boie-
Takeda Chem. vs Hon. Dionisio de la Serna and Phil. Fuji Xerox Corp. vs Hon. Cresenciano Trajano. PDI
alleged that the decision in the Duplicators case should be reversed since the Boie-Takeda decision went
“directly opposite and contrary to” the conclusion reached in the former further seeking to dismiss the money
claims of private respondent union. In view of the nature of the issues raised, the Court considered the Motion
for Reconsideration and accepted it as a banc case.

Issues:

1) Whether Or Not the Duplicators decision goes against the Boie -Takeda decision.
2) Whether Or Not the sales commission earned by the salesmen of PDI constitute a part of their “wage”
and should be included in the computation of 13th month pay.
Held:

1. NO. The doctrines enunciated in the two cases present different factual situations. The so-called
commissions received by the Boie-Takeda medical representatives or by the rank and file employees of Fuji
were characterized as “productivity bonuses”. These are additional monetary benefits generally tied to the
capacity for revenue production of a corporation. As such, they more closely resemble profit-sharing payments
and are not directly related to the amount of work actually done by an employee.

The “commissions” paid to the medical reps were not “sales commissions” in the same sense as in the
Duplicators case. Medical representatives are not salesmen; they merely promote products and leave samples
with physicians. As such, no actual sales are made placing the commissions in the nature of a profit-sharing
bonus.

2. YES. The commissions received by every duplicating machine sold constitute part of the basic
compensation of PDI’s salesmen, apart from a small fixed wage. It is important to note that the fixed portion of
their salaries represent only 15-30% of an employee’s total earnings in a year. Considering this, the sales
commissions were an integral part of PDI’s basic salary structure and not mere profit-sharing payments or
fringe benefits.

The Supplementary Rules and Regulations Implementing P.D. 851(The 13th Month Pay Law) clarifies
the scope of items excluded in the computation of 13th month pay. Section 4 of the Law states that “Overtime
pay, earnings and other remunerations which are not part of the basic salary shall not be included in the
computation of the 13th month pay.” What constitutes “other remunerations not part of basic salary” is a
question to be resolved on a case-to-case basis. In the instant case, it is important to distinguish the
productivity bonuses granted in Boie-Takeda from the sales commissions of the Duplicators case.

A productivity bonus is something extra given to an employee for which no specific additional services
are rendered. Since a bonus is a gratuity of the employer, the recipient cannot demand its payment as a matter

67
of right. If an employer cannot be compelled to pay a productivity bonus to his employees, then it follows that
the bonus should not fall under “basic salary” when computing 13th month pay.

Sales commissions, on the other hand, are directly proportional to the extent or energy of an
employee’s work. Such commissions are paid upon the specific results achieved by a salesman and form an
integral part of his basic pay and should thus be included in the computation of 13th month pay.

48. LOURDES G. MARCOS, ALEJANDRO T. ANDRADA, BALTAZARA J. LOPEZ AND VILMA L. CRUZ
vs.
NLRC AND INSULAR LIFE ASSURANCE CO., LTD.
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 (50%) of unused
current sick leave, special redundancy benefit, equivalent to three (3) 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, petitioner Marcos had been in the employ of private respondent
for more than twenty years, from August 26, 1970; petitioner Andrada, more than twenty-five years, from July
26, 1965; petitioner Lopez, exactly thirty years, from October 31, 1960; and petitioner Cruz, more than twenty
years, from March 1, 1970.

Petitioners, particularly Baltazara 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.

On March 21, 1991, petitioners inquired from the legal service of the department of labor and
employment whether respondent corporation could legally refuse the payment of their service awards as
mandated in their employee's manual.

About three months later the labor department issued its opinion, with pertinent authorities, responding
to petitioners' query as follows:

The department deems the service award to be part of the benefits of the employees of insular life.
company policies and practices are fertile sources of employee's rights. These must be applied
uniformly as interpretation cannot vary from one employee to another. . . .

While it may be argued that the above-cited case applies only to retirement benefits, we find solace in
the cases of Liberation Steamship Co., Inc. vs. CIR and National Development Company vs.
Unlicensed Crew Members of Three Dons vessels (23 scra 1105) where the supreme court held that a
gratuity or bonus, by reason of its long and regular concession indicating company practice, may
become regarded as part of regular compensation and thus demandable.

The award is earned at the pertinent anniversary date. At this time, entitlement to the award becomes
vested. the anniversary date is the only crucial determining factor. Since the award accrues on that
date, it is of no moment that the entitled employee is separated from service for whatever cause before
the awards are physically handed out.

Even if the award has not accrued — as when an employee is separated from service because of
redundancy before the applicable 5th year anniversary, the material benefits of the award must be
given, prorated, by insular life. This is especially true in redundancy, wherein he/she had no control.

68
 The fact that you were required to sign "release and quitclaim" does not affect your right to the material
benefits of the service award. . . .

In the same year, private respondent celebrated its 80th anniversary wherein the management
approved the grant of an anniversary bonus equivalent to one (1) month salary only to permanent and
probationary employees as of november 15, 1990.9

On March 26, 1991, respondent company announced the grant of performance bonus to both rank and
file employees and supervisory specialist grade and managerial staff equivalent to two (2) months salary and
2.75 basic salary, respectively, as of December 30, 1990. the performance bonus, however, would be given
only to permanent employees as of March 30, 1991.

Despite the aforequoted opinion of the DOLE, private respondent refused to pay petitioners service
awards. This prompted the latter to file a consolidated complaint, which was assigned to NLRC Labor Arbiter
Lopez, for payment of their service awards, including performance and anniversary bonuses.

Petitioners contended that they are likewise entitled to the performance and anniversary bonuses
because, at the time the performance bonus was announced to be given, they were only short of two (2)
months service to be entitled to the full amount thereof as they had already served the company for ten (10)
months prior to the declaration of the grant of said benefit. Also, they lacked only fifteen (15) days to be entitled
to the full amount of the anniversary bonus when it was announced to be given to employees as of November
15, 1990.

In a decision dated October 8, 1992, the labor arbiter ordered respondent company to pay petitioners
their service awards, anniversary bonuses and prorated performance bonuses, including ten percent (10%)
thereof as attorney's fees.

Respondent company appealed to public respondent NLRC claiming grave abuse of discretion
committed by the labor arbiter in holding it liable to pay said service award, performance and anniversary
bonuses, and in not finding that petitioners were estopped from claiming the same as said benefits had already
been given to them.

Setting aside the decision of the labor arbiter, respondent NLRC upheld the validity of the quitclaim
document executed by petitioners. It rationalized that "Certainly, before complainants signed the quitclaim and
release, they are aware of the nature of such document. In fact, they never assailed the genuineness and due
execution of the same. Hence, we can safely say that they were not placed under duress or were compelled by
means of force to sign the document." Furthermore, the NLRC held that "neither was there any unwritten
agreement between complainants and respondent upon separation, which entitled the former to other
renumerations or benefits. On the contrary, they voluntarily accepted the redundancy benefit package,
otherwise, they would not have been separated from employment."

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. On “Release and Quitclaim” - 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 demanding benefits to which he is legally entitled. Renuntiatio non
praesumitur. While there may be possible exceptions to this holding, we do not perceive any in the case at
bar.

The element of total voluntariness in executing that instrument is negated by the fact that they
expressly stated therein their claim for the service awards, a manifestation equivalent to a protest and a
disavowal of any waiver thereof.

Petitioners even sought the opinion of the Department of Labor and Employment to determine where
and how they stood in the controversy. This act only shows their adamant desire to obtain their service awards

69
and to underscore their disagreement with the "Release and Quitclaim" they were virtually forced to sign in
order to receive their separation pay.

While rights may be waived, the same must not be contrary to law, public order, public policy, morals or
good customs or prejudicial to a third person with a right recognized by law.

Article 6 of the Civil Code renders a quitclaim agreement void ab initio where the quitclaim obligates the
workers concerned to forego their benefits while at the same time exempting the employer from any liability
that it may choose to reject. This runs counter to Art. 22 of the Civil Code which provides that no one shall be
unjustly enriched at the expense of another.

On Service Awards and other Bonuses - The petitioners are entitled to receive service awards and
other bonuses. The contention of the respondent that service award is a bonus and therefore is an act of
gratuity which the complainants have no right to demand and service awards are governed by respondent's
employee's manual and (are) therefore contractual in nature is not impressive.

Anniversary and performance bonuses have ripened into a company practice therefore become
demandable. It is not disputed that it is respondent's practice to give an anniversary bonus every five years
from its incorporation. The prerogative of the employer to determine who among its employees shall be
entitled to receive bonuses which are, as a matter of practice, given periodically cannot be exercised arbitrarily.

Pursuant to their policies on the matter, the service award differential is given at the end of the year to
an employee who has completed years of service divisible by 5.

A bonus is not a gift or gratuity, but is paid for some services or consideration and is in addition to what
would ordinarily be given. The term "bonus" as used in employment contracts, also conveys an idea of
something which is gratuitous, or which may be claimed to be gratuitous, over and above the prescribed wage
which the employer agrees to pay.

If one enters into a contract of employment under an agreement that he shall be paid a certain salary
by the week or some other stated period and, in addition, a bonus, in case he serves for a specified length of
time, there is no reason for refusing to enforce the promise to pay the bonus, if the employee has served
during the stipulated time, on the ground that it was a promise of a mere gratuity.

49. BUSINESSDAY INFORMATION SYSTEMS AND SERVICES, INC., AND RAUL LOCSIN
vs.
NLRC, NEMESIO MOYA, ET, AL.
Facts:

Businessday Information Sysytems and Services, Inc. (BSSI) was engaged in the manufacture and
sale of computer forms. Due to financial reverses, its creditors, the Development Bank of the Philippines (DBP)
and the Asset Privatization Trust (APT), took possession of its assets, including a manufacturing plant in
Marilao, Bulacan.

As a retrenchment measure, some plant employees, including the private respondents, were laid off on
May 16, 1988, after prior notice, and were paid separation pay equivalent to one-half (1/2) month pay for every
year of service. Upon receipt on her separation may, the private respondents signed individual releases and
quitclaims in favor of BSSI.

BSSI retained some employees in an attempt to rehabilitate its business as a trading company.
However, barely two and a half months later, these remaining employees were likewise discharged because
the company decided to cease business operations altogether. Unlike the private respondents, that batch of
employees received separation pay equivalent to a full month's salary for every year of service plus mid-year
bonus.

Protesting against the discrimination in the payment of their separation benefits, the twenty-seven (27)
private respondents filed complaints against the BSSI and Raul Locsin.

70
Issues:

(1) Whether Or Not there was unlawful discrimination in the payment of separation benefits to the
employees.
(2) Whether Or Not the company is obliged to pay mid-year bonus.
(3) Whether Or Not Locsin should be held liable.

Held:

1. YES. Petitioners' right to terminate employees on account of retrenchment to prevent losses or closure of
business operations, is recognized by law, but it may not pay separation benefits unequally for such
discrimination breeds resentment and ill-will among those who have been treated less generously than others.

The respondents cited financial business difficulties to justify their termination of the complainants'
employment. They were given one-half (1/2) month of their salary for every year of service. Due to continuing
looms, they closed operations where they dismissed the second batch of employees who were given one (1)
month pay for every year they served. The third batch of employees were terminated and were likewise given
one (1) monthly pay for every year of service. The business climate when the complainants were terminated
did not at all defer improvement-wise. The interval between the dates of termination was so close to each
other, so that, no improvement in business maybe likely expected.

The law requires the granting of the same amount of separation benefits to the affected employees in
any of the cases. The respondent argued that the giving of more separation benefit to the second and third
batches of employees separated was their expression of gratitude and benevolence to the remaining
employees who have tried to save and make the company viable in the remaining lays of operations. This
justification is not plausible. There are workers in the first batch who have rendered more years of service and
more efficient than those separated subsequently, yet, they did not receive the same recognition.

There was impermissible discrimination against the private respondents in the payment of their
separation benefits. 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

2. NO. 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 company's business was no longer profitable (it was in fact moribund)
plus the fact that the private respondents did not work up to the middle of the year (they were discharged in
May 1993) were valid reasons for not granting them a mid-year bonus.

3. NO. A corporate officer is not personally liable for the money claims of discharged corporate employees
unless he acted with evident malice and bad faith in terminating their employment. There is no evidence in this
case that Locsin acted in bad faith or with malice in carrying out the retrenchment and eventual closure of the
company, hence, he may not be held personally and solidarily liable with the company for the satisfaction of
the judgment in favor of the retrenched employees.

50. PHILIPPINE APPLIANCE CORPORATION (PHILACOR)

vs.
THE COURT OF APPEALS, THE HONORABLE SECRETARY OF LABOR BIENVENIDO E. LAGUESMA
AND UNITED PHILACOR WORKERS UNION-NAFLU,

Facts:

Petitioner is a domestic corporation engaged in 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.

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 During one collective bargaining negotiation, petitioner offered P4000 to each employee as an “early
conclusion bonus,” or 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.

After this CBA expired in Aug.1999, the 2 parties began negotiations for a new CBA but after 11
meetings, respondent union declared a deadlock and a few days later filed a notice of strike. A conciliation and
mediation conference was held but it still left the ff. issues unresolved: wages, rice subsidy, signing and
retroactive bonus. Failure to come to an agreement led respondent union to go on an 11-day strike which
resulted in stoppage of manufacturing operations as well as losses for petitioner. This constrained petitioner to
file a petition before the DOLE and the Labor Secretary Laguesma resolved the dispute by issuing an order
which, among others, granted a signing bonus of P3,000 to the union.

Petitioner Philacor filed a Motion for Reconsideration, stating that it accepted the decision but took
exception to the award of the signing bonus, claiming that it is not demandable or enforceable since it is in the
nature of an incentive. Labor Sec. denied this motion. PhilCOR then filed for Certiorari with the Court of
Appeals which was dealt with similarly. The Labor Secretary’s award of signing bonus was affirmed since
petitioner itself offered the same incentive to expedite the CBA negotiations, which they did not withdraw and
was still outstanding when the dispute reached the DOLE. Petitioner filed a Motion for Reconsideration which
was again denied, leading to this petition.

Issue:

Whether Or Not the signing bonus awarded by the Labor Secretary and affirmed by respondent Court
of Appeals was proper.

Held:

NO. A signing bonus may not be demanded as a matter of right if it is not agreed upon by the parties or
unilaterally offered as an additional incentive. It is not a demandable and enforceable obligation. The condition
for awarding it must be duly satisfied.

Two things militate against the grant of the signing bonus: first, the non-fulfillment of the condition for
which it was offered, i.e., the speedy and amicable conclusion of the CBA negotiations; and second, the failure
of respondent union to prove that the grant of the said bonus is a long established tradition or a “regular
practice” on the part of petitioner. Petitioner admits, and respondent union does not dispute, that it offered an
“early conclusion bonus” or an incentive for a swift finish to the CBA negotiations.

A signing bonus is justified by and is the consideration paid for the goodwill that existed in the
negotiations that culminated in the signing of a CBA. In the case at bar, the CBA negotiation between petitioner
and respondent union failed. Respondent union went on strike for eleven days and blocked the ingress to and
egress from petitioner’s work plants. The labor dispute had to be referred to the Secretary of Labor and
Employment because neither of the parties was willing to compromise their respective positions regarding the
four remaining items which stood unresolved. While we do not fault any one party for the failure of the
negotiations, it is apparent that there was no more goodwill between the parties and that the CBA was clearly
not signed through their mutual efforts alone. Hence, the payment of the signing bonus is no longer justified
and to order such payment would be unfair and unreasonable for petitioner.

We have consistently ruled that although a bonus is not a demandable and enforceable obligation, 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.

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51. PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,
vs.
HON. FRANKLIN M. DRILON AS SECRETARY OF LABOR AND EMPLOYMENT, AND TOMAS D.
ACHACOSO, AS ADMINISTRATOR OF THE PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION, respondents.

Facts:

In this petition for certiorari and prohibition, Philippine Association of Service Exporters, Inc. (PASEI, for
short), a firm "engaged principally in the recruitment of Filipino workers, male and female, for overseas
placement," 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,". 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.

On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary of Labor and
Administrator of the Philippine Overseas Employment Administration, filed a Comment informing the Court that
on March 8, 1988, the respondent Labor Secretary lifted the deployment ban in the states of Iraq, Jordan,
Qatar, Canada, Hongkong, United States, Italy, Norway, Austria, and Switzerland. In submitting the validity of
the challenged "guidelines," the Solicitor General invokes the police power of the Philippine State.

Issue:

Whether or not the Department Order No. 1, series of 1988, of the Department of Labor and
Employment valid under our Constitution.

Held:

The SC dismissed the petition. The court ruled that the Department Order has valid classification and
that there is no question that it applies only to female contract workers but it does not thereby make an undue
discrimination between 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.

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." Department
Order No. 1 is a valid implementation of the Labor Code, in particular, its basic policy to "afford protection to
labor," pursuant to the respondent Department of Labor's rule-making authority vested in it by the Labor Code.
The petitioner assumes that it is unreasonable simply because of its impact on the right to travel, but as we
have stated, the right itself is not absolute. The disputed Order is a valid qualification thereto.

"The police power of the State ... is a power coextensive with self- protection, and it is not inaptly termed the
"law of overwhelming necessity." It may be said to be that inherent and plenary power in the State which
enables it to prohibit all things hurtful to the comfort, safety, and welfare of society."

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 rulemaking powers in the enforcement whereof.

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52. PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND GRACE DE GUZMAN, respondents.

Facts:

Seeking relief through the extraordinary writ of certiorari, petitioner Philippine Telegraph and Telephone
Company (PT&T) invokes the alleged concealment of civil status and defalcation of company funds as grounds
to terminate the services of an employee. That employee, herein private respondent Grace de Guzman,
contrarily argues that what really motivated PT&T to terminate her services was her having contracted
marriage during her employment, which is prohibited by petitioner in its company policies. She thus claims that
she was discriminated against in gross violation of law, such a proscription by an employer being outlawed by
article 136 of the labor code.

Grace de Guzman was hired by petitioner on several occasions as a reliever, specifically as a

supernumerary project worker, for a fixed period. On September 2, 1991, private respondent was once more
asked to join petitioner company as a probationary employee, the probationary period to cover 150 days. In the
job application form that was furnished her to be filled up for the purpose, she indicated in the portion for civil
status therein that she was single although she had contracted marriage a few months earlier. It now appears
that private respondent had made the same representation in the two successive reliever agreements which
she signed. Despite explanations made by respondent de Guzman with regard to the discrepancy, she was
dismissed from the company.

The labor arbiter declared that private respondent, who had already gained the status of a regular
employee, was illegally dismissed by petitioner. The arbiter expressed that the ground relied upon by petitioner
in dismissing private respondent was clearly insufficient, and that it was apparent that she had been
discriminated against on account of her having contracted marriage in violation of company rules.

On appeal, the National Labor Relations Commission upheld the Labor Arbiter’s decision and the
subsequent motion for reconsideration filed by petitioner was rebuffed, hence this special civil action assailing
the aforestated decisions of the Labor Arbiter and respondent NLRC.

Issue:

Whether or not PT&T’s policy of not accepting married women for employment valid under labor laws
and the Constitution.

Held:

The court ruled that the policy of respondent against marriage is patently illegal. This finds support in
section 9 of the new constitution, which provides:

Sec. 9. The state shall afford protection to labor, promote full employment and equality in employment,
ensure equal work opportunities regardless of sex, race, or creed, and regulate the relations between
workers and employees. The state shall assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions of work.

In the case at bar, petitioners 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 petitioners 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.

The government, to repeat, abhors any stipulation or policy in the nature of that adopted by petitioner
PT&T. The labor code states, in no uncertain terms, as follows:

Art. 136. Stipulation against marriage. - it shall be unlawful for an employer to require as a condition of
employment or continuation of employment that a woman shall not get married, or to stipulate expressly
or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to

74
 actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason
of marriage.

On the foregoing premises, the petition of PT&T company is hereby dismissed for lack of merit, with
double costs against petitioner.

53. CARLOS G. LIBRES, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, NATIONAL STEEL CORPORATION, OSMUNDO G.
WAGA, JR., ANTOINE D. SEVA, PETER J. LOQUILLANO, SATURNINO P. MEJORADA AND ISIDRO
F. HYNSON, JR., respondents.

Facts:

This petition for certiorari seeks to annul the decision of public respondent National Labor Relations
Commission (NLRC) sustaining the Labor Arbiter's finding that petitioner was validly suspended by private
respondents, as well as the NLRC resolution denying petitioner's motion to reconsider its decision.

Petitioner Carlos G. Libres, an electrical engineer, was holding a managerial position with National
Steel Corporation (NSC) as Assistant Manager when he received a Notice of Investigation to the charge of
sexual harassment made by Susan D. Capiral. The notice warned him that failure to file his written explanation
would be construed as a waiver of his right to be heard.

The Management Evaluation Committee (MEC), after deliberation concluded that the charges against
petitioner constituted a violation of Item 2, Table V, of the Plant's Rules and Regulations. It opined 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". The MEC finally concluded that petitioner's acts clearly constituted sexual harassment as
charged and recommended petitioner's suspension for thirty (30) days without pay.

Seeking to reverse his misfortune, Libres filed a complaint for illegal suspension and unjust
discrimination against respondent NSC and its officers, private respondents herein, before the Labor Arbiter.
Citing the failure of the MEC to grant him audience despite his offer to answer clarificatory questions, petitioner
claimed denial of due process. Labor Arbiter however ruled that due process was properly observed and that
there was a positive finding of sexual harassment to justify petitioner's suspension.

Issues:

1. Whether or not the petitioner was not afforded due process.

2. Whether or not the issue of sexual harassment was not adequately considered in fact and in law

Held:

The court finds on the question of due process that the requirements thereof 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 and, that upon release of the suspension order made by the MEC petitioner requested its
reconsideration but was denied. The personal confrontation with the MEC officers, which he requested, was
not necessary since the parties had already exhaustively presented their claims and defenses in different fora.
From the foregoing it can be gleaned that petitioner was given more than adequate opportunity to explain his
side and air his grievances.

On the issue of sexual harassment, the court finds and hold that the decision of NLRC was both fitting
and appropriate since it singularly addressed the issue of a managerial employee committing sexual
harassment on a subordinate. The petitioner’s claim that the delay in instituting the complaint shows that it was

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only an afterthought is untenable in fact, 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.

The petition is DISMISSED, stating that no grave abuse of discretion having been committed by public
respondent National Labor Relations Commission in upholding the suspension of petitioner Carlos G. Libres as
justified and in accordance with due process.

54. PHILIPPINE AEOLUS AUTOMOTIVE UNITED CORPORATION AND/OR FRANCIS CHUA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND ROSALINDA C. CORTEZ, respondents.
Facts:

Petitioner Philippine Aeolus Automotive United Corporation (PAAUC) is a corporation duly organized
and existing under Philippine laws, petitioner Francis Chua is its president while private respondent Rosalinda
C. Cortez was a company nurse of petitioner corporation until her termination on 7 november 1994.

On 5 october 1994 private respondent Rosalinda C. Cortez was required by the personnel manager to
explain within forty-eight (48) hours why no disciplinary action should be taken against her (a) for throwing a
stapler at plant manager William Chua, her superior, and uttering invectives against him (b) for losing the
amount of P1,488.00 entrusted to her by plant manager Chua and (c) for asking a co-employee to punch-in
her time card. The memorandum however was refused by private respondent although it was read to her and
discussed with her by a co-employee. She did not also submit the required explanation, so that while her case
was pending investigation the company placed her under preventive suspension for thirty (30) days.

On 20 October 1994, while Cortez was still under preventive suspension, another memorandum was
issued by petitioner corporation giving her seventy-two (72) hours to explain why no disciplinary action should
be taken against her for allegedly failing to process the atm applications of her nine (9) co-employees with the
allied banking corporation. Private respondent also refused to receive the second memorandum although it
was read to her by a co-employee. A copy of the memorandum was also sent by the personnel manager to
private respondent at her last known address by registered mail.

Meanwhile, private respondent submitted a written explanation with respect to the loss of the P1,488.00
and the punching-in of her time card by a co-employee.

On 3 November 1994, a third memorandum was issued to private respondent, this time informing her of
her termination from the service effective 7 November 1994 on grounds of gross and habitual neglect of duties,
serious misconduct and fraud or willful breach of trust.

Private respondent filed with the labor arbiter a complaint for illegal dismissal, non-payment of annual
service incentive leave pay, 13th month pay and damages against PAAUC and its president Francis Chua.

The labor arbiter rendered a decision holding the termination of Cortez as valid and legal, however on
appeal to NLRC, public respondent reversed of the labor arbiter and found petitioner corporation guilty of illegal
dismissal of private respondent Cortez.

Issues:

1. Whether or not NLRC gravely abused its discretion in holding as illegal the dismissal of private
respondent.

2. Whether or not the respondent was sexually harassed.

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Held:

The labor code as amended provides specific grounds by which an employer may validly terminate the
services of an employee, which grounds should be strictly construed since a person’s employment constitutes
"property" under the context of the constitutional protection that "no person shall be deprived of life, liberty or
property without due process of law" and, as such, the burden of proving that there exists a valid ground for
termination of employment rests upon the employer. Likewise, in light of the employee's right to security of
tenure, where a penalty less punitive than dismissal will suffice, whatever missteps may have been committed
by labor ought not to be visited with a consequence so severe.

The penalty of dismissal is too excessive and not proportionate to the alleged infractions committed
considering that it does not appear that private respondent was an incorrigible offender or that she inflicted
serious damage to the company, nor would her continuance in the service be patently inimical to her
employer’s interest.

On the issue of sexual harassment, complainants assertion that the cause of the altercation between
her and the plant manager where she threw a stapler to him and uttered invectives against him was her refusal
to submit to his advances to her which started from her early days of employment and lasted for almost four
years, is hardly believable. Public respondent in thus concluding appears baffled why it took private respondent
more than four (4) years to expose William Chua's alleged sexual harassment.

The court however is not persuaded in the contention. The gravamen of the offense in sexual
harassment is not the violation of the employee's sexuality but the abuse of power by the employer. Any
employee, male or female, may rightfully cry "foul" provided the claim is well substantiated. Strictly speaking,
there is no time period within which he or she is expected to complain through the proper channels. The time to
do so may vary depending upon the needs, circumstances, and more importantly, the emotional threshold of
the employee.

55. APEX MINING COMPANY, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION AND SINCLITICA CANDIDO, respondents.

Facts:

Private respondent Sinclita Candida was employed by petitioner Apex Mining Company, Inc. On May
18, 1973 to perform laundry services at its staff house located at Masara, Maco, Davao Del Norte. In the
beginning, she was paid on a piece rate basis. However, on january 17, 1982, she was paid on a monthly
basis at p250.00 a month which was ultimately increased to p575.00 a month.

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. She reported the accident to her immediate
supervisor Mila De La Rosa and to the personnel officer, Florendo D. Asirit. 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 P 5,000.00 to persuade her to quit her job, but
she refused the offer and preferred to return to work. Petitioner 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. After
the parties submitted their position papers as required by the labor arbiter assigned to the case, the latter
decided in favor of the private respondent ordering Apex Mining Company, Inc., to pay the complainant the
total amount of fifty five thousand one hundred sixty one pesos and 42/100 (P55,161.42).

Not satisfied therewith, Apex Mining Company, Inc appealed to the public respondent NLRC, wherein in
due course a decision was rendered dismissing the appeal for lack of merit and affirming the appealed
decision.

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Issue:

Whether or not the househelper in the staff houses of an industrial company is a domestic helper or a
regular employee of the said firm.

Held:

Under Rule XIII, section l(b), book 3 of the labor code, as amended, the terms "househelper" or
"domestic servant" are defined as follows:

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 foregoing definition clearly contemplates such househelper or domestic servant who is employed in
the employer's home to minister exclusively to the personal comfort and enjoyment of the employer's family.
Such definition covers family drivers, domestic servants, laundry women, yayas, gardeners, houseboys and
other similar househelps.

The definition cannot be interpreted to include househelp or laundrywomen working in staffhouses of a

company, like petitioner who attends to the needs of the company's guest and other persons availing of said
facilities. By the same token, it cannot be considered to extend to then driver, houseboy, or gardener
exclusively working in the company, the staffhouses and its premises. They may not be considered as within
the meaning of a "househelper" or "domestic servant" as above-defined by law.

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 of the employer and not as a mere family househelper or domestic servant
as contemplated in rule xiii, section l(b), book 3 of the labor code, as amended.

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