1.

G.R. No. 49549 August 30, 1990

EVELYN CHUA-QUA, petitioner,
vs.
HON. JACOBO C. CLAVE, in his capacity as Presidential Executive Assistant, and TAY TUNG HIGH SCHOOL,
INC., respondents.
William C. Gunitang and Jaime Opinion for petitioner.
Laogan Law Offices for private respondent.
FACTS OF THE CASE:
The case was about an affair and marriage of 30 years old teacher Evelyn Chua in Tay Tung High School in Bacolod City to her 16
years old student. The petitioner teacher was suspended without pay and was terminated of his employment for Abusive and
Unethical Conduct Unbecoming of a Dignified School Teacher which was filed by a public respondent as a clearance for
termination.
ISSUE:
Was her dismissal valid?
Whether or not there is substantial evidence to prove that the antecedent facts which culminated in the marriage between petitioner
and her student constitute immorality and or grave misconduct?
SUPREME COURT RULING:
The Supreme Court declared the dismissal illegal saying:
If the two eventually fell in love despite the disparity in their ages and academic level, this only leads to the truism that the heart
has reason of its own which reason does not know. But, definitely, yielding to this gentle and universal emotion is not to be
casually equated to immorality. The deviation of the circumstances of their marriage from the usual societal pattern cannot be
considered as a defiance of contemporary social mores.
Finding that there is no substantial evidence of the imputed immoral acts, it follows that the alleged violation of Code of Ethics
governing school teachers would have no basis. Private respondent utterly failed to show that petitioner took advantage of her
position to court her student. The deviation of the circumstances of their marriage from the usual societal pattern cannot be
considered as a defiance of contemporary social mores.
Private respondent [the school] utterly failed to show that petitioner [30-year old lady teacher] took advantage of her position to
court her student [16-year old]. If the two eventually fell in love, despite the disparity in their ages and academic levels, this only
lends substance to the truism that the heart has reasons of its own which reason does not know. But, definitely, yielding to this
gentle and universal emotion is not to be so casually equated with immorality. The deviation of the circumstances of their marriage
from the usual societal pattern cannot be considered as a defiance of contemporary social mores. ( Chua-Qua vs. Clave, G.R. No.
L-49549, 30 August 1990).
Landmark Case: CHUA QUA vs. CLAVE G.R. No. L-49549 August 30, 1990 (Case Digest)
A truly remarkable case wherein the Supreme Court ruled in favor of love. The setting of the case was in when marriage
between minors was still legal, way before the Family Code. In this case, a 30 year old teacher had married her student which
prompted the school to terminate her. And against odds the Supreme Court Ruled in favor of here, hence, creating this Landmark
Case. truism that the heart has reasons of its own which reason does not know.
CHUA QUA vs. CLAVE G.R. No. L-49549 August 30, 1990
Digested Case
FACTS:
This would have been just another illegal dismissal case were it not for the controversial and unique situation that the marriage of
herein petitioner, then a classroom teacher, to her student who was fourteen (14) years her junior, was considered by the school
authorities as sufficient basis for terminating her services.
The case was about an affair and marriage of 30 years old teacher Evelyn Chua in Tay Tung High School in Bacolod City to her 16
years old student. The petitioner teacher was suspended without pay and was terminated of his employment for Abusive and
Unethical Conduct Unbecoming of a Dignified School Teacher which was filed by a public respondent as a clearance for
termination.
ISSUE:
Was her dismissal valid?
Whether or not there is substantial evidence to prove that the antecedent facts which culminated in the marriage between petitioner
and her student constitute immorality and or grave misconduct?
RULING:
The Supreme Court declared the dismissal illegal saying:
Private respondent [the school] utterly failed to show that petitioner [30-year old lady teacher] took advantage of her position to
court her student [16-year old]. If the two eventually fell in love, despite the disparity in their ages and academic levels, this

only lends substance to the truism that the heart has reasons of its own which reason does not know. But, definitely, yielding
to this gentle and universal emotion is not to be so casually equated with immorality. The deviation of the circumstances of their
marriage from the usual societal pattern cannot be considered as a defiance of contemporary social mores.
Finding that there is no substantial evidence of the imputed immoral acts, it follows that the alleged violation of Code of Ethics
governing school teachers would have no basis. Private respondent utterly failed to show that petitioner took advantage of her
position to court her student. The deviation of the circumstances of their marriage from the usual societal pattern cannot be
considered as a defiance of contemporary social mores.
FACTS OF THE CASE:
Petitioner worked as a teacher in Tay Tung High School in Bacolod City since 1963. In 1976, petitioner was a Grade VI class
adviser where one Bobby Qua, 16 years old, was enrolled. Petitioner was giving remedial lessons to Bobby Qua as per policy of
the school when petitioner and Bobby became very close. On December 24, 1975, they were married in a civil ceremony in Iloilo
City, petitioner was then 30 years old. Bobby, only 16 years old, received the consent and advice of the latters mother, Mrs.
Concepcion Ong. Evelyn and Bobby were married in a church wedding on January 10, 1976.
On February 4, 1976, Tay Tung High School filed with the Department of Labor in Bacolod City an application for clearance to
terminate petitioners employment on the ground of abusive and unethical conduct unbecoming of a dignified school teacher.
Petitioner was suspended without pay on March 12, 1976. Labor Arbiter Jose Aguirre, without conducting any formal hearing,
awarded in favor of Tay Tung High School. Petitioner appealed to the NLRC claiming denial of due process for not receiving
copies of affidavits relied by labor arbiter. On December 27, 1976, NLRC reversed the labor arbiters decision. This was in turn
reversed by the Minister of Labor, but awarding 6 months salary to petitioner as financial assistance. Petitioner appealed to the
Office of the President of the Philippines, and through Executive Assistant Jacobo C. Clave, reversed the decision of the Minister
of Labor and ordered petitioner to be reinstated. Public respondent reversed his earlier decision however and supported petitioners
dismissal from work.
ISSUE:
Did petitioner commit an immoral act as a teacher warranting dismissal from work?
RULING: No, petitioner was never proved to have abused nor taken advantage, or abused or committed immoral acts with any
student in any circumstance. The petitioners dismissal was based solely on her marriage to Bobby Qua and the imputed charges of
abuse, immorality and unethical conduct were unsubstantiated, hence unwarranted and illegal.
Petition for certiorari granted, private respondent is ordered to pay petitioner back wages equivalent to three years without
deduction and separation pay of one month for every year of service.

2. G.R. No. 167217

February 4, 2008

P.I. MANUFACTURING, INCORPORATED, petitioner,

vs.
P.I. MANUFACTURING SUPERVISORS AND FOREMAN ASSOCIATION and the NATIONAL LABOR UNION,
respondents.
In 1987, the President signed into law Republic Act (RA) No. 6640 providing, among others, an increase in the statutory minimum
wage and salary rates of employees and workers in the private sector. Thereafter, P.I. Manufacturing Incorporated (P.I), petitioner,
and P.I. Manufacturing Supervisors and Foremen Association (PIMASUFA), respondents, entered into a new Collective
Bargaining Agreement(1987 CBA) whereby the supervisors were granted an increase of Php 625 per month and the foremen, Php
475 per month. In 1989, PIMASUFA and the National Labor Union filed a complaint with the National Labor Relations
Commission (NLRC) charging P.I. with violation of RA No. 6640, contending that the implementation of the said statute had
resulted in a wage distortion.
The Labor Arbiter rendered a Decision in favor of PIMASUFA, ordering P.I. to pay all the members of PIMASUFA (across the
board) wage increases equivalent to 13.5%of their basic pay. On appeal, the NLRC rendered a Resolution affirming the Labor
Arbiter's judgement. Thereafter, P.I. filed a petition for Certiorari with this Court, which the Court referred to the CA. The CA
rendered a Decision affirming that of the NLRC's with modification by raising the 13.5% wage increase to 18.5%. A motion for
reconsideration was filed by P.I. but it was denied.
ISSUE:
Whether the implementation of RA No. 6640 resulted in a wage distortion and whether suchdistortion was cured or remedied by
the 1987 CBA
HELD:
Wage distortion means the disappearance or virtual disappearance of pay differentials between lower and higher positions in an
enterprise because of compliance with a wage order.
In this case, the Court of Appeals correctly ruled that a wage distortion occurred due to the implementation of R.A. No. 6640.
Notably, the implementation of R.A. No. 6640 resulted in the increase of P10.00 in the wage rates of Alcantara, supervisor, and
Morales and Salvo, both foremen. They are petitioners lowest paid supervisor and foremen. As a consequence, the increased wage

rates of foremen Morales and Salvo exceeded that of supervisor Buencuchillo. Also, the increased wage rate of supervisor
Alcantara exceeded those of supervisors Buencuchillo and Del Prado. Consequently, the P9.79 gap or difference between the
wage rate of supervisor Del Prado and that of supervisor Alcantara was eliminated. Instead, the latter gained a P.21 lead over Del
Prado. Like a domino effect, these gaps or differences between and among the wage rates of all the above employees have been
substantially altered and reduced. It is therefore undeniable that the increase in the wage rates by virtue of R.A. No. 6640 resulted
in wage distortion or the elimination of the intentional quantitative differences in the wage rates of the above employees.
However, while we find the presence of wage distortions, we are convinced that the same were cured or remedied when
respondent PIMASUFA entered into the 1987 CBA with petitioner after the effectivity of R.A. No. 6640. The 1987 CBA increased
the monthly salaries of the supervisors by P625.00 and the foremen, by P475.00, effective May 12, 1987. These increases reestablished and broadened the gap, not only between the supervisors and the foremen, but also between them and the rank-and-file
employees. Significantly, the 1987 CBA wage increases almost doubled that of the P10.00 increase under R.A. No. 6640. The
P625.00/month means P24.03 increase per day for the supervisors, while the P475.00/month means P18.26 Increase per day for
the foremen. These increases
3. G.R. No. 140689

February 17, 2004

BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and BANKARD, INC., respondents.
FACTS:
Bankard, Inc. classifies its employees according to level: Level I, Level II, Level III, Level IV and Level V (See Note #1 for
corresponding salary rates). On May 28, 1993, the directors of respondent Bankard, Inc. approved a new salary scale for the
purpose of making its hiring rate competitive in the labor market. The new salary scale increased the hiring rates of new
employees, to wit: Levels I and V were increased by P1,000.00 while Levels II, III and IV were increased by P900.00 (see Note #
1). The salaries of employees who fell below the new minimum rates were also adjusted accordingly to reach such rates under their
levels. As a result, Bankard Employees Union-Workers Alliance Trade Unions (Bankard Union) demanded for salary increase of
its old, regular employees. Bankard refused on the ground that it had no obligation to grant all its employees the same increase.
Bankard Union filed a Notice of Strike on the ground of discrimination and other acts of Unfair Labor Practice. This was initially
treated as a preventive mediation case on the ground that the issues raised were not strikable. Upon the second notice of strike, the
dispute was certified for compulsory arbitration. The NLRC dismissed the case for lack of merit, finding no wage distortion. The
CA denied the same for lack of merit. Hence, this petition.
ISSUE:
Whether the unilateral adoption by an employer of an upgraded salary scale that increased the hiring rates of new employees
without increasing the salary rates of old employees resulted in wage distortion within the contemplation of Article 124 of the
Labor Code.
RULING:
No. The Court held that wage distortion does not exist in this case as all the elements were not met. There are four elements of
wage distortion (See note #2), namely: (1) An existing hierarchy of positions with corresponding salary rates, (2) a significant
change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one, (3) the elimination
of the distinction between the two levels and (4) the existence of the distortion in the same region of the country. In a problem
dealing with "wage distortion," the basic assumption is that there exists a grouping or classification of employees that establishes
distinctions among them on some relevant or legitimate bases. Various factors such as the degrees of responsibility, the skills and
knowledge required, the complexity of the job, or other logical basis of differentiation are involved in such classifications.
According to the NLRC, to determine the existence of wage distortion, the "historical" classification of the employees prior to the
wage increase must be established. In this case, the employees of Bankard have been historically classified into levels (I-V), and
not on the basis of their length of service. New employees are automatically placed under any of these levels upon their entry. This
is the wage structure formulated by Bankard, a recognized management prerogative which Bankard Union may not encroach upon
by creating their own independent classification (ie, based on newly hired and old employees) to use as a basis for demanding an
across-the-board salary increase. According to established jurisprudence, the formulation of a wage structure through the
classification of employees is a matter of management judgment and discretion.
Based on the wage structure, there is no hierarchy of positions between the newly hired and regular employees of Bankard since it
is a structure which is based on level, not seniority. The first element of wage distortion is therefore lacking.
Second, the third element of wage distortion ie the elimination of the distinction between the two levels, is also missing. Even if
there was indeed a resulting decrease in the wage gap between the salary of the old and new employees, the gap was held to be
insignificant as to result in severe contraction of the intentional quantitative differences in the salary rates between the employee
group as the classification under the wage structure is based on rank, and not seniority.
Third, pursuant to Article 124 of the Labor Code, Bankard cannot be legally obligated to correct the alleged wage distortion,
should it have existed in this case, because the increase in the wages and salaries of the newly-hired was not due to a
prescribed law or wage order. ( See Note #3). The fixing of hiring rates which resulted to wage increases was a voluntary and

unilateral increases\ made by Bankard. The Court held that Art 124 is to be construed in relation to minimum wage fixing, the
intention of the law being that in case of an increase of minimum wage, the distinctions in the wage structure will be preserved.
The case of Metro Transit Organization Inc, vs. NLRC (See Note #4) is not applicable in this case as in the former, there was no
CBA but instead, an existing company practice that whenever rank-and-file employees were paid a statutorily mandated salary
increase, supervisory employees were paid a statutorily mandated salary increase, supervisory employees were, as does not ipso
facto result to an obligation to rectify it, absent a law or other source of obligation which requires its rectification. Furthermore,
Bankards right to increase its hiring rate, to establish minimum salaries for specific jobs, and to adjust the rates of employees
affected is embodied under the parties CBA (See Note #5). The CBA is a valid and legally enforceable source of rights between
the parties and as such, will not be interfered with by the Courts absent any bad faith on the part of the employer.
ADJUDICATION:
WHEREFORE, the present petition is hereby DENIED.
4. G.R. No. 102636 September 10, 1993
METROPOLITAN BANK & TRUST COMPANY EMPLOYEES UNION-ALU-TUCP and ANTONIO V.
BALINANG,petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (2nd Division) and METROPOLITAN BANK and TRUST
COMPANY, respondents.
Gilbert P. Lorenzo for petitioners.
Marcial G. dela Fuente for private respondents.
VITUG, J.:
In this petition for certiorari, the Metropolitan Bank & Trust Company Employees Union-ALU-TUCP (MBTCEU) and its
president, Antonio V. Balinang, raise the issue of whether or not the implementation by the Metropolitan Bank and Trust Company
of Republic Act No. 6727, mandating an increase in pay of P25 per day for certain employees in the private sector, created a
distortion that would require an adjustment under said law in the wages of the latter's other various groups of employees.
On 25 May 1989, the bank entered into a collective bargaining agreement with the MBTCEU, granting a monthly P900 wage
increase effective 01 January 1989, P600 wage increase 01 January 1990, and P200 wage increase effective 01 January 1991. The
MBTCEU had also bargained for the inclusion of probationary employees in the list of employees who would benefit from the first
P900 increase but the bank had adamantly refused to accede thereto. Consequently, only regular employees as of 01 January 1989
were given the increase to the exclusion of probationary employees.
Barely a month later, or on 01 January 1989, Republic Act 6727, "an act to rationalize wage policy determination be establishing
the mechanism and proper standards thereof, . . . fixing new wage rates, providing wage incentives for industrial dispersal to the
countryside, and for other purposes," took effect. Its provisions, pertinent to this case, state:
Sec. 4. (a) Upon the effectivity of this Act, the statutory minimum wage rates of all workers and employees in
the private sector, whether agricultural or non-agricultural, shall be increased by twenty-five pesos (P25) per day,
. . .: Provided, That those already receiving above the minimum wage rates up to one hundred pesos(P100.00)
shall also receive an increase of twenty-five pesos (P25.00) per day, . . .
(d) If expressly provided for and agreed upon in the collective bargaining agreements, all increase in the daily
basic wage rates granted by the employers three (3) months before the effectivity of this Act shall be credited as
compliance with the increases in the wage rates prescribed herein, provided that, where such increases are less
than the prescribed increases in the wage rates under this Act, the employer shall pay the difference. Such
increase shall not include anniversary wage increases, merit wage increase and those resulting from the
regularization or promotion of employees.
Where the application of the increases in the wage rates under this Section results in distortions as defined under
existing laws in the wage structure within an establishment and gives rise to a dispute therein, such dispute shall
first be settled voluntarily between the parties and in the event of a deadlock, the same shall be finally resolved
through compulsory arbitration by the regional branches of the National Labor Relations Commission (NLRC)
having jurisdiction over the workplace.
It shall be mandatory for the NLRC to conduct continous hearings and decide any dispute arising under this
Section within twenty (20) calendar days from the time said dispute is formally submitted to it for arbitration.
The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of the
increase in the wage rates prescribed under this Section.
Pursuant to the above provisions, the bank gave the P25 increase per day, or P750 a month, to its probationary employees and to
those who had been promoted to regular or permanent status before 01 July 1989 but whose daily rate was P100 and below. The
bank refused to give the same increase to its regular employees who were receiving more than P100 per day and recipients of the
P900 CBA increase.
Contending that the bank's implementation of Republic Act 6727 resulted in the categorization of the employees into (a) the
probationary employees as of 30 June 1989 and regular employees receiving P100 or less a day who had been promoted to
permanent or regular status before 01 July 1989, and (b) the regular employees as of 01 July 1989, whose pay was over P100 a
day, and that, between the two groups, there emerged a substantially reduced salary gap, the MBTCEU sought from the bank the
correction of the alleged distortion in pay. In order to avert an impeding strike, the bank petitioned the Secretary of Labor to
assume jurisdiction over the case or to certify the same to the National Labor Relations Commission (NLRC) under Article 263 (g)
of the Labor Code. 1The parties ultimately agreed to refer the issue for compulsory arbitration to the NLRC.

The case was assigned to Labor Arbiter Eduardo J. Carpio. In his decision of 05 February 1991, the labor arbiter disregard with the
bank's contention that the increase in its implementation of Republic Act 6727 did not constitute a distortion because "only 143
employees or 6.8% of the bank's population of a total of 2,108 regular employees" benefited. He stressed that "it is not necessary
that a big number of wage earners within a company be benefited by the mandatory increase before a wage distortion may be
considered to have taken place," it being enough, he said, that such increase "result(s) in the severe contraction of an intentional
quantitative difference in wage between employee groups."
The labor arbiter concluded that since the "intentional quantitative difference" in wage or salary rates between and among groups
of employees is not based purely on skills or length of service but also on "other logical bases of differentiation, a P900.00 wage
gap intentionally provided in a collective bargaining agreement as a quantitative difference in wage between those who WERE
regular employees as of January 1, 1989 and those who WERE NOT as of that date, is definitely a logical basis of differentiation
(that) deserves protection from any distorting statutory wage increase." Otherwise, he added, "a minimum wage statute that seek to
uplift the economic condition of labor would itself destroy the mechanism of collective bargaining which, with perceived stability,
has been labor's constitutional and regular source of wage increase for so long a time now." Thus, since the "subjective quantitative
difference" between wage rates had been reduced from P900.00 to barely P150.00, correction of the wage distortion pursuant to
Section 4(c) of the Rules Implementing Republic Act 6727 should be made.
The labor arbiter disposed of the case, thus:
WHEREFORE, premises considered, the respondent is hereby directed to restore to complainants and their
members the Nine Hundred (P900.00) Pesos CBA wage gap they used to enjoy over non-regular employees as of
January 1, 1989 by granting them a Seven Hundred Fifty (P750.00) Pesos monthly increase effective July 1,
1989.
SO ORDERED. 2
The bank appealed to the NLRC. On 31 May 1991, the NLRC Second Division, by a vote of 2 to 1, reversed the decision of the
Labor Arbiter. Speaking, through Commissioners Rustico L. Diokno and Domingo H. Zapanta, the NLRC said:
. . . a wage distortion can arise only in a situation where the salary structure is characterized by intentional
quantitative differences among employee groups determined or fixed on the basis of skills, length of service, or
other logical basis of differentiation and such differences or distinction are obliterated (In Re: Labor Dispute at
the Bank of the Philippine Islands, NCMB-RB-7-11-096-89, Secretary of Labor and Employment, February 18,
1991).
As applied in this case, We noted that in the new wage salary structure, the wage gaps between Level 6 and 7
levels 5 and 6, and levels 6 and 7 (sic) were maintained. While there is a noticeable decrease in the wage gap
between levels 2 and 3, Levels 3 and 4, and Levels 4 and 5, the reduction in the wage gaps between said levels is
not significant as to obliterate or result in severe contraction of the intentional quantitative differences in salary
rates between the employees groups. For this reason, the basis requirement for a wage in this case. Moreover,
there is nothing in the law which would justify an across-the-board adjustment of P750.00 as ordered by the
labor Arbiter.
WHEREFORE, premises considered, the appealed decision is hereby set aside and a new judgment is hereby
entered, dismissing the complaint for lack of merit.
SO ORDERED. 3
In her dissent, Presiding Commissioner Edna Bonto-Perez opined:
There may not be an obliteration nor elimination of said quantitative distinction/difference aforecited but clearly
there is a contraction. Would such contraction be severe as to warrant the necessary correction sanctioned by the
law in point, RA 6727? It is may considered view that the quantitative intended distinction in pay between the
two groups of workers in respondent company was contracted by more than fifty (50%) per cent or in particular
by more or less eighty-three (83%) per cent hence, there is no doubt that there is an evident severe contraction
resulting in the complained of wage distortion.
Nonetheless, the award of P750.00 per month to all of herein individual complainants as ordered by the Labor
Arbiter below, to my mind is not the most equitable remedy at bar, for the same would be an across the board
increase which is not the intention of RA 6727. For that matter, herein complainants cannot by right claim for the
whole amount of P750.00 a month or P25.00 per day granted to the workers covered by the said law in the sense
that they are not covered by the said increase mandated by RA 6727. They are only entitled to the relief granted
by said law by way of correction of the pay scale in case of distortion in wages by reason thereof.
Hence, the formula offered and incorporated in Wage Order No. IV-02 issued on 21 May 1991 by the Regional
Tripartite Wages and Productivity Commission for correction of pay scale structures in case of wage distortion as
in the case at bar which is:
Minimum Wage = % x Prescribed = Distortion
Increased Adjustment
Actual Salary
would be the most equitable and fair under the circumstances obtaining in this case.
For this very reason, I register my dissent from the majority opinion and opt for the modification of the Labor
Arbiter's decision as afore-discussed. 4
The MBTCEU filed a motion for reconsideration of the decision of the NLRC; having been denied, the MBTCEU and its president
filed the instant petition for certiorari, charging the NLRC with gave abuse of discretion by its refusal (a) "to acknowledge the
existence of a wage distortion in the wage or salary rates between and among the employee groups of the respondent bank as a

result of the bank's partial implementation" of Republic Act 6727 and (b) to give due course to its claim for an across-the-board
P25 increase under Republic Act No. 6727. 5
We agree with the Solicitor General that the petition is impressed with merit. 6
The term "wage distortion", under the Rules Implementing Republic Act 6727, is defined, thus:
(p) Wage Distortion means a situation where an increase in prescribed wage rates results in the elimination or
severe contradiction of intentional quantitative differences in wage or salary rates between and among employee
groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on
skills, length of service, or other logical bases of differentiation.
The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain employees, we
agree, is, by and large, a question of fact the determination of which is the statutory function of the NLRC. 7 Judicial review of
labor cases, we may add, does not go beyond the evaluation of the sufficiency of the evidence upon which the labor official's
findings rest. 8 As such, factual findings of the NLRC are generally accorded not only respect but also finality provided that its
decision are supported by substantial evidence and devoid of any taint of unfairness of arbitrariness. 9 When, however, the
members of the same labor tribunal are not in accord on those aspects of a case, as in this case, this Court is well cautioned not to
be as so conscious in passing upon the sufficiency of the evidence, let alone the conclusions derived therefrom.
In this case, the majority of the members of the NLRC, as well as its dissenting member, agree that there is a wage distortion
arising from the bank's implementation of the P25 wage increase; they do differ, however, on the extent of the distortion that can
warrant the adoption of corrective measures required by law.
The definition of "wage distortion," 10 aforequoted, shows that such distortion can so exist when, as a result of an increase in the
prescribed wage rate, an "elimination or severe contraction of intentional quantitative differences in wage or salary rates" would
occur "between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such
wage structure based on skills, length of service, or other logical bases of differentiation." In mandating an adjustment, the law did
not require that there be an elimination or total abrogation of quantitative wage or salary differences; a severe contraction thereof is
enough. As has been aptly observed by Presiding Commissioner Edna Bonto-Perez in her dissenting opinion, the contraction
between personnel groupings comes close to eighty-three (83%), which cannot, by any stretch of imagination, be considered less
than severe.
The "intentional quantitative differences" in wage among employees of the bank has been set by the CBA to about P900 per month
as of 01 January 1989. It is intentional as it has been arrived at through the collective bargaining process to which the parties are
thereby concluded. 11 The Solicitor General, in recommending the grant of due course to the petition, has correctly emphasized that
the intention of the parties, whether the benefits under a collective bargaining agreement should be equated with those granted by
law or not, unless there are compelling reasons otherwise, must prevail and be given effect. 12
In keeping then with the intendment of the law and the agreement of the parties themselves, along with the often repeated rule that
all doubts in the interpretation and implementation of labor laws should be resolved in favor of labor, 13 we must approximate an
acceptable quantitative difference between and among the CBA agreed work levels. We, however, do not subscribe to the labor
arbiter's exacting prescription in correcting the wage distortion. Like the majority of the members of the NLRC, we are also of the
view that giving the employees an across-the-board increase of P750 may not be conducive to the policy of encouraging
"employers to grant wage and allowance increases to their employees higher than the minimum rates of increases prescribed by
statute or administrative regulation," particularly in this case where both Republic Act 6727 and the CBA allow a credit for
voluntary compliance. As the Court, through Associate Justice Florentino Feliciano, also pointed out in Apex Mining Company,
Inc. v. NLRC: 14
. . . . (T)o 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 interests
of labor is concerned. . . .
We find the formula suggested then by Commissioner Bonto-Perez, which has also been the standard considered by the regional
Tripartite Wages and Productivity Commission for the correction of pay scale structures in cases of wage distortion, 15 to well be
the appropriate measure to balance the respective contentions of the parties in this instance. We also view it as being just and
equitable.
WHEREFORE, finding merit in the instant petition for certiorari, the same is GRANTED DUE PROCESS, the questioned NLRC
decision is hereby SET ASIDE and the decision of the labor arbiter is REINSTATED subject to the MODIFICATION that the
wage distortion in question be corrected in accordance with the formula expressed in the dissenting opinion of Presiding
Commissioner Edna Bonto-Perez. This decision is immediately executory

5. G.R. No. 172161

March 2, 2011
SLL INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, 4th DIVISION, ROLDAN LOPEZ, EDGARDO ZUIGA and
DANILO CAETE, Respondents.
FACTS:
Private Respondents were hired by Lagon as apprentice or trainee cable/lineman and were paid the full minimum wage and other
benefits; they did not report to work regularly, since they are trainees, but came in substitutes for other regular workers. After their
training, they were engaged as Project Employees in different parts of the Country (Bohol, Anitpolo, Bulacan and Caloocan) upon
which they have to re-apply after every completion. Faced with economic problems, Lagon was constrained to cut down the
overtime work of its workers. Thus, when private respondents requested to work overtime, Lagon refused. Private respondents

went home to Cebu and filed a complaint for illegal dismissal, non-payment of wages, holiday pay, 13th month pay and service
incentive leave pay as well as damages and attorneys fees.
Petitioners admitted private respondents employment but claimed that the latter were only project employees for their services
were merely engaged for a specific project or undertaking and the same were covered by contracts duly signed by private
respondents. And since the workplaces of private respondents were all in Manila, the complaint should be filed there. Thus,
petitioners prayed for the dismissal of the complaint for lack of jurisdiction and utter lack of merit.
The LA claimed that his office had jurisdiction under RULE 4 SEC 1 of the NLRC RULES because the "workplace," as defined in
the said rule, included the place where the employee was supposed to report back after a temporary detail, assignment or travel,
which in this case was Cebu. As to the status of their employment, the LA opined that private respondents were regular employees
because they were repeatedly hired by petitioners and they performed activities which were usual, necessary and desirable in the
business or trade of the employer.
LA found that private respondents were underpaid. It ruled that the free board and lodging, electricity, water, and food enjoyed by
them could not be included in the computation of their wages because these were given without their written consent. However,
petitioners were not liable for illegal dismissal. The LA viewed private respondents act of going home as an act of indifference
when petitioners decided to prohibit overtime work.
The NLRC affirmed the LAs decision. It noted that no single report of project completion was filed with the PUBLIC
EMPLOYMENT office as required by DOLE. The CA affirmed both the LAs and NLRCs decisions and considered that
petitioners failure to comply with the simple but compulsory requirement to submit a report of termination to the nearest Public
Employment Office every time private respondents employment was terminated was proof that the latter were not project
employees but regular employees.
ISSUE(S):
WON private respondents are entitled to be paid the minimum wage.
HELD:
YES. As a general rule, on payment of wages, a party who alleges payment as a defense has the burden of proving it. Specifically
with respect to labor cases, the burden of proving payment of monetary claims rests on the employer, the rationale being that the
pertinent personnel files, payrolls, records, remittances and other similar documents are not in the possession of the worker but in
the custody and absolute control of the employer.
In this case, petitioners, aside from bare allegations that private respondents received wages higher than the prescribed minimum,
failed to present any evidence, such as payroll or payslips, to support their defense of payment. Thus, petitioners utterly failed to
discharge the onus probandi.
Private respondents, on the other hand, are entitled to be paid the minimum wage, whether they are regular or non-regular
employees.
On whether the value of the facilities should be included in the computation of the "wages" received by private respondents,
Section 1 of DOLE Memorandum Circular No. 2 provides that an employer may provide subsidized meals and snacks to his
employees provided that the subsidy shall not be less that 30% of the fair and reasonable value of such facilities. In such cases, the
employer may deduct from the wages of the employees not more than 70% of the value of the meals and snacks enjoyed by the
latter, provided that such deduction is with the written authorization of the employees concerned.
Moreover, before the value of facilities can be deducted from the employees wages, the following requisites must all be attendant:
first, proof must be shown that such facilities are customarily furnished by the trade; second, the provision of deductible facilities
must be voluntarily accepted in writing by the employee; and finally, facilities must be charged at reasonable value. Mere
availment is not sufficient to allow deductions from employees wages.
These requirements, however, have not been met in this case. SLL failed to present any company policy or guideline showing that
provisions for meals and lodging were part of the employees salaries. It also failed to provide proof of the employees written
authorization, much less show how they arrived at their valuations. At any rate, it is not even clear whether private respondents
actually enjoyed said facilities.
Facilities VS Supplements
"Supplements," therefore, constitute extra remuneration or special privileges or benefits given to or received by the laborers over
and above their ordinary earnings or wages. "Facilities," on the other hand, are items of expense necessary for the laborers and his
family's existence and subsistence so that by express provision of law, they form part of the wage and when furnished by the
employer are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same.
In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and over his basic or
ordinary earning or wage is supplement; and when said benefit or privilege is part of the laborers' basic wages, it is a facility. The
distinction lies not so much in the kind of benefit or item (food, lodging, bonus or sick leave) given, but in the purpose for which it
is given. In the case at bench, the items provided were given freely by SLL for the purpose of maintaining the efficiency and health
of its workers while they were working at their respective projects,
6. G.R. Nos. 171594-96, September 18, 2013

ASIA BREWERY, INC., Petitioner,

v. TUNAY NA PAGKAKAISA NG MGA MANGGAGAWA SA ASIA (TPMA), Respondent.
DEL CASTILLO, J.:
In cases of compulsory arbitration before the Secretary of Labor pursuant to Article 263(g) of the Labor Code, the financial
statements of the employer must be properly audited by an external and independent auditor in order to be admissible in evidence
for purposes of determining the proper wage award.
This Petition for Review on Certiorari assails the Court of Appeals (CA) October 6, 2005 Decision 1 and the February 17, 2006
Amended Decision2 in CA-G.R. SP Nos. 80839, and 83168 which modified the January 19, 2004 Decision 3 of the Secretary of
Labor in OS-AJ-0042-2003.
Factual Antecedents
The antecedents are aptly summarized by the CA:
Respondent union Tunay Na Pagkakaisa ng mga Manggagawa sa Asia (TPMA) is a legitimate labor organization, certified as the
sole and exclusive bargaining agent of all regular rank and file employees of petitioner corporation Asia Brewery, Incorporated
(ABI). The petitioner corporation, on the other hand, is a company engaged in the manufacture, sale and distribution of beer,
shandy, glass and bottled water products. It employs about 1,500 workers and has existing distributorship agreements with at least
13 companies.
Respondent union and petitioner corporation had been negotiating for a new collective bargaining agreement (CBA) for the years
2003-2006 since the old CBA expired last July 2003. After about 18 sessions or negotiations, the parties were still unable to
reconcile their differences on their respective positions on most items, particularly on wages and other economic benefits.
On October 21, 2003, the Respondent union declared a deadlock. On October 27, 2003, Respondent union filed a notice of strike
with the National Conciliation and Mediation Board (NCMB), docketed as NCMB-RB-IV-LAG- NS-10-064-03. However, the
parties did not come to terms even before the NCMB.
On November 18, 2003, Respondent union conducted a strike vote. Out of the 840 union members, 768 voted in favor of holding a
strike.
On November 20, 2003, petitioner corporation then petitioned the Secretary of the Department of Labor and Employment (DOLE)
to assume jurisdiction over the parties labor dispute, invoking Article 263 (g) of the Labor Code. In answer, Respondent union
opposed the assumption of jurisdiction, reasoning therein that the business of petitioner corporation is not in dispensable to the
national interest.
On December 2, 2003, Respondent union filed before the Court of Appeals a petition for injunction, docketed as CA-G.R. SP No.
80839, which sought to enjoin the respondent Secretary of Labor from assuming jurisdiction over the labor dispute, or in the
alternative, to issue a temporary restraining order, likewise to enjoin the former from assuming jurisdiction.
On December 19, 2003, the public respondent, through Undersecretary/Acting Secretary Manuel G. Imson, issued an order
assuming jurisdiction over the labor dispute between the Respondent union and petitioner corporation. The pertinent portions of
the said order read:
"WHEREFORE, based on our considered determination that the current labor dispute is likely to adversely affect national interest,
this Office hereby ASSUMES JURISDICTION over the labor dispute between the ASIA BREWERY, INCORPORATED and the
TUNAY NA PAGKAKAISA NGMANGGAGAWA SA ASIA pursuant to Article 263 (g) of the Labor Code, as amended.
Accordingly, any strike or lockout in the Company, whether actual or impending, is hereby enjoined. Parties are hereby directed to
cease and desist from taking any action that might exacerbate the situation.
"To expedite the resolution of this dispute, the parties are directed to submit in three (3) copies, their Position Papers within ten
(10) days from receipt of this Order and another five (5) days from receipt of the said position papers to submit their Reply.
"1. The Company shall be required to provide:
"a. Complete Audited Financial Statements for the past five (5) years certified as to its completeness by the Chief
Financial Comptroller or Accountant;
"b. Projected Financial Statements of the Company for the next three (3) years;
"c. CBA history as to economic issues; and
"d. The average monthly salary of the employees in this bargaining unit.
"2. The Union is required to provide an itemized summary of their CBA demands with financial costing and sample
CBAs (if any) in similarly situated or comparable bargaining units.
"In the interest of speedy labor justice, this Office will entertain no motion for extension or postponement.
"The appropriate police authority is hereby deputized to enforce this Order in case of defiance or the same is not forthwith obeyed.
"SO ORDERED."
On January 19, 2004, respondent union filed another petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No.
81639,imputing bad faith and grave abuse of discretion to the Secretary of Labor. Respondent union prayed therein for the
nullification of the order of assumption of jurisdiction and the declaration that petitioner corporation is not an industry
indispensable to the national interest.
In the meantime, in a decision dated January 19, 2004, Secretary of Labor Patricia Sto. Tomas resolved the deadlock between the
parties. As summarized in a later resolution, the public respondent granted the following arbitral awards:
(1) WAGE INCREASES as follows:

First Year

= P18.00

Second Year

= 15.00

Third Year

= 12.00

Total

= P45.00

(2) HEALTH CARE (HMO)

P1,300 premium to be shouldered by Asia Brewery, Inc., for each covered employee and P1,800 contribution for each Union
member-dependent.
xxxx
The respondent union moved for a reconsideration of the decision on the ground that the ruling lacks evidentiary proof to
sufficiently justify the same. It also filed a "Paglilinaw o Pagwawasto" of the Decision. Similarly, petitioner corporation also filed a
motion for clarification/reconsideration. The respondent Secretary of Labor resolved all three motions in a resolution dated January
29, 2004 x x x.
Thereafter, on February 9, 2004, the parties executed and signed the Collective Bargaining Agreement with a term from August 1,
2003 to July 31,2006.
Subsequently, on April 1, 2004, respondent union filed another petition for certiorari before the Court of Appeals, which was
docketed as SP-83168, assailing the arbitral award and imputing grave abuse of discretion upon the public respondent.
Court of Appeals Ruling
On October 6, 2005, the CA rendered the first assailed Decision affirming with modification the arbitral award of the Secretary of
Labor, viz:
WHEREFORE, judgment is hereby rendered with the following rulings:
1) The assailed order dated December 19, 2003 of public respondent Secretary of Labor is AFFIRMED . The petitions for
injunction and certiorari in CA-G.R. SP Nos. 80839 and 81639 are denied and accordingly DISMISSED.
2) In CA-G.R. SP No. 81368, the assailed decision dated January 19,2004 and the order dated January 29, 2004 of the
public respondent are hereby MODIFIED to read as follows:
a) The present CBA is declared effective as of August 1, 2003;
b) Consequently, the employees are entitled to the arbitral awards or benefits from August 1, 2003 on top of
the P2,500.00 signing bonus;
c) The computation of the wage increase is REMANDED to the public respondent; and
d) The health benefit of the employees shall be P1,390.00.
SO ORDERED.

In modifying the arbitral award of the Secretary of Labor, the CA ruled that: (1)The effectivity of the CBA should be August 1,
2003 because this is the date agreed upon by the parties and not January 1, 2004 as decreed by the Secretary of Labor; (2) The
computation of wage increase should be remanded to the Secretary of Labor because the computation was based on petitioner
corporations unaudited financial statements, which have no probative value pursuant to the ruling in Restaurante Las Conchas v.
Llego,6 and was done in contravention of DOLE Advisory No. 1, Series of 2004, which contained the guidelines in resolving
bargaining deadlocks; and (3) The health benefits should be P1,390.00 per covered employee because petitioner corporation had
already agreed to this amount and the same cannot be altered or reduced by the Secretary of Labor.
Aggrieved, respondent union and petitioner corporation moved for reconsideration and partial reconsideration, respectively. On
February 17, 2006,the CA issued an Amended Decision, viz :
WHEREFORE , the foregoing considered, the Motion for Reconsideration of respondent union is DENIED and the Partial Motion
for Reconsideration of petitioner corporation is PARTIALLY GRANTED .Accordingly, Our Decision is MODIFIED and the
signing bonus previously awarded is hereby DELETED . The assailed Decision of the respondent Secretary with respect to the
issue on salary increases is REMANDED to her office for a definite resolution within one month from the finality of this Courts
Decision using as basis the externally audited financial statements to be submitted by petitioner corporation.
SO ORDERED.7
The CA partially modified its previous Decision by deleting the award of the signing bonus. It ruled that, pursuant to the express
provisions of the CBA, the signing bonus is over and beyond what the parties agreed upon in the said CBA.
From this Amended Decision, only petitioner corporation appealed to this Court via this Petition for Review on Certiorari.
Issues
Petitioner corporation raises the following issues for our resolution:
I. Whether the CA erred when it failed to dismiss CA-G.R. SP No.83168 despite the lack of authority of those who
instituted it.
II. Whether the CA erred when it remanded to the Secretary of Labor the issue on wage increase.
III. Whether the CA erred when it awarded P1,390.00 as premium payment for each covered employee. 8

Our Ruling
The Petition lacks merit.
The authority of Rodrigo Perez (Perez)
to file the petition before the CA was not
sufficiently refuted.
Petitioner corporation claims that Perez, the person who verified the Petition in CA-G.R. SP No. 83168 questioning the propriety
of the arbitral award issued by the Secretary of Labor, was without authority to represent respondent union. While there was a
Secretarys Certificate attached to the aforesaid Petition purportedly authorizing Perez to file the Petition on behalf of the union,
there was no showing that the union president, Jose Manuel Miranda (Miranda), called for and presided over the meeting when the
said resolution was adopted as required by the unions constitution and by-laws. Moreover, the aforesaid resolution was adopted on
March 23, 2004 while the Petition was filed on April 1, 2004 or nine days from the adoption of the resolution. Under the unions
constitution and by-laws, the decision of the board of directors becomes effective only after two weeks from its issuance. Thus, at
the time of the filing of the aforesaid Petition, the resolution authorizing Perez to file the same was still ineffective. Petitioner
corporation also adverts to two labor cases allegedly divesting Perez of authority to represent the union in the case before the
appellate court.
We disagree.
The Secretarys Certificate9 attached to the Petition in CA-G.R. SP No.83168 stated that the unions board of directors held a
special meeting on March23, 2004 and unanimously passed a resolution authorizing Perez to file a Petition before the CA to
question the Secretary of Labors arbitral award. 10 While petitioner corporation claims that the proper procedure for calling such a
meeting was not followed, it presented no proof to establish the same. Miranda, the union president who allegedly did not call for
and preside over the said meeting, did not come out to contest the validity of the aforesaid resolution or Secretarys Certificate.
Similarly, petitioner corporations claim that the aforesaid resolution was still ineffective at the time of the filing of the subject
Petition is unsubstantiated. A fair reading of the provisions which petitioner corporation cited in the unions constitution and bylaws, particularly Article VIII, Section 211 thereof, would show that the same refers to decisions of the board of directors regarding
the laws or rules that would govern the union, hence, the necessity of a two-week prior notice to the affected parties before they
become effective. These provisions have not been shown to apply to resolutions granting authority to individuals to represent the
union in court cases. Besides, even if we assume that these provisions in the unions constitution and by-laws apply to the subject
resolution, the continuing silence of the union, from the time of its adoption to the filing of the Petition with the CA and up to this
point in these proceedings, would indicate that such defect, if at all present, in the authority of Perez to file the subject Petition,
was impliedly ratified by respondent union itself.
As to the two labor cases allegedly divesting Perez of the authority to file the subject Petition, an examination of the same would
show that they did not affect the legal capacity of Perez to file the subject Petition. The first labor case (i.e., RO400-0407-AU002,12 RO400-0409-AU-006,13 and RO400-0412-AU-00114) involved the move of Perez and other union members to amend the
unions Constitution and By-Laws in order to include a provision on recall elections and to conduct a recall elections on June 26,
2004. In that case, the Med-Arbiter, in his January 25, 2005 Order,15 ruled that the amendment sought to be introduced was not
validly ratified by the requisite two-thirds vote from the union membership. As a result, the recall elections held on June 26, 2004
was annulled.16The second labor case (
i.e. , NLRC NCR CC No. 000282-04 17 and NLRC-RAB IV-12-20200-04-L18) involved the strike staged by Perez and other union
members on October 4, 2004. There, the National Labor Relations Commission, in its March 2006Decision, 19 ruled that the strike
was illegal and, as a consequence, Perez and the other union members were declared to have lost their employment status. 20
These two labor cases had no bearing on the legal capacity of Perez to represent the union in CA-G.R. SP No. 83168 because (1)
they did not nullify the authority granted to Perez in the March 23, 2004 resolution of the unions board of directors to file the
subject Petition, and (2) the material facts of these cases occurred and the Decisions thereon were rendered after the subject
Petition was already filed with the CA on April 1, 2004.
The remand of this case to the Secretary
of Labor as to the issue of wage increase
was proper.
Petitioner corporation admits that what it submitted to the Secretary of Labor were unaudited financial statements which were then
used as one of the bases in fixing the wage award. However, petitioner corporation argues that these financial statements were duly
signed and certified by its chief financial officer. These statements have also been allegedly submitted to various government
agencies and should, thus, be considered official and public documents. Moreover, respondent union did not object to the subject
financial statements in the proceedings before the Secretary of Labor and even used the same in formulating its (the unions)
arguments in said proceedings. Thus, petitioner corporation contends that although the subject financial statements were not
audited by an external and independent auditor, the same should be considered substantial compliance with the order of the
Secretary of Labor to produce the petitioner corporations complete audited financial statements for the past five years.
Furthermore, the Decision of the Secretary of Labor was not solely based on the subject financial statements as the CBA history,
costing of the proposals, and wages in other similarly situated bargaining units were considered. Finally, petitioner corporation
claims that the demands of respondent union on wage increase are unrealistic and will cause the former to close shop.
The contention is untenable.
In Restaurante Las Conchas v. Llego, 21 several employees filed a case for illegal dismissal after the employer closed its restaurant
business. The employer sought to justify the closure through unaudited financial statements showing the alleged losses of the
business. We ruled that such financial statements are mere self-serving declarations and inadmissible in evidence even if the
employees did not object to their presentation before the Labor Arbiter.22 Similarly, in Uichico v. National Labor Relations
Commission,23 the services of several employees were terminated on the ground of retrenchment due to alleged serious business
losses suffered by the employer. We ruled that by submitting unaudited financial statements, the employer failed to prove the
alleged business losses, viz :

x x x It is true that administrative and quasi-judicial bodies like the NLRC are not bound by the technical rules of procedure in the
adjudication of cases. However, this procedural rule should not be construed as a license to disregard certain fundamental
evidentiary rules. While the rules of evidence prevailing in the courts of law or equity are not controlling in proceedings before the
NLRC, the evidence presented before it must at least have a modicum of admissibility for it to be given some probative value. The
Statement of Profit and Losses submitted by Crispa, Inc. to prove its alleged losses, without the accompanying signature of a
certified public accountant or audited by an independent auditor, are nothing but self-serving documents which ought to be treated
as a mere scrap of paper devoid of any probative value. For sure, this is not the kind of sufficient and convincing evidence
necessary to discharge the burden of proof required of petitioners to establish the alleged losses suffered by Crispa, Inc. in the
years immediately preceding 1990 that would justify the retrenchment of respondent employees. x x x 24
While the above-cited cases involve proof necessary to establish losses in cases of business closure or retrenchment, we see no
reason why this rule should not equally apply to the determination of the proper level of wage award in cases where the Secretary
of Labor assumes jurisdiction in a labor dispute pursuant to Article 263(g) 25 of the Labor Code.
In MERALCO v. Sec. Quisumbing,26 we had occasion to expound on the extent of our review powers over the arbitral award of the
Secretary of Labor, in general, and the factors that the Secretary of Labor must consider in determining the proper wage award, in
particular, viz:
The extent of judicial review over the Secretary of Labor's arbitral award is not limited to a determination of grave abuse in the
manner of the secretary's exercise of his statutory powers. This Court is entitled to, and must in the exercise of its judicial
power review the substance of the Secretary's award when grave abuse of discretion is alleged to exist in the award, i.e., in the
appreciation of and the conclusions the Secretary drew from the evidence presented.
In this case we believe that the more appropriate and available standard and one does not require a constitutional interpretation
is simply the standard of reasonableness. In layman's terms, reasonableness implies the absence of arbitrariness; in legal
parlance, this translates into the exercise of proper discretion and to the observance of due process. Thus, the question we have to
answer in deciding this case is whether the Secretary's actions have been reasonable in light of the parties' positions and the
evidence they presented.
This Court has recognized the Secretary of Labor's distinct expertise in the study and settlement of labor disputes falling under his
power of compulsory arbitration. It is also well-settled that factual findings of labor administrative officials, if supported by
substantial evidence, are entitled not only to great respect but even to finality. x x x
But at the same time, we also recognize the possibility that abuse of discretion may attend the exercise of the Secretary's arbitral
functions; his findings in an arbitration case are usually based on position papers and their supporting documents (as they are in the
present case), and not on the thorough examination of the parties' contending claims that may be present in a court trial and in the
face-to-face adversarial process that better insures the proper presentation and appreciation of evidence. There may also be grave
abuse of discretion where the board, tribunal or officer exercising judicial function fails to consider evidence adduced by the
parties. Given the parties' positions on the justiciability of the issues before us, the question we have to answer is one that goes into
the substance of the Secretary's disputed orders: Did the Secretary properly consider and appreciate the evidence presented before
him?
While We do not seek to enumerate in this decision the factors that should affect wage determination, we must emphasize that a
collective bargaining dispute such as this one requires due consideration and proper balancing of the interests of the parties to the
dispute and of those who might be affected by the dispute. To our mind, the best way in approaching this task holistically is to
consider the available objective facts, including, where applicable, factors such as the bargaining history of the company, the
trends and amounts of arbitrated and agreed wage awards and the company's previous CBAs, and industry trends in general. As a
rule, affordability or capacity to pay should be taken into account but cannot be the sole yardstick in determining the wage award,
especially in a public utility like MERALCO.1wphi1 In considering a public utility, the decision maker must always take into
account the "public interest" aspects of the case; MERALCO's income and the amount of money available for operating expenses
including labor costs are subject to State regulation. We must also keep in mind that high operating costs will certainly and
eventually be passed on to the consuming public as MERALCO has bluntly warned in its pleadings.
We take note of the "middle ground" approach employed by the Secretary in this case which we do not necessarily find to be the
best method of resolving a wage dispute. Merely finding the midway point between the demands of the company and the union,
and "splitting the difference" is a simplistic solution that fails to recognize that the parties may already be at the limits of the wage
levels they can afford. It may lead to the danger too that neither of the parties will engage in principled bargaining; the company
may keep its position artificially low while the union presents an artificially high position, on the fear that a "Solomonic" solution
cannot be avoided. Thus, rather than encourage agreement, a "middle ground approach" instead promotes a "play safe" attitude that
leads to more deadlocks than to successfully negotiated CBAs.27
Thus, we rule that the Secretary of Labor gravely abused her discretion when she relied on the unaudited financial statements of
petitioner corporation in determining the wage award because such evidence is self-serving and inadmissible. Not only did this
violate the December 19, 2003 Order 28 of the Secretary of Labor herself to petitioner corporation to submit its complete audited
financial statements, but this may have resulted to a wage award that is based on an inaccurate and biased picture of petitioner
corporation's capacity to pay one of the more significant factors in making a wage award. Petitioner corporation has offered no
reason why it failed and/or refused to submit its audited financial statements for the past five years relevant to this case. This only
further casts doubt as to the veracity and accuracy of the unaudited financial statements it submitted to the Secretary of Labor.
Verily, we cannot countenance this procedure because this could unduly deprive labor of its right to a just share in the fruits of
production29 and provide employers with a means to understate their profitability in order to defeat the right of labor to a just wage.
We also note with disapproval the manner by which the Secretary of Labor issued the wage award in this case, effectively paying
lip service to the guidelines we laid down in Meralco. To elaborate, the Secretary of Labor held:
Based on such factors as BARGAINING HISTORY, TRENDS OFARBITRATED AND AGREED AWARDS AND INDUSTRY
TRENDS, in general, we hold that vis--vis the Unions demands and the Companys offers, as follows:
UNION[S] DEMANDS

COMPANYS OFFERS

For the FIRST YEAR:

P36

For the First 18 months:

P18

For the SECOND YEAR:

36

For the Second 18 months: 18

For the THIRD YEAR:

36

TOTAL:

=======
P108
for
three (3) years

=======
P36
for 36 months

this Office awards the following wage increases:

For the FIRST YEAR:

P18

For the SECOND YEAR:

15

For the THIRD YEAR:

12P
====
45

for three (3) years30

As can be seen, the Secretary of Labor failed to indicate the actual data upon which the wage award was based. 1wphi1It even
appears that she utilized the "middle ground" approach which we precisely warned against in Meralco . Factors such as the actual
and projected net operating income, impact of the wage increase on net operating income, the company's previous CBAs, and
industry trends were not discussed in detail so that the precise bases of the wage award are not discernible on the face of the
Decision. The contending parties are effectively precluded from seeking a review of the wage award, even if proper under our
ruling in Meralco , because of the general but unsubstantiated statement in the Decision that the wage award was based on factors
like the bargaining history, trends of arbitrated and agreed awards, and industry trends. In fine, there is no way of determining if
the Secretary of Labor utilized the proper evidence, figures or data in arriving at the subject wage award as well as the
reasonableness thereof. This falls short of the requirement of administrative due process obligating the decision-maker to
adjudicate the rights of the parties in such a manner that they can know the various issues involved and the reasons for the decision
rendered.31
Based on the foregoing, we hold that the Secretary of Labor gravely abused her discretion in making the subject wage award. The
appellate court, thus, correctly remanded this case to the Secretary of Labor for the proper determination of the wage award which
should utilize, among others, the audited financial statements of petitioner corporation and state with sufficient clarity the facts and
law on which the wage award is based.
The modification of the arbitral award
on health benefits from P1,300.00 to
P1,390.00 was proper.
The CA held that the Secretary of Labor gravely abused her discretion when the latter awarded P1,300.00 as premium payment for
each covered employee because the minutes of the October 17, 2003 collective bargaining negotiations between the parties showed
that they had previously agreed to a higher P1,390.00 premium payment for each covered employee. However, petitioner
corporation claims that it never agreed to this higher amount as borne out by the same minutes. The final offer of petitioner
corporation on this item was allegedly to provide onlyP1,300.00 (not P1,390.00) as premium payment for each covered employee.
We have reviewed the minutes 32 of the October 17, 2003 collective bargaining negotiations adverted to by both parties. A fair
reading thereof indicates that the issue of premium payments underwent several proposals and counter-proposals from petitioner
corporation and respondent union, respectively. The last proposal of petitioner corporation relative thereto was to allot P1,390.00
as premium payment per covered employee provided that it (petitioner corporation) would not shoulder the premium payments of
the employees dependents. For its part, respondent union accepted the proposal provided that the premium payment would be
renegotiated on the second and third years of the CBA. Consequently, both parties agreed at the minimum that the premium
payment shall be P1,390.00 per covered employee and the remaining point of contention was whether the premium payment could
be renegotiated on the second and third years of the CBA. It was, thus, grave abuse of discretion on the part of the Secretary of
Labor to reduce the award to P1,300.00 which is below the minimum of P1,390.00 previously agreed upon by the parties. We also
note that in the proceedings before the CA, respondent union only pleaded for the award of the P1,390.00 premium payment per
covered employee33 thereby effectively waiving its proposal on the renegotiation of the premium payment on the second and third
years of the CBA.
WHEREFORE, the Petition is DENIED. The February 17, 2006 Amended Decision of the Court of Appeals in CA-G.R. SP Nos.
80839, 81639, and 83168 is AFFIRMED.
7. THE SEVEN (7) BASIC RIGHTS OF WORKERS SPECIFICALLY GRANTED BY THE CONSTITUTION ARE:
The right to organize; 2.

To conduct collective bargaining or negotiation with management; 3.

To engage in peaceful concerted activities, including strike in accordance with law; 4.

To enjoy security of tenure; 5.

To work under humane conditions; 6.

To receive a living wage; and

To participate in policy and decision-making processes affecting their rights and benefits as may be provided by
law.

7. G.R. Nos. 92981-83 January 9, 1992

INTERNATIONAL PHARMACEUTICALS, INC., petitioner,
vs.
HON. SECRETARY OF LABOR and ASSOCIATED LABOR UNION (ALU), respondents.
E.B. Ramos & Associates for petitioner.
Celso C. Reales for private respondent.
REGALADO, J.:
The issue before us is whether or not the Secretary of the Department of Labor and Employment has the power to assume
jurisdiction over a labor dispute and its incidental controversies, including unfair labor practice cases, causing or likely to cause a
strike or lockout in an industry indispensable to the national interest.
The operative facts which culminated in the present recourse are undisputed.
Prior to the expiration on January 1, 1989 of the collective bargaining agreement between petitioner International Pharmaceuticals,
Inc. (hereafter, Company) and the Associated Labor Union (Union, for brevity), the latter submitted to the Company its economic
and political demands. These were not met by the Company, hence a deadlock ensued.
On June 27, 1989, the Union filed a notice of strike with Regional Office No. VII of the National Conciliation and Mediation
Board, Department of Labor and Employment, which was docketed as NCMB-RBVII-NS-06-050-89. After all conciliation efforts
had failed, the Union went on strike on August 8, 1989 and the Company's operations were completely paralyzed.
Subsequently, three other labor cases involving the same parties were filed with the National Labor Relations Commission
(NLRC) to wit:
1. International Pharmaceuticals, Inc. vs. Associated Labor Union, NLRC Case No. VII-09-0810-89, 1a petition
for injunction and damages with temporary restraining order filed by the Company against the Union and some
of its members for picketing the Company's establishment in Cebu, Davao, and Metro Manila allegedly without
the required majority of the employees approving and agreeing to the strike and with simulated strike votes, in
direct violation of the provisions of their collective bargaining agreement and in total and complete defiance of
the provisions of the Labor Code;
2. Associated Labor Union vs. International Pharmaceuticals, Inc., et al., NLRC Case No-VII-08-0715-89, 2 a
complaint for unfair labor practice with prayer for damages and attorney's fees filed by the Union against the
Company, its personnel manager, and the Workers Alliance of Trade Unions (WATU) as a result of the
Company's refusal to include the sales workers in the bargaining unit resulting in a deadlock in the bargaining
negotiations; for coddling the respondent WATU as a separate bargaining agent of the sales workers despite a
contrary ruling of the Med-Arbiter; and undue interference by the Company in the right of the workers to selforganization through harassment and dispersal of a peaceful picket during the strike; and
3. International Pharmaceuticals, Inc., et al. vs. Associated Labor Union, NLRC Case No. VII-08-0742-89, 3 a
petition to declare the strike illegal with prayer for damages filed by the Company alleging, among others, that
the notice of strike filed by the Union with the National Conciliation and Mediation Board did not conform with
the requirements of the Labor Code, and that the Union, in violation of the Labor Code provisions on the conduct
of the strike, totally blockaded and continued to blockade the ingress and egress of the Company's premises by
human barricades, placards, benches and other obstructions, completely paralyzing its business operations.
Meanwhile, considering that the Company belongs to an industry indispensable to national interest, it being engaged in the
manufacture of drugs and pharmaceuticals and employing around 600 workers, then Acting Secretary of Labor, Ricardo C. Castro,
invoking Article 263 (g) of the Labor Code, issued an order dated September 26, 1989 assuming jurisdiction over the aforesaid
case docketed as NCMB-RBVII-NS-06-050-89 and directing the parties to return to the status quo before the work stoppage. The
decretal portion of the order reads:
WHEREFORE, PREMISES CONSIDERED, this Office hereby assumes jurisdiction over the labor dispute at
the International Pharmaceuticals, Incorporated pursuant to Article 263 (g) of the Labor Code, as amended.
Accordingly, all striking workers are hereby directed to return to work and management to accept them under the
same terms and conditions prevailing before the work stoppage, within twenty four (24) hours from receipt of
this Order. Management is directed to post copies of this Order in three (3) conspicuous places in the company
premises.
The parties are likewise ordered to cease and desist from committing any and all acts that will prejudice either
party and aggravate the situation as well as the normalization of operations.
SO ORDERED. 4
On January 15, 1990, the Union filed a motion in NCMB-RBVII-NS-06-050-85, the case over which jurisdiction had been
assumed by the Secretary of Labor and Employment (hereafter referred to as the Secretary), seeking the consolidation of the three
NLRC cases (NLRC Cases Nos. VII-09-0810-89, VII-08-0715-89, and VII-08-0742-89) with the first stated case.
In an order dated January 31, 1990, Secretary of Labor Ruben D. Torres granted the motion and ordered the consolidation of the
three NLRC cases with NCMB-RBVII-NS-06-050-89, as follows:
WHEREFORE, finding the Associated Labor Union's Motion to be meritorious, the same is granted and NLRC
Cases Nos. VII-09-0810-89, VII-08-0715-89 and VII-08-0742-89 are hereby ordered consolidated with the

instant proceedings. The Labor Arbiter handling the same is directed to immediately transmit the records of the
said cases to the Asst. Regional Director, DOLE Regional Office No. 7 who has been designated to hear and
receive the evidence of the parties.
SO ORDERED. 5
The Company's subsequent motion for reconsideration of the order consolidating the cases was denied by the Secretary on March
5, 1990. 6 Thereafter, the Assistant Regional Director of Regional Office No. VII, as directed, assumed jurisdiction over the
consolidated cases and set the same for reception of evidence.
Petitioner Company now comes to this Court assailing the aforesaid orders and alleging grave abuse of discretion on the part of the
public respondent in the issuance thereof. The Union, as the bargaining agent of the rank and file workers of the Company, was
impleaded as the private respondent.
Petitioner Company submits that the exclusive jurisdiction to hear and decide the three NLRC cases above-specified is vested in
the labor arbiter as provided in paragraph (a) (1) and (5) of Article 217 of the Labor Code.
Moreover, petitioner insists that there is nothing in Article 263 (g) of the Labor Code which directs the labor arbiter to hold in
abeyance all proceedings in the NLRC cases and await instruction from the Secretary. Otherwise, so it postulates, Section 6, Rule
V of the Revised Rules of the NLRC which is invoked by the Secretary is null and void since it orders the cessation of all
proceedings before the labor arbiter and orders him to await instructions from the Secretary in labor disputes where the Secretary
bas assumed jurisdiction, thereby amending Article 263 (g) of the Labor Code by enlarging the jurisdiction of the Secretary.
Petitioner further contends that, granting arguendo that Section 6, Rule V of the Revised Rules of the NLRC is in accordance with
Article 263 (g) of the Labor Code, still the Secretary should not have ordered the consolidation of the three unfair labor practice
cases with NCMB-RBVII-NS-06-050-89, since the Secretary assumed jurisdiction only over the deadlock in the negotiation of the
collective bargaining agreement and the petition for contempt as a result of the said deadlock.
Respondents, on the other band, assert that the authority to assume jurisdiction over labor disputes, vested in the Secretary by
Article 263 (g) of the Labor Code, extends to all questions and incidents arising therein causing or likely to cause strikes or
lockouts in industries indispensable to national interest.
Moreover, respondents counter that Section 6, Rule V of the Revised Rules of the NLRC is in accordance with Article 263 (g) of
the Labor Code, notwithstanding the provisions of Article 217 of the Labor Code. To rule otherwise, they point out, would
encourage splitting of jurisdiction, multiplicity of suits, and possible conflicting findings and decisions which could only result in
delay and complications in the disposition of the labor disputes.
It was also stressed that the three NLRC cases which respondent Secretary ordered consolidated with the labor dispute over which
he had assumed jurisdiction arose from or are directly related to and are incidents of the said labor dispute.
Finally, respondents invoke the rule that all doubts in the implementation and interpretation of the Labor Code provisions should
be resolved in favor of labor. By virtue of the assailed orders, the Union and its members were relieved of the burden of having to
litigate their interrelated cases in different fora.
There are three governing labor law provisions which are determinative of the present issue of jurisdiction, viz.:
1. Article 217 (a) (1) and (5) of the Labor Code which provides:
Art. 217. Jurisdiction of Labor Arbiters and the Commission (a) Except as otherwise provided under this
Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide . . . the following cases
involving all workers. . . .
1. Unfair labor practice cases;
xxx xxx xxx
5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of
strikes and lockouts; . . .
2. Article 263 (g) of the Labor Code which declares:
(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike of lockout in an industry
indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the
dispute and decide it or certify the same to the Commission for compulsory arbitration. . . .
3. Section 6, Rule V of the Revised Rules of the NLRC which states:
Sec. 6. Disposition of cases. . . .
Provided, that when the Minister (Secretary) of Labor and Employment has assumed jurisdiction over a strike or
lockout dispute or certified the same to the Commission, the parties to such dispute shall immediately inform the
Minister (Secretary) or the Commission as the case may be, of all cases between them pending before any
Regional Arbitration Branch, and the Labor Arbiter handling the same of such assumption or certification,
whereupon all proceedings before the Labor Arbiter concerning such cases shall cease and the Labor Arbiter
shall await instructions from the Minister (Secretary) or the Commission.
The foregoing provisions persuade us that the Secretary did not gravely abuse his discretion when he issued the questioned orders.
As early as 1913, this Court laid down in Herrera vs. Baretto, et al., 7 the fundamental normative rule that jurisdiction is the
authority to bear and determine a cause the right to act in a case. However, this should be distinguished from the exercise of
jurisdiction. The authority to decide a case at all and not the decision rendered therein is what makes up jurisdiction. Where there
is jurisdiction over the person and the subject matter, the decision of all other questions arising in the case is but an exercise of that
jurisdiction. 8

In the present case, the Secretary was explicitly granted by Article 263 (g) of the Labor Code the authority to assume jurisdiction
over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and decide
the same accordingly. Necessarily, this authority to assume jurisdiction over the said labor dispute must include and extend to all
questions and controversies arising therefrom, including cases over which the labor arbiter has exclusive jurisdiction.
Moreover, Article 217 of the Labor Code is not without, but contemplates, exceptions thereto. This is evident from the opening
proviso therein reading "(e)xcept as otherwise provided under this Code . . ." Plainly, Article 263 (g) of the Labor Code was meant
to make both the Secretary (or the various regional directors) and the labor arbiters share jurisdiction, subject to certain
conditions. 9 Otherwise, the Secretary would not be able to effectively and efficiently dispose of the primary dispute. To hold the
contrary may even lead to the absurd and undesirable result wherein the Secretary and the labor arbiter concerned may have
diametrically opposed rulings. As we have said, "(i)t is fundamental that a statute is to be read in a manner that would breathe life
into it, rather than defeat it." 10
In fine, the issuance of the assailed orders is within the province of the Secretary as authorized by Article 263 (g) of the Labor
Code and Article 217 (a) (1) and (5) of the same Code, taken conjointly and rationally construed to subserve the objective of the
jurisdiction vested in the Secretary.
Our pronouncement on this point should be distinguished from the situation which obtained and our consequent ruling
in Servando's, Inc. vs. The Secretary of Labor and Employment, et al. 11 wherein we referred to the appropriate labor arbiter a case
previously decided by the Secretary. The said case was declared to be within the exclusive jurisdiction of the labor arbiter since the
aggregate claims of each of the employees involved exceeded P5,000.00. In Servando, the Secretary invoked his visitorial and
enforcement powers to assume jurisdiction over the case, the exclusive and original jurisdiction of which belongs to the labor
arbiter. We said that to uphold the Secretary would empower him, under his visitorial powers, to hear and decide an employee's
claim of more than P5,000.00. We held that he could not do that and we, therefore, overruled him.
In the present case, however, by virtue of Article 263 (g) of the Labor Code, the Secretary has been conferred jurisdiction over
cases which would otherwise be under the original and exclusive jurisdiction of labor arbiters. There was an existing labor dispute
as a result of a deadlock in the negotiation for a collective bargaining agreement and the consequent strike, over which the
Secretary assumed jurisdiction pursuant to Article 263 (g) of the Labor Code. The three NLRC cases were just offshoots of the
stalemate in the negotiations and the strike. We, therefore, uphold the Secretary's order to consolidate the NLRC cases with the
labor dispute pending before him and his subsequent assumption of jurisdiction over the said NLRC cases for him to be able to
competently and efficiently dispose of the dispute in its totality.
Petitioner's thesis that Section 6, Rule V of the Revised Rules of the NLRC is null and void has no merit. The aforesaid rule has
been promulgated to implement and enforce Article 263 (g) of the Labor Code. The rule is in harmony with the objectives sought
to be achieved by Article 263 (g) of the Labor Code, particularly the Secretary's assumption of jurisdiction over a labor dispute and
his subsequent disposition of the same in the most expeditious and conscientious manner. To be able to completely dispose of a
labor dispute, all its incidents would have to be taken into consideration. Clearly, the purpose of the questioned regulation is to
carry into effect the broad provisions of Article 263 (g) of the Labor Code.
By and large, Section 6, Rule V of the Revised Rules of the NLRC is germane to the objects and purposes of Article 263 (g) of the
Labor Code, and it is not in contradiction with but conforms to the standards the latter requires. Thus, we hold that the terms of the
questioned regulation are within the statutory power of the Secretary to promulgate as a necessary implementing rule or regulation
for the enforcement and administration of the Labor Code, in accordance with Article 5 of the same Code.
Besides, to uphold petitioner Company's arguments that the NLRC cases are alien and totally separate and distinct from the
deadlock in the negotiation of the collective bargaining agreement is to sanction split jurisdiction which is obnoxious to the orderly
administration of justice. 12
Moreover, the rule is that all doubts in the interpretation and implementation of labor laws should be resolved in favor of labor. In
upholding the assailed orders of the Secretary, the Court is only giving meaning to this rule. The Court should help labor
authorities provide workers immediate access to their rights and benefits, without being hampered by arbitration or litigation
processes that prove to be not only nerve-wracking, but financially burdensome in the long run. 13 Administrative rules of
procedure should be construed liberally in order to promote their object and assist the parties, especially the workingman, in
obtaining just, speedy, and inexpensive determination of their respective claims and defenses. By virtue of the assailed orders. The
Union and its members are relieved of the burden of litigating their interrelated cases in different tribunals.
WHEREFORE. there being no grave abuse of discretion committed by the Secretary of Labor and Employment, the petition at bar
is hereby DISMISSED.
SO ORDERED.