Section 13 of the assailed Wage Order explicitly provides that any party aggrieved by the Wage Order may

file an appeal with the NWPC through the RTWPB within 10 days from the publication of the wage 31 order. The Wage Order was published in a newspaper of general circulation on December 2, 1995. In this case, petitioner did not avail of the remedy provided by law. No appeal to the NWPC was filed by the petitioner within 10 calendar days from publication of the Wage Order on December 2, 1995. Petitioner was silent until seven months later, when it filed a letter-inquiry on July 24, 1996 with the NWPC seeking a clarification on the application of the Wage Order. Evidently, the letter-inquiry is not an appeal. It must also be noted that the NWPC only referred petitioner's letter-inquiry to the RTWPB. Petitioner did not appeal the letter-reply dated August 12, 1996 of the RTWPB to the NWPC. No direct action was taken by the NWPC on the issuance or implementation of the Wage Order. Petitioner failed to invoke the power of the NWPC to review regional wage levels set by the RTWPB to determine if these are in accordance with prescribed guidelines. Thus, not only was it improper to implead the NWPC as party-respondent in the petition before the CA and this Court, but also petitioner failed to avail of the primary jurisdiction of the NWPC under Article 121 of the Labor Code. Under the doctrine of primary jurisdiction, courts cannot and will not resolve a controversy involving a question which is within the jurisdiction of an administrative tribunal, especially where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative tribunal to determine technical and intricate matters of fact. Nevertheless, the Court will proceed to resolve the substantial issues in the present petition pursuant to the well-accepted principle that acceptance of a petition for certiorari or prohibition as well as the grant of due course thereto is addressed to the sound discretion of the court. It is a well-entrenched principle that rules of procedure are not inflexible tools designed to hinder or delay, but to facilitate and promote the administration of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate, rather than promote substantial justice, must always be eschewed. WAGE ENFORCEMENT AND RECOVERY RAJAH HUMABON HOTEL VS. TRAJANO G.R. No. 100222-23; November 14, 1993 Facts For redress in regard to underpaid wages and non-payment of benefits, respondents turned to the Regional Director of the DOLE. Subsequent to its institution on March 14, 1989 of the initial pleading with Regional Office No. 7 of the DOLE, petitioners were instructed to allow the inspection of the employment records of respondents on April 4, 1989. However, no inspection could be done on that date on account of the pickets staged by other workers at the premises which prevented the inspectors entry thereat. At the re-scheduled examination after closure of petitoners business on April 16, 1989, instead of presenting the payrolls and daily time records of respondents, petitioner submitted a motion to dismiss, on the supposition that the Regional Director has no jurisdiction over the claim because the EE-ER relationship has been severed as a result of the closure of petitioners business, apart from the fact that each of the claims of respondents exceeded the jurisdictional limit of P5000 as pegged by R.A. No. 6715 of the New Labor Relations Law. Petitioners plea was rejected by the Regional Director. The DOLE sustained the Order. Thus, the petition to the SC. Arguments Petitioner: 1) The subsequent severance of EE-ER relationship between the parties divested the Regional Director of his jurisdiction over the case, as the severance reduced respondents grievances to simple monetary demands.

It is the Labor Arbiter who may properly entertain the grievance. Respondent: In addition to money claims, they are also advancing enforcement of Labor Standards laws, which are within the authority of the Regional Director. Issue Whether or not the Regional Director has authority to hear the case. Decision NO, IT DOES NOT. The regional directors under Republic Act No. 6715, can try money claims only if the following requisites concur: the claim is presented by an employee or person employed in domestic or household service, or househelper under the code; the claimant, no longer being employed, does not seek reinstatement; and, the aggregate money claim of the employee or housekeeper does not exceed five thousand pesos (P5,000.00). A simple examination of the labor arbiter's impugned order dated September 25, 1989 readily shows that the aggregate claims of each of the twenty-five employees of petitioner are above the amount of P5,000.00 fixed by Republic Act No. 6715. Therefore, the regional director had no jurisdiction over the case. In the process of harmonizing Articles 128 (b), 129 and 217(6) of the Labor Code, a careful consideration of the above-quoted three (3) provisions of the Labor Code leads the Court to reiterate its ruling that the exclusive jurisdiction to hear and decide employees' claims arising from employer-employee relations, exceeding the aggregate amount of P5,000.00 for each employee, is vested in the Labor Arbiter (Article 217 (a) [6]). This exclusive jurisdiction of the Labor Arbiter is confirmed by the provisions of Article 129 which excludes from the jurisdiction of the Regional Director or any hearing officer of the Department of Labor the power to hear and decide claims of employees arising from employer-employee relations exceeding the amount of P5,000.00 for each employee. To construe the visitorial power of the Secretary of Labor to order and enforce compliance with labor laws as including the power to hear and decide cases involving employees' claims for wages, arising from employer-employee relations, even if the amount of said claims exceed P5,000.00 for each employee, would, in our considered opinion, emasculate and render meaningless, if not useless, the provisions of Article 217 (a) (6) and Article 129 of the Labor Code which, as above-pointed out, confer exclusive jurisdiction on the Labor Arbiter to hear and decide such employees' claims (exceeding P5,000.00 for each employee). To sustain the respondents' position would, in effect, sanction a situation where all employees' claims, regardless of amount, can be heard and determined by the Secretary of Labor under his visitorial power. This does not, however, appear to be the legislative intent. We further hold that to harmonize the above-quoted three (3) provisions of the Labor Code, the Secretary of Labor should be held as possessed of his plenary visitorial powers to order the inspection of all establishments where labor is employed, to look into all possible violations of labor laws and regulations but the power to hear and decide employees' claims exceeding P5,000.00 for each employee should be left to the Labor Arbiter as the exclusive repository of the power to hear and decide such claims. In other words, the inspection conducted by the Secretary of Labor, through labor regulation officers or industrial safety engineers, may yield findings of violations of labor standard under labor laws; the Secretary of Labor may order compliance with said labor standards, if necessary, through appropriate writs of execution but when the findings disclose an employee claim of over P5,000.00, the matter should be referred to the Labor Arbiter in recognition of his exclusive jurisdiction over such claims. Nor is this position devoid of sound reason or purpose, because the proceedings before the Secretary of Labor (or his agents) exercising his visitorial powers is summary in nature. On the other hand, proceedings before the Labor Arbiters are more formal and in accord with rules of evidence. When the employee's claim is less than P5,000.00, a summary procedure for its settlement can be justified, but not when a claim is more or less substantial, from the standpoint of both employee and management, for which reason, an employee's claim exceeding P5,000.00 is placed within the exclusive jurisdiction of the

Labor Arbiter to hear and decide; Article 129 of the Labor Code expressly provides that "upon complaint of any interested party," the Regional Director (and, consequently, the Secretary of Labor to whom appeals from the Regional Director are taken) is empowered to hear and decide simple money claims, i. e. those that do not exceed P5,000.00 for each employee, employing for this purpose a summary procedure. If Article 128 (b) of the Labor Code were to be construed as empowering the Secretary of Labor, under his visitorial power, to hear and decide all types of employee's claims, including those exceeding P5,000.00 for each employee, employing for this purpose a summary procedure, then, Article 129 (limiting the Regional Director's jurisdiction to a claim not exceeding P5,000.00) becomes a useless surplusage in the Labor Code; and Article 129 would seem to limit the jurisdiction of the Regional Director (and, therefore, the Secretary of Labor on appeal from the Regional Director) to "complaints of any interested party" seeking an amount of not more than P5,000.00, for each employee, it cannot be that, because of the absence of any complaint from any interested party, the Secretary of Labor under his visitorial power, is motu proprio empowered to hear and decide employee's claim of more than P5,000.00, for each employee. GUICO VS. SECRETARY OF LABOR G.R. No. 131750; November 16, 1998 Facts The Office of the Regional Director, DOLE, Region 1, received a letter-complaint dated April 25, 1995, requesting for an investigation of petitioner establishment for violation of labor standards laws. Pursuant to article 128 of the Labor Code, as amended, inspections were conducted at petitoners outlets on April 27 and May 2, 1995. The inspections yielded the violations of certain labor standards laws with regards to 21 employees. The first hearing was thus held on June 14, 1995. On July 14, 1995, petitioner submitted a Joint Affidavit signed and executed by the employees expressing their disinterest in prosecuting the case and their waiver and release of petitioner from his liabilities arising from violations of labor standards laws. Individually signed documents dated December 21, 1994 purporting to be the employees receipt, waiver and quitclaim were also submitted. In the investigation conducted on July 21, 1995, the employees claimed that they signed the JA for fear of losing their jobs. They added that their daily salary was increased but the incentive and commission schemes were discontinued. They alleged that they did not waive the unpaid benefits due them. The Regional Director ruled in favor or respondents. Subsequently, petitioner questioned the jurisdiction of the Regional Director, citing article 129 of the Labor Code, as amended and section 1 Rule IX of the Implementing Rules of R.A. No. 6715. Arguments Petitioner: 1) The Regional Director has no jurisdiction over this case since the individual money claims of the 21 employees exceed P5000. 2) Following article 129 of the Labor Code, as amended and section 1, Rule IX of the Implementing Rules of R.A. No. 6715, the Labor Arbiter has jurisdiction and the Regional Director should have endorsed it to the appropriate NLRC branch. Respondent: The jurisdictional limitation imposed by article 129 on the SOLEs visitorial and enforcement power under article 128(b) of the Labor Code, as amended, has been repealed by R.A. No. 7730. The amendment nothwithstanding the provisions of article 129 and 217 of the Labor Code to the contrary erased all doubts as to the amendatory nature of the new law. Issue

Whether or not the Regional Director has jurisdiction over the instant labor standards case. Decision YES, IT DOES. The ruling that the visitorial power of the Secretary of Labor to order and enforce compliance with labor standard laws cannot be exercised where the individual claim exceeds P5,000.00, can no longer be applied in view of the enactment of R.A. No. 7730 amending Article 128(b) of the Labor Code, viz: Art. 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 the order appealed from. EJR CRAFTS CO. VS. CA G.R. No. 154101; March 10, 2006 Facts On August 22, 1997, an inspection was conducted on the premises of petitoners offices wherein it was found that certain violations of labor standards laws were committed. On the same day, the Notice of Inspection Result was received by and explained to, the manager, with the corresponding directive that necessary restitution be effected within five days from said receipt. As no restitution was made, the Regional Office conducted summary investigations. However, despite due notice, petitioner failed to appear for two consecutive scheduled hearings. Furthermore, petitioner failed to question the findings of the Labor Inspector received by and explained to the manager. The inspection was prompted by the filing of respondents sometime in 1997 against petitioner a complaint for underpayment of wages, regular holiday pay, and other benefits. On November 6, 1997, the Regional Director issued a ruling against petitioner, which was appealed, but later on denied. Thus, the petition. Arguments Petitioner: The Regional Director has no jurisdiction over the case since respondents have ceased to be connected with petitioner at the time of the filing of the complaint as well as when the inspection/investigation was conducted. Thus, there being no ER-EE relationship, the claims of payment of monetary benefits fall within the exclusive and original jurisdiction of the Labor Arbiter. Issue Whether or not the Regional Director had jurisdiction to hear the case.

Decision YES, IT DOES. Aside from photocopies of documents entitled Release and Quitclaim, no other evidence was adduced by the petitioner to substantiate this claim. These documents, being mere photocopies are unreliable and incompetent without the original and deserves little credence or weight. As is well-settled, if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the employee. Since it is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writings should be resolved in the formers favor. Considering thus that there still exists an employer-employee relationship between petitioner and private respondents and that the case involves violations of labor standard provisions of the Labor Code, the Regional Director has jurisdiction to hear and decide the instant case in conformity with Article 128(b) of the Labor Code. EX-BATAAN VETERANS SECURITY AGENCY VS. SOLE G.R. No. 152396; November 20, 2007 Facts Petitioner is in the business of providing security services while respondents are employees assigned to the National Power Corporation. On February 20, 1996, respondents instituted a complaint for underpayment of wages against petitioner before the Regional Office of the DOLE. On March 7, 1996, the Regional Office conducted a complaint inspection of the Plant, and violations of labor standards laws were found. On the same date, the Regional Office issued a notice of hearing, requiring petitioner and respondents to attend. On August 19, 1996, the Director of the Regional Office issued an order in favor of respondents. Petitioner filed a motion for reconsideration, questioning the jurisdiction of the Regional Director, which was denied. Petitioner appealed to the SOLE, which affirmed the Regional Directors orders. Petitioner appealed to the CA, which dismissed the petition. Hence, the present petition. Arguments Petitioner: 1) The Regional Director did not acquire jurisdiction over petitioner because he failed to comply with section 11, Rule 14 of the 1997 Rules of Civil Procedure. The notice of hearing was served at the Plant, not at petitioners main office, and addressed to its VP. 2) Under articles 129 and 217(b) of the Labor Code, the Labor Arbiter, not the Regional Director, has exclusive and original jurisdiction over the case because the individual monetary claim of respondents exceeds P5000. 3) The case falls under the exception clause in article 128(b) of the Labor Code. The Regional Director should have certified the case to the arbitration branch of the NLRC. Issue

Whether or not the SOLE or his duly authorized representatives acquired jurisdiction over petitioner. Whether or not the SOE or his duly authorized representatives have jurisdiction over the money claims which exceed P5000. Decision I. YES, THEY HAVE. The Rules on the Disposition of Labor Standards Cases in the Regional Offices (rules) specifically state that notices and copies of orders shall be served on the parties or their duly authorized representatives at their last known address or, if they are represented by counsel, through the latter. The rules shall be liberally construedand only in the absence of any applicable provision will the Rules of Court apply in a suppletory character. In this case, EBVSAI does not deny having received the notices of hearing. In fact, on 29 March and 13 June 1996, Danilo Burgos and Edwina Manao, detachment commander and bookkeeper of EBVSAI, respectively, appeared before the Regional Director. They claimed that the 22 March 1996 notice of hearing was received late and manifested that the notices should be sent to the Manila office. Thereafter, the notices of hearing were sent to the Manila office. They were also informed of EBVSAIs violations and were asked to present the employment records of the private respondents for verification. They were, moreover, asked to submit, within 10 days, proof of compliance or their position paper. The Regional Director validly acquired jurisdiction over EBVSAI. EBVSAI can no longer question the jurisdiction of the Regional Director after receiving the notices of hearing and after appearing before the Regional Director. II. YES, THEY DO. 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. 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. --- (b) Notwithstanding the provisions of Article[s] 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 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, 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. 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 217of this Code to the contrary x x x thereby retaining and further strengthening the power of the Secretary of Labor or his duly authorized representatives 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 officer or industrial safety engineer made in the course of inspection.

The visitorial and enforcement powers of the DOLE Regional Director to order and enforce compliance with labor standard laws can be exercised even where the individual claim exceeds P5,000. However, if the labor standards case is covered by the exception clause in Article 128(b) of the Labor Code, then the Regional Director will have to endorse the case to the appropriate Arbitration Branch of the NLRC. In order to divest the Regional Director or his representatives of jurisdiction, the following elements must be present: (a) that the employer contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection. The rules also provide that the employer shall raise such objections during the hearing of the case or at any time after receipt of the notice of inspection results. In this case, the Regional Director validly assumed jurisdiction over the money claims of private respondents even if the claims exceeded P5,000 because such jurisdiction was exercised in accordance with Article 128(b) of the Labor Code and the case does not fall under the exception clause. The Court notes that EBVSAI did not contest the findings of the labor regulations officer during the hearing or after receipt of the notice of inspection results. It was only in its supplemental motion for reconsideration before the Regional Director that EBVSAI questioned the findings of the labor regulations officer and presented documentary evidence to controvert the claims of private respondents. But even if this was the case, the Regional Director and the Secretary of Labor still looked into and considered EBVSAIs documentary evidence and found that such did not warrant the reversal of the Regional Directors order. The Secretary of Labor also doubted the veracity and authenticity of EBVSAIs documentary evidence. Moreover, the pieces of evidence presented by EBVSAI were verifiable in the normal course of inspection because all employment records of the employees should be kept and maintained in or about the premises of the workplace, which in this case is in Ambuklao Plant, the establishment where private respondents were regularly assigned. CATHOLIC VICARIATE BAGUIO CITY V. HON. STO. TOMAS GR No. 167334, March 7, 2008 FACTS: Petitioner contracted Kunwha Luzon Construction (KUNWHA) to construct the retaining wall of the Baguio Cathedral. KUNWHA, in turn, subcontracted CEREBA Builders (CEREBA) to do the formworks of the church. The contract between KUNWHA and CEREBA lasted up to the completion of the project or on 8 September 2000. KUNWHA failed to pay CEREBA. Consequently, the latter failed to pay its employees. On 29 August 2000, respondent George Agbucay, along with 81 other employees, lodged a complaint against CEREBA, KUNWHA and petitioner before the DOLE-CAR Regional Office for nonpayment of wages, special and legal holiday premium pay. An inspection of the premises resulted in the discovery of violations of labor standards law, such as nonpayment of wages and holiday pay from 28 June 2000 to 5 September 2000, non-presentation of employment records, and others. Petitioner, KUNWHA and CEREBA were given five (5) days from receipt of the notice of inspection results to rectify its violations. Despite the notice, the parties failed to comply. A hearing was set wherein CEREBA manifested its willingness to pay the affected employees on the condition that KUNWHA would pay its obligation to CEREBA. Petitioner meanwhile manifested that the retention fee due to KUNWHA was sufficient to pay the deficiencies due the affected employees. On 12 March 2001, the DOLE-CAR Regional Director issued an Order holding CEREBA, KUNWHA and petitioner jointly and severally liable to the 82 affected workers in the amount of P1,029,952.80 or P12,560.40 for each employee. During the pendency of its motion for reconsideration, KUNWHA voluntarily settled the deficiencies due the 23 affected workers amounting to P84,544.00. On 21 May 2001, the Regional Director dismissed the complaint by reason of the said settlement. On appeal, the Secretary of Labor reversed the ruling of the Regional Director and held that pursuant to Articles 106 and 107 of the Labor Code, the liability of KUNWHA, CEREBA and the Catholic Vicariate is solidary notwithstanding the absence of an employer-employee relationship.The settlement with respect to the 23 workers was declared unconscionable and the Order of the Regional Director dated 12 March 2001 was reinstated.

On 28 September 2004, the Court of Appeals affirmed the order of the Secretary of Labor with the modification that payments made in favor of the 23 workers amounting to P84,544.00 be deducted from whatever amount still due each of them. ISSUES: (1) whether the Secretary of Labor acquired jurisdiction over the appeal considering that this case falls within the exception stated in Article 128(b) of the Labor Code; (2) whether the quitclaims signed by affected employees are valid; and (3) whether the appeal interposed by petitioner inures to the benefit of the other affected employees. RULING: (1) Petitioner is now estopped from questioning the jurisdiction of the Regional Director when it actively participated in the proceedings held therein. In said case, petitioner also submitted to the jurisdiction of the Regional Director by taking part in the hearings before him and by submitting a position paper. Similarly, it was only when the order of the Regional Director was modified did petitioner question the formers jurisdiction to hear and decide the case. This Court declares that petitioner is barred by estoppel from raising the issue of jurisdiction. (2) Not all quitclaims are per se invalid or against public policy. A quitclaim is said to be invalid and against public policy (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or (2) where the terms of settlement are unconscionable on their face. In such cases, the law will step in to annul the questionable transaction. The second exception obtains in the case at bar. Indeed, as ordered by the Regional Director, the 23 affected workers are entitled to receive P12,560.40 each or a total of P288,889.20 for unpaid wages and special and regular holiday premium pay. KUNWHA however paid them only P84,544.00, less than half of what they are entitled to as computed by the Regional Director. Therefore, this Court is not inclined to sustain the validity of the quitclaims although apparently they were signed voluntarily and in the presence of the Regional Director. (3) Finally, petitioner asserts that the Secretary of Labor erred in granting affirmative relief to those who did not appeal. On the contrary, however, the Court of Appeals properly affirmed the monetary award of the Secretary of Labor to the other affected employees. While as a general rule, a party who has not appealed is not entitled to affirmative relief other than the ones granted in the decision of the court below, the Court of Appeals is imbued with sufficient authority and discretion to review matters not otherwise assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a complete and just resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice. Instant petition for review is DENIED. SAPIO VS. UNDALOC CONSTRUCTION, ET. AL. G.R. No. 155034; May 22, 2008 Facts Petitioner had been employed as watchman from 1 May 1995 to 30 May 1998 when he was terminated on the ground that the project he was assigned to was already finished, he being allegedly a project employee. Petitioner filed a complaint against respondent for illegal dismissal, underpayment of wages and nonpayment of statutory benefits. It should be useful to note that respondent is a single proprietorship engaged in road construction business. On July 12, 1999, the Labor Arbiter rendered a decision against petitioner, to which they appealed to the NLRC. The NLRC sustained the Labor Arbiters decision. An appeal to the CA yielded no result. Thus, the instant petition. Arguments

Petitioner: 1) He was a regular employee having been engaged to perform works which are usually necessary or desirable in respondents business. 2) From 1 May to 31 August 1995 and from 1 September to 31 December 1995, his daily wage rate was only P80.00 and P90.00, respectively, instead of P121.87 as mandated by Wage Order No. ROVII-03. From 1 March 1996 to 30 May 1998, his daily rate was P105.00. 3) He was made to sign two payroll sheets, the first bearing the actual amount he received wherein his signature was affixed to the last column opposite his name, and the second containing only his name and signature. 4) He also averred that his salary from 18 to 30 May 1998 was withheld by respondents 5) He was paid a daily salary way below the minimum wage provided for by law. His claim of salary differential represents the difference between the daily wage he actually received and the statutory minimum wage, Respondents: 1) Petitioner was hired as a project employee on 1 May 1995 and was assigned as watchman from one project to another until the termination of the project on 30 May 1998. 2) He was indeed paid, as evidenced by typewritten and signed payroll sheets from 2 September to 8 December 1996, from 26 May to 15 June 1997, and from 12 January to 31 May 1998. These payroll sheets clearly indicate that petitioner did receive a daily salary of P141.00. Issue Whether or not the payrolls made in pencil were valid. Whether or not petitioner is entitled to the salary differential ordered by the Labor Arbiter. Decision I. YES, THEY ARE. The conclusion of the Labor Arbiter that entries in the December 1995 payroll sheet could have been altered is utterly baseless. The claim that the December 1995 payroll sheet was written in pencil and was thus rendered it prone to alterations or erasures is clearly non sequitur. The same is true with respect to the typewritten payroll sheets. In fact, neither the Labor Arbiter nor the NLRC found any alteration or erasure or traces thereat, whether on the pencil-written or typewritten payroll sheets. Indeed, the most minute examination will not reveal any tampering. Furthermore, if there is any adverse conclusion as regards the December 1995 payroll sheet, it must be confined only to it and cannot be applied to the typewritten payroll sheets. Moreover, absent any evidence to the contrary, good faith must be presumed in this case. Entries in the payroll, being entries in the course of business, enjoy the presumption of regularity under Rule 130, Section 43 of the Rules of Court. Hence, while as a general rule, the burden of proving payment of monetary claims rests on the employer, when fraud is alleged in the preparation of the payroll, the burden of evidence shifts to the employee and it is incumbent upon him to adduce clear and convincing evidence in support of his claim. Unfortunately, petitioners bare assertions of fraud do not suffice to overcome the disputable presumption of regularity. II. NO, HE IS NOT. The Labor Arbiter erred in his computation. He fixed the daily wage rate actually received by petitioner at P105.00 without taking into consideration the P141.00 rate indicated in the typewritten payroll sheets submitted by respondents. Moreover, the Labor Arbiter misapplied the wage orders when he wrongly

categorized respondent as falling within the first category. Based on the stipulated number of employees and audited financial statements, respondents should have been covered by the second category. The total salary differential that petitioner is lawfully entitled to amounts to P6,578.00 However, pursuant to Section 12 of Republic Act (R.A.) No. 6727, as amended by R.A. No. 8188. Respondents are required to pay double the amount owed to petitioner, bringing their total liability to P13,156.00. Section 12. Any person, corporation, trust, firm, partnership, association or entity which refuses or fails to pay any of the prescribed increases or adjustments in the wage rates made in accordance with this Act shall be punished by a fine not less than Twenty-five thousand pesos (P25,000.00) nor more than One hundred thousand pesos (P100,000.00) or imprisonment of not less than two (2) years nor more than four (4) years, or both such fine and imprisonment at the discretion of the court: Provided, That any person convicted under this Act shall not be entitled to the benefits provided for under the Probation Law. The employer concerned shall be ordered to pay an amount equivalent to double the unpaid benefits owing to the employees: Provided, That payment of indemnity shall not absolve the employer from the criminal liability imposable under this Act. If the violation is committed by a corporation, trust or firm, partnership, association or any other entity, the penalty of imprisonment shall be imposed upon the entitys responsible officers, including, but not limited to, the president, vice president, chief executive officer, general manager, managing director or partner. The award of attorneys fees is warranted under the circumstances of this case. Under Article 2208 of the New Civil Code, attorney's fees can be recovered in actions for the recovery of wages of laborers and actions for indemnity under employer's liability laws but shall not exceed 10% of the amount awarded. The fees may be deducted from the total amount due the winning party.

HON. SECRETARY OF LABOR VS. PANAY VETERANS SECURITY AND INVESTIGATION AGENCY GR NO. 167708, AUGUST 22, 2008 Facts: Petitioners Edgardo M. Agapay and Samillano A. Alonso, Jr.[4] were hired by respondent Panay Veterans Security and Investigation Agency, Inc. as security guards stationed at the plant site of Food Industries, Inc. (FII) until FII terminated its contract with respondent security agency. They were not given new assignments and their benefits (including 13th month pay, overtime pay and holiday pay as well as wage differentials due to underpayment of wages) were withheld by respondent security agency. This prompted them to file a complaint for violation of labor standards in the regional office of DOLE NCR. A labor employment officer conducted an inspection of respondent security agency but respondent security agency failed to present its payroll as well as the daily time records. Such was noted as violation and the officer, thereafter, issued a notice of inspection to respondent security agency. Respondents neither paid the claims of petitioners Agapay and Alonso, Jr. nor questioned the labor employment officers findings. Thus, the Regional Director of DOLE-NCR rendered judgment in favor of petitioners Agapay and Alonso, Jr. Respondents filed an appeal (with motion to reduce cash or surety bond) to the Secretary of Labor and Employment. The Secretary of Labor and Employment found that respondents failed to perfect their appeal since they did not post a cash or surety bond equivalent to the monetary award. Thus, the appeal was dismissed. Upon appeal, the CA initially dismissed the petition for lack of merit but later on granted reconsideration and allowed respondents to pursue their appeal. Issue: Whether or not respondents may still pursue their appeal

Held: We uphold the Secretary of Labor and Employment. RESPONDENTS FAILED TO PERFECT THEIR APPEAL Article 128(b) of the Labor Code clearly provides that the appeal bond must be in the amount equivalent to the monetary award in the order appealed from. The records show that petitioner failed to post the required amount of the appeal bond. His appeal was therefore not perfected. The rule is that, to perfect an appeal of the Regional Directors order involving a monetary award in cases which concern the visitorial and enforcement powers of the Secretary of Labor and Employment, the appeal must be filed and the cash or surety bond equivalent to the monetary award must be posted within ten calendar days from receipt of the order. Failure either to file the appeal or post the bond within the prescribed period renders the order final and executory. In this case, respondents admit that they failed to post the required bond when they filed their appeal to the Secretary of Labor and Employment. Because of such failure, the appeal was never perfected. MOTION TO REDUCE APPEAL BOND IS NOT ALLOWED IN APPEALS TO THE SECRETARY OF LABOR The jurisdiction of the NLRC is separate and distinct from that of the Secretary of Labor and Employment. In other words, the rules of procedure of the NLRC are different from (and do not apply in) cases cognizable by the Secretary of Labor and Employment. The CAs amended decision also contradicted the spirit that animates all labor laws, the promotion of social justice and the protection of workers. The posting of a cash or surety bond to perfect an appeal of an order involving a monetary award has a two-fold purpose: (1) to assure the employee that, if he finally prevails in the case, the monetary award will be given to him upon dismissal of the employers appeal and (2) to discourage the employer from using the appeal to delay or evade payment of his obligations to the employee. The CA should have resolved any doubt in the implementation and interpretation of the Labor Code and its implementing rules in favor of labor. MONETARY AWARD IS SUBJECT TO LEGAL INTEREST The obligation of respondents to pay the lawful claims of petitioners Agapay and Alonso, Jr. was established with reasonable certainty when respondents received the notice of inspection from the labor employment officer. Since such obligation did not constitute a loan or forbearance of money, it was subject to legal interest at the rate of 6% per annum from that date until the May 10, 2001 order of the DOLE-NCR Regional Director attained finality. From the time the May 10, 2001 order of the DOLE-NCR Regional Director became final and executory, petitioners Agapay and Alonso, Jr. were entitled to 12% legal interest per annum until the full satisfaction of their respective claims. NATIONAL MINES AND ALLIED WORKERS UNION VS. MARCOPPER MINING CORP. GR NO. 174641, NOVEMBER 11, 2008 FACTS: On April 1, 1996, the Department of Environment and Natural Resources (DENR) ordered the indefinite suspension of MARCOPPER's operations for causing damage to the environment of the Province of Marinduque by spilling the company's mine waste or tailings from an old underground impounding area into the Boac River, in violation of its Environmental Compliance Certificate (ECC). NAMAWU was the exclusive bargaining representative of the rank-and-file workers of MARCOPPER. It filed a complaint at the Regional Arbitration Branch No. IV of the NLRC against MARCOPPER for nonpayment of wages, separation pay, damages, and attorney's fees; the case is hereinafter referred to as the "environmental incident case." NAMAWU claimed that due to the indefinite suspension of MARCOPPER's operations, its members were not paid the wages due them for six months (from April 12, 1996 to October 12, 1996) under Rule X, Book III, Section 3(b) of the Implementing Rules and Regulations of the Labor Code.8 It further claimed that its members are also entitled to be paid their separation pay pursuant to their collective bargaining agreement with MARCOPPER and pursuant to Book IV, Rule I, 4(b) of the Labor Code's implementing rules.

MARCOPPER denied liability, contending that NAMAWU had not been authorized by the individual employees - the real parties-in-interest - to file the complaint; and that the complaint should be dismissed for lack of certification of non-forum shopping, for the pendency of another action between the same parties, and for lack of factual and legal basis. Labor Arbiter Pedro C. Ramos ruled in NAMAWU's favor. MARCOPPER and the President and its General Manager of the company were ordered to pay jointly and severally the rank-and-file workers represented by NAMAWU and other employees similarly situated their wages for suspension of operation for the period April 12, 1996 to October 12, 1996; separation pay; and attorneys fees. MARCOPPER appealed the decision to the NLRC. In this appeal, it also moved that it be allowed not to post an appeal bond for 615 NAMAWU members - former MARCOPPER employees who had been dismissed effective March 7, 1995 due to an earlier illegal strike. MARCOPPER, however, posted the required bond for three non-striking employees, namely: Apollo V. Saet, Rogelio Regencia and Jose Romasanta. The NLRC dismissed MARCOPPER's appeal for its failure to post the appeal bond required by Article 223 of the Labor Code. Loney (President) and Reed (General Manager) were at the same time dropped as respondents in the case. The NLRC subsequently denied MARCOPPER's motion for reconsideration.11 MARCOPPER thus sought relief from the CA through a petition for certiorari under Rule 65 of the Rules of Court. The petition imputed grave abuse of discretion on the NLRC for disregarding an earlier CA decision on the illegal strike case involving the same parties and the same reliefs; and for awarding wages and separation pay to NAMAWU members who had earlier been dismissed and were no longer MARCOPPER employees when MARCOPPER suspended its operations. The CA granted MARCOPPERs petition, nullified the resolution of the NLRC, and ordered the NLRC to give due course to MARCOPPERs appeal. The CA found the non-filing of the appeal bond for the 615 NAMAWU members covered by the Labor Arbiter's award to be justified since their employment had been terminated as early as March 7, 1995, i.e., prior to the suspension of operations for which wages and separation pay were being claimed. The CA noted in the assailed decision that it had previously confirmed the validity of the termination of employment of NAMAWU members in its decision dated May 28, 1999 on the illegal strike case. The CA stressed that NAMAWU elevated the illegal strike case in this court but denied the petition for review. Further, CA denied NAMAWUs motion for reconsideration. Thus, this petition. ISSUES: Whether the CA erred in ruling that there was no need for MARCOPPER to post an appeal bond; Whether the CA erred in ordering the NLRC to give due course to MARCOPPER's appeal. RULING: SC stated at the outset that they do not agree with NAMAWU's position that the illegal strike case between it and MARCOPPER is "an entirely separate and distinct case not connected with the case under consideration." In the first place, both the previous and the present cases are between the same parties - NAMAWU and MARCOPPER. Both cases refer to termination of employment and its consequences. In fact, the payment of separation pay that NAMAWU seeks in the present case was considered by the NLRC in its decision in the illegal strike case, although the award was stricken out by the CA when the illegal strike case was brought to it for review.

The employment of the NAMAWU officers and members had been declared terminated on March 7, 1995 as a result of their failure to return to work after their strike of February 27, 1995. Thereafter, the illegal strike litigation commenced, resulting in a decision by the NLRC on November 11, 1996 declaring the strike illegal. The environmental incident referred to in this illegal strike ruling is the same environmental incident that gave rise to the present complaint that NAMAWU filed on April 10, 1996. While the NLRC had not yet ruled on the illegal strike case when the present environmental incident complaint was filed, the Labor Arbiter's ruling on the latter complaint came very much later, in fact long after both the NLRC and the CA had ruled on the illegal strike case. The NLRC denied the motion for reconsideration of its November 11, 1996 decision in the illegal strike case on June 11, 1997, while the CA issued its decision on the same case on May 28, 1999. The Labor Arbiter issued his decision on the present environmental incident case only on March 14, 2000. Under this sequence of rulings, the Labor Arbiter effectively restored in the environmental incident case the same separation pay award that the CA struck off from the NLRC decision in the illegal strike case. In effect, the Labor Arbiter disregarded the CA ruling and actually reversed it. Further, the NLRC was already burdened with knowledge of the final and executory decision of no less than this Court (confirming the March 7, 1995 dismissal of the striking NAMAWU members) when the NLRC issued its decision in the present case dismissing the MARCOPPER appeal for failure to file an appeal bond for the already dismissed workers. Thus, like the Labor Arbiter below, the NLRC in effect sought to negate what a higher tribunal, this Court no less, had already affirmed and confirmed, i.e., the termination of employment of 615 NAMAWU members. Whether the CA erred in ruling that there was no need for MARCOPPER to post an appeal bond MARCOPPER had every reason to claim in its April 10, 2000 appeal to the NLRC that it should be excused from filing an appeal bond with respect to the NAMAWU members who were no longer company employees. The CA decision decreeing the termination of employment of those involved in the illegal strike case had already been issued at that time. SC subsequently ruled on the same issue during the time the environmental incident case was pending before the NLRC. Thus, when the NLRC dismissed MARCOPPER's appeal for failure to file the requisite appeal bond corresponding to the 615 NAMAWU members, the termination of employment of these NAMAWU members was already a settled matter that the NLRC was in no position to disregard. In this light, the CA was correct in reversing the dismissal of MARCOPPER's appeal for failure to file an appeal bond. Pursued to its logical end, the CA conclusions should lead to the dismissal of NAMAWU's complaint with respect to its 615 previously dismissed members. In contrast with the above, the case of the three other employees - Apollo V. Saet, Rogelio Regencia and Jose Romasanta - who were in MARCOPPER's employ at the time of the suspension of operations on April 12, 1996 and for whom MARCOPPER properly posted an appeal bond before the NLRC - is another matter. The SC ruled on it even if it is within the jurisdiction of the NLRC since it passed a decade from that issue. SC find from the pleadings filed that the environmental incident that gave rise to NAMAWU's April 1996 complaint to be undisputed; MARCOPPER caused the spillage of mine waste and tailings into the Boac River. Neither is it disputed that the company had to suspend its operations by order of the DENR, and that the company's indefinite cessation of operations lasted beyond the 6-month temporary suspension of operations that Article 286 of the Labor Code allows. All that remains is the determination of the employees' rights under the circumstances. The suspension of MARCOPPER's operations was decreed in an Ex-Parte Order dated April 1, 1996 issued by the Pollution Adjudication Board of the DENR pursuant to Presidential Decree (P.D.) No. 984 and Section 36 of its Implementing Rules. Separately from this Order, the DENR Secretary ordered on June 21, 1996 the cancellation of MARCOPPER's ECC without which MARCOPPER could not continue to undertake its mining operations. Thus, as of that date, the temporary suspension of operations that started on April 12, 1996 became

permanent so that MARCOPPER did not have to wait for the end of the six-month suspension of operations before the services of the three employees were deemed terminated. In Labor Code terms, the cancellation of the ECC on June 21, 1996 amounted to a company closure governed by Article 283 of the Labor Code - the provision that governs the relationship of employers and employees in closure situations. The rule that NAMAWU cites in its claim for wages is Rule X, Book III, Section 3(b) of the Rules and Regulations implementing the Labor Code.41 This rule, however, specifically relates to suspension of operations due to health and safety concerns. It states: Enforcement power on health and safety of workers. - (a) The Regional Director may likewise order stoppage of work or suspension of operation of any unit or department of an establishment when noncompliance with the law, safety order or implementing rules and regulations poses grave and imminent danger to the health and safety of workers in the workplace. (b) x x x In case the violation is attributable to the fault of the employer, he shall pay the employees concerned their salaries or wages during the period of such stoppage of work or suspension of operation. While the mine tailing leakage and pollution of the Boac River cannot but affect the health and safety of those in the MARCOPPER vicinity, particularly its employees, we find that the Department of Labor and Employment (DOLE) Regional Director - at whose initiative a suspension of operation must originate for the above-quoted provision to apply - did not act as envisioned by the above rule. Specifically, there was no ruling or directive from the DOLE that the environmental incident was a workplace health and safety concern that required a suspension of operation. There is likewise nothing in the laws applicable to pollution, specifically, P.D. No. 984 and P.D. No. 1586 and their implementing rules that speak of the consequences of a DENR-ordered suspension of operations on employment relationships. Neither does the CBA between MARCOPPER and NAMAWU provide for the consequences of a suspension of operation due to environmental causes. Under the circumstances, we can only conclude that the general "no work, no pay" rule should prevail with respect to employees' wages during the suspension period, subject to existing CBA terms on leave credits and similar benefits of employees. Because the initial suspension of operations that the DENR imposed eventually turned into an involuntary closure as discussed above, Article 283 of the Labor Code comes into play entitling the three remaining employees the payment of separation pay computed under the terms of that Article. The termination of employment date, for separation pay purposes, should be computed from June 21, 1996 and not from October 12, 1996 (or six months from the April 12, 1996 suspension of operation date); June 21, 1996 must be the closure date as it is from this date that MARCOPPER, by law, ceased to have any authority to conduct its mining operations. *SC PARTIALLY GRANTED NAMAWU's petition with respect to the payment of separation pay to Apollo V. Saet, Rogelio Regencia and Jose Romasanta. MARCOPPER is hereby ORDERED to PAY them separation pay pursuant to Article 283 of the Labor Code. The claim under the petition for the payment of wages during the suspension of operation period is hereby DENIED for lack of merit. DISMISSED the petition with respect to the remaining 615 NAMAWU members who were no longer MARCOPPER employees at the time MARCOPPER suspended its operations in April 1996. PEOPLES BROADCASTING VS. SEC/DOLE GR NO. 179652, MAY 8, 2009 Facts: Jandeleon Juezan (respondent) filed a complaint against People s Broadcasting Service, Inc. (Bombo Radyo Phils., Inc) (petitioner) for illegal deduction, non-payment of service incentive leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and non- coverage of SSS, PAG-IBIG and Philhealth before the Department of Labor and Employment (DOLE) Regional Office No. VII,Cebu City.

On the basis of the complaint, the DOLE conducted a plant level inspection on 23 September 2003. In the Inspection Report Form, the Labor Inspector wrote under the heading Findings/Recommendations non- diminution of benefits and Note: Respondent deny employeremployee relationship with the complainant- see Notice of Inspection results. Petitioner was required to rectify/restitute the violations within five (5) days from receipt. No rectification was effected by petitioner; thus, summary investigations were conducted, with the parties eventually ordered to submit their respective position papers. In his Order dated 27 February 2004, DOLE Regional Director Atty. Rodolfo M. Sabulao (Regional Director) ruled that respondent is an employee of petitioner, and that the former is entitled to his money claims amounting to P203, 726.30. Petitioner sought reconsideration of the Order, claiming that the Regional Director gave credence to the documents offered by respondent without examining the originals, but at the same time he missed or failed to consider petitioners evidence. Petitioners motion for reconsideration was denied.[ On appeal to the DOLE Secretary, petitioner denied once more the existence of employer-employee relationship. In its Order dated 27 January 2005, the Acting DOLE Secretary dismissed the appeal on the ground that petitioner did not post a cash or surety bond and instead submitted a Deed of Assignment of Bank Deposit. Petitioner maintained that there is no employer-employee relationship had ever existed between it and respondent because it was the drama directors and producers who paid, supervised and disciplined respondent. It also added that the case was beyond the jurisdiction of the DOLE and should have been considered by the labor arbiter because respondents claim exceeded P5,000.00. Issue: Does the Secretary of Labor have the power to determine the existence of an employer-employee relationship? Held: No. Clearly the law accords a prerogative to the NLRC over the claim when the employer-employee relationship has terminated or such relationship has not arisen at all. The reason is obvious. In the second situation especially, the existence of an employer-employee relationship is a matter which is not easily determinable from an ordinary inspection, necessarily so, because the elements of such a relationship are not verifiable from a mere ocular examination. The intricacies and implications of an employer-employee relationship demand that the level of scrutiny should be far above the cursory and tthe mechanical. While documents, particularly documents found in the employers office are the primary source materials, what may prove decisive are factors related to the history of the employers business operations, its current state as well as accepted contemporary practices in the industry. More often than not, the question of employer-employee relationship becomes a battle of evidence, the determination of which should be comprehensive and intensive and therefore best left to the specialized quasi-judicial body that is the NLRC. It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to make a determination of the existence of an employer-employee relationship. Such prerogatival determination, however, cannot be coextensive with the visitorial and enforcement power itself. Indeed, such determination is merely preliminary, incidental and collateral to the DOLE s primary function of enforcing labor standards provisions. The determination of the existence of employer-employee relationship

is still primarily lodged with the NLRC. This is the meaning of the clause in cases where the relationship of employer-employee still exists in Art. 128 (b). Thus, before the DOLE may exercise its powers under Article 128, two important questions must be resolved: (1) Does the employer-employee relationship still exist, or alternatively, was there ever an employer- employee relationship to speak of; and (2) Are there violations of the Labor Code or of any labor law? The existence of an employer-employee relationship is a statutory prerequisite to and a limitation on the power of the Secretary of Labor, one which the legislative branch is entitled to impose.The rationale underlying this limitation is to eliminate the prospect of competing conclusions of the Secretary of Labor and the NLRC, on a matter fraught with questions of fact and law, which is best resolved by the quasi-judicial body, which is the NRLC, rather than an administrative official of the executive branch of the government. If the Secretary of Labor proceeds to exercise his visitorial and enforcement powers absent the first requisite, as the dissent proposes, his office confers jurisdiction on itself which it cannot otherwise acquire. Reading of Art. 128 of the Labor Code reveals that the Secretary of Labor or his authorized representatives was granted visitorial and enforcement powers for the purpose of determining violations of, and enforcing, the Labor Code and any labor law, wage order, or rules and regulations issued pursuant thereto. Necessarily, the actual existence of an employer-employee relationship affects the complexion of the putative findings that the Secretary of Labor may determine, since employees are entitled to a different set of rights under the Labor Code from the employer as opposed to non-employees. Among these differentiated rights are those accorded by the labor standards provisions of the Labor Code, which the Secretary of Labor is mandated to enforce. If there is no employer-employee relationship in the first place, the duty of the employer to adhere to those labor standards with respect to the non-employees is questionable. At least a prima facie showing of such absence of relationship, as in this case, is needed to preclude the DOLE from the exercise of its power. The Secretary of Labor would not have been precluded from exercising the powers under Article 128 (b) over petitioner if another person with better-grounded claim of employment than that which respondent had. Respondent, especially if he were an employee, could have very well enjoined other employees to complain with the DOLE, and, at the same time, petitioner could illafford to disclaim an employment relationship with all of the people under its aegis. The most important consideration for the allowance of the instant petition is the opportunity for the Court not only to set the demarcation between the NLRC s jurisdiction and the DOLE s prerogative but also the procedure when the case involves the fundamental challenge on the DOLE s prerogative based on lack of employer-employee relationship. As exhaustively discussed here, the DOLE s prerogative hinges on the existence of employer-employee relationship, the issue is which is at the very heart of this case. And the evidence clearly indicates private respondent has never been petitioner s employee. But the DOLE did not address, while the Court of Appeals glossed over, the issue. The peremptory dismissal of the instant petition on a technicality would deprive the Court of the opportunity to resolve the novel controversy. WHEREFORE, the petition is GRANTED. PHIL. HOTELIERS INC., ET. AL., VS. NATIONAL UNION OF WORKERS IN HOTEL, RESTAURANT AND ALLIED INDUSTRIES-DUSIT HOTEL NIKKO CHAPTER GR NO. 181972, AUGUST 25, 2009 FACTS:

RTWPB issued Wage Order No. 9 that took effect on November 5, 2001. It grants P30.00 ECOLA to particular employees and workers of all private sectors, identified as follows in Section 1 thereof: Section 1. Upon the effectivity of this Wage Order, all private sector workers and employees in the National Capital Region receiving daily wage rates of TWO HUNDRED FIFTY PESOS (P250.00) up to TWO HUNDRED NINETY PESOS (P290.00) shall receive an emergency cost of living allowance in the amount of THIRTY PESOS (P30.00) per day payable in two tranches as follows: Amount of ECOLA Effectivity P15.00 5 November 2001 P15.00 1 February 2002 Respondent National Union of Workers in Hotel, Restaurant and Allied Industries-Dusit Hotel Nikko Chapter (Union), through its President, Reynaldo C. Rasing (Rasing), sent a letter to Director Alex Maraan (Dir. Maraan) of the Department of Labor and Employment-National Capital Region (DOLENCR), reporting the non-compliance of Dusit Hotel with WO No. 9, while there was an on-going compulsory arbitration before the National Labor Relations Commission (NLRC) due to a bargaining deadlock between the Union and Dusit Hotel; and requesting immediate assistance on this matter. Rasing sent Dir. Maraan another letter following-up his previous request for assistance. Acting on Rasings letters, the DOLE-NCR sent Labor Standards Officer Estrellita Natividad (LSO Natividad) to conduct an inspection of Dusit Hotel premises on 24 April 2002. LSO Natividads Inspection Results Report dated 2 May 2002 stated: Based on interviews/affidavits of employees, they are receiving more than P290.00 average daily rate which is exempted in the compliance of Wage Order NCR-09; Remarks: There is an ongoing negotiation under Case # NCMB-NCR-NS-12-369-01 & NCMB-NCR-NS01-019-02 now forwarded to the NLRC office for the compulsory arbitration. NOTE: Payrolls to follow later upon request including position paper of [Dusit Hotel]. By virtue of Rasings request for another inspection, LSO Natividad conducted a second inspection of Dusit Hotel premises on 29 May 2002. In her Inspection Results Report dated 29 May 2002, LSO Natividad noted: *Non-presentation of records/payrolls *Based on submitted payrolls & list of union members by NUWHRAIN-DUSIT HOTEL NIKKO Chapter, there are one hundred forty-four (144) affected in the implementation of Wage Order No. NCR-09-> ECOLA covering the periods from Nov.5/01 to present. Accordingly, the DOLE-NCR issued a Notice of Inspection Result directing Dusit Hotel to effect restitution and/or correction of the noted violations within five days from receipt of the Notice, and to submit any question on the findings of the labor inspector within the same period, otherwise, an order of compliance would be issued. The Notice of Inspection Result was duly received by Dusit Hotel Assistant Personnel Manager Rogelio Santos. In the meantime, the NLRC rendered a Decision dated 9 October 2002 in NLRC-NCR-CC No. 000215-02 the compulsory arbitration involving the Collective Bargaining Agreement (CBA) deadlock between Dusit Hotel and the Union granting the hotel employees the following wage increases, in accord with the CBA: Effective January 1, 2001- P500.00/month Effective January 1, 2002- P550.00/month

Effective January 1, 2003- P600.00/month On 22 October 2002, based on the results of the second inspection of Dusit Hotel premises, DOLE-NCR, through Dir. Maraan, issued the Order directing Dusit Hotel to pay 144 of its employees the total amount of P1,218,240.00, corresponding to their unpaid ECOLA under WO No. 9; plus, the penalty of double indemnity, pursuant to Section 12 of Republic Act No. 6727,11 as amended by Republic Act No. 8188. The employer concerned shall be ordered to pay an amount equivalent to double the unpaid benefits owing to the employees: Provided, that payment of indemnity shall not absolve the employer from the criminal liability under this Act. If the violation is committed by a corporation, trust or firm, partnership, association or any other entity, the penalty of imprisonment shall be imposed upon the entitys responsible officers including but not limited to the president, vice president, chief executive officer, general manager, managing director or partner. Dusit Hotel filed a Motion for Reconsideration of the DOLE-NCR Order dated 22 October 2002, arguing that the NLRC Decision dated 9 October 2002, resolving the bargaining deadlock between Dusit Hotel and the Union, and awarding salary increases under the CBA to hotel employees retroactive to 1 January 2001, already rendered the DOLE-NCR Order moot and academic. With the increase in the salaries of the hotel employees ordered by the NLRC Decision of 9 October 2002, along with the hotel employees share in the service charges, the 144 hotel employees, covered by the DOLE-NCR Order of 22 October 2002, would already be receiving salaries beyond the coverage of WO No. 9. Acting on the Motion, DOLE-NCR issued a Resolution setting aside its earlier Order for being moot and academic, in consideration of the NLRC decision and dismissing the complaint of the Union against Dusit Hotel, for non-compliance with WO No. 9, for lack of merit. The Union appealed before the DOLE Secretary maintaining that the wage increases granted by the NLRC Decision of 9 October 2002 should not be deemed as compliance by Dusit Hotel with WO No. 9. The DOLE, through Acting Secretary Manuel G. Imson, issued an Order granting the appeal of the Union. The DOLE Secretary reasoned that the NLRC Decision dated 9 October 2002 categorically declared that the wage increase under the CBA finalized between Dusit Hotel and the Union shall not be credited as compliance with WOs No. 8 and No. 9. Furthermore, Section 1 of Rule IV of the Rules Implementing WO No. 9, which provides that wage increases granted by an employer in an organized establishment within three months prior to the effectivity of said Wage Order shall be credited as compliance with the ECOLA prescribed therein, applies only when an agreement to this effect has been forged between the parties or a provision in the CBA allowing such crediting exists. Expectedly, Dusit Hotel sought reconsideration of the Order of the DOLE Secretary. In an Order, the DOLE Secretary granted the Motion for Reconsideration of Dusit Hotel and reversed his Order dated 22 July 2004. The DOLE Secretary, in reversing his earlier Order, admitted that he had disregarded therein that the wage increase granted by the NLRC in the latters Decision dated 9 October 2002 retroacted to 1 January 2001. The said wage increase, taken together with the hotel employees share in the service charges of Dusit Hotel, already constituted compliance with the WO No. 9. It was then the turn of the Union to file a Motion for Reconsideration, but it was denied by the DOLE Secretary. The DOLE Secretary found that it would be unjust on the part of Dusit Hotel if the hotel employees were to enjoy salary increases retroactive to 1 January 2001, pursuant to the NLRC Decision dated 9 October 2002, and yet said salary increases would be disregarded in determining compliance by the hotel with WO No. 9. The Union appealed the Orders dated 16 December 2004 and 13 October 2005 of the DOLE Secretary with the Court of Appeals, the Court of Appeals promulgated its Decision ruling in favor of the Union. Referring to Section 13 of WO No. 9, the Court of Appeals declared that wage increases/allowances granted by the employer shall not be credited as compliance with the prescribed increase in the same

Wage Order, unless so provided in the law or the CBA itself; and there was no such provision in the case at bar. The appellate court also found that Dusit Hotel failed to substantiate its position that receipt by its employees of shares in the service charges collected by the hotel was to be deemed substantial compliance by said hotel with the payment of ECOLA required by WO No. 9. The Court of Appeals adjudged that Dusit Hotel should be liable for double indemnity for its failure to comply with WO No. 9 within five days from receipt of notice. The appellate court stressed that ECOLA is among the laborers financial gratifications under the law, and is distinct and separate from benefits derived from negotiation or agreement with their employer. The Motion for Reconsideration of Dusit Hotel was denied for lack of merit by the Court of Appeals. ISSUE: Whether the 144 hotel employees were still entitled to ECOLA granted by WO No. 9 despite the increases in their salaries, retroactive to 1 January 2001, ordered by NLRC in the latters Decision dated 9 October 2002. RULING: The reliance of the Union on Section 13 of WO No. 9 in this case is misplaced. Dusit Hotel is not contending creditability of the hotel employees salary increases as compliance with the ECOLA mandated by WO No. 9. Creditability means that Dusit Hotel would have been allowed to pay its employees the salary increases in place of the ECOLA required by WO No. 9. This, however, is not what Dusit Hotel is after. The position of Dusit Hotel is merely that the salary increases should be taken into account in determining the employees entitlement to ECOLA. The retroactive increases could raise the hotel employees daily salary rates above P290.00, consequently, placing said employees beyond the coverage of WO No. 9. Evidently, Section 13 of WO No. 9 on creditability is irrelevant and inapplicable herein. The Court agrees with Dusit Hotel that the increased salaries of the employees should be used as bases for determining whether they were entitled to ECOLA under WO No. 9. The very fact that the NLRC decreed that the salary increases of the Dusit Hotel employees shall be retroactive to 1 January 2001 and 1 January 2002, means that said employees were already supposed to receive the said salary increases beginning on these dates. The increased salaries were the rightful salaries of the hotel employees by 1 January 2001, then again by 1 January 2002. Although belatedly paid, the hotel employees still received their salary increases. It is only fair and just, therefore, that in determining entitlement of the hotel employees to ECOLA, their increased salaries by 1 January 2001 and 1 January 2002 shall be made the bases. There is no logic in recognizing the salary increases for one purpose (i.e., to recover the unpaid amounts thereof) but not for the other (i.e., to determine entitlement to ECOLA). For the Court to rule otherwise would be to sanction unjust enrichment on the part of the hotel employees, who would be receiving increases in their salaries, which would place them beyond the coverage of Section 1 of WO No. 9, yet still be paid ECOLA under the very same provision. The NLRC, in its Decision dated 9 October 2002, directed Dusit Hotel to increase the salaries of its employees by P500.00 per month, retroactive to 1 January 2001. After applying the said salary increase, only 82 hotel employees would have had daily salary rates falling within the range of P250.00 to P290.00. Thus, upon the effectivity of WO No. 9 on 5 November 2001, only the said 82 employees were entitled to receive the first tranch of ECOLA, equivalent to P15.00 per day. The NLRC Decision also ordered Dusit Hotel to effect a second round of increase in its employees salaries, equivalent to P550.00 per month, retroactive to 1 January 2002. As a result of this increase, the daily salary rates of all hotel employees were already above P290.00. Consequently, by 1 January 2002, no more hotel employee was qualified to receive ECOLA.

The assertion of Dusit Hotel that the receipt by said hotel employees of their shares in the service charges already constituted substantial compliance with the prescribed payment of ECOLA under WO No. 9. It must be noted that the hotel employees have a right to their share in the service charges collected by Dusit Hotel, pursuant to Article 96 of the Labor Code of 1991, to wit: Article 96. Service charges. All service charges collected by hotels, restaurants and similar establishments shall be distributed at the rate of eighty-five percent (85%) for all covered employees and fifteen percent (15%) for management. The share of employees shall be equally distributed among them. In case the service charge is abolished, the share of the covered employees shall be considered integrated in their wages. Since Dusit Hotel is explicitly mandated by the afore-quoted statutory provision to pay its employees and management their respective shares in the service charges collected, the hotel cannot claim that payment thereof to its 82 employees constitute substantial compliance with the payment of ECOLA under WO No. 9. Undoubtedly, the hotel employees right to their shares in the service charges collected by Dusit Hotel is distinct and separate from their right to ECOLA; gratification by the hotel of one does not result in the satisfaction of the other. SC finds no basis to hold Dusit Hotel liable for double indemnity Under Section 2(m) of DOLE Department Order No. 10, Series of 1998, the Notice of Inspection Result "shall specify the violations discovered, if any, together with the officers recommendation and computation of the unpaid benefits due each worker with an advice that the employer shall be liable for double indemnity in case of refusal or failure to correct the violation within five calendar days from receipt of notice." A careful review of the Notice of Inspection Result dated 29 May 2002, issued herein by the DOLE-NCR to Dusit Hotel, reveals that the said Notice did not contain such an advice. Although the Notice directed Dusit Hotel to correct its noted violations within five days from receipt thereof, it was not sufficiently apprised that failure to do so within the given period would already result in its liability for double indemnity. The lack of advice deprived Dusit Hotel of the opportunity to decide and act accordingly within the five-day period, as to avoid the penalty of double indemnity. By 22 October 2002, the DOLENCR, through Dir. Maraan, already issued its Order directing Dusit Hotel to pay 144 of its employees the total amount of P1,218,240.00, corresponding to their unpaid ECOLA under WO No. 9; plus the penalty of double indemnity, pursuant to Section 12 of Republic Act No. 6727, as amended by Republic Act No. 8188. SC AFFIRMED WITH THE FOLLOWING MODIFICATIONS: (1) Dusit Hotel Nikko is ORDERED to pay its 82 employees who, after applying the salary increases for 1 January 2001, had daily salaries of P250.00 to P290.00 the first tranch of Emergency Cost of Living Allowance, equivalent to P15.00 per day, from 5 November 2001 to 31 December 2001, within ten (10) days from finality of this Decision; and (2) the penalty for double indemnity is DELETED. No costs. Although the Court is mindful of the fact that labor embraces individuals with a weaker and unlettered position as against capital, it is equally mindful of the protection that the law accords to capital. While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. WAGE PROTECTION PROVISIONS AND PROHIBITIONS REGARDING WAGES

GAA VS. COURT OF APPEALS G.R. No. L-44169; December 3 1985

Facts Respondent Europhil Industries Corporation was formerly one of the tenants in Trinity Building at T.M. Kalaw Street, Manila, while petitioner was then the building administrator. On December 12, 1973, Europhil Industries commenced an action in the Court of First Instance of Manila for damages against petitioner for having perpetrated certain acts that Europhil Industries considered a trespass upon its rights, namely, cutting of its electricity, and removing its name from the building directory and gate passes of its officials and employees. On June 28, 1974, said court rendered judgment in favor of respondent Europhil Industries, ordering petitioner to pay the former the sum of P10,000.00 as actual damages, P5,000.00 as moral damages, P5,000.00 as exemplary damages and to pay the costs. The said decision having become final and executory, a writ of garnishment was issued pursuant to which Deputy Sheriff Cesar A. Roxas on August 1, 1975 served a Notice of Garnishment upon El Grande Hotel, where petitioner was then employed, garnishing her salary, commission and/or remuneration. Petitioner then filed with the Court of First Instance of Manila a motion to lift said garnishment. Arguments Petitioner: Her salaries, commission and or remuneration are exempted from execution under article1708 of the New Civil Code. Issue Whether or not petitioners salaries, commission and or remuneration are exempted from execution under article 1708 of the New Civil Code. Decision NO, IT IS NOT. 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 placed employee of El Grande Hotel, responsible for planning, directing, controlling, and coordinating the activities of all housekeeping personnel so as to ensure the cleanliness, maintenance and orderliness of all guest rooms, function rooms, public areas, and the surroundings of the hotel. Considering the importance of petitioner's function in El Grande Hotel, it is undeniable that petitioner is occupying a position equivalent to that of a managerial or supervisory position. 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. In determining whether a particular laborer or employee is really a "laborer," the character of the word he does must be taken into consideration. He must be classified not according to the arbitrary designation given to his calling, but with reference to the character of the service required of him by his employer. All men who earn compensation by labor or work of any kind, whether of the head or hands, including judges, lawyers, bankers, merchants, officers of corporations, and the like, are in some sense "laboring men." But they are not "laboring men" in the popular sense of the term, when used to refer how the legislature used the term. Contractors, consulting or assistant engineers, agents, superintendents, secretaries of corporations and livery stable keepers, do not come within the meaning of the term. A laborer, within the statute exempting from garnishment the wages of a "laborer," is one whose work depends on mere physical power to perform ordinary manual labor, and not one engaged in services consisting mainly of work requiring mental skill or business capacity, and involving the exercise of intellectual faculties. It is a term ordinarily employed to denote one who subsists by physical toil in contradistinction to those who subsists by professional skill. They are those persons who earn a livelihood by their own manual labor. 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 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 services. 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. We do not think that the legislature intended the exemption in Article 1708 of the New Civil Code to operate in favor of any but those who are laboring men or women in the sense that their work is manual. Persons belonging to this class usually look to the reward of a day's labor for immediate or present support, and such persons are more in need of the exemption than any others. Petitioner is definitely not within that class. NESTLE PHILS. VS. NLRC G.R. No. 91231; February 4, 1991 Facts Four collective bargaining agreements separately covering the petitioner's employees in its Alabang/Cabuyao factories, Makati Administration Office. (both Alabang/Cabuyao factories and Makati office were represented by the respondent, Union of Filipro Employees [UFE]), Cagayan de Oro Factory represented by WATU, and Cebu/Davao Sales Offices represented by the Trade Union of the Philippines and Allied Services (TUPAS), all expired on June 30, 1987. Thereafter, UFE was certified as the sole and exclusive bargaining agent for all regular rank-and-file employees at the petitioner's Cagayan de Oro factory, as well as its Cebu/Davao Sales Office. In August, 1987, while the parties, were negotiating, the employees at Cabuyao resorted to a "slowdown" and walk-outs prompting the petitioner to shut down the factory. Marathon collective bargaining negotiations between the parties ensued. On September 2, 1987, the UFE declared a bargaining deadlock. On September 8, 1987, the Secretary of Labor assumed jurisdiction and issued a return to work order. In spite of that order, the union struck, without notice, at the Alabang/Cabuyao factory, the Makati office and Cagayan de Oro factory on September 11, 1987 up to December 8, 1987. The company retaliated by dismissing the union officers and members of the negotiating panel who participated in the illegal strike. The NLRC affirmed the dismissals on November 2, 1988. On January 26, 1988, UFE filed a notice of strike on the same ground of CBA deadlock and unfair labor practices. However, on March 30, 1988, the company was able to conclude a CBA with the union at the Cebu/Davao Sales Office, and on August 5, 1988, with the Cagayan de Oro factory workers. The union assailed the validity of those agreements and filed a case of unfair labor practice against the company on November 16, 1988. Arguments Petitioner: Since its retirement plan is non-contributory, it (Nestl) has the sole and exclusive prerogative to define the terms of the plan because the workers have no vested and demandable rights thereunder, the grant thereof being not a contractual obligation but merely gratuitous. At most the company can only be directed to maintain the same but not to change its terms. It should be left to the discretion of the company on how to improve or mollify the same. Issue Whether or not petitioner may de directed to change the terms of its retirement plan. Decision YES, IT MAY. The Retirement Plan was "a collective bargaining issue right from the start" for the improvement of the existing Retirement Plan was one of the original CBA proposals submitted by the UFE on May 8, 1987 to Arthur Gilmour, president of Nestl Philippines. The union's original proposal was to modify the existing

plan by including a provision for early retirement. The company did not question the validity of that proposal as a collective bargaining issue but merely offered to maintain the existing non-contributory retirement plan which it believed to be still adequate for the needs of its employees, and competitive with those existing in the industry. The union thereafter modified its proposal, but the company was adamant. Consequently, the impass on the retirement plan become one of the issues certified to the NLRC for compulsory arbitration. The company's contention that its retirement plan is non-negotiable, is not well-taken. The NLRC correctly observed that the inclusion of the retirement plan in the collective bargaining agreement as part of the package of economic benefits extended by the company to its employees to provide them a measure of financial security after they shall have ceased to be employed in the company, reward their loyalty, boost their morale and efficiency and promote industrial peace, gives "a consensual character" to the plan so that it may not be terminated or modified at will by either party. The fact that the retirement plan is non-contributory, i.e., that the employees contribute nothing to the operation of the plan, does not make it a non-issue in the CBA negotiations. As a matter of fact, almost all of the benefits that the petitioner has granted to its employees under the CBA (salary increases, rice allowances, mid-year bonuses, 13th and 14th month pay, seniority pay, medical and hospitalization plans, health and dental services, vacation, sick & other leaves with pay) are non-contributory benefits. Since the retirement plan has been an integral part of the CBA since 1972, the Union's demand to increase the benefits due the employees under said plan, is a valid CBA issue. The deadlock between the company and the union on this issue was resolvable by the Secretary of Labor, or the NLRC, after the Secretary had assumed jurisdiction over the labor dispute. The petitioner's contention, that employees have no vested or demandable right to a non-contributory retirement plan, has no merit for employees do have a vested and demandable right over existing benefits voluntarily granted to them by their employer. The latter may not unilaterally withdraw, eliminate or diminish such benefits. FIVE J TAXI VS. NLRC G.R. No. 111474; August 22, 1994 Facts Private respondents were hired by the petitioners as taxi drivers and, as such, they worked for 4 days weekly on a 24-hour shifting schedule. Aside from the daily "boundary" of P700.00 for air-conditioned taxi or P450.00 for non-air-conditioned taxi, they were also required to pay P20.00 for car washing, and to further make a P15.00 deposit to answer for any deficiency in their "boundary," for every actual working day. In less than 4 months after Maldigan was hired as an extra driver by the petitioners, he already failed to report for work for unknown reasons. Later, petitioners learned that he was working for "Mine of Gold" Taxi Company. With respect to Sabsalon, while driving a taxicab of petitioners on September 6, 1983, he was held up by his armed passenger who took all his money and thereafter stabbed him. He was hospitalized and after his discharge, he went to his home province to recuperate. In January, 1987, Sabsalon was re-admitted by petitioners as a taxi driver under the same terms and conditions as when he was first employed, but his working schedule was made on an "alternative basis," that is, he drove only every other day. However, on several occasions, he failed to report for work during his schedule. On September 22, 1991, Sabsalon failed to remit his "boundary" of P700.00 for the previous day. Also, he abandoned his taxicab in Makati without fuel refill worth P300.00. Despite repeated requests of petitioners for him to report for work, he adamantly refused. Afterwards it was revealed that he was driving a taxi for "Bulaklak Company." Sometime in 1989, Maldigan requested petitioners for the reimbursement of his daily cash deposits for 2 years, but herein petitioners told him that not a single centavo was left of his deposits as these were not even enough to cover the amount spent for the repairs of the taxi he was driving. This was allegedly the practice adopted by petitioners to recoup the expenses incurred in the repair of their taxicab units. When Maldigan insisted on the refund of his deposit, petitioners terminated his services. Sabsalon, on his part, claimed that his termination from employment was effected when he refused to pay for the washing of his taxi seat covers.

On November 27, 1991, private respondents filed a complaint with the Manila Arbitration Office of the National Labor Relations Commission charging petitioners with illegal dismissal and illegal deductions. That complaint was dismissed. Thus, the petition to the SC. Issue Whether or not respondent Maldigan is entitled to their reimbursement of their daily cash deposits. Whether or not respondent Sabsalon may be compelled to pay for the washing of his taxi seat covers. Decision I. NO, HE IS NOT. The P15.00 daily deposits made by respondents to defray any shortage in their "boundary" is covered by the general prohibition in Article 114 of the Labor Code against requiring employees to make deposits, and that there is no showing that the Secretary of Labor has recognized the same as a "practice" in the taxi industry. Consequently, the deposits made were illegal and the respondents must be refunded therefor. Article 114 of the Labor Code provides as follows: Art. 114. Deposits for loss or damage. No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business where the practice of making deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor in appropriate rules and regulations. It can be deduced therefrom that the said article provides the rule on deposits for loss or damage to tools, materials or equipments supplied by the employer. Clearly, the same does not apply to or permit deposits to defray any deficiency which the taxi driver may incur in the remittance of his "boundary." Also, when private respondents stopped working for petitioners, the alleged purpose for which petitioners required such unauthorized deposits no longer existed. In other case, any balance due to private respondents after proper accounting must be returned to them with legal interest. II. YES, HE MAY. 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 petitioners, respondents 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 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 car washing after a tour of duty is a practice in the taxi industry, and is, in fact, dictated by fair play. MANILA ELECTRIC COMPANY V. SEC. OF LABOR GR No. 127598, Jan. 27, 1999 Facts: MEWA informed MERALCO of its intention to re-negotiate the terms and conditions of their existing 19921997 CBA covering the remaining period of two years. Thereafter, collective bargaining negotiations proceeded. However, despite the series of meetings between the negotiating panels of MERALCO and MEWA, the parties failed to arrive at terms and conditions acceptable to both of them. On April 23, 1996, MEWA filed a Notice of Strike with the National Capital Region Branch of the National Conciliation and Mediation Board (NCMB) of the Department of Labor and Employment (DOLE) which was docketed as NCMB-NCR-NS-04-152-96, on the grounds of bargaining deadlock and unfair labor practices.

The newly create CBA eliminated some of the benefits previously enjoyed by employees. Issue: Whether or not withdrawal of benefits amounted to diminution of benefits. Decision: The record shows that MERALCO, aside from complying with the regular 13th month bonus, has further been giving its employees an additional Christmas bonus at the tail-end of the year since 1988. While the special bonuses differed in amount and bore different titles, it can not be denied that these were given voluntarily and continuously on or about Christmas time. The considerable length of time MERALCO has been giving the special grants to its employees indicates a unilateral and voluntary act on its part, to continue giving said benefits knowing that such act was not required by law. Indeed, a company practice favorable to the employees has been established and the payments made by MERALCO pursuant thereto ripened into benefits enjoyed by the employees. Consequently, the giving of the special bonus can no longer be withdrawn by the company as this would amount to a diminution of the employee's existing benefits. PHIL. VETERANS BANK VS. NLRC G.R. No. 130439; October 26, 1999 Facts In 1983, petitioner Philippine Veterans Bank was placed under receivership by the Central Bank (now Bangko Sentral) by virtue of Resolution No. 334 issued by the Monetary Board. Petitioner was subsequently placed under liquidation on 15 June 1985. Consequently, its employees, including private respondent Dr. Jose Teodorico V. Molina (MOLINA), were terminated from work and given their respective separation pay and other benefits. To assist in the liquidation, some of petitioner's former employees were rehired, among them MOLINA, whose re-employment commenced on 15 June 1985. On 11 May 1991, MOLINA filed a complaint against members of the liquidation team. The complaint demanded the implementation of Wage Orders Nos. NCR-01 and NCR-02 as well as moral damages and attorney's fees. In his decision, the Labor Arbiter rejected the 26.16 factor used by the liquidators in computing the daily wage of MOLINA, adopting instead the factor of "365 days." Consequently, they were ordered to pay MOLINA P4,136.64 and P2,190 representing the wage differentials due him under W.O. 1 and W.O. 2. They were also required to pay him P100,000 in moral damages and attorney's fees. On appeal, the NLRC sustained the labor arbiter's ruling after concluding that MOLINA was a regular employee of petitioner with a basic monthly salary of P3,754.60 at the time of his dismissal on 31 January 1992. He was, therefore, entitled to the wage increases mandated by the aforesaid wage orders. Arguments Petitioner: 1) He started working for petitioner as a legal assistant on 17 March 1974. When petitioner was placed under liquidation in 1985, he was retained as Manager II in the Legal Department, where he continued to receive a monthly salary of P3,754,60. Meanwhile, W.O. 1 took effect on 10 November 1990, prescribing a P17-increase in the daily wage of employees whose monthly salary did not exceed P3,802.08. On the other hand, W.O. 2, which became effective on 8 January 1991, mandated a P12increase in the daily wage of employees whose monthly salary did not exceed P4,319.16. His salary should have been adjusted in compliance with said wage orders. 2) Upon petitioner's rehabilitation it assumed all the rights and obligations of the liquidator, including the NLRC's monetary award arising from the labor complaint he filed against the liquidation team. Respondent: 1) MOLINA was not entitled to any salary increase because he was already receiving a monthly salary of P6,654.60 broken down as follows: P3,754.60 as basic compensation, P2,000 as representation and transportation allowance (RATA), and a special allowance of P900. 2) The factor of 26.16 should have been applied in determining MOLINA's daily wage. Doing so would show that MOLINA's daily pay exceeded the minimum wage and, therefore, was beyond the scope of the wage orders. 3) When it was placed under liquidation, it lost its juridical personality, such that it could no longer enter into contracts or transact business. All its assets and liabilities were turned over to the Central Bank. MOLINA's complaint pertained to acts committed during liquidation and so was correctly filed against the liquidation team. Its substitution as party-respondent was clearly erroneous.

Issue Whether or not WO 1 and WO 2 are applicable to petitioner. Who is liable to pay petitioners claims? Decision I. YES, THEY ARE. The old practice of the bank in using factor 365 days in a year in determining the equivalent monthly salary cannot unilaterally be changed by the employer without the consent of the employees, such practice being now a part of the terms and conditions of the employment. An employment agreement, whether written or unwritten, is a bilateral contract and, as such other party thereto cannot change or amend the terms thereof without the consent of the other party thereto. From the foregoing, it is clear that Molina is entitled to the wage increase under R.A. 6440 computed on the basis of 365 paid days and to the corresponding salary differentials as a result of the application of this factor. Evidently, the use of the 365 factor is binding and conclusive, forming as it did part of the employment contract. Petitioner can no longer invoke the 26.16 factor after it voluntarily adopted the 365 factor as a policy even prior to its receivership. To abandon such policy and revert to its old practice of using the 26.16 factor would be a diminution of a labor benefit, which is prohibited by the Labor Code. It cannot be doubted that the 365 factor favors petitioner's employees, including MOLINA, because it results in a higher determination of their monthly salary. II. PETITIONER IS LIABLE. When a bank is declared insolvent and placed under receivership, the Monetary Board of the Central Bank determines whether to proceed with the liquidation or reorganization of the financially distressed bank. A receiver takes control and possession of the assets of the bank for the benefit of its creditors and concurrently represents the bank. On the other hand, a liquidator assumes the role of the receiver upon the determination by the Monetary Board that the bank can no longer resume business. His task is to dispose of all the assets of the bank and effect partial payments of its obligations in accordance with their legal priority. In both receivership and liquidation proceedings, the bank retains its juridical personality notwithstanding the closure of its business; in fact, the bank may even be sued. Its corporate existence is assumed by the receiver or liquidator. The latter, however, acts not only for the benefit of the bank, but for the bank's creditors as well. In the instant case, petitioner was initially closed and put under receivership and liquidation. Subsequently, its rehabilitation was effected by virtue of Republic Act No. 7169 and Monetary Board Resolution No. 348 dated 10 April 1992. Rehabilitation contemplates a continuance of corporate life and activities in an effort to restore and reinstate the corporation to its former position of successful operation and solvency. Upon its rehabilitation, petitioner assumed the rights and obligations of the receiver and liquidator. This includes MOLINA's claim for unpaid wages. It must be borne in mind that all the acts of the receiver and liquidator pertain to petitioner, both having assumed petitioner's corporate existence. Petitioner cannot disclaim liability by arguing that the non-payment of MOLINA's just wages was committed by the liquidators during the liquidation period. PHIL. APPLIANCES CORP. VS. CA G.R. No. 149434; June 3, 2004 Facts Petitioner is a domestic corporation engaged in the business of manufacturing refrigerators, freezers and washing machines. Respondent United Philacor Workers Union-NAFLU is the duly elected collective bargaining representative of the rank-and-file employees of petitioner. During the collective bargaining

negotiations between petitioner and respondent union in 1997 (for the last two years of the collective bargaining agreement covering the period of July 1, 1997 to August 31, 1999), petitioner offered the amount of four thousand pesos (P4,000.00) to each employee as an "early conclusion bonus". Petitioner claims that this bonus was promised as a unilateral incentive for the speeding up of negotiations between the parties and to encourage respondent union to exert their best efforts to conclude a CBA. Upon conclusion of the CBA negotiations, petitioner accordingly gave this early signing bonus. In view of the expiration of this CBA, respondent union sent notice to petitioner of its desire to negotiate a new CBA. Petitioner and respondent union began their negotiations. On October 22, 1999, after eleven meetings, respondent union expressed dissatisfaction at the outcome of the negotiations and declared a deadlock. A few days later, on October 26, 1999, respondent union filed a Notice of Strike with the National Conciliation and Mediation Board (NCMB), Region IV in Calamba, Laguna, due to the bargaining deadlock. A conciliation and mediation conference was held on October 30, 1999 at the NCMB in Imus, Cavite, before a Conciliator. The conciliation meetings started with eighteen unresolved items between petitioner and respondent union. At the meeting on November 20, 1999, respondent union accepted petitioners proposals on fourteen items, leaving the following items unresolved: wages, rice subsidy, signing, and retroactive bonus. Petitioner and respondent union failed to arrive at an agreement concerning these four remaining items. On January 18, 2000, respondent union went on strike at the petitioners plant at Barangay Maunong, Calamba, Laguna and at its washing plant at Paraaque, Metro Manila. The strike lasted for eleven days and resulted in the stoppage of manufacturing operations as well as losses for petitioner, which constrained it to file a petition before the Department of Labor and Employment (DOLE). Labor Secretary assumed jurisdiction over the dispute and, on January 28, 2000, ordered the striking workers to return to work within twenty-four hours from notice and directed petitioner to accept back the said employees. On April 14, 2000, SOLE issued the Order ruling in favor of Companys proposal on signing bonus, pegging the amount of P3,000 bonus as fair and reasonable under the circumstances. Arguments Petitioner: The award of the signing bonus was patently erroneous since it was not part of the employees salaries or benefits or of the collective bargaining agreement. It is not demandable or enforceable since it is in the nature of an incentive. As no CBA was concluded through the mutual efforts of the parties, the purpose for the signing bonus was not served. Issue Whether or not the award of the signing bonus is warranted. Decision NO, IT IS NOT. The signing bonus is a grant motivated by the goodwill generated when a CBA is successfully negotiated and signed between the employer and the union. A signing bonus is not a benefit which may be demanded under the law. It 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, the condition for awarding it must be duly satisfied. In the case at bar, 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. The offer was first made during the 1997 CBA negotiations and then again at the start of the 1999 negotiations. The bonus offered is consistent with the very concept of a signing bonus. In the case at bar, the CBA negotiation between petitioner and respondent union failed notwithstanding the intervention of the NCMB. Respondent union went on strike for eleven days and blocked the ingress to and egress from petitioners two 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. Furthermore, we have consistently ruled that a bonus is not a demandable and enforceable obligation. True, it may nevertheless be granted on equitable considerations as when the giving of such bonus has been the companys long and regular practice. To be considered a "regular practice," however, the giving of the bonus should have been done over a long period of time, and must be shown to have been consistent and deliberate. The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowing fully well that said employees are not covered by the law requiring payment thereof. Respondent does not contest the fact that petitioner initially offered a signing bonus only during the previous CBA negotiation. Previous to that, there is no evidence on record that petitioner ever offered the same or that the parties included a signing bonus among the items to be resolved in the CBA negotiation. Hence, the giving of such bonus cannot be deemed as an established practice considering that the same was given only once, that is, during the 1997 CBA negotiation. SPECIAL STEEL PRODUCTS VS. VILLAREAL G.R. No. 143304; July 8, 2004 Facts Petitioner is a domestic corporation engaged in the principal business of importation, sale, and marketing of BOHLER steel products. Respondents worked for petitioner as assistant sales manager and salesman, respectively. Sometime in May 1993, respondent Villareal obtained a car loan from the Bank of Commerce, with petitioner as surety, as shown by a "continuing suretyship agreement" and "promissory note" wherein they jointly and severally agreed to pay the bank P786,611.60 in 72 monthly installments. On January 15, 1997, respondent Villareal resigned and thereafter joined Hi-Grade Industrial and Technical Products, Inc. as executive vice-president. Sometime in August 1994, petitioner "sponsored" respondent Frederick So to attend a training course in Kapfenberg, Austria conducted by BOHLER, petitioners principal company. This training was a reward for respondent Sos outstanding sales performance. When respondent returned nine months thereafter, petitioner directed him to sign a memorandum providing that BOHLER requires trainees from Kapfenberg to continue working with petitioner for a period of three (3) years after the training. Otherwise, each trainee shall refund to BOHLER $6,000.00 (US dollars) by way of set-off or compensation. On January 16, 1997 or 2 years and 4 months after attending the training, respondent resigned from petitioner. Immediately, petitioner ordered respondents to render an accounting of its various Christmas giveaways they received. These were intended for distribution to petitioners customers. In protest, respondents demanded from petitioner payment of their separation benefits, commissions, vacation and sick leave benefits, and proportionate 13th month pay. But petitioner refused and instead, th withheld their 13 month pay and other benefits. On April 16, 1997, respondents filed with the Labor Arbiter a complaint for payment of their monetary benefits against petitioner and its president. Arguments Petitioner: 1) It was withholding of Villareals monetary benefits as a lien for the protection of its right as surety in the car loan. It will release Villareals monetary benefits if he would cause its substitution as surety by Hi-Grade. 2) Since Villareals debt to the Bank is now due and demandable, it may, pursuant to Art. 2071 of the New Civil Code, demand a security that shall protect him from any proceeding by the creditor and from the danger of insolvency of the debtor. 3) As a guarantor, it could legally withhold respondent Villareals monetary benefits as a preliminary remedy pursuant to Article 2071 of the Civil Code, as amended. As to respondent So, petitioner, citing Article 113 of the Labor Code, as amended, in relation to Article 1706 of the Civil Code, as amended, maintains that it could withhold his monetary benefits being authorized by the memorandum he signed. Issue

Whether or not the withholding of the monetary benefits is valid. Decision NO, IT IS NOT. Article 116 of the Labor Code, as amended, provides: "ART. 116. Withholding of wages and kickbacks prohibited. It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages (and benefits) of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the workers consent." th Petitioner has no legal authority to withhold respondents 13 month pay and other benefits. What an employee has worked for, his employer must pay. Thus, an employer cannot simply refuse to pay the wages or benefits of its employee because he has either defaulted in paying a loan guaranteed by his employer; or violated their memorandum of agreement; or failed to render an accounting of his employers property. Nonetheless, petitioner, relying on Article 2071 contends that the right to demand security and obtain release from the guaranty it executed in favor of respondent Villareal may be exercised even without initiating a separate and distinct action. There is no guaranty involved herein and, therefore, the provision of Article 2071 does not apply. A guaranty is distinguished from a surety in that a guarantor is the insurer of the solvency of the debtor and thus binds himself to pay if the principal is unable to pay, while a surety is the insurer of the debt, and he obligates himself to pay if the principal does not pay. Based on the above distinction, it appears that the contract executed by petitioner and respondent Villareal (in favor of the Bank of Commerce) is a contract of surety. In fact, it is denominated as a "continuing suretyship agreement." Hence, petitioner could not just unilaterally withhold respondents wages or benefits as a preliminary remedy under Article 2071. It must file an action against respondent Villareal. Petitioner may only protect its right as surety by instituting an action to demand a security. As to respondent So, petitioner maintains that there can be a set-off or legal compensation between th them. Consequently, it can withhold his 13 month pay and other benefits. For legal compensation to take place, the requirements set forth in Articles 1278 and 1279 of the Civil Code, quoted below, must be present. "ARTICLE 1278. Compensation shall take place when two persons, in their own right, are creditors and debtors of each other. "ARTICLE 1279. In order that compensation may be proper, it is necessary: (1) That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other; (2) That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated; (3) That the two debts be due; (4) That they be liquidated and demandable; (5) That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor." In the present case, set-off or legal compensation cannot take place between petitioner and respondent So because they are not mutually creditor and debtor of each other. A careful reading of the Memorandum dated August 22, 1994 reveals that the "lump sum compensation of not less than US $6,000.00 will have to be refunded" by each trainee to BOHLER, not to petitioner. th In fine, we rule that petitioner has no legal right to withhold respondents 13 month pay and other benefits to recompense for whatever amount it paid as security for respondent Villareals car loan; and for the expenses incurred by respondent So in his training abroad. AGABON VS. NLRC G.R. No. 158693; November 17, 2004 Facts Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 19922 until February 23, 1999 when they were dismissed for abandonment of work.

Petitioners then filed a complaint for illegal dismissal and payment of money claims3 and on December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the monetary claims. On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned their work, and were not entitled to backwages and separation pay. The other money claims awarded by the Labor Arbiter were also denied for lack of evidence.5 Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the Court of Appeals. The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had abandoned their employment but ordered the payment of money claims. Arguments Petitioner: 1) They were dismissed because the private respondent refused to give them assignments unless they agreed to work on a "pakyaw" basis when they reported for duty on February 23, 1999. They did not agree on this arrangement because it would mean losing benefits as Social Security System (SSS) members. 2) Private respondent did not comply with the twin requirements of notice and hearing. Respondent: 1) Petitioners were not dismissed but had abandoned their work. In fact, private respondent sent two letters to the last known addresses of the petitioners advising them to report for work. Private respondent's manager even talked to petitioner Virgilio Agabon by telephone sometime in June 1999 to tell him about the new assignment at Pacific Plaza Towers involving 40,000 square meters of cornice installation work. However, petitioners did not report for work because they had subcontracted to perform installation work for another company. 2) Petitioners also demanded for an increase in their wage to P280.00 per day. When this was not granted, petitioners stopped reporting for work and filed the illegal dismissal case. Issue Whether or not petitioners were illegally dismissed. Whether or not petitioners are entitled to their money claims. Whether or not the deductions of the loans and the value of the shoes from petitioners 13th month pay were valid. Decision I. NO, THEY WERE NOT. Petitioners' dismissal was for a just cause. They had abandoned their employment and were already working for another employer. In February 1999, petitioners were frequently absent having subcontracted for an installation work for another company. Subcontracting for another company clearly showed the intention to sever the employer-employee relationship with private respondent. This was not the first time they did this. In January 1996, they did not report for work because they were working for another company. Private respondent at that time warned petitioners that they would be dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear intention to sever their employer-employee relationship. The record of an employee is a relevant consideration in determining 17 the penalty that should be meted out to him. Private respondent, however, did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the employee's last known address.21 Thus, it should be held liable for non-compliance with the procedural requirements of due process. The rule is: where the employer had a valid reason to dismiss an employee but did not follow the due process requirement, the dismissal may be upheld but the employer will be penalized. II. YES, THEY ARE.

Private respondent is liable for petitioners' holiday pay, service incentive leave pay and 13th month pay without deductions. As a general rule, one who pleads payment has the burden of proving it. Even where the employee must allege non-payment, the general rule is that the burden rests on the employer to prove payment, rather than on the employee to prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other similar documents which will show that overtime, differentials, service incentive leave and other claims of workers have been paid are not in the possession of the worker but in the custody and absolute control of the employer. In the case at bar, if private respondent indeed paid petitioners' holiday pay and service incentive leave pay, it could have easily presented documentary proofs of such monetary benefits to disprove the claims of the petitioners. But it did not, except with respect to the 13th month pay wherein it presented cash vouchers showing payments of the benefit in the years disputed. Allegations by private respondent that it does not operate during holidays and that it allows its employees 10 days leave with pay, other than being self-serving, do not constitute proof of payment. Consequently, it failed to discharge the onus probandi thereby making it liable for such claims to the petitioners. III. NO, THEY WERE NOT. The evident intention of Presidential Decree No. 851 is to grant an additional income in the form of the 13th month pay to employees not already receiving the same so as "to further protect the level of real wages from the ravages of world-wide inflation." Clearly, as additional income, the 13th month pay is included in the definition of wage under Article 97(f) of the Labor Code from which an employer is prohibited under Article 113 of the same Code from making any deductions without the employee's knowledge and consent. In the instant case, private respondent failed to show that the deduction of the SSS loan and the value of the shoes from petitioner Virgilio Agabon's 13th month pay was authorized by the latter. The lack of authority to deduct is further bolstered by the fact that petitioner Virgilio Agabon included the same as one of his money claims against private respondent. AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES VS. AMERICAN WIRE G.R. No.155059, April 29, 2005 Facts American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and cables. There are two unions in this company, the American Wire and Cable Monthly-Rated Employees Union (Monthly-Rated Union) and the American Wire and Cable Daily-Rated Employees Union (Daily-Rated Union). On 16 February 2001, an original action was filed before the NCMB of the Department of Labor and Employment (DOLE) by the two unions for voluntary arbitration. Arguments Petitioner: 1) Private respondent, without valid cause, suddenly and unilaterally withdrew and denied the benefits and entitlements of service award (35% premium pay of an employees basic pay for the work rendered during Holy Monday, Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29), Christmas party, and promotional increase which they have long enjoyed. 2) The grant of these benefits was a customary practice that can no longer be unilaterally withdrawn by private respondent without the tacit consent of the petitioner. The benefits in question were given by the respondent to the petitioner consistently, deliberately, and unconditionally since time immemorial. The benefits/entitlements were not given to petitioner due to an error in interpretation, or a construction of a difficult question of law, but simply, the grant has been a practice over a long period of time. As such, it cannot be withdrawn from the petitioner at respondents whim and caprice, and without the consent of the former. The benefits given by the respondent cannot be considered as a bonus as they are not founded on profit. Even assuming that it can be treated as a bonus, the grant of the same, by reason of its long and regular concession, may be regarded as part of regular compensation. 3) A promotional increase was asked by the petitioner for fifteen (15) of its members who were given or assigned new job classifications. According to petitioner, the new job classifications were in the nature of a promotion, necessitating the grant of an increase in the salaries of the said 15 members.

4) On the matter of the withdrawal of the service award, it is the employees length of service which is taken as a factor in the grant of this benefit, and not whether the company acquired profit or not. 5) On respondent companys Revenues and Profitability Analysis for the years 1996-2000, the petitioner insists that since the former was unaudited, it should not have justified the companys sudden withdrawal of the benefits/entitlements. The normal and/or legal method for establishing profit and loss of a company is through a financial statement audited by an independent auditor. Respondent: 1) The grant of all subject benefits has not ripened into practice that the employees concerned can claim a demandable right over them. The grant of these benefits was conditional based upon the financial performance of the company and that conditions/circumstances that existed before have indeed substantially changed thereby justifying the discontinuance of said grants. The companys financial performance was affected by the recent political turmoil and instability that led the entire nation to a bleeding economy. Hence, it only necessarily follows that the companys financial situation at present is already very much different from where it was three or four years ago. 2) It is not required that the only legal method to ascertain profit and loss is through an audited financial statement. The cases only provide that an audited financial statement is the normal method. 3) The 15 members of petitioner union were not actually promoted. There was only a realignment of positions. Issue Whether or not respondent is guilty of violating article 100 of the Labor Code when it withdrew the benefits or entitlements given to members of petitioner Union. Decision NO, IT IS NOT. Article 100 of the Labor Code provides: ART. 100. PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS. Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code. For the Court to resolve the issue presented, it is critical that a determination must be first made on whether the benefits/entitlements are in the nature of a bonus or not, and assuming they are so, whether they are demandable and enforceable obligations. The benefits/entitlements subjects of the instant case are all bonuses which were given by the private respondent out of its generosity and munificence. The additional 35% premium pay for work done during selected days of the Holy Week and Christmas season, the holding of Christmas parties with raffle, and the cash incentives given together with the service awards are all in excess of what the law requires each employer to give its employees. Since they are above what is strictly due to the members of petitionerunion, the granting of the same was a management prerogative, which, whenever management sees necessary, may be withdrawn, unless they have been made a part of the wage or salary or compensation of the employees. The consequential question therefore that needs to be settled is if the subject benefits/entitlements, which are bonuses, are demandable or not. Stated another way, can these bonuses be considered part of the wage or salary or compensation making them enforceable obligations? For a bonus to be enforceable, it must have been promised by the employer and expressly agreed upon by the parties, or it must have had a fixed amountand had been a long and regular practice on the part of the employer. The benefits/entitlements in question were never subjects of any express agreement between the parties. They were never incorporated in the Collective Bargaining Agreement (CBA). As observed by the Voluntary Arbitrator, the records reveal that these benefits/entitlements have not been subjects of any express agreement between the union and the company, and have not yet been incorporated in the CBA. In fact, the petitioner has not denied having made proposals with the private respondent for the service award and the additional 35% premium pay to be made part of the CBA. The Christmas parties and its incidental benefits, and the giving of cash incentive together with the service award cannot be said to have fixed amounts. What is clear from the records is that over the years, there had been a downtrend in the amount given as service award. There was also a downtrend with respect to the holding of the Christmas parties in the sense that its location changed from paid

venues to one which was free of charge, evidently to cut costs. Also, the grant of these two aforementioned bonuses cannot be considered to have been the private respondents long and regular practice. To be considered a regular practice, 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 downtrend in the grant of these two bonuses over the years demonstrates that there is nothing consistent about it. The additional 35% premium pay for work rendered during selected days of the Holy Week and Christmas season cannot be held to have ripened into a company practice that the petitioner herein have a right to demand. Aside from the general averment of the petitioner that this benefit had been granted by the private respondent since time immemorial, there had been no evidence adduced that it had been a regular practice. Notwithstanding that the subject 35% premium pay was deliberately given and the same was in excess of that provided by the law, the same however did not ripen into a company practice on account of the fact that it was only granted for two (2) years and with the express reservation from respondent corporations owner that it cannot continue to rant the same in view of the companys current financial situation. To hold that an employer should be forced to distribute bonuses which it granted out of kindness is to penalize him for his past generosity. On the alleged promotion of 15 members of the petitioner union that should warrant an increase in their salaries, considering that the Union was unable to adduce proof that a promotion indeed occur[ed] with respect to the 15 employees, the Daily Rated Unions claim for promotional increase likewise falls there being no promotion established under the records at hand. HONDA PHILS. VS. SAMAHANG MALAYANG MANGGAGAWA SA HONDA G.R. No. 145561; June 15, 2005 Facts A Collective Bargaining Agreement (CBA) was forged between petitioner Honda and respondent which contained provisions on 13th Month Pay (The COMPANY shall maintain the present practice in the th th th implementation [of] the 13 month pay), 14 Month Pay (The COMPANY shall grant a 14 Month Pay, th computed on the same basis as computation of 13 Month Pay, and an agreement by the COMPANY to 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 the latter part of 1998, the parties started re-negotiations for the fourth and fifth years of their CBA. When the talks between the parties bogged down, respondent union filed a Notice of Strike on the ground of bargaining deadlock. Thereafter, Honda filed a Notice of Lockout. On March 31, 1999, then Department of Labor and Employment (DOLE) Secretary assumed jurisdiction over the labor dispute 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. Respondent union went on strike and picketed the premises of Honda on May 19, 1999. On June 16, 1999, DOLE Acting Secretary assumed jurisdiction over the case and certified the same to the National Labor Relations Commission (NLRC) for compulsory arbitration. 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 companys 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. Respondent union opposed the pro-rated computation of the bonuses in a letter dated November 25, 1999. The matter was brought before the Grievance Machinery in accordance with the parties existing CBA but when the issue remained unresolved, it was submitted for voluntary arbitration. In his decision dated May 2, 2000, Voluntary Arbitrator invalidated Hondas computation.

Issue th Whether or not the pro-rated computation of the 13 month pay and other bonuses in question is valid and lawful. Decision NO, IT IS NOT. 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. In some instances, however, the provisions of a CBA may become contentious, as in this case. Honda wanted to implement a pro-rated computation of the benefits based on the no work, no pay rule. According to the company, the phrase present practice as mentioned in the CBA refers to the manner and requisites with respect to the payment of the bonuses, i.e., 50% to be given in May and the other 50% in December of each year. Respondent union, however, insists that the CBA provisions relating to the implementation of the 13th month pay necessarily relate to the computation of the same. The assailed CBA provisions are far from being unequivocal. A cursory reading of the provisions will show that they did not state categorically whether the computation of the 13th month pay, 14th month pay and the financial assistance would be based on one full months basic salary of the employees, or prorated based on the compensation actually received. The arbitrator thus properly resolved the ambiguity in favor of labor as mandated by Article 1702 of the Civil Code. The Court of Appeals affirmed the arbitrators finding and added that the computation of the 13th month pay should be based on the length of service and not on the actual wage earned by the worker. th Presidential Decree No. 851, otherwise known as the 13 Month Pay Law, which required all employers th to pay their employees a 13 month pay, was issued to protect the level of real wages from the ravages of worldwide inflation. Under the Revised Guidelines on the Implementation of the 13th month pay issued on November 16, 1987, the salary ceiling of P1,000.00 under P.D. No. 851 was removed. It further provided that the minimum 13th 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 guidelines pertinently provides that the basic salary of an employee for the purpose of computing th the 13 month pay shall include all remunerations or earnings paid by his employer for services rendered but does not include allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime premium, night differential and holiday pay, and cost-of-living allowances. For employees receiving regular wage, we have interpreted basic salary to mean, not the amount actually received by an employee, but 1/12 of their standard monthly wage multiplied by their length of service within a given calendar year. Thus, we exclude from the computation of basic salary payments for sick, vacation and maternity leaves, night differentials, regular holiday pay and premiums for work th done on rest days and special holidays. The 13 month pay due an employee was computed based on the employees basic monthly wage multiplied by the number of months worked in a calendar year prior to separation from employment. The revised guidelines also provided for a pro-ration of this benefit only in cases of resignation or separation from work. As the rules state, under these circumstances, an employee is entitled to a pay in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year. More importantly, it has not been refuted that Honda has not implemented any pro-rating of the 13th month pay before the instant case. 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 companys financial standing. This is an implicit acceptance that prior to the strike, a full month basic pay computation was the present practice intended to be maintained in the CBA. With regard to the length of time the company practice should have been exercised to constitute voluntary employer practice which cannot be unilaterally withdrawn by the employer, we hold that jurisprudence has

not laid down any rule requiring a specific minimum number of years. Some may be 6 years (Davao Fruits Corporation vs. Associated Labor Unions), 3 and 9 months (Davao Integrated Port Stevedoring Services vs. Abarquez), 3 years and 4 months (Tiangco vs. Leogardo, Jr.), or two years (Sevilla Trading Company vs. Semana). This, we rule constitutes voluntary employer practice which cannot be unilaterally withdrawn by the employer without violating Art. 100 of the Labor Code. Lastly, the foregoing interpretation of law and jurisprudence 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 workingmans welfare should be the primordial and paramount consideration. What is more, the factual milieu of this case is such that 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. PRODUCERS BANK VS. NLR G.R. No. 100701; March 28, 2001

Facts Private respondent filed a complaint on 11 February 1988 with the Arbitration Branch, National Capital Region, National Labor Relations Commission (NLRC), charging petitioner with diminution of benefits, non-compliance with Wage Order No. 6 and non-payment of holiday pay. In addition, private respondent prayed for damages. On 31 March 1989, Labor Arbiter found private respondent's claims to be unmeritorious and dismissed its complaint. In a complete reversal, however, the NLRC granted all of private respondent's claims, except for damages. Arguments Petitioner: 1) It cannot be compelled to pay the alleged bonus differentials due to its depressed financial condition, as evidenced by the fact that in 1984 it was placed under conservatorship by the Monetary Board. According to petitioner, it sustained losses in the millions of pesos from 1984 to 1988, an assertion which was affirmed by the labor arbiter. Moreover, the collective bargaining agreement of the parties does not provide for the payment of any mid-year or Christmas bonus. 2) It is not covered by PD 851 since the mid-year and Christmas bonuses it has been giving its employees from 1984 to 1988 exceeds the basic salary for one month (except for 1985 where a total of one month basic salary was given). Hence, this amount should be applied towards the satisfaction of the 13th month pay, pursuant to Section 2 of PD 851. 3) It complied with Wage Order No. 6 because the first year salary and allowance increase provided for under the collective bargaining agreement can be credited against the wage and allowance increase mandated by such wage order. Under Wage Order No. 6, all increases in wages or allowances granted by the employer between 17 June 1984 and 1 November 1984 shall be credited as compliance with the wage and allowance adjustments prescribed therein. Although the collective bargaining agreement was signed by the parties on 16 November. 1984, the first year salary and allowance increase was made to take effect retroactively, beginning from 1 March 1984 until 28 February 1985. This period encompasses the period of creditability provided for under Wage Order No. 6 and that, therefore, the balance remaining after applying the first year salary and allowance increase in the collective bargaining agreement to the increase mandated by Wage Order No. 5, in the amount of P125.00, should be made chargeable against the increase prescribed by Wage Order No. 6, and if not sufficient, petitioner is willing to pay the difference. Respondent: 1) The mid-year and Christmas bonuses, by reason of their having been given for thirteen consecutive years, have ripened into a vested right and, as such, can no longer be unilaterally withdrawn by petitioner without violating Article 100 of Presidential Decree No. 4429 which prohibits the diminution or elimination of benefits already being enjoyed by the employees. Although private respondent concedes that the grant of a bonus is discretionary on the part of the employer, it argues that, by reason of its long and regular concession, it may become part of the employee's regular compensation.

2) The conservator was not justified in diminishing or not paying the 13th month pay and that petitioner should have instead applied for an exemption, in accordance with section 7 of Presidential Decree No. 851 (PD 851), as amended by Presidential Decree No. 1364, but that it did not do so. The actions of the conservator ran counter to the provisions of PD 851. 3) The first year salary and allowance increases under the collective bargaining agreement cannot be applied towards the satisfaction of the increases prescribed by Wage Order No. 6 because the former were not granted within the period of creditability provided for in such wage order. The significant dates with regard to the granting of the first year increases are 9 November 1984 the date of issuance of the MOLE Resolution, 16 November 1984 - the date when the collective bargaining agreement was signed by the parties and 1 March 1984 the retroactive date of effectivity of the first year increases. None of these dates fall within the period of creditability under Wage Order No. 6 which is from 17 June 1984 to 1 November 1984. Thus, petitioner has not complied with Wage Order No. 6. 4) The Inter-office Memorandum dated August 13,1986 provides for a divisor of 303 days in computing overtime pay. The clear import of this document is that from the 365 days in a year, we deduct 52 rest days which gives a total of 313 days. Now, if 313 days is the number of working days of the employees then, there is a disputable presumption that the employees are paid their holiday pay. However, this is not so in the case at bar. The bank uses 303 days as its divisor. Hence, it is not paying its employees their corresponding holiday pay. Issue Whether or not petitioner is entitled to pay the bonuses and 13th month pay. Whether or not petitioner has complied with WO No. 6. Whether or not the 303 divisor used by petitioner is violative of article 94 of the Labor Code. Decision I. NO, THEY ARE NOT. A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employer's business and made possible the realization of profits. It is an act of generosity granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits. The granting of a bonus is a management prerogative, something given in addition to what is ordinarily received by or strictly due the recipient. Thus, a bonus is not a demandable and enforceable obligation, except when it is made part of the wage, salary or compensation of the employee. However, an employer cannot be forced to distribute bonuses which it can no longer afford to pay. To hold otherwise would be to penalize the employer for his past generosity. Private respondent's contention, that the decrease in the mid-year and year-end bonuses constituted a diminution of the employees' salaries, is not correct, for bonuses are not part of labor standards in the same class as salaries, cost of living allowances, holiday pay, and leave benefits, which are provided by the Labor Code. Petitioner was placed under conservatorship by the Monetary Board, pursuant to its authority under Section 28-A of Republic Act No. 265,21 as amended by Presidential Decree No. 72. Under Section 28-A, the Monetary Board may place a bank under the control of a conservator when it finds that the bank is continuously unable or unwilling to maintain a condition of solvency or liquidity. Petitioner was not only experiencing a decline in its profits, but was reeling from tremendous losses triggered by a bank-run which began in 1983. In such a depressed financial condition, petitioner cannot be legally compelled to continue paying the same amount of bonuses to its employees. Thus, the conservator was justified in reducing the mid-year and Christmas bonuses of petitioner's employees. To hold otherwise would be to defeat the reason for the conservatorship which is to preserve the assets and restore the viability of the financially precarious bank. Ultimately, it is to the employees' advantage that the conservatorship achieve its purposes for the alternative would be petitioner's closure whereby employees would lose not only their benefits, but their jobs as well. th With regard to 13 month pay, PD 851, which was issued by President Marcos on 16 December 1975, requires all employers to pay their employees receiving a basic salary of not more than P 1,000 a month, regardless of the nature of the employment, a 13th month pay, not later than December 24 of every year.

However, employers already paying their employees a 13th month pay or its equivalent are not covered by th the law. Under the Revised Guidelines on the Implementation of the 13 -Month Pay Law, the term "equivalent" shall be construed to include Christmas bonus, mid-year bonus, cash bonuses and other payments amounting to not less than 1/12 of the basic salary. The intention of the law was to grant some relief - not to all workers - but only to those not actually paid a 13th month salary or what amounts to it, by whatever name called. It was not envisioned that a double burden would be imposed on the employer already paying his employees a 13th month pay or its equivalent whether out of pure generosity or on the basis of a binding agreement. To impose upon an employer already giving his employees the equivalent of a 13th month pay would be to penalize him for his liberality and in all probability, the employer would react by withdrawing the bonuses or resist further voluntary grants for fear that if and when a law is passed giving the same benefits, his prior concessions might not be given due credit. In the case at bar, even assuming the truth of private respondent's claims as contained in its position paper or Memorandum regarding the payments received by its members in the form of 13th month pay, mid-year bonus and Christmas bonus, it is noted that, for each and every year involved, the total amount given by petitioner would still exceed, or at least be equal to, one month basic salary and thus, may be th considered as an "equivalent" of the 13 month pay mandated by PD 851. Thus, petitioner is justified in crediting the mid-year bonus and Christmas bonus as part of the 13th month pay. II. YES, IT HAS. WO 6 came into effect on 1 November 1984, increased the statutory minimum wage of workers, with different increases being specified for agricultural plantation and non-agricultural workers. The bone of contention, however, involves Section 4 thereof which reads: All wage increase in wage and/or allowance granted by employers between June 17, 1984 and the effectivity of this Order shall be credited as compliance with the minimum wage and allowance adjustments prescribed herein, provided that where the increases are less than the applicable amount provided in this Order, the employer shall pay the difference. Such increases shall not include anniversary wage increases provided in collective bargaining agreements unless the agreement expressly provide otherwise. The creditability provision in Wage Order No. 6 is based on important public policy, that is, the encouragement of employers to grant wage and allowance increases to their employees higher than the minimum rates of increases prescribed by statute or administrative regulation. To obliterate the creditability provisions in the Wage Orders through interpretation or otherwise, and to compel employers simply to add on legislated increases in salaries or allowances without regard to what is already being paid, would be to penalize employers who grant their workers more than the statutorily prescribed minimum rates of increases. Clearly, this would be counter-productive so far as securing the interest of labor is concerned. The creditability provisions in the Wage Orders prevent the penalizing of employers who are industry leaders and who do not wait for statutorily prescribed increases in salary or allowances and pay their workers more than what the law or regulations require. Section 1 of Article VIII of the collective bargaining agreement of the parties states that "the parties have formulated and agreed on the following highly substantial packaged increases in salary and allowance which take into account and cover (a) any deflation in income of employees because of such price increases and inflation and (b) the expected governmental response thereto in the form of statutory adjustments in wages, allowances and benefits, during the next three (3) years of this Agreement..." The unequivocal wording of this provision manifests the clear intent of the parties to apply the wage and allowance increases stipulated in the collective bargaining agreement to any statutory wage and allowance, adjustments issued during the effectivity of such agreement from 1 March 1984 to 28 February 1987. Furthermore, contrary to private respondent's contentions, there is nothing in the wording of Section 2 of Article VIII of the collective bargaining agreement that would prevent petitioner from crediting the first year salary and allowance increases against the increases prescribed by Wage Order No. 6. It would be inconsistent with the above stated rationale underlying the creditability provision of Wage Order No. 6 if, after applying the first year increase to Wage Order No. 5, the balance was not made chargeable to the increases under Wage Order No. 6 for the fact remains that petitioner actually granted

wage and allowance increases sufficient to cover the increases mandated by Wage Order No. 5 and part of the increases mandated by Wage Order No. 6. III. NO, IT IS NOT. Article 94 of the Labor Code provides that every worker shall be paid his regular daily wage during regular holidays and that 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. In this case, the divisor used by petitioner in arriving at the employees' daily rate for the purpose of . computing salary-related benefits is 314 Apparently, the divisor of 314 is arrived at by subtracting all Sundays from the total number of calendar days in a year, since Saturdays are considered paid rest days, as stated in the inter-office memorandum. Thus, the use of 314 as a divisor leads to the inevitable conclusion that the ten legal holidays are already included therein. However, the divisor was reduced to 303 by virtue of an inter-office memorandum issued on 13 August 1986. The usual practice of 314 days as divisor used in the computation for cash conversion and determination of daily rate, among others, still remain, Saturdays, therefore, are still considered paid rest days. Corollarily, the Acting Conservator also approved the increase of meal allowance from P25.00 to P30.00 for a minimum of four (4) hours of work for Saturdays. The divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid employee's salary and in the computation of his daily rate. The reduction of the divisor to 303 was done for the sole purpose of increasing the employees' overtime pay, and was not meant to exclude holiday pay from the monthly salary of petitioner's employees. In fact, it was expressly stated in the inter-office memorandum - also referred to by private respondent in its pleadings - that the divisor of 314 will still be used in the computation for cash conversion and in the determination of the daily rate. Thus, based on the records of this case and the parties' own admissions, the Court holds that petitioner has complied with the requirements of Article 94 of the Labor Code. JARDIN VS. NLRC G.R. No. 119268; February 23, 2000 Facts Petitioners were drivers of private respondent, Philjama International Inc., a domestic corporation engaged in the operation of "Goodman Taxi." Petitioners used to drive private respondent's taxicabs every other day on a 24-hour work schedule under the boundary system. Under this arrangement, the petitioners earned an average of P400.00 daily. Nevertheless, private respondent admittedly regularly deducts from petitioners, daily earnings the amount of P30.00 supposedly for the washing of the taxi units. Believing that the deduction is illegal, petitioners decided to form a labor union to protect their rights and interests. Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their taxicabs when they reported for work on August 6, 1991, and on succeeding days. Petitioners suspected that they were singled out because they were the leaders and active members of the proposed union. Aggrieved, petitioners filed with the labor arbiter a complaint against private respondent for unfair labor practice, illegal dismissal and illegal deduction of washing fees. In a decision dated August 31, 1992, the labor arbiter dismissed said complaint for lack of merit. On appeal, the NLRC, in a decision dated April 28, 1994, reversed and set aside the judgment of the labor arbiter. Private respondent's first motion for reconsideration was denied. Remaining hopeful, private respondent filed another motion for reconsideration. This time, public respondent, in its decision dated October 28, 1994, granted aforesaid second motion for reconsideration. It ruled that it lacks jurisdiction over the case as petitioners and private respondent have no employer-employee relationship. It held that the relationship of the parties is leasehold which is covered by the Civil Code rather than the Labor Code. Issue Whether or not the second motion for reconsideration was properly entertained. Whether or not there is an existence of employee-employer relationship. Whether or not the deduction of car wash is valid.

Decision I. NO, IT WAS NOT. The phrase "grave abuse of discretion amounting to lack or excess of jurisdiction" has settled meaning in the jurisprudence of procedure. It means such capricious and whimsical exercise of judgment by the tribunal exercising judicial or quasi-judicial power as to amount to lack of power. In labor cases, this Court has declared in several instances that disregarding rules it is bound to observe constitutes grave abuse of discretion on the part of labor tribunal. In this case before us, private respondent exhausted administrative remedy available to it by seeking reconsideration of public respondent's decision dated April 28, 1994, which public respondent denied. With this motion for reconsideration, the labor tribunal had ample opportunity to rectify errors or mistakes it may have committed before resort to courts of justice can be had. Thus, when private respondent filed a second motion for reconsideration, public respondent should have forthwith denied it in accordance with Rule 7, Section 14 of its New Rules of Procedure which allows only one motion for reconsideration from the same party. The rationale for allowing only one motion for reconsideration from the same party is to assist the parties in obtaining an expeditious and inexpensive settlement of labor cases. For obvious reasons, delays cannot be countenanced in the resolution of labor disputes. The dispute may involve no less than the livelihood of an employee and that of his loved ones who are dependent upon him for food, shelter, clothing, medicine, and education. It may as well involve the survival of a business or an industry. The second motion for reconsideration filed by private respondent is indubitably a prohibited pleading which should have not been entertained at all. Public respondent cannot just disregard its own rules on the pretext of "satisfying the ends of justice", especially when its disposition of a legal controversy ran afoul with a clear and long standing jurisprudence in this jurisdiction as elucidated in the subsequent discussion. Clearly, disregarding a settled legal doctrine enunciated by this Court is not a way of rectifying an error or mistake. In our view, public respondent gravely abused its discretion in taking cognizance and granting private respondent's second motion for reconsideration as it wrecks the orderly procedure in seeking reliefs in labor cases. II. YES, THERE IS. The relationship between taxiowners/operators on one hand and taxi drivers on the other under the boundary system is that of employer-employee and not of lessor-lessee. In the lease of chattels, the lessor loses complete control over the chattel leased although the lessee cannot be reckless in the use thereof, otherwise he would be responsible for the damages to the lessor. In the case of taxi owners/operators and taxi drivers, the former exercise supervision and control over the latter. The management of the business is in the owner's hands. The owner as holder of the certificate of public convenience must see to it that the driver follows the route prescribed by the franchising authority and the rules promulgated as regards its operation. Now, the fact that the drivers do not receive fixed wages but get only that in excess of the so-called "boundary" they pay to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee. Hence, petitioners are undoubtedly employees of private respondent because as taxi drivers they perform activities which are usually necessary or desirable in the usual business or trade of their employer. III. YES, IT IS. 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. Car washing after a tour of duty is indeed a practice in the taxi industry and is in fact dictated by fair play. Hence, the drivers are not entitled to reimbursement of washing charges. MANILA JOCKEYS CLUB EMPLOYEES LABOR UNION VS. MANILA JOCKEY CLUB G.R. No. 167601; March 7 2007 Facts

Petitioner and respondent, a corporation with a legislative franchise to conduct, operate and maintain horse races, entered into a Collective Bargaining Agreement (CBA) effective January 1, 1996 to December 31, 2000. The CBA governed the economic rights and obligations of respondents regular monthly paid rank-and-file employees. In the CBA, the parties agreed to a 7-hour work schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. on a work week of Monday to Saturday. The CBA likewise reserved in respondent certain management prerogatives, including the determination of the work schedule. On April 3, 1999, respondent issued an inter-office memorandum declaring that, effective April 20, 1999, the hours of work of regular monthly-paid employees shall be from 1:00 p.m. to 8:00 p.m. when horse races are held, that is, every Tuesday and Thursday. The memorandum, however, maintained the 9:00 a.m. to 5:00 p.m. schedule for non-race days. On October 12, 1999, petitioner and respondent entered into an Amended and Supplemental CBA retaining Section 1 of Article IV and Section 2 of Article XI, supra, and clarified that any conflict arising therefrom shall be referred to a voluntary arbitrator for resolution. Subsequently, before a panel of voluntary arbitrators of the National Conciliation and Mediation Board (NCMB), petitioner questioned the above office memorandum as violative of the prohibition against nondiminution of wages and benefits guaranteed under the CBA which specified the work schedule of respondent's employees to be from 9:00 a.m. to 5:00 p.m. Petitioner claimed that as a result of the memorandum, the employees are precluded from rendering their usual overtime work from 5:00 p.m. to 9:00 p.m. The NCMBs panel of voluntary arbitrators, in a decision dated October 18, 2001, upheld respondent's prerogative to change the work schedule of regular monthly-paid employees under Section 2, Article XI, of the CBA. Petitioner moved for reconsideration but the panel denied the motion. Dissatisfied, petitioner then appealed the panels decision to the CA. which upheld that of the panel and denied petitioners subsequent motion for reconsideration via its equally challenged resolution of April 4, 2005. Hence, petitioners present recourse. Arguments Respondents: The change in the program of horse races as reason for the adjustment of the employees work schedule. It rationalizes that when the CBA was signed, the horse races started at 10:00 a.m. When the races were moved to 2:00 p.m., there was no other choice for management but to change the employees' work schedule as there was no work to be done in the morning. Evidently, the adjustment in the work schedule of the employees is justified. Issue Whether or not the memorandum constitutes a violation of article 100 of the Labor Code on diminution of wages? Decision NO, IT DOES NOT. We are not unmindful that every business enterprise endeavors to increase profits. As it is, the Court will not interfere with the business judgment of an employer in the exercise of its prerogative to devise means to improve its operation, provided that it does not violate the law, CBAs, and the general principles of justice and fair play. We have thus held that management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working

regulations, transfer of employees, work supervision, layoff of workers and discipline, dismissal, and recall of workers. While it is true that Section 1, Article IV of the CBA provides for a 7-hour work schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. from Mondays to Saturdays, Section 2, Article XI, however, expressly reserves on respondent the prerogative to change existing methods or facilities to change the schedules of work. Such exact language lends no other meaning but that while respondent may have allowed the initial determination of the work schedule to be done through collective bargaining, it expressly retained the prerogative to change it. Moreover, it cannot be said that in agreeing to Section 1 of Article IV, respondent already waived that customary prerogative of management to set the work schedule. Had that been the intention, Section 2 of Article XI would not have made any reference at all to the retention by respondent of that prerogative. The CBA would have instead expressly prohibited respondent from exercising it. x x x As it were, however, the CBA expressly recognized in respondent the prerogative to change the work schedule. This effectively rules out any notion of waiver on the part of respondent of its prerogative to change the work schedule. The same provision of the CBA also grants respondent the prerogative to relieve employees from duty because of lack of work. Section 1, Article IV, of the CBA does not guarantee overtime work for all the employees but merely provides that "all work performed in excess of seven (7) hours work schedule and on days not included within the work week shall be considered overtime and paid as such." Respondent was not obliged to allow all its employees to render overtime work everyday for the whole year, but only those employees whose services were needed after their regular working hours and only upon the instructions of management. The overtime pay was not given to each employee consistently, deliberately and unconditionally, but as a compensation for additional services rendered. Thus, overtime pay does not fall within the definition of benefits under Article 100 of the Labor Code on prohibition against elimination or diminution of benefits. While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be presumed that every labor dispute will be automatically decided in favor of labor. The partiality for labor has not in any way diminished our belief that justice in every case is for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine. SAN MIGUEL CORP. VS. LAYOC, JR. G.R. No. 149640; October 19, 2007 Facts Respondents were among the Supervisory Security Guards of the Beer Division of the San Miguel Corporation, a domestic corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines with offices at No. 40 San Miguel Avenue, Mandaluyong City. They started working as guards with the petitioner San Miguel Corporation assigned to the Beer Division on different dates until such time that they were promoted as supervising security guards. From the commencement of their employment, the private respondents were required to punch their time cards for purposes of determining the time they would come in and out of the companys work place. Corollary, the private respondents were availing the benefits for overtime, holiday and night premium duty through time card punching. However, in the early 1990s, the San Miguel Corporation embarked on a Decentralization Program aimed at enabling the separate divisions of the San Miguel Corporation to pursue a more efficient and effective management of their respective operations. As a result of the Decentralization Program, the Beer Division of the San Miguel Corporation implemented on January 1, 1993 a no time card policy whereby the Supervisory I and II composing of the supervising security guards of the Beer Division were no longer required to punch their time cards. Consequently, on January

16, 1993, without prior consultation with the private respondents, the time cards were ordered confiscated and the latter were no longer allowed to render overtime work. However, in lieu of the overtime pay and the premium pay, the personnel of the Beer Division of the petitioner San Miguel Corporation affected by the No Time Card Policy were given a 10% across-theboard increase on their basic pay while the supervisors who were assigned in the night shift (6:00 p.m. to 6:00 a.m.) were given night shift allowance ranging from P2,000.00 to P2,500.00 a month. On 1 December 1994, respondents filed a complaint for unfair labor practice, violation of Article 100 of the Labor Code of the Philippines, and violation of the equal protection clause and due process of law in relation to paragraphs 6 and 8 of Article 32 of the New Civil Code of the Philippines. Respondents prayed for actual damages for two years (1993-1994), moral damages, exemplary damages, and overtime, holiday, and night premium pay. Arguments Petitioner: Respondents were supervisory security guards who were exempt from the provisions of the Labor Code on hours of work, weekly rest periods, and rest days. The no time card policy did not just prevent respondents from punching their time cards, but it also granted respondents an across-the-board increase of 10% of basic salary and either a P2,000 or P2,500 night shift allowance on top of their yearly merit increase. The no time card policy was a valid exercise of management prerogative and that all supervisors in the Beer Division were covered by the no time card policy, which classification was distinct and separate from the other divisions within SMC. 2) There was no evidence that respondents rendered overtime work and respondents admitted that they never or seldom rendered overtime work. The award of overtime pay was thus contrary to the principle of no work, no pay.

Respondent: 1) The Beer Division of SMC maliciously and fraudulently refused payment of their overtime, holiday, and night premium pay from 1 to 15 January 1993 because of the no time card policy. Moreover, petitioners had no written authority to stop respondents from punching their time cards because the alleged memorandum authorizing such stoppage did not include supervisory security guards. Thus, the respondents suffered a diminution of benefits, making petitioners liable for nonpayment of overtime, holiday, and night premium pay. 2) They are entitled to render overtime work and receive overtime pay despite the institution of the no time card policy because (1) SMC previously allowed them to render overtime work and paid them accordingly, and (2) supervising security guards in other SMC divisions are allowed to render overtime work and receive the corresponding overtime pay. Issues Whether or not the circumstances in the present case constitute an exception to the rule that supervisory employees are not entitled to overtime pay. Decision I. NO, THEY DO NOT. Respondents are supervising security guards, thus, managerial employees. Article 82[13] of the Labor Code states that the provisions of the Labor Code on working conditions and rest periods shall not apply to managerial employees. The other provisions in the Title include normal hours of work (Article 83), hours worked (Article 84), meal periods (Article 85), night shift differential (Article 86), overtime work (Article 87), undertime not offset by overtime (Article 88), emergency overtime work (Article 89), and computation of additional compensation (Article 90). It is thus clear that, generally, managerial employees such as respondents are not entitled to overtime pay for services rendered in

excess of eight hours a day. Respondents failed to show that the circumstances of the present case constitute an exception to this general rule. First, respondents assert that Article 100[14] of the Labor Code prohibits the elimination or diminution of benefits. However, contrary to the nature of benefits, petitioners did not freely give the payment for overtime work to respondents. Petitioners paid respondents overtime pay as compensation for services rendered in addition to the regular work hours. Respondents rendered overtime work only when their services were needed after their regular working hours and only upon the instructions of their superiors. Respondents even differ as to the amount of overtime pay received on account of the difference in the additional hours of services rendered. Aside from their allegations, respondents were not able to present anything to prove that petitioners were obliged to permit respondents to render overtime work and give them the corresponding overtime pay. Even if petitioners did not institute a no time card policy, respondents could not demand overtime pay from petitioners if respondents did not render overtime work. The requirement of rendering additional service differentiates overtime pay from benefits such as thirteenth month pay or yearly merit increase. These benefits do not require any additional service from their beneficiaries. Thus, overtime pay does not fall within the definition of benefits under Article 100 of the Labor Code. Given the discretion granted to the various divisions of SMC in the management and operation of their respective businesses and in the formulation and implementation of policies affecting their operations and their personnel, the no time card policy affecting all of the supervisory employees of the Beer Division is a valid exercise of management prerogative. The no time card policy undoubtedly caused pecuniary loss to respondents. However, petitioners granted to respondents and other supervisory employees a 10% across-the-board increase in pay and night shift allowance, in addition to their yearly merit increase in basic salary, to cushion the impact of the loss. So long as a companys management prerogatives are exercised in good faith for the advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold them. SAN MIGUEL CORP. VS. PONTILLAS G.R. No. 155178; May 7, 2008 Facts On 24 October 1980, petitioner employed respondent as a daily wage company guard. In 1984, respondent became a monthly-paid employee which entitled him to yearly increases in salary. Respondent alleged that his yearly salary increases were only a percentage of what the other security guards received. On 19 October 1993, respondent filed an action for recovery of damages due to discrimination under Article 100 of the Labor Code of the Philippines (Labor Code), as amended, as well as for recovery of salary differential and backwages, against petitioner. During the mandatory conference on 23 November 1993, respondent questioned the rate of salary increase given him by petitioner. On 6 December 1993, petitioners Vice President and VisMin Operations Center Manager, issued a Memorandum ordering, among others, the transfer of responsibility of the Oro Verde Warehouse to the newly-organized VisMin Logistics Operations effective 1 January 1994. In compliance with Memorandum, another Memorandum was issued dated 7 February 1994 addressed to VisMin Logistics Operations Manager, effecting the formal transfer of responsibility of the security personnel and equipment in the Oro Verde Warehouse to Security Officer of the VisMin Logistics Operations, effective 14 February 1994. Simultaneously, it gave the same information to his Supervising Security Guards for them to relay the information to the company security guards. Respondent continued to report at Oro Verde Warehouse. He alleged that he was not properly notified of the transfer and that he did not receive any written order from Capt. Fortich, his immediate superior. Respondent also alleged that he was wary of the transfer because of his pending case against petitioner.

He further claimed that two other security guards continue to report at Oro Verde Warehouse despite the order to transfer. Petitioner alleged that respondent was properly notified of the transfer but he refused to receive 14 memoranda issued by Major Enriquez from 14-27 February 1994. Petitioner also alleged that respondent was given notices of Guard Detail dated 9 February 1994 and 15 February 1994 but he still refused to report for duty at the VisMin Logistics Operations. In a letter dated 28 February 1994, petitioner informed respondent that an administrative investigation would be conducted on 4 March 1994 relative to his alleged offenses of Insubordination or Willful Disobedience in Carrying Out Reasonable Instructions of his superior. During the investigation, respondent was given an opportunity to present his evidence and be assisted by counsel. In a letter dated 7 April 1994, petitioner informed respondent of its decision to terminate him for violating company rules and regulations, particularly for Insubordination or Willful Disobedience in Carrying Out Reasonable Instructions of his superior. On 15 June 1994, respondent filed an amended complaint against petitioner for illegal dismissal and payment of backwages, termination pay, moral and exemplary damages, and attorneys fees. Issue Whether or not respondent was illegally dismissed. Decision NO, HE WAS NOT. An employer may terminate an employment for serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work. Willful disobedience requires the concurrence of two elements: (1) the employees assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge. The records show that respondent was not singled out for the transfer. Respondents transfer was the effect of the integration of the functions of the Mandaue Brewery Materials Management and the Physical Distribution group into a unified logistics organization, the VisMin Logistics Operations. The entire Oro Verde Warehouse, to which unit respondent belonged, was affected by the integration. We do not agree that respondent was not formally notified of the transfer. As early as 9 February 1994, Major Enriquez, the head of the VisMin Logistics Operations and thus, respondents new superior, issued a guard detail for 14-20 February 1994. All agency guards signed the detail, except respondent who refused to sign. On 15 February 1994, Major Enriquez again issued a guard detail for 21-27 February 1994. Again, all security guards concerned signed the detail except respondent who refused to sign. Major Enriquez issued successive memoranda to respondent officially informing him of his transfer to the VisMin Logistics Operations but respondent refused to sign all the notices. The employer exercises the prerogative to transfer an employee for valid reasons and according to the requirements of its business, provided the transfer does not result in demotion in rank or diminution of the employees salary, benefits, and other privileges. In this case, we found that the order of transfer was reasonable and lawful considering the integration of Oro Verde Warehouse with VisMin Logistics Operations. Respondent was properly informed of the transfer but he refused to receive the notices on the pretext that he was wary because of his pending case against petitioner. Respondent failed to prove that petitioner was acting in bad faith in effecting the transfer. There was no demotion involved, or even a diminution of his salary, benefits, and other privileges. Respondents persistent refusal to obey petitioners lawful order amounts to willful disobedience under Article 282 of the Labor Code.

ARCO METAL PRODUCTS CO. VS. SAMAHAN NG MGA MANGGAGAWA SA ARCO METAL NAFLU G.R. No. 170734; May 14, 2008 Facts Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union of petitioners rank and file employees. Sometime in December 2003, petitioner paid the 13th month pay, bonus, and leave encashment of three union members in amounts proportional to the service they actually rendered in a year, which is less than a full twelve (12) months. Respondent protested the prorated scheme, claiming that on several occasions petitioner did not prorate the payment of the same benefits to seven (7) employees who had not served for the full 12 months. The payments were made in 1992, 1993, 1994, 1996, 1999, 2003, and 2004. According to respondent, the prorated payment violates the rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the National Conciliation and Mediation Board (NCMB). The parties submitted the case for voluntary arbitration. Arguments Petitioner: 1) The grant of 13th month pay, bonus, and leave encashment in full regardless of actual service rendered does not constitute voluntary employer practice and, consequently, the prorated payment of the said benefits does not constitute diminution of benefits under Article 100 of the Labor Code. 2) There is a one-year cutoff in the entitlement to the benefits provided in the CBA which is evident from the wording of its pertinent provisions as well as of the existing law. Its full payment of benefits regardless of the length of service to the company does not constitute voluntary employer practice. The payments had been erroneously made and they occurred in isolated cases in the years 1992, 1993, 1994, 1999, 2002 and 2003. It was only in 2003 that the accounting department discovered the error when there were already three (3) employees involved with prolonged absences and the error was corrected by implementing the pro-rata payment of benefits pursuant to law and their existing CBA. The seven earlier cases of full payment of benefits went unnoticed considering the proportion of one employee concerned (per year) vis vis the 170 employees of the company. For a grant of a benefit to be considered a practice, it should have been practiced over a long period of time and must be shown to be consistent, deliberate and intentional, which is not what happened in this case. The CBA has not been modified to incorporate the giving of full benefits regardless of the length of service, proof that the grant has not ripened into company practice. Issue Whether or not the prorated payments of the benefits constitutes diminution of benefits under article 100 of the Labor Code. Decision YES, THEY DO. First, we determine whether the intent of the CBA provisions is to grant full benefits regardless of service actually rendered by an employee to the company. There is no doubt that in order to be entitled to the full monetization of sixteen (16) days of vacation and sick leave, one must have rendered at least one year of service. The clear wording of the provisions does th not allow any other interpretation. Anent the 13 month pay and bonus, the CBA provisions did not give any meaning different from that given by the law, thus it should be computed at 1/12 of the total compensation which an employee receives for the whole calendar year. The bonus is also equivalent to

the amount of the 13th month pay given, or in proportion to the actual service rendered by an employee within the year. Petitioner granted, in several instances, full benefits to employees who have not served a full year. Petitioner arguers that its full payment of benefits regardless of the length of service does not constitute voluntary employer practice. This is untenable. Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of nondiminution of benefits is founded on the Constitutional mandate to "protect the rights of workers and promote their welfare, and to afford labor full protection. Said mandate in turn is the basis of Article 4 of the Labor Code which states that all doubts in the implementation and interpretation of this Code, including its implementing rules and regulations shall be rendered in favor of labor. Jurisprudence is replete with cases which recognize the right of employees to benefits which were voluntarily given by the employer and which ripened into company practice. The act which was favorable to the employees though not conforming to law had thus ripened into a practice and could not be withdrawn, reduced, diminished, discontinued or eliminated. In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely, voluntarily and consistently granting full benefits to its employees regardless of the length of service rendered. True, there were only a total of seven employees who benefited from such a practice, but it was an established practice nonetheless. Jurisprudence has not laid down any rule specifying a minimum number of years within which a company practice must be exercised in order to constitute voluntary company practice. Thus, it can be six (6) years, three (3) years, or even as short as two (2) years. Petitioner cannot shirk away from its responsibility by merely claiming that it was a mistake or an error. In cases involving money claims of employees, the employer has the burden of proving that the employees did receive the wages and benefits and that the same were paid in accordance with law. Indeed, if petitioner wants to prove that it merely erred in giving full benefits, it could have easily presented other proofs, such as the names of other employees who did not fully serve for one year and thus were given prorated benefits. Experientially, a perfect attendance in the workplace is always the goal but it is seldom achieved. There must have been other employees who had reported for work less than a full year and who, as a consequence received only prorated benefits. This could have easily bolstered petitioners theory of mistake/error, but sadly, no evidence to that effect was presented. GENESIS TRANSPORT SERVICE INC. et al., vs. UNYON NG MALATANG MANGGAGAWA NG GENESIS TRANSPORT et, al., GR No. 182114; April 5, 2010 Facts: Respondent Juan Taroy was hired by petitioner Genesis Transport Service, Inc. (Genesis Transport) as driver on commission basis at 9% of the gross revenue per trip. On May 10, 2002, Taroy was, after due notice and hearing, terminated from employment after an accident on April 20, 2002 where he was deemed to have been driving recklessly. Taroy thus filed a complaint for illegal dismissal and payment of service incentive leave pay, claiming that he was singled out for termination because of his union activities, other drivers who had met accidents not having been dismissed from employment. Taroy later amended his complaint to implead his herein co-respondent Unyon ng Malayang Manggagawa ng Genesis Transport (the union) as complainant and add as grounds of his cause of action unfair labor practice (ULP), reimbursement of illegal deductions on tollgate fees, and payment of service incentive leave pay. Respecting the claim for refund of illegal deductions, Taroy alleged that in 1997, petitioner started deducting from his weekly earnings an amount ranging from P160 to P900 representing toll fees, without his consent and written authorization as required under Article 113 of the Labor Code and contrary to company practice; and that deductions were also taken from the bus conductors earnings to thus result to double deduction. Genesis Transport countered that Taroy committed several violations of company rules for which he was given warnings or disciplined accordingly; that those violations, the last of which was the April 20, 2002

incident, included poor driving skills, tardiness, gambling inside the premises, use of shabu, smoking while driving, insubordination and reckless driving; and that Taroys dismissal was on a valid cause and after affording him due process. The Labor Arbiter rendered dismissing instant complaint for illegal dismissal for lack of merit and was ordered to refund to complainant the underpayment/differential due him as a result of the deduction of the tollgate fees from the gross receipts. The NLRC affirmed the Labor Arbiters decision with modification. It deleted the award to Taroy of attorneys fees. The respondent challenged the decision on the CA questioning the Labor Arbiters failure to pass on the propriety of his preventive suspension, dismissal of his complaint for constructive dismissal and ULP, and failure to award him service incentive leave pay. The petitioners questioned the order for them to refund "underpayment" and pay attorneys fees. Issue: Whether or not the respondent is entitled for a refund underpayment for the toll fees deducted from his weekly earnings. Whether or not the issue of preventive suspension violated Taroys right to due process. Held: The Supreme Court affirmed CA decision with the refund of underpayment with the modification that the award of nominal damages to respondent Juan Taroy is deleted. First Issue: The Court take judicial notice of petitioners claim that the deduction of tollgate fees from the gross earnings of drivers is an accepted and long-standing practice in the transportation industry. Expertravel & Tours, Inc. v. Court of Appeals10 instructs: Generally speaking, matters of judicial notice have three material requisites: (1) the matter must be one of common and general knowledge; (2) it must be well and authoritatively settled and not doubtful or uncertain; and (3) it must be known to be within the limits of the jurisdiction of the court. The principal guide in determining what facts may be assumed to be judicially known is that of notoriety. Hence, it can be said that judicial notice is limited to facts evidenced by public records and facts of general notoriety. Moreover, a judicially noticed fact must be one not subject to a reasonable dispute in that it is either: (1) generally known within the territorial jurisdiction of the trial court; or (2) capable of accurate and ready determination by resorting to sources whose accuracy cannot reasonably be questionable. None of the material requisites for the Court to take judicial notice of a particular matter was established by petitioners. Albeit the amounts representing tollgate fees were deducted from gross revenues and not directly from Taroys commissions, the labor tribunal and the appellate court correctly held that the withholding of those amounts reduced the amount from which Taroys 9% commission would be computed. Such a computation not only marks a change in the method of payment of wages, resulting in a diminution of Taroys wages in violation of Article 113 vis--vis Article 100 of the Labor Code, as amended. It need not be underlined that without Taroys written consent or authorization, the deduction is considered illegal. The invocation of the rule on "company practice" is generally used with respect to the grant of additional benefits to employees, not on issues involving diminution of benefits. Second Issue: Respecting the issue of statutory due process, the Court holds that Taroys right thereto was not violated. In any event, what the Rules require is that the employer act on the suspended workers status of employment within the 30-day period by concluding the investigation either by absolving him of the charges, or meting the corresponding penalty if liable, or ultimately dismissing him. If the suspension exceeds the 30-day period without any corresponding action on the part of the employer, the employer must reinstate the employee or extend the period of suspension, provided the employees wages and benefits are paid in the interim. In the present case, petitioner company had until May 20, 2002 to act on Taroys case. It did by terminating him through a notice dated May 10, 2002, hence, the 30-day requirement was not violated even if the termination notice was received only on June 4, 2002, absent any showing that the delayed service of the notice on Taroy was attributable to Genesis Transport.

Taroys statutory due process not having been violated, he is not entitled to the award of nominal damages. PAYMENT OF WAGES CONGSON VS. NLRC G.R. No. 114250; April 5, 1995 Facts Petitioner is the registered owner of Southern Fishing Industry. Private respondents were hired on various dates 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. 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-pertuna movement due to the scarcity of tuna. Private respondents resisted petitioner's proposed rate reduction. When they reported for work the next day, they were informed that they had been replaced by a new set of workers, When they requested for a dialogue with the management, they were instructed to wait for further notice. They waited for the notice of dialogue for a full week but in vain. On 15 June 1990, private respondents filed a case against petitioner before the NLRC for underpayment of wages 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. On 2 July 1990, private respondents filed another case against petitioner containing an additional claim for separation pay should their complaint for constructive dismissal be upheld. Arguments Petitioner: 1) Private respondents were not dismissed but rather, they abandoned their work after learning of petitioner's proposal to reduce tuna movement rates because of the scarcity of tuna, and that, it took private respondents one (1) month to return to work, but they could no longer be accommodated as petitioner had already hired their replacements after private respondents failed to heed petitioner's repeated demands for them to return to work. Upon said premises, petitioner contended that private respondents were not entitled to separation pay. 2) Notwithstanding the fact that private respondents' actual cash wage fell below the minimum wage fixed by law, respondent NLRC should have considered as forming a substantial part of private respondents' total wages the cash value of the tuna liver and intestines private respondents were entitled to retrieve. Petitioner therefore argues that the combined value of private respondents' cash wage and the monetary value of the tuna liver and intestines clearly exceeded the minimum wage fixed by law. Respondent: 1) Petitioner refused to give them work assignments and replaced them with new workers when they showed resistance to the petitioner's proposed reduction of the rate-per-tuna movement. 2) Petitioner violated 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). Issue Whether or not the tuna liver and intestines respondents were entitled to retrieve should be considered as forming a substantial part of respondents total wages. Decision NO, THEY SHOULD NOT. 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. NORTH DAVAO MINING VS. NLRC G.R. No. 112546; March 13, 1996 Facts Petitioner was incorporated in 1974 as a 100% privately-owned company. Later, the Philippine National Bank (PNB) became part owner thereof as a result of a conversion into equity of a portion of loans obtained by North Davao from said bank. On June 30, 1986, PNB transferred all its loans to and equity in North Davao in favor of the national government which, by virtue of Proclamation No. 50 dated December 8, 1986, later turned them over to petitioner Asset Privatization Trust (APT). As of December 31, 1990 the national government hold 81.8% of the common stock and 100% of the preferred stock of said company. Respondent Wilfredo Guillema is one among several employees of North Davao who were separated by reason of the company's closure on May 31, 1992, and who were the complainants in the cases before the respondent labor arbiter. On May 31, 1992, petitioner completely ceased operations due to serious business reverses. From 1988 until its closure in 1992, North Davao suffered net losses averaging three billion pesos (P3,000,000,000.00) per year, for each of the five years prior to its closure. All told, as of December 31, 1991, or five months prior to its closure, its total liabilities had exceeded its assets by 20,392 billion pesos, as shown by its financial statements audited by the Commission on Audit. When it ceased operations, its remaining employees were separated and given the equivalent of 12.5 days' pay for every year of service, computed on their basic monthly pay, in addition to the commutation to cash of their unused vacation and sick leaves. However, it appears that, during the life of the petitioner corporation, from the beginning of its operations in 1981 until its closure in 1992, it had been giving separation pay equivalent to thirty (30) days' pay for every year of service. Moreover, inasmuch as the region where North Davao operated was plagued by insurgency and other peace and order problems, the employees had to collect their salaries at a bank in Tagum, Davao del Norte, some 58 kilometers from their workplace and about 2 1/2 hours' travel time by public transportation; this arrangement lasted from 1981 up to 1990. Subsequently, a complaint was filed with respondent Labor Arbiter by respondent Wilfredo Guillema and 271 other separated employees for: (1) additional separation pay of 17.5 days for every year of service; (2) back wages equivalent to two days a month; (3) transportation allowance; (4) hazard pay; (5) housing allowance; (6) food allowance; (7) post-employment medical clearance; and (8) future medical allowance, all of which amounted to P58,022,878.31 as computed by private respondent. Arguments Respondents: 1) North Davao's long-standing policy of giving separation pay benefits equivalent to 30days' pay, which policy had been in force in the years prior to its closure. Respondents contend that, by denying the same separation benefits to private respondent and the others similarly situated, petitioners discriminated against them. 2) They are also entitled to backwages and transportation allowance. Issue Whether or not an employer whose business operations ceased due to serious business losses reverses is obliged to pay separation pay to its employees separated by reason of such closure. Whether or not time spent in collecting wages in a place other than the place of employment is compensable notwithstanding that the same is done during official time.

Whether or not private respondents are entitled to transportation expenses in the absence of evidence that these expenses were incurred. Decision I. NO, IT IS NOT. Art. 283 of the Labor Code, which reads as follows: Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. The underscored portion of Art. 283 governs the grant of separation benefits "in case of closures or cessation of operation" of business establishments "NOT due to serious business losses or financial reverses. Where, however, the closure was due to business losses, as in the instant case, in which the aggregate losses amounted to over P20 billion, the Labor Code does not impose any obligation upon the employer to pay separation benefits, for obvious reasons. There is no need to belabor this point. The company's practice of giving one month's pay for every year of service could no longer be continued precisely because the company could not afford it anymore. It was forced to close down on account of accumulated losses of over P20 billion. It gave 30-days' separation pay to its employees when it was still a going concern even if it was already losing heavily. As a going concern, its cash flow could still have sustained the payment of such separation benefits. But when a business enterprise completely ceases operations, i.e., upon its death as a going business concern, its vital lifeblood, its cashflow, literally dries up. Therefore, the fact that less separation benefits ware granted when the company finally met its business death cannot be characterized as discrimination. Such action was dictated not by a discriminatory management option but by its complete inability to continue its business life due to accumulated losses. Indeed, one cannot squeeze blood out of a dry stone. Nor water out of parched land. As already stated, Art. 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to losses. In the case before us, the basis for the claim of the additional separation benefit of 17.5 days is alleged discrimination, i.e., unequal treatment of employees, which is proscribed as an unfair labor practice by Art. 248 (e) of said Code. Under the facts and circumstances of the present case, the grant of a lesser amount of separation pay to private respondent was done, not by reason of discrimination, but rather, out of sheer financial bankruptcy, a fact that is not controlled by management prerogatives. Stated differently, the total cessation of operation due to mind-boggling losses was a supervening fact that prevented the company from continuing to grant the more generous amount of separation pay. The fact that North Davao at the point of its forced closure voluntarily paid any separation benefits at all, although not required by law, and 12.5-days worth at that, should have elicited admiration instead of condemnation. But to require it to continue being generous when it is no longer in a position to do so would certainly be unduly oppressive, unfair and most revolting to the conscience. The law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer. The Solicitor General stresses that North Davao was among the assets transferred by PNB to the national government, and that by virtue of Proclamation No. 50 dated December 8, 1986, the APT was constituted trustee of this government asset. He then concludes that "it would, therefore, be incongruous to declare that the National Government, which should always be presumed to be solvent, could not pay now private respondents' money claims." Such argumentation is completely misplaced. Even if the national government owned or controlled 81.8% of the common stock and 100% of the preferred stock of North Davao, it remains only a stockholder thereof, and under existing laws and prevailing jurisprudence,

a stockholder as a rule is not directly, individually and/or personally liable for the indebtedness of the corporation. The obligation of North Davao cannot be considered the obligation of the national government, hence, whether the latter be solvent or not is not material to the instant case. The respondents have not shown that this case constitutes one of the instances where the corporate veil may be pierced. From another angle, the national government is not the employer of private respondent and his co-complainants, so there is no reason to expect any kind of bailout by the national government under existing law and jurisprudence. II. YES, THEY SHOULD. It is undisputed that because of security reasons, from the time of its operations, petitioner NDMC maintained its policy of paying its workers at a bank in Tagum, Davao del Norte, which usually took the workers about two and a half (2 1/2) hours of travel from the place of work and such travel time is not official. Records also show that on February 12, 1992, when an inspection was conducted by the Department of Labor and Employment at the premises of petitioner NDMC at Amacan, Maco, Davao del Norte, it was found out that petitioners had violated labor standards law, one of which is the place of payment of wages. Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides that: Sec. 4. Place of payment. (a) As a general rule, the place of payment shall be at or near the place of undertaking. Payment in a place other than the workplace shall be permissible only under the following circumstances: (1) When payment cannot be effected at or near the place of work by reason of the deterioration of peace and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or other calamity rendering payment thereat impossible; (2) When the employer provides free transportation to the employees back and forth; and (3) Under any analogous circumstances; provided that the time spent by the employees in collecting their wages shall be considered as compensable hours worked. Thus, the hours spent by complainants in collecting salaries at a bank in Tagum, Davao del Norte shall be considered compensable hours worked. Considering further the distance between Amacan, Maco to Tagum which is 2 1/2 hours by travel and the risks in commuting all the time in collecting complainants' salaries, would justify the granting of backwages equivalent to two (2) days in a month as prayed for. III. YES, THEY ARE. On the contrary, it will be petitioners' burden or duty to present evidence of compliance of the law on labor standards, rather than for private respondents to prove that they were not paid/provided by petitioners of their backwages and transportation expenses. Corollary to the above findings, and for equitable reasons, we likewise hold respondents liable for the transportation expenses incurred by complainants at P40.00 round trip fare during pay days. HEIRS OF SARA LEE VS. REY G.R. No. 149013; August 31, 2006 Facts The House of Sara Lee (petitioner) is engaged in the direct selling of a variety of product lines for men and women, including cosmetics, intimate apparels, perfumes, ready to wear clothes and other novelty items, through its various outlets nationwide. In the pursuit of its business, the petitioner engages and contracts with dealers to sell the aforementioned merchandise. These dealers, known either as Independent Business Managers (IBMs) or Independent Group Supervisors (IGSs), depending on whether they sell individually or through their own group, would obtain at discounted rates the merchandise from the petitioner on credit and then sell the same products to their own customers at fixed prices also determined by the petitioner. In turn, the dealers are paid Services Fees, or sales commissions, the amount of which depends on the volume and value of their sales. Under existing company policy, the dealers must remit to the petitioner the proceeds

of their sales within a designated credit period, which would either be 38 days for IGSs or 52 days for IBMs, counted from the day the said dealers acquired the merchandise from the petitioner. To discourage late remittances, the petitioner imposes a Credit Administration Charge, or simply, a penalty charge, on the value of the unremitted payment. Additionally, if the dealer concerned has overdue payments or is said to be in default, he or she cannot purchase additional products from the petitioner. The dealers under this system earn income through a profit margin between the discounted purchase price they pay on credit to the petitioner and the fixed selling price their customers will have to pay. On top of this margin, the dealer is given the Service Fee, a sales commission, based on the volume of sales generated by him or her. Due to the sheer volume of sales generated by all of its outlets, the petitioner has found the need to strictly monitor the 38- or 52-day rolling due date of each of its IBMs and IGSs through the employment of Credit Administration Supervisors (CAS) for each branch. The primary duty of the CAS is to strictly monitor each of these deadlines, to supervise the credit and collection of payments and outstanding accounts due to the petitioner from its independent dealers and various customers, and to screen prospective IBMs. To discharge these responsibilities, the CAS is provided with a computer equipped with control systems through which data is readily generated. Under this organizational setup, the CAS is under the direct and immediate supervision of the Branch Operations Manager (BOM). Cynthia Rey, at the time of her dismissal from employment, or on June 25, 1996, held the position of Credit Administration Supervisor or CAS at the Cagayan de Oro City branch of the petitioner. Respondent was first employed by the petitioner in July 16, 1993 as an Accounts Receivable Clerk at its Caloocan City branch. In November 1993, respondent was transferred to the Cagayan de Oro City branch retaining the same position. In January 1994, respondent was elevated to the position of CAS. At that time, the Branch Operations Manager or BOM of the Cagayan de Oro City branch was a certain Mr. Jeremiah Villagracia. In March 1995, respondent was temporarily assigned to the Butuan City branch. Sometime in June 1995, while respondent was still working in Butuan City, she allegedly instructed the Accounts Receivable Clerk of the Cagayan de Oro outlet, to change the credit term of one of the IBMs of the petitioner, who happens to be respondents sister-in-law, from the 52-day limit to an unauthorized term of 60 days. The respondent made the instruction, the petitioner avers, just before the computer data for the computation of the Service Fee accruing to Ms. Rey-Petilla was about to be generated. Ms. Mendoza then reported this allegedly unauthorized act of respondent to her Branch Operations Manager, Mr. Villagracia. Acting on the report, as the petitioner alleges, BOM Villagracia discreetly verified the records and discovered that it was not only the 52-day credit term of IBM Rey-Petilla that had been extended by the respondent, but there were several other IBMs whose credit terms had been similarly extended beyond the periods allowed by company policy. BOM Villagracia then summoned the respondent and required her to explain the unauthorized credit extensions. The petitioner alleges that during that confrontation, respondent admitted her infractions and begged the BOM not to elevate or disclose the matter further to higher authorities. In a letter dated June 22, 1995, Villagracia formally reported the matter to higher management, stating that respondent, in tears and remorse and confiding her sincerest apology, personally admitted that the credit terms of certain IBMs were adjusted in the computer for purposes of computing the Service Fees. On June 24, 1995, Villagracia formally served a show-cause letter to respondent and placed her on indefinite suspension effective on the same day. On June 27, 1995, respondent submitted her explanation denying the accusations made against her and stated that the discrepancies in the service fees may have been the result of deadlines falling on holidays, after reconsiderations had been requested by the IBM concerned and with the full knowledge of and approval by BOM Villagracia as part of his campaign to increase collections. Additionally, in the same letter-response, respondent vehemently denied that she waived her right to explain as well as any admission she allegedly made before Villagracia, and she pointed to the latter as the author of the discrepancies. As a consequence of the discovery of the foregoing alleged anomalous practice of extending the credit terms of certain IBMs, management undertook an audit of the Cagayan de Oro City and Butuan City branches. During the process, the petitioner alleges, respondent was interviewed by the auditors before

whom she again openly admitted her infractions. Upon being furnished a copy of the Auditors Report, Petitioner, on July 29, 1995, directed respondent again to explain, but in more detail, the alleged anomalies uncovered by the audit. After requesting more time to review the report and submit her comment, on July 31, 1995, respondent requested instead that a formal investigation be conducted in the presence of her lawyer. In the meantime, respondents suspension was lifted, but without prejudice to the outcome of the administrative investigation. On September 7, 1995, the petitioner conducted a formal hearing which was attended by respondent and her counsel of record. Subsequently, respondent and her counsel affixed their respective signatures on the transcripts of the hearing. Meanwhile, on April 15, 1996, BOM Villagracia resigned. Upon his resignation, respondent managed the Cagayan de Oro branch for three months pending the appointment of a new BOM. On the basis of the hearing, the alleged voluntary admissions of respondent, and the findings of the auditors report, the petitioner, on June 25, 1996, formally dismissed the respondent for breach of trust and confidence. On September 24, 1996, as stated above, respondent filed her Complaint for illegal dismissal, backwages and damages, with the Labor Arbiter. Issue Whether or not petitioner was illegally dismissed th Whether or not petitioner is entitled to 13 month pay. th th Whether or not petitioner is entitled to 14 , and 15 month pay, as well as monthly salary increase. Whether or not petitioner is entitled to separation pay. Decision I. NO, SHE WAS NOT. Law and jurisprudence have long recognized the right of employers to dismiss employees by reason of loss of trust and confidence. More so, in the case of supervisors or personnel occupying positions of responsibility, loss of trust justifies termination. Loss of confidence as a just cause for dismissal is premised on the fact that an employee concerned holds a position of trust and confidence. This situation applies where a person is entrusted with confidence on delicate matters, such as the custody, handling, or care and protection of the employers property. But, in order to constitute a just cause for dismissal, the act complained of must be work-related, such that the employee concerned is unfit to continue working for the employer. The degree of proof required in labor cases is not as stringent as in other types of cases. It must be noted, however, that recent decisions of this Court have distinguished the treatment of managerial employees from that of rank-and-file personnel in the application of the doctrine of loss of trust and confidence. With respect to rank-and-file personnel, loss of trust and confidence as ground for valid dismissal requires proof of involvement in the alleged events in question, and that mere uncorroborated assertions and accusations by the employer will not be sufficient. But as to a managerial employee, the mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal. Hence, in the case of managerial employees, proof beyond reasonable doubt is not required; it is sufficient that there is some basis for the loss of confidence, as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded by his position. In the present case, the respondent is not an ordinary rank-and-file employee. The nature of her work requires a substantial amount of trust and confidence on the part of the employer. Being the Credit Administration Supervisor of the Cagayan de Oro and Butuan City branches of the petitioner, respondent

occupied a highly sensitive and critical position and may thus be dismissed on the ground of loss of trust and confidence. Respondents position involves a high degree of responsibility requiring trust and confidence. The position carried with it the duty to observe proper company procedures in the fulfillment of her job, as it relates closely to the financial interests of the company. Respondents unauthorized extensions of the credit periods of the dealers are prejudicial to the interest of the petitioner and bear serious financial implications. Moreover, respondent was not guilty of one-time unauthorized extension of the credit terms, but of repeated acts over the course of several months. Her bare, unsubstantiated and uncorroborated denial of her participation in the anomalies does not prove her innocence nor disprove her alleged guilt, especially considering that she would vacillate between admitting and denying the charges. On the contrary, such denial or failure to rebut the serious accusations hurled against her militate against her innocence and strengthen the adverse averments of the petitioner. The requirement that there must be some basis or reasonable ground to believe that the employee is responsible for the misconduct was sufficiently met in this case. Additionally, even if the employee had no actual and direct participation in the alleged anomalies, his failure to detect any anomaly that would normally fall within the scope of his work reflects his ineffectiveness and amounts to gross negligence and incompetence, which are, likewise, justifiable grounds for his dismissal; and that it is not necessary to prove the employees direct participation in the irregularity, for what is material is that his actuations were more than sufficient to sow in his employer the seed of mistrust and loss of confidence. Furthermore, as alleged by petitioner that her mistakes had the blessing of management, while case law provides that where a violation of company policy or breach of company rules and regulations was found to have been tolerated by management, then the same could not serve as a basis for termination, in this case respondent failed to show that her extensions of the credit terms were condoned by management. Pending the final outcome of the investigation, respondent, as with all persons, has in her favor the presumption of innocence, and for this reason she may even be entitled to a promotion in due course. But after due investigation and marshalling of facts, after the employer forms a moral conviction that indeed the employee breached its trust and confidence, and despite such promotion, the employer may then proceed to dismiss the erring employee. The rules on termination of employment and the penalties for infractions, insofar as fiduciary employees are concerned, are not necessarily the same as those applicable to the termination of employment of ordinary employees. Employers, generally, are allowed a wider latitude of discretion in terminating the employment of managerial personnel or those of similar rank performing functions which by their nature require the employers trust and confidence, than in the case of ordinary rank-and-file employees. II. NO, SHE IS NOT. Respondent is not a rank-and-file employee and is, therefore, not entitled to thirteenth-month pay. III. NO, SHE IS NOT. The respondent must show that these benefits are due to her as a matter of right. The rule in these cases is, she who alleges, not she who denies, must prove. Mere allegations by the respondent do not suffice in the absence of proof supporting the same. With respect to salary increases in particular, the respondent must likewise show that she has a vested right to the same, such that her salary increases can be made a component in the computation of backwages. What is evident is that salary increases are a mere expectancy. They are by nature volatile and dependent on numerous variables, including the

companys fiscal situation, the employees future performance on the job, or the employees continued stay in a position. In short, absent any proof, there is no vested right to salary increases. IV. NO, SHE IS NOT. Well-settled is the rule that separation pay shall be allowed only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on her moral character. Inasmuch as the reason for which the respondent was validly separated involves her integrity, which is required for the position of Credit Administration Supervisor, she is not worthy of compassion as to deserve separation pay for her length of service. EQUITABLE BANK VS. SADAC G.R. No. 164772; June 8, 2006 Facts Respondent was appointed VP of the legal department of petitioner, and subsequently, General Counsel thereof. On June 26, 1989, nine lawyers of petitioners legal department accused respondent of abusive conduct and ultimately petitioned for a change in leadership of the department. On the ground of lack of confidence in respondent, under the rules of client-lawyer relationship, petitioner instructed respondent to deliver all materials in his custody in all cases in which he was appearing as its counsel of record. Respondent requested a full hearing and formal investigation but the same remained unheeded. On November 9, 1989, respondent filed a complaint for illegal dismissal against petitioner and individual members of the BOD. After learning of the filing, petitioner terminated the services of respondent. On August 10, 1989, respondent was removed from his office and ordered disentitled to any compensation and other benefits. Respondent was found to have been illegally dismissed, entitling him to backwages from termination of employment until turning 60 years of age, and to retirement benefits in accordance with law. However, respondents computation of the total amount of the monetary reward differed from that of petitioners, as he included the general increases which he should have earned during the period of his illegal termination. Pursuant to a Motion for Execution filed by respondent with the Labor Arbiter, the latter ruled in favor of the formers computation. The NLRC reversed the Labor Arbiters decision. The CA ruled in favor of respondents. Hence, the petition for review by petitioner. Arguments Petitioner: 1) Article 279 of the Labor Code does not contemplate the inclusion of salary increases in the definition of full backwages. 2) While R.A. No. 6715, in amending article 279, intends to give more benefits to workers, nowhere in article 279, as amended, are salary increases spoken of. 3) The employee is paid the wage rate at the time of the dismissal. Respondent: 1) Article 279 of the Labor Code provides that it is the obligation of the employer to pay an illegally dismissed employee the whole amount of the salaries/wages, plus all other benefits and bonuses and general increases to which he could have been normally entitled to, had he not been dismissed. Thus, salary increases should be deemed a component in the computation of backwages.

Issue Whether or not general salary increases should be included in the computation of full backwages. Decision NO, THEY ARE NOT. Backwages in general are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal. It is not private compensation or damages but is awarded in furtherance and effectuation of the public objective of the Labor Code. Nor is it a redress of a private right but rather in the nature of a command to the employer to make public reparation for dismissing an employee either due to the formers unlawful act or bad faith. Conformably with the evident legislative intent as expressed in Rep. Act No. 6715, above-quoted, backwages to be awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal. The underlying reason for this ruling is that the employee, while litigating the legality (illegality) of his dismissal, must still earn a living to support himself and family, while full backwages have to be paid by the employer as part of the price or penalty he has to pay for illegally dismissing his employee. The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was previously given them under the Mercury Drug rule or the "deduction of earnings elsewhere" rule. Thus, a closer adherence to the legislative policy behind Rep. Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. In other words, the provision calling for "full backwages" to illegally dismissed employees is clear, plain and free from ambiguity and, therefore, must be applied without attempted or strained interpretation. Article 279 mandates that an employees full backwages shall be inclusive of allowances and other benefits or their monetary equivalent. Contrary to the ruling of the Court of Appeals, we do not see that a salary increase can be interpreted as either an allowance or a benefit. Salary increases are not akin to allowances or benefits, and cannot be confused with either. The term "allowances" is sometimes used synonymously with "emoluments," as indirect or contingent remuneration, which may or may not be earned, but which is sometimes in the nature of compensation, and sometimes in the nature of reimbursement. Allowances and benefits are granted to the employee apart or separate from, and in addition to the wage or salary. In contrast, salary increases are amounts which are added to the employees salary as an increment thereto for varied reasons deemed appropriate by the employer. Salary increases are not separate grants by themselves but once granted, they are deemed part of the employees salary. To extend the coverage of an allowance or a benefit to include salary increases would be to strain both the imagination of the Court and the language of law. Indeed, if the intent were to include salary increases as basis in the computation of backwages, the same should have been explicitly stated in the same manner that the law used clear and unambiguous terms in expressly providing for the inclusion of allowances and other benefits. An unqualified award of backwages means that the employee is paid at the wage rate at the time of his dismissal. The base figure to be used in the computation of backwages is pegged at the wage rate at the time of the employees dismissal, inclusive of regular allowances that the employee had been receiving such as the emergency living allowances and the 13th month pay mandated under the law. "The term backwages without qualification and deduction means that the workers are to be paid their backwages fixed as of the time of the dismissal or strike without deduction for their earnings elsewhere during their layoff and without qualification of their wages as thus fixed; i.e., unqualified by any wage increases or other benefits that may have been received by their co-workers who are not dismissed or did not go on strike. Awards including salary differentials are not allowed. The salary base properly used should, however, include not only the basic salary but also the emergency cost of living allowances and also transportation allowances if the workers are entitled thereto." Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work. They are a reparation for the illegal dismissal of an employee based on earnings which the employee would have obtained, either by virtue of a lawful decree or order, as in the case of a wage increase under a wage order, or by rightful expectation, as in the case of ones salary or wage. The

outstanding feature of backwages is thus the degree of assuredness to an employee that he would have had them as earnings had he not been illegally terminated from his employment. Respondents claim, however, is based simply on expectancy or his assumption that, because in the past he had been consistently rated for his outstanding performance and his salary correspondingly increased, it is probable that he would similarly have been given high ratings and salary increases but for his transfer to another position in the company. In contrast to a grant of backwages or an award of lucrum cessans in the civil law, this contention is based merely on speculation. Furthermore, it assumes that in the other position to which he had been transferred petitioner had not been given any performance evaluation. The mere fact that he had been previously granted salary increases by reason of his excellent performance does not necessarily guarantee that he would have performed in the same manner and, therefore, qualify for the said increase later. What is more, his claim is tantamount to saying that he had a vested right to remain as General Counsel and given salary increases simply because he had performed well in such position, and thus he should not be moved to any other position where management would require his services. There was no lawful decree or order supporting his claim, such that his salary increases can be made a component in the computation of backwages. What is evident is that salary increases are a mere expectancy. They are, by its nature volatile and are dependent on numerous variables, including the companys fiscal situation and even the employees future performance on the job, or the employees continued stay in a position subject to management prerogative to transfer him to another position where his services are needed. In short, there is no vested right to salary increases. That respondent Sadac may have received salary increases in the past only proves fact of receipt but does not establish a degree of assuredness that is inherent in backwages. From the foregoing, the plain conclusion is that respondent Sadacs computation of his full backwages which includes his prospective salary increases cannot be permitted. Respondent Sadac cannot take exception by arguing that jurisprudence speaks only of wage and not salary, and therefore, the rule is inapplicable to him. It is respondent Sadacs stance that he was not paid at the wage rate nor was he engaged in some form of manual or physical labor as he was hired as Vice President of petitioner Bank. The distinction between salary and wage was for the purpose of Article 1708 of the Civil Code which mandates that, "the laborers wage shall not be subject to execution or attachment, except for debts incurred for food, shelter, clothing and medical attendance." In labor law, however, the distinction appears to be merely semantics. Paramount and Evangelista may have involved wage earners, but the petitioner in Broadly, the word "salary" means a recompense or consideration made to a person for his pains or industry in another mans business. Whether it be derived from "salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with it the fundamental idea of compensation for services rendered. Indeed, there is eminent authority for holding that the words "wages" and "salary" are in essence synonymous. CONDITIONS OF EMPLOYMENT SAN JUAN DE DIOS HOSPITAL V. NLRC (supra) SIMEDARBY VS. NLRC G.R. No. 119205; April 15, 1998 Facts Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires, tubes and other rubber products. Sime Darby Salaried Employees Association (ALU-TUCP), private respondent, is an association of monthly salaried employees of petitioner at its Marikina factory. Prior to the present controversy, all company factory workers in Marikina including members of private respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30-minute paid "on call" lunch break.

On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its monthly salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance Department working on shifts, a change in work schedule effective 14 September 1992. Since private respondent felt affected adversely by the change in the work schedule and discontinuance of the 30-minute paid "on call" lunch break, it filed on behalf of its members a complaint with the Labor Arbiter for unfair labor practice, discrimination and evasion of liability. However, the Labor Arbiter dismissed the complaint. Private respondent appealed to respondent National 4 Labor Relations Commission (NLRC) which sustained the Labor Arbiter and dismissed the appeal. However, upon motion for reconsideration by private respondent, the NLRC, this time with two (2) new commissioners replacing those who earlier retired, reversed its earlier decision of 20 April 1994 as well as the decision of the Labor Arbiter. Issue Whether or not the act of management in revising the work schedule of its employees and discarding their paid lunch break constitutive of unfair labor practice. Decision NO, IT DOES NOT. The right to fix the work schedules of the employees rests principally on their employer. In the instant case petitioner, as the employer, cites as reason for the adjustment the efficient conduct of its business operations and its improved production. It rationalizes that while the old work schedule included a 30minute paid lunch break, the employees could be called upon to do jobs during that period as they were "on call." Even if denominated as lunch break, this period could very well be considered as working time because the factory employees were required to work if necessary and were paid accordingly for working. With the new work schedule, the employees are now given a one-hour lunch break without any interruption from their employer. For a full one-hour undisturbed lunch break, the employees can freely and effectively use this hour not only for eating but also for their rest and comfort which are conducive to more efficiency and better performance in their work. Since the employees are no longer required to work during this one-hour lunch break, there is no more need for them to be compensated for this period. We agree with the Labor Arbiter that the new work schedule fully complies with the daily work period of eight (8) hours without violating the Labor Code. Besides, the new schedule applies to all employees in the factory similarly situated whether they are union members or not. The change effected by management with regard to working time is made to apply to all factory employees engaged in the same line of work whether or not they are members of private respondent union. Hence, it cannot be said that the new scheme adopted by management prejudices the right of private respondent to self-organization. Every business enterprise endeavors to increase its profits. In the process, it may devise means to attain that goal. Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. Thus, management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay off of workers and discipline, dismissal and recall of workers. Further, management retains the prerogative, whenever exigencies of the service so require, to change the working hours of its employees. So long as such prerogative is exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold such exercise. While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every dispute will be automatically decided in favor of labor. Management also has rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. Although this Court has inclined more often than not toward the worker and has upheld his cause in his conflicts with the employer, such favoritism has not blinded the Court to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine.

PHIL. AIRLINES VS. NLRC G.R. No. 132805; February 2, 1999 Facts Private respondent was employed as flight surgeon at petitioner company. He was assigned at the PAL Medical Clinic at Nichols and was on duty from 4:00 in the afternoon until 12:00 midnight. On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have his dinner at his residence, which was about five-minute drive away. A few minutes later, the clinic received an emergency call from the PAL Cargo Services. One of its employees, Mr. Manuel Acosta, had suffered a heart attack. The nurse on duty, Mr. Merlino Eusebio, called private respondent at home to inform him of the emergency. The patient arrived at the clinic at 7:50 in the evening and Mr. Eusebio immediately rushed him to the hospital. When private respondent reached the clinic at around 7:51 in the evening, Mr. Eusebio had already left with the patient. Mr. Acosta died the following day. Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the Chief Flight Surgeon to conduct an investigation. The Chief Flight Surgeon, in turn, required private respondent to explain why no disciplinary sanction should be taken against him. In his explanation, private respondent asserted that he was entitled to a thirty-minute meal break; that he immediately left his residence upon being informed by Mr. Eusebio about the emergency and he arrived at the clinic a few minutes later; that Mr. Eusebio panicked and brought the patient to the hospital without waiting for him. Finding private respondent's explanation unacceptable, the management charged private respondent with abandonment of post while on duty. He was given ten days to submit a written answer to the administrative charge. In his answer, private respondent reiterated the assertions in his previous explanation. He further denied that he abandoned his post on February 17, 1994. He said that he only left the clinic to have his dinner at home. In fact, he returned to the clinic at 7:51 in the evening upon being informed of the emergency. After evaluating the charge as well as the answer of private respondent, petitioner company decided to suspend private respondent for three months effective December 16, 1994. Private respondent filed a complaint for illegal suspension against petitioner. On July 16, 1996, Labor Arbiter Romulus A. Protasio rendered a decision declaring the suspension of private respondent illegal. It also ordered petitioner to pay private respondent the amount equivalent to all the benefits he should have received during his period of suspension plus P500,000.00 moral damages. Petitioner appealed to the NLRC. The NLRC, however, dismissed the appeal after finding that the decision of the Labor Arbiter is supported by the facts on record and the law on the matter. The NLRC likewise denied petitioner's motion for reconsideration. Hence, this petition. Arguments Petitioner: Being a full-time employee, private respondent is obliged to stay in the company premises for not less than eight (8) hours. Hence, he may not leave the company premises during such time, even to take his meals. Issue Whether or not the suspension was valid. Decision NO, IT WAS NOT. The facts do not support petitioner's allegation that private respondent abandoned his post on the evening of February 17, 1994. Private respondent left the clinic that night only to have his dinner at his house, which was only a few minutes' drive away from the clinic. His whereabouts were known to the nurse on duty so that he could be easily reached in case of emergency. Upon being informed of Mr. Acosta's condition, private respondent immediately left his home and returned to the clinic. These facts belie petitioner's claim of abandonment. Art. 83 and 85 of the Labor Code read:

Art. 83. Normal hours of work. The normal hours of work of any employee shall not exceed eight (8) hours a day. Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled to an additional compensation of at least thirty per cent (30%) of their regular wage for work on the sixth day. For purposes of this Article, "health personnel" shall include: resident physicians, nurses, nutritionists, dieticians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. (emphasis supplied) Art. 85. Meal periods. Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every employer to give his employees not less than sixty (60) minutes time-off for their regular meals. Sec. 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states: Sec. 7. Meal and Rest Periods. Every employer shall give his employees, regardless of sex, not less than one (1) hour time-off for regular meals, except in the following cases when a meal period of not less than twenty (20) minutes may be given by the employer provided that such shorter meal period is credited as compensable hours worked of the employee; (a) Where the work is non-manual work in nature or does not involve strenuous physical exertion; (b) Where the establishment regularly operates not less than sixteen hours a day; (c) In cases of actual or impending emergencies or there is urgent work to be performed on machineries, equipment or installations to avoid serious loss which the employer would otherwise suffer; and (d) Where the work is necessary to prevent serious loss of perishable goods. Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable working time. Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be inferred that employees must take their meals within the company premises. Employees are not prohibited from going out of the premises as long as they return to their posts on time. Private respondent's act, therefore, of going home to take his dinner does not constitute abandonment. LINTON COMMERCIAL CO. INC. VS. HELLERA G.R. No. 163147; October 10, 2007 Facts Linton is a domestic corporation engaged in the business of importation, wholesale, retail and fabrication of steel and its by-products. Petitioner Desiree Ong is Lintons vice president. On 17 December 1997, Linton issued a memorandum addressed to its employees informing them of the companys decision to suspend its operations from 18 December 1997 to 5 January 1998 due to the currency crisis that affected its business operations. Linton submitted an establishment termination report to the Department of Labor and Employment (DOLE) regarding the temporary closure of the establishment covering the said period. The companys operation was to resume on 6 January 1998. On 7 January 1997, Linton issued another memorandum informing them that effective 12 January 1998, it would implement a new compressed workweek of three (3) days on a rotation basis. In other words, each worker would be working on a rotation basis for three working days only instead for six days a week. On the same day, Linton submitted an establishment termination report concerning the rotation of its workers. Linton proceeded with the implementation of the new policy without waiting for its approval by DOLE. Aggrieved, sixty-eight (68) workers (workers) filed a Complaint for illegal reduction of workdays with the Arbitration Branch of the NLRC on 17 July 1998. Arguments Petitioner: 1) The devaluation of the peso created a negative impact in international trade and affected their business because a majority of their raw materials were imported. Their business suffered a net loss

of P3,569,706.57 primarily due to currency devaluation and the slump in the market. Consequently, Linton decided to reduce the working days of its employees to three (3) days on a rotation basis as a cost-cutting measure. 2) The compressed workweek was actually implemented on 12 January 1998 and not on 7 January 1998, and that Article 283 was not applicable to the instant case. 3) The reduction of workdays is not equivalent to constructive dismissal. There was no reduction of salary but instead only a reduction of working days from six to three days per week. The reduction of workdays, while not expressly covered by any of the provisions of the Labor Code, is analogous to the situation contemplated in Article 286 of the Labor Code because the company implemented the reduction of workdays to address its financial losses. 4) Since there was no retrenchment, the one-month notice requirement under Article 283 of the Labor Code is not applicable. Respondent: Linton implemented the reduction of work hours without observing Article 283 of the Labor Code, which required submission of notice thereof to DOLE one month prior to the implementation of reduction of personnel, since Linton filed only the establishment termination report enacting the compressed workweek on the very date of its implementation. Issue Whether or not had committed illegal reduction of work when it imposed a reduction of work hours thereby affecting its employees. Decision YES, IT DID. For the reduction of working hours to be valid, the following must be taken into consideration: the arrangement was temporary, it was a more humane solution instead of a retrenchment of personnel, there was notice and consultations with the workers and supervisors, a consensus were reached on how to deal with deteriorating economic conditions and it was sufficiently proven that the company was suffering from losses. A reduction of the number of regular working days is valid where the arrangement is resorted to by the employer to prevent serious losses due to causes beyond his control, such as when there is a substantial slump in the demand for his goods or services or when there is lack of raw materials. A close examination of petitioners financial reports for 1997-1998 shows that, while the company suffered a loss of P3,645,422.00 in 1997, it retained a considerable amount of earnings and operating income. Clearly then, while Linton suffered from losses for that year, there remained enough earnings to sufficiently sustain its operations. In business, sustained operations in the black is the ideal but being in the red is a cruel reality. However, a year of financial losses would not warrant the immolation of the welfare of the employees, which in this case was done through a reduced workweek that resulted in an unsettling diminution of the periodic pay for a protracted period. Permitting reduction of work and pay at the slightest indication of losses would be contrary to the States policy to afford protection to labor and provide full employment. Certainly, management has the prerogative to come up with measures to ensure profitability or loss minimization. However, such privilege is not absolute. Management prerogative must be exercised in good faith and with due regard to the rights of labor. As previously stated, financial losses must be shown before a company can validly opt to reduce the work hours of its employees. However, to date, no definite guidelines have yet been set to determine whether the alleged losses are sufficient to justify the reduction of work hours. If the standards set in determining the justifiability of financial losses under Article 283 (i.e., retrenchment) or Article 286 (i.e., suspension of

work) of the Labor Code were to be considered, petitioners would end up failing to meet the standards. On the one hand, Article 286 applies only when there is a bona fide suspension of the employers operation of a business or undertaking for a period not exceeding six (6) months. Records show that Linton continued its business operations during the effectivity of the compressed workweek, which spanned more than the maximum period. On the other hand, for retrenchment to be justified, any claim of actual or potential business losses must satisfy the following standards: (1) the losses incurred are substantial and not de minimis; (2) the losses are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses; and (4) the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled, are proven by sufficient and convincing evidence. Linton failed to comply with these standards. BISIG MANGGAGAWA SA TRYCO V. NLRC GR No. 151309; Oct. 15, 2008 Facts: RESPONDENT Tryco Pharma Corp. received a letter dated March 26, 1997 from the Bureau of Animal Industry of the Department of Agriculture reminding it that its production should be conducted in San Rafael, Bulacan, not in Caloocan City. Accordingly, respondent issued memoranda directing petitioners to report to the companys plant site in Bulacan. Petitioners opposed the transfer and filed a case for illegal dismissal with money claims against respondent claiming that the transfer was tantamount to constructive dismissal. Is there merit to the claim? Ruling: No. Furthermore, Trycos decision to transfer its production activities to San Rafael, Bulacan, regardless of whether it was made pursuant to the letter of the Bureau of Animal Industry, was within the scope of its inherent right to control and manage its enterprise effectively. While the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied. Indisputably, in the instant case, the transfer orders do not entail a demotion in rank or diminution of salaries, benefits and other privileges of the petitioners. Petitioners, therefore, anchor their objection solely on the ground that it would cause them great inconvenience since they are all residents of Metro Manila and they would incur additional expenses to travel daily from Manila to Bulacan. The Court has previously declared that mere incidental inconvenience is not sufficient to warrant a claim of constructive dismissal. Objection to a transfer that is grounded solely upon the personal inconvenience or hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of transfer. () MINIMUM LABOR STANDARDS UNION OF FILIPRO EMPLOYEES VS. VIVAR G.R. No. 79255; January 20, 1992 Facts On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations Commission (NLRC) a petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its monthly paid employees for holiday pay. Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to: pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject only to the exclusions and limitations specified in Article 82 and such other legal restrictions as are provided for in the Code.

Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2) the exclusion of salesmen, sales representatives, truck drivers, merchandisers and medical representatives (hereinafter referred to as sales personnel) from the award of the holiday pay, and (3) deduction from the holiday pay award of overpayment for overtime, night differential, vacation and sick leave benefits due to the use of 251 divisor. On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of the holiday pay award shall retroact to November 1, 1974, the date of effectivity of the Labor Code. He adjudged, however, that the company's sales personnel are field personnel and, as such, are not entitled to holiday pay. He likewise ruled that with the grant of 10 days' holiday pay, the divisor should be changed from 251 to 261 and ordered the reimbursement of overpayment for overtime, night differential, vacation and sick leave pay due to the use of 251 days as divisor. Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent Arbitrator treated the two motions as appeals and forwarded the case to the NLRC which issued a resolution dated May 25, 1987 remanding the case to the respondent arbitrator on the ground that it has no jurisdiction to review decisions in voluntary arbitration cases pursuant to Article 263 of the Labor Code as amended by Section 10, Batas Pambansa Blg. 130 and as implemented by Section 5 of the rules implementing B.P. Blg. 130. However, in a letter dated July 6, 1987, the respondent arbitrator refused to take cognizance of the case reasoning that he had no more jurisdiction to continue as arbitrator because he had resigned from service effective May 1, 1986. Hence, this petition. Argumentefits Petitioner: 1) The award should be made effective from the date of effectivity of the Labor Code 2) Their sales personnel are not field personnel and are therefore entitled to holiday pay, and that the use of 251 as divisor is an established employee benefit which cannot be diminished. 3) The fact that these sales personnel are given incentive bonus every quarter based on their performance is proof that their actual hours of work in the field can be determined with reasonable certainty. 4) The period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales personnel's working hours which can be determined with reasonable certainty. 5) The divisor should not be changed from 251 to 261 days to include the additional 10 holidays and the employees should not reimburse the amounts overpaid by Filipro due to the use of 251 days' divisor. Issue Whether or not the sales personnel should be excluded from the computation of holiday pay award. Whether or not the change in the divisor in the computation of benefits from 251 to 261 is valid. Decision I. YES, THEY SHOULD. Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as "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." The controversy centers on the interpretation of the clause "whose actual hours of work in the field cannot be determined with reasonable certainty." It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-based. The law requires that the actual hours of work in the field be reasonably ascertained. The company has no way of determining whether or not these sales personnel, even if they report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m, really spend the hours in between in actual field work. The requirement for the salesmen and other similarly situated employees to report for work at the office at 8:00 a.m. and return at 4:00 or 4:30 p.m. is not within the realm of work in the field as defined in the Code but an exercise of purely management prerogative of providing administrative control over such personnel. This does not in any manner provide a reasonable level of determination on the actual field

work of the employees which can be reasonably ascertained. The theoretical analysis that salesmen and other similarly-situated workers regularly report for work at 8:00 a.m. and return to their home station at 4:00 or 4:30 p.m., creating the assumption that their field work is supervised, is surface projection. Actual field work begins after 8:00 a.m., when the sales personnel follow their field itinerary, and ends immediately before 4:00 or 4:30 p.m. when they report back to their office. The period between 8:00 a.m. and 4:00 or 4:30 p.m. comprises their hours of work in the field, the extent or scope and result of which are subject to their individual capacity and industry and which "cannot be determined with reasonable certainty." This is the reason why effective supervision over field work of salesmen and medical representatives, truck drivers and merchandisers is practically a physical impossibility. Consequently, they are excluded from the ten holidays with pay award. Moreover, the requirement that "actual hours of work in the field cannot be determined with reasonable certainty" must be read in conjunction with Rule IV, Book III of the Implementing Rules which provides: Rule IV Holidays with Pay Sec. 1. Coverage.This rule shall apply to all employees except: (e) Field personnel and other employees whose time and performance is unsupervised by the employer xxx In deciding whether or not an employee's actual working hours in the field can be determined with reasonable certainty, query must be made as to whether or not such employee's time and performance is constantly supervised by the employer. To the argument that the giving of incentive bonus proves that their actual hours in the field can be determined with reasonable certainty, the criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on sales target; (2) good collection performance; (3) proper compliance with good market hygiene; (4) good merchandising work; (5) minimal market returns; and (6) proper truck maintenance. The above criteria indicate that these sales personnel are given incentive bonuses precisely because of the difficulty in measuring their actual hours of field work. These employees are evaluated by the result of their work and not by the actual hours of field work which are hardly susceptible to determination. The reasons for excluding an outside salesman are fairly apparent. Such a salesman, to a greater extent, works individually. There are no restrictions respecting the time he shall work and he can earn as much or as little, within the range of his ability, as his ambition dictates. In lieu of overtime he ordinarily receives commissions as extra compensation. He works away from his employer's place of business, is not subject to the personal supervision of his employer, and his employer has no way of knowing the number of hours he works per day. The same rule on holiday pay benefits also apply to overtime pay. II. NO, IT IS NOT. The divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid employee's salary and in the computation of his daily rate. even without the presumption found in the rules and in the policy instruction, the company practice indicates that the monthly salaries of the employees are so computed as to include the holiday pay provided by law. Following the criterion laid down in the Chartered Bank case (the Chartered Bank, in computing overtime compensation for its employees, employs a "divisor" of 251 days. The 251 working days divisor is the result of subtracting all Saturdays, Sundays and the ten (10) legal holidays from the total number of calendar days in a year. If the employees are already paid for all non-working days, the divisor should be 365 and not 251), the use of 251 days' divisor by respondent Filipro indicates that holiday pay is not yet included in the employee's salary, otherwise the divisor should have been 261. It must be stressed that the daily rate, assuming there are no intervening salary increases, is a constant figure for the purpose of computing overtime and night differential pay and commutation of sick and vacation leave credits. Necessarily, the daily rate should also be the same basis for computing the 10 unpaid holidays. To change the divisor from 251 to 261 days would result in a lower daily rate which is violative of the prohibition on non-diminution of benefits found in Article 100 of the Labor Code. To maintain the same

daily rate if the divisor is adjusted to 261 days, then the dividend, which represents the employee's annual salary, should correspondingly be increased to incorporate the holiday pay. To illustrate, if prior to the grant of holiday pay, the employee's annual salary is P25,100, then dividing such figure by 251 days, his daily rate is P100.00 After the payment of 10 days' holiday pay, his annual salary already includes holiday pay and totals P26,100 (P25,100 + 1,000). Dividing this by 261 days, the daily rate is still P100.00. There is thus no merit in respondent Nestle's claim of overpayment of overtime and night differential pay and sick and vacation leave benefits, the computation of which are all based on the daily rate, since the daily rate is still the same before and after the grant of holiday pay. NATIONAL SUGAR REFINERIES CO. VS. NLRC G.R. No. 101761; March 24, 1993 Facts Petitioner, a corporation which is fully owned and controlled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation No. 50. Private respondent union represents the former supervisors of the NASUREFCO Batangas Sugar Refinery, namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor, Senior Financial/Budget Analyst, General Accountant, Cost Accountant, Sugar Accountant, Junior Financial/Budget Analyst, Shift Boiler Supervisor, Shift Operations Chemist, Shift Electrical Supervisor, General Services Supervisor, Instrumentation Supervisor, Community Development Officer, Employment and Training Supervisor, Assistant Safety and Security Officer, Head of Personnel Services, Head Nurse, Property Warehouse Supervisor, Head of Inventory Control Section, Shift Process Supervisor, Assistant Shift Process Supervisor, Shift R/M Supervisor, Day Maintenance Supervisor and Motorpool Supervisor. On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from rank-and-file to department heads. The JE Program was designed to rationalize the duties and functions of all positions, reestablish levels of responsibility, and reorganize both wage and operational structures. Jobs were ranked according to effort, responsibility, training and working conditions and relative worth of the job. As a result, all positions were re-evaluated, and all employees including the members of respondent union were granted salary adjustments and increases in benefits commensurate to their actual duties and functions. We glean from the records that for about ten years prior to the JE Program, the members of respondent union were treated in the same manner as rank-and-file employees. As such, they used to be paid overtime, rest day and holiday pay pursuant to the provisions of Articles 87, 93 and 94 of the Labor Code, as amended. With the implementation of the JE Program, the following adjustments were made: (1) the members of respondent union were re-classified under levels S-5 to S-8 which are considered managerial staff for purposes of compensation and benefits; (2) there was an increase in basic pay on the average of 50% of their basic pay prior to the JE Program, with the union members now enjoying a wide gap (P1,269.00 per month) in basic pay compared to the highest paid rank-and-file employee; (3) longevity pay was increased on top of alignment adjustments; (4) they were entitled to increased company COLA of P225.00 per month; and (5) there was a grant of P100.00 allowance for rest day/holiday work. On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which was organized pursuant to Republic Act No. 6715 allowing supervisory employees to form their own unions, as the bargaining representative of all the supervisory employees at the NASUREFCO Batangas Sugar Refinery. Two years after the implementation of the JE Program, specifically on June 20, 1990, the members of herein respondent union filed a complaint with the executive labor arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code. Arguments Petiitioner: 1) The members of respondent union are members of the managerial staff who are not entitled to overtime, rest day and holiday pay; and petitioner should not assume the "double burden" of giving the benefits due to rank-and-file employees together with those due to supervisors under the JE Program. 2) For purposes of forming and joining unions, certification elections, collective bargaining, and so forth, the union members are supervisory employees. In terms of working conditions and rest periods and

entitlement to the questioned benefits, however, they are officers or members of the managerial staff, hence they are not entitled thereto. Issue Whether or not supervisory employees are entitled to overtime, rest day and holiday pay. Decision NO, THEY ARE NOT. It is not disputed that the members of respondent union are supervisory employees, as defined under Article 212(m), Book V of the Labor Code on Labor Relations, which reads: (m) "Managerial employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book. Article 82, Book III of the Labor Code on "Working Conditions and Rest Periods" and amplified in Section 2, Rule I, Book III of the Rules to Implement the Labor Code, however, provides: Art. 82. Coverage. The provisions 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. As used herein, "managerial employees" refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff. xxx xxx xxx Sec. 2. Exemption. The provisions of this rule shall not apply to the following persons if they qualify for exemption under the condition set forth herein: xxx xxx xxx (b) Managerial employees, if they meet all of the following conditions, namely: (1) Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof; (2) They customarily and regularly direct the work of two or more employees therein; (3) They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight.