PAYROLL ENTRIES

KAR ASIA V CORONA

437 SCRA 184YNARES-SANTIAGO; August 24, 2004
FACTS
- Respondents, regular employees of petitioner KAR ASIA, Inc., an automotive dealer in
Davao City, filed on September 24,1 9 9 7 c l a i m t h a t t h e y w e r e n o t p a i d t h e i r
cost of living allowance (COLA) for the months of December 1993 and
December 1994.- P e t i t i o n e r c o m p a n y a n d i t s p r e s i d e n t C e l e s t i n o B a r r e t t o
countered by saying that respondents had already been paid t h e i r C O L A f o r t h e s a i d
p e r i o d s . P e t i t i o n e r s p r e s e n t e d i n evidence the payrolls for December 1993 and
December 1994showing that the respondents acknowledged in writing the receipt of
their COLA, and the affidavits of Ermina Daray and Cristina Arana, cashiers of KAR
ASIA, refuting respondents claim that they were made to sign blank pieces of paper.- Labor Arbiter
rendered a decision in favor of petitioners. NLRC affirmed the decision of the Labor
Arbiter. Court of Appeals r e v e r s e d t h e d e c i s i o n o f t h e N L R C a n d o r d e r e d
p e t i t i o n e r company to pay the respondents the P25.00 per day COLA for the period
December 1 to 31, 1994, plus interest thereon at the rate of 1% per month computed from
the time the same was withheld from respondents up to the time they were actually
paid the respective sums due them
ISSUE
WON not the petitioner company paid the respondents the COLA for December 1993
and December 1994 as mandated by RTWPB XI Wage Order No. 3
HELD
YES
-A close scrutiny of the payroll for the December 1993C O L A r e a d i l y d i s c l o s e t h e
s i g n a t u r e s o f t h e r e s p o n d e n t s opposite their printed names and the numeric value of
P654.00.Respondents averment that the petitioner company harassed them into signing the said
payroll without giving them its cash equivalent cannot be given credence. He who asserts
not he w h o d e n i e s m u s t p r o v e ; u n f o r t u n a t e l y, t h e r e s p o n d e n t s miserably failed to
discharge this burden
-The payrolls for December 1 to 15, 1994 and December 16 to31, 1994 indicate an allowance of
P327.00 for each period, or a t o t a l o f P 6 5 4 . 0 0 f o r t h e e n t i r e m o n t h . H o w e v e r , a
c a s u a l observation of the payroll for the December 1993 COLA will also show that the
respondents signed for the amount of P654.00.Also, the allowances appearing in the two separate
pay slips for December 1 to 15, 1994 and December 16 to 31, 1994 sum up t o a t o t a l o f
P 6 5 4 . 0 0 . A l t h o u g h t h e n u m e r i c f i g u r e s i n t h e December 1994 payroll and the
pay slips for the same period were denominated merely as allowances while those in
the December 1993 payroll were specifically identified as COLA, the fact that they add up to the same
figure, i.e ., P654.00, is not a coincidence- While ordinarily a pay slip is only a statement
of the gross monthly income of the employee, his signature therein coupled by an
acknowledgement of full compensation alter the legal complexion of the document. The pay
slip becomes a substantial proof of actual payment. Moreover, there is no hard-and-fast rule requiring
that the employees signature in the payroll is the o n l y a c c e p t a b l e p r o o f o f

payment. By implicati on, the r e s p o n d e n t s , i n s i g n i n g t h e

p a y s l i p s w i t h t h e i r acknowledgement of full compensation, unqualifiedly
admitted the receipt thereof, including the COLA for December 1994
Wage Deduction
RADIO COMMUNICATIONS OF THE PHILS INC V SECOF LABOR
169 SCRA 38REGALADO; January 9, 1989
FACTS
- On May 4, 1981, petitioner, a domestic corporation engaged in the telecommunications business, filed
with the National Wages Council an application for exemption from the coverage
of Wage Order No. 1. The application was opposed by respondent United RCPI
Communications Labor Association (URCPICLA -FUR), a labor organization
affiliated with the Federation of Unions of Rizal (FUR).
- On May 22, 1981, the National Wages Council disapproved said application and
ordered petitioner to pay its covered e m p l o ye e s t h e m a n d a t o r y l i v i n g
a l l o w a n c e o f P 2 . 0 0 d a i l y effective March 22, 1981.
- As early as March 13, 1985, before the aforesaid case was elevated to this Court,
respondent union filed a motion for the issuance of a writ of execution, asserting therein
its claim to15% of the total back pay due to all its members as "union service fee"
for having successfully prosecuted the latter's claim for payment of wages and for reimbursement
of expenses incurred by FUR and prayed for the segregation and remittance of said amount to FUR
thru its National President.
- On October 24, 1985, without the knowledge and consent of r e s p o n d e n t u n i o n ,
p e t i t i o n e r e n t e r e d i n t o a c o m p r o m i s e agreement with Buklod ng Manggagawa sa
RCPI-NFL (BMRCPI-N F L )
as
the
new
bargaining
agent
of
o p p o s i t o r s R C P I employees.
- Thereupon, the parties filed a joint motion praying for the dismissal of the
decision of the National Wages Council for it had already been novated by the
Compromise Agreement re-defining the rights and obligations of the parties. Respondent Union
on November 7, 1985 countered by opposing the motion and alleging that one of the signatories
thereof- BMRCPI-NFL is not a party in interest in the case bu t that it was respondent
Union which represented oppositors RCPI employees all the way from the level of the National Wages
Council up the Supreme C o u r t . R e s p o n d e n t U n i o n t h e r e f o r e c l a i m e d
t h a t t h e Compromise Agreement is irregular and invalid, apart from the fact that there was
nothing to compromise in the face of a final and executory decision.
-Director Severo M. Pucan issued an Order dated November 25, 1985 awarding to URCPICLA-FUR
and FUR 15% of the total back pay of RCPI employees as their union serv ice fees,
and directing RCPI to deposit said amount with the cashier of the Regional Office for
proper disposition to said awardees.
-D e s p i t e s a i d o r d e r , p e t i t i o n e r p a i d i n f u l l t h e c o v e r e d employees on
November 29, 1985, without deducting the union service fee of 15%.
-In an order dated May 7, 1986, NCR officer-in-charge found petitioner RCPI and its employees
jointly and severally liable for t h e p a ym e n t o f t h e 1 5 % u n i o n s e r v i c e f e e
amounting toP 4 2 7 , 8 4 5 . 6 0 t o p r i v a t e r e s p o n d e n t U R C P I C L A - F U R

a n d consequently ordered the garnishment of petitioner's bank account to enforce said

claim.
-Secretary of Labor and Employment issued an order on August1 8 , 1 9 8 6 m o d i f yi n g t h e o r d e r
a p p e a l e d f r o m b y h o l d i n g petitioner solely liable to respondent union for 10% of
the awarded amounts as attorney's fees
ISSUE:
WON public respondents acted with grave abuse of discretion amounting to lack of jurisdiction
in holding the petitioner solely liable for "union service fee' to respondent URCPICLA-FUR
HELD:
NO. Attorney's fee due the oppositor is chargeable against RCPI.
-The defaulting employer or government agency remains liable for attorney's fees because it
compelled the complainant t o e m p l o y t h e s e r v i c e s o f c o u n s e l b y u n j u s t l y
r e f u s i n g t o recognize the validity of the claim. (Cristobal vs. ECC)
-It is undisputed that oppositor (private respondent herein) was the counsel on record of the RCPI
employees in their claim forE C 0 L A u n d e r W a g e O r d e r N o . 1 s i n c e t h e i n c e p t i o n
o f t h e proceedings at the National Wages Council up to the Supreme Court. It had therefore a
valid claim for attorney's fee which it called union service fee.
- As is evident in the compromise agreement, petitioner was bound to pay only 30%
of the amount due each employee on November 30, 1985, while the balance of 70% would
still be the s u b j e c t o f r e n e g o t i a t i o n b y t h e p a r t i e s . Y e t , d e s p i t e s u c h conditions
beneficial to it, petitioner paid in full the back pay of its employees on November 29, 1985,
ignoring the service fee due the private respondent.- Worse, petitioner supposedly paid to
one Atty. Rodolfo M.Capocyan the 10% fee that properly pertained to herein private
respondent, an unjustified and baffling diversion of funds.
- Finally, petitioner cannot invoke the lack of an individual written authorization
from the employees as a shield for its fraudulent refusal to pay the service fee of private
respondent. Be that as it may, the lack thereof was remedied and supplied by the execution of
the compromise agreement whereby the employees, expressly approved the 10%
deduction and held petitioner RCPI free from any claim, suit or complaint arising
from the deduction thereof. When petitioner was there after again ordered to pay the
10% fees to respondent union, it no longer had any legal basis or subterfuge for refusing to pay
the latter.
- We agree that Article 222 of the Labor Code requiring an i n d i v i d u a l w r i t t e n
a u t h o r i z a t i o n a s a p r e r e q u i s i t e t o w a g e deductions seeks to protect the employee
against unwarranted practices that would diminish his compensation without his
knowledge and consent. However, for all intents and purposes, the deductions required of the
petitioner and the employees do not run counter to the express mandate of the law since
the same are not unwarranted or without their k nowledge and c o n s e n t . A l s o , t h e
d e d u c t i o n s f o r t h e u n i o n s e r v i c e f e e i n question are authorized by law and do
not require individual check-off authorizations.
-The order of the Secretary of Labor of August 16,1986 is hereby AFFIRMED and the petition at
bar is DISMISSED, with double costs against petitioner. The temporary restraining order issued

pursuant to the Resolution of the Court of June 22,1987 is LIFTED and declared of no further force and
effect.
Wage Deduction
APODACA V NLRC (MIRASOL, INTRANS PHILS)
172 SCRA 442GANCAYCO; April 18, 1989
FACTS
- Petitioner was employed in respondents corporation
- 1 9 7 5 : p e t i t i o n e r w a s a p p o i n t e d P r e s i d e n t a n d G e n e r a l Manager of respondent
corporation
- 1985: Respondent Mirasol persuaded petitioner to subscribe to 1,500 shares of respondent
corporation at P100 per share (total of P150, 000). He made an initial payment of P37, 500.January, 1986: petitioner resigned
- December, 1986: petitioner instituted with NLRC a complaint f o r t h e p a y m e n t o f h i s
u n p a i d w a g e s , h i s c o s t o f l i v i n g allowance, the balance of his gas and
representation expenses, and his bonus compensation for 1986.
- Private respondents admitted there is due to the petitionerP17, 060, but this was
applied to the unpaid balance of his subscription in the amount of P95, 439.93
- Petitioner questioned the set off since there was no call or notice for the payment of
the unpaid subscription, and that the alleged obligation is not enforceable.
- The NLRC held that a stockholder who fails to pay his unpaid subscription on call becomes a
debtor of the corporation and that the set-off of said obligation against the wages and other due to
petitioner is not contrary to law, morals, public policy
ISSUE
1. WON the NLRC has jurisdiction to resolve a claim for non -payment of stock
subscriptions to a corporation
2. WON an obligation arising from the non -payment of stock s u b s c r i p t i o n c a n b e
o f f s e t a g a i n s t a m o n e y c l a i m o f a n y employee against an employer
HELD
1. NO
- The NLRC has no jurisdiction to determine such intra-corporate dispute between the stockholder and the
corporation as in the matter of unpaid subscriptions. This is within the
exclusive jurisdiction of the Securities and Exchange Commission.
2. NO
-Assuming arguendo that the NLRC may exercise jurisdiction in this case, the unpaid
subscriptions are not due and payable until a call is made by the corporation for payment.
It does not appear that a notice of such call has been sent to petitioner. The records only
show that the respondent corporation d e d u c t e d t h e a m o u n t d u e t o p e t i t i o n e r f r o m
t h e a m o u n t receivable from him from for the unpaid subscriptions. This set-off was without
lawful basis. As there was no notice or call for payment, the same is not yet due or payable.Assuming that there had been a call for payment, the NLRC s t i l l c a n n o t v a l i d l y
s e t i t o f f a g a i n s t t h e w a g e s a n d o t h e r benefits due petitioner.

- Art. 113 of the Labor code allow such a deduction from the wages of the employees by
employer in only 3 instances:
(a) Inc a s e s w h e r e t h e w o r k e r i s i n s u r e d w i t h h i s c o n s e n t b y t h e employer, and
the deduction is to recompense the employer for the amount paid by him as premium on the
insurance;
(b) For union dues, in cases where the right of the worker or his union to check off has been
recognized by the employer or authorized in writing by the individual worker concerned; and (c)
In cases where the employer is authorized by law or regulations issued by the Secretary of
Labor.
-The petition is GRANTED and the questioned decision of the NLRC dated September 18, 1987
is hereby set a s i d e a n d a n o t h e r j u d g m e n t i s h e r e b y r e n d e r e d o r d e r i n g private
respondents to pay petitioner the amount of P17,060.07 plus legal interest computed from the
time of the filing of the complaint on December 19, 1986, with costs against private
respondents.
Check-off
MANILA TRADING & SUPPLY CO V MANILA TRADINGLABOR ASSN
93 PHIL 288REYES; April 29, 1953

FACTS
- On October 10, 1950, the Manila Trading Labor Association, composed of workers of Manila
Trading and Supply Co., made a demand upon said company for increase of wages, increase
of personnel, Christmas bonus, and other gratuities and privileges. As the demand was
refused and the Department of Labor -whose intervention had been sought by the
association
-failed to effect an amicable settlement, the Head of the Department certified the dispute to
the Court of Industrial Relations on October 25, and there it was docketed as case No. 521V. The company, on its part, on that same day applied to the Court of Industrial Relations for
authority to lay off 50 laborers due to "poor business," the application being docketed as
Case No.415-V (4).
-To resolve the disputes involved in the two cases the Court of I n d u s t r i a l R e l a t i o n s
c o n d u c t e d v a r i o u s h e a r i n g s b e t w e e n October 26, 1950, and January 18, 1951. Of their
own volition the president and vice-president of the association attended s o m e i f n o t
a l l o f t h e h e a r i n g s , a n d t h o u g h t h e y a b s e n t e d themselves from work for that reason
they afterwards claimed that they were entitled to their wages. The Court of Industrial
R e l a t i o n s f o u n d m e r i t i n t h e c l a i m , a n d a t t h e i r i n s t a n c e , ordered the company
to pay them their wages corresponding to the days they were absent from work while in
attendance at the hearings.
-Contending that the industrial court had no authority to issue such an order, the company asks
this Court to have it annulled. Opposing the petition, the association, on its part, contends that the
order comes within the broad powers of the industrial court in the settlement of disputes between capital
and labor.
ISSUE

WON Court of Industrial Relations may require an employer to pay the wages of officers of
its employees' labor union while attending the hearing of cases between the employer and
the union
HELD:
When in case of strikes, and according to the CIR even if the strike is legal, strikers may not
collect their wages during the days they did not go to work, for the same reasons if not
more, laborers who voluntarily absent themselves from work to attend the hearing of a case
in which they seek to prove and establish their demands against the company, the legality
and propriety of which demands is not yet known, should lose their pay during the period of such
absence from work.
-The age-old rule governing the relation between labor and capital or management and
employee is that of a "fair day's wage for a fair day's labor.' If there is no work performed
by the employee there can be no wage or pay, unless of course, the laborer was able, willing
and ready to work but was illegally locked out, dismissed or suspended. It is hardly fair or
just for an employee or laborer to fight or litigate against his employer on the employer's time.
- The respondent association, however, claims that it was not t h e o n e t h a t b r o u g h t t h e
c a s e s t o t h e C o u r t o f I n d u s t r i a l Relations, and the point is made that "if the
laborer who is dragged to court is deprived of his wages while attending court h e a r i n g s , h e
w o u l d i n e f f e c t b e d e n i e d t h e o p p o r t u n i t y t o defend himself and protect his
interests and those of his fellow workers." But while it is true that it was the Secretary of Labor
who certified the dispute involved in case No. 521 -V to the Court of Industrial
Relations, the fact remains that the dispute was initiated by a demand from the labor association. The truth,
t h e r e f o r e , i s t h a t w h i l e o n e o f t h e c a s e s w a s f i l e d b y t h e employer, the offer
was initiated by the employees. It may be conceded that the employer is in most cases in a better
position to bear the burdens of litigation than the employees. But as was said in the case of J.
P. Heilbronn Co. vs. National Labor Union, supra, "It is hardly fair for an employee or laborer to fight
or litigate against his employer on the employer's time." The most that could be
conceded in favor of the claimants herein is to have the absences occasioned by their
attendance at the hearings charged against their vacation leave if they have any, or as
suggested by three of the Justices who signed the decision in the case just cited, to have the
wages they failed to earn charged as damages in the event the cases whose hearings
they attended are decided in favor of the association. But the majority of the Justices make
no commitment on this latter point.
-Petition for certiorari is granted and the order complained of set aside
Deposit
DENTECH MANUFACTURING V NLRC (MARBELLA)
172 SCRA 588GANCAYCO; April 19, 1989
FACTS:
-Dentech Manufacturing Corporation is a domestic corporation organized under Philippine
laws owned and managed by the p e t i t i o n e r J a c i n t o L e d e s m a . T h e f i r m i s
e n g a g e d i n t h e manufacture and sale of dental equipment and supplies.

-Private respondents Benjamin Marbella, Armando Torno, Juanito Tajan, Jr. and Joel
Torno are members of the C o n f e d e r a t i o n o f C i t i z e n s L a b o r U n i o n ( C C L U ) ,
a l a b o r organization registered with the DOLE. They used to be the employees of
Dentech, working as welders, upholsterers and painters. They were already employed with the
company when it was still a sole proprietorship. They were dismissed from the firm beginning
February 14, 1985.
-They filed a Complaint with the NLRC against Dentech and Ledesma for, among
others, illegal dismissal and violation of PD851. They were originally joined by another
employee, one Raymundo Labarda, who later withdrew his Complaint. At first, they only
sought the payment of their 13th month pay under PD851 as well as their separation pay, and the
refund of the cash b o n d t h e y f i l e d w i t h t h e c o m p a n y a t t h e s t a r t o f t h e i r
employment. Later on, they sought their reinstatement as well as the payment of their 13th
month pay and service incentive leave pay, and separation pay in the event that they are
not reinstated. It is alleged that they were dismissed from the firm for pursuing union activities.
-Dentech argued that they are not entitled to a 13th month pay. They maintained
that each of the private respondents receive a total monthly compensation of more that
P1,000 and that under Section 1 of PD 851, such employees are not entitled t o r e c e i v e a 1 3 t h m o n t h
p a y. A l s o , t h e c o m p a n y i s i n b a d f i n a n c i a l s h a p e a n d t h a t p u r s u a n t t o
S e c t i o n 3 , t h e f i r m i s exempted from complying with the provisions of the
Decree. Dentech also contended that the refund of the cash bond filed by the Marbella, et al., is
improper inasmuch as the proceeds of the same had already been given to a certain carinderia to
pay for their outstanding accounts.
ISSUES
1. WON the private respondents are entitled as a matter of right to a 13th month pay
2. WON the refund of the cash bond is proper
HELD
1. YES
-P D 8 5 1 w a s s i g n e d i n t o l a w i n 1 9 7 5 b y t h e n P r e s i d e n t Ferdinand
Marcos. Under the original provisions of Section 1, all employers are required to pay all their
employees receiving a basic salary of not more than P1,000 a month, regardless of the nature of
their employment, a 13th month pay not later than December 24 of every year. Under
Section 3 of the rules and r e g u l a t i o n s i m p l e m e n t i n g P D 8 5 1 , f i n a n c i a l l y
d i s t r e s s e d employers, i.,e., those currently incurring substantial losses, are not covered by the
Decree. Section 7 requires, however, that such distressed employers must obtain the prior
authorization of the Secretary of Labor before they may qualify for such exemption.
-On May 1, 1978, PD 1364 was signed into law. The Decree enjoined the DOLE to stop
accepting applications for exemption under PD 851. On August 13, 1986, President Corazon
Aquino issued Memorandum Order No. 28 which modified Section 1 of PD 851. The said issuance
eliminated the P1, 000 salary ceiling.
-It clearly appears that Dentech has no basis to claim that it is e x e m p t e d f r o m c o m p l yi n g
w i t h t h e p r o v i s i o n s o f t h e l a w r e l a t i n g t o t h e 1 3 th m o n t h p a y. T h e P 1 , 0 0 0
s a l a r y c e i l i n g provided in PD 851 pertains to basic salary, not total monthly compensation.
Dentech admits that Marbella, at al., work only five days a week and that they each receive a
basic daily wage o f P 4 0 o n l y. A s i m p l e c o m p u t a t i o n o f t h e b a s i c d a i l y w a g e

multiplied by the number of working days in a month results in an amount of less than P1, 000.
Thus, there is no basis for the contention that the company is exempted from the provision
of P D 8 5 1 w h i c h m a n d a t e d t h e p a y m e n t o f 1 3 t h m o n t h
c o m p e n s a t i o n t o e m p l o ye e s r e c e i v i n g l e s s t h a n P 1 , 0 0 0 a month.
- Even assuming, arguendo, that Marbella, et al., are each paid a m o n t h l y s a l a r y o f o v e r
P1,000, Dentech is still not in a p o s i t i o n t o c l a i m e x e m p t i o n . T h e
r u l e s a n d r e g u l a t i o n s implementing PD 851 provide that a distressed employer shall
qualify for exemption from the requirements of the Decree only upon prior authorization from
the Secretary of Labor. No such prior authorization had been obtained by Dentech.
2. YES
-The refund of the cash bond is in order. Article 114 of the Labor Code prohibits an
employer from requiring his employees t o f i l e a c a s h b o n d o r t o m a k e d e p o s i t s ,
s u b j e c t t o c e r t a i n exceptions.
-Art. 114. Deposits for loss or damage.
-No employer shall require his worker to make deposits from which deductions shall
be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by
the employer, except when the employer is engaged i n s u c h t r a d e s , o c c u p a t i o n s o r
b u s i n e s s w h e r e t h e practice of making deductions or requiring deposits is ar e
c o g n i z e d o n e , o r i s n e c e s s a r y o r d e s i r a b l e a s determined by the
S e c r e t a r y o f L a b o r i n a p p r o p r i a t e rules and regulations.
- Dentech has not satisfactorily disputed the applicability of this provision to the case at bar.
Considering further that it failed to show that it is authorized by law to require Marbella, et al., to
file the cash bond in question, the refund is in order.- The allegation that the proceeds of the cash bond
had already been given to a certain carinderia to pay for the accounts of the private respondents
does not merit serious consideration. No evidence or receipt has been shown to prove such payment.
-Petition is hereby DISMISSED for lack of merit
Deposit
FIVE J TAXI V NLRC
235 SCRA 556REGALADO; August 22, 1994
FACTS
-Maldigan and Sabsalon were hired by the petitioners as taxi drivers. They paid daily "boundary"
of P700 for air-conditioned or P450 for non-air-conditioned taxi, P20 for car washing, and aP15
deposit to answer for any deficiency in their "boundary," for every actual working day.
-In less than 4 months, Maldigan already failed to report for work. Later, petitioners learned
that he was working for "Mine of Gold" Taxi Company.
-Sabsalon was held up by his armed passenger who took all his money and stabbed him.
After his hospital discharge, he went to his home province to recuperate. He was re-admitted by
petitioners after 4 years under the same terms and conditions, but he was only allowed to
drive only every other day. However, on several occasions, he failed to report for work
during his schedule.
-Sept. 1991: Sabsalon failed to remit his "boundary" for the previous day. Also, he
abandoned his taxicab in Makati without fuel refill worth P300. He adamantly refused to report

to work d e s p i t e d e m a n d s . A f t e r w a r d s i t w a s r e v e a l e d t h a t h e w a s driving a taxi for

"Bulaklak Company."
-1989: Maldigan requested petitioners for the reimbursement of his daily cash deposits for 2
years, but petitioners told him that nothing 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
-When Maldigan insisted on the refund, petitioners terminated h i s s e r v i c e s . S a b s a l o n
c l a i m e d t h a t h i s t e r m i n a t i o n f r o m e m p l o ym e n t w a s e f f e c t e d w h e n h e
r e f u s e d t o p a y f o r t h e washing of his taxi seat covers. They filed a complaint for illegal
dismissal and illegal deductions
-Labor arbiter dismissed case holding that the unreasonable delay in filing the case (two
years) was not consistent with the natural reaction of a person who claimed to be unjustly treated.
-NLRC: Private respondents dismissal was legal since they voluntarily left to work
for another company. The deductions were held illegal and it ordered petitioners to
reimburse the accumulated deposits and car wash payments, plus interest thereon at
the legal rate from the date of promulgation of judgment to the date of actual payment,
and 10% of the total amount as and for attorney's fees
ISSUE
WON private respondents are entitled to the refund of deposits
HELD
YES- NLRC held that the daily deposits made by respondents to d e f r a y a n y
s h o r t a g e i n t h e i r " b o u n d a r y" i s c o v e r e d b y t h e general prohibition in Article
114 of the Labor Code and that there is no showing that the Secretary of Labor has
recognized the same as a "practice" in the taxi industry. 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, e x c e p t w h e n t h e e m p l o y e r i s e n g a g e d i n s u c h t r a d e s ,
o c c u p a t i o n s o r b u s i n e s s w h e r e t h e p r a c t i c e o f m a k i n g deposits is a recognized
one, or is necessary or desirable as determined by the Secretary of Labor in appropriate rules and
regulations.
-A r t i c l e 1 1 4 d o e s n o t a p p l y t o o r p e r m i t d e p o s i t s t o defray any deficiency which
the taxi driver may incur in t h e r e m i t t a n c e o f h i s " b o u n d a r y ." A l s o , w h e n p r i v a t e
respondents stopped working for petitioners, the alleged purpose for
w h i c h p e t i t i o n e r s r e q u i r e d s u c h u n a u t h o r i z e d deposits no longer existed. In
other case, any balance due to private respondents after proper accounting must be returned
to them with legal interest.
-The evidence shows that Sabsalon was able to withdraw his deposits through vales or
he incurred shortages, such that he is even indebted to petitioners in the amount of P3,448.00.
With r e s p e c t t o M a l d i g a n ' s d e p o s i t s , n o t h i n g w a s m e n t i o n e d questioning the
same. Since the evidence shows that he had not withdrawn the same, he should be
reimbursed the amount of his accumulated cash deposits.
-On car wash payment: No refund. There was nothing to prevent private
r e s p o n d e n t s f r o m c l e a n i n g t h e t a x i u n i t s themselves, if they wanted to save their
P20. Also, car washing after a tour of duty is a practice in the taxi industry, and is, in fact,
dictated by fair play.

- On attorneys fees: Article 222 of the Labor Code, as amended by Section 3 of PD. 1691, states
that non-lawyers may appear before the NLRC or any labor arbiter only (1) if they represent
themselves, or (2) if they represent their organization or the members thereof. While it
may be true that Guillermo H. Pulia was the authorized representative of private respondents, he
was a non-lawyer who did not fall in either of the foregoing c a t e g o r i e s . H e n c e ,
b y c l e a r m a n d a t e o f t h e l a w , h e i s n o t entitled to attorney's fees.
-NLRC decision MODIFIED by deleting the awards for reimbursement of car wash
expenses and attorney's fees and directing NLRC to order and effect the
computation and payment by petitioners of the refund for Maldigan's deposits, p l u s l e g a l
i n t e r e s t t h e r e o n f r o m t h e d a t e o f f i n a l i t y o f t h i s resolution up to the date of actual
payment thereof.
Garnishment/Attachment
PACIFIC CUSTOMS BROKERAGE V INTER-ISLANDDOCKMEN AND LABOR UNION AND CIR
89 PHIL 722BAUTISTA ANGELO; August 24, 1951
FACTS
-Inter-island Dockmen and Labor Union filed petition in CIR against Pacific Customs
Brokerage praying that said company be ordered to desist from dismissing members of said
union, to turn over to the treasurer of union all dues and fees withheld by the company and to
reinstate with back pay the workers.
-A motion was filed by labor union praying that Pacific Customs Brokerage be ordered to pay
union members their wages which was allegedly withheld by it for certain alleged damages
caused by said members for staging a strike. To this motion, Pacific objected.
ISSUE
WON Pacific Customs Brokerage can be compelled by CIR to p a y w a g e s o f t h e
u n i o n m e m b e r s i n s p i t e o f t h e w r i t o f garnishment issued by CFI in civil case,
directing the sheriff to levy upon moneys of Pacific Customs Brokerage Workers Union which are
in the possession of Pacific Customs Brokerage
HELD
YES- Pacific Customs Brokerage contends otherwise because the moneys having been
garnished, are in custodia legis, and cant be controlled by CIR. The Court noticed that this is the
same argument advanced by petitioner before the respondent court in its effort to frustrate the
purpose of the motion of the labor u n i o n , a n d t h e r e s p o n d e n t c o u r t f o u n d s a i d
a r g u m e n t untenable. Art 1708 of new Civil Code provides, Laborers wages shall
not be subject to execution or attachment, except f o r d e b t s i n c u r r e d f o r f o o d ,
s h e l t e r , c l o t h i n g , a n d m e d i c a l attendance.
- P a c i f i c C u s t o m s B r o k e r a g e d o e s n t d i s p u t e t h a t m o n e y garnished is intended to
pay wages of members of labor union. There is nothing to show that such money was garnished
or a t t a c h e d f o r d e b t s i n c u r r e d f o r f o o d , s h e l t e r , c l o t h i n g a n d medical
attendance. The writ of garnishment issued by the court, while it purports to include
all moneys and properties belonging to the employing company, cannot, in any manner,
touch or affect what said company has in its possession to pay the wages of its laborers.- When CFI

issued writ of garnishment, its scope could not have been extended to include money intended to
pay the wages of members of labor union.
-But before the order of the respondent court can be enforced there is need of lifting the
garnishment by presentation of a motion to that effect by the labor union.- Petitioner's
contention that the motion should be denied b e c a u s e i t i s p r e d i c a t e d o n a l a b o r
c o n t r a c t e n t e r e d i n t o between the petitioner and the Pacific Customs Brokerage
Workers Union has no foundation in fact, it appearing that the members of the two labor unions
are one and the same. The members of the Pacific Customs Brokerage Workers' Union are the
same laborers now members of the petitioner union
Garnishment/Attachment
GAA vs. COURT OF APPEALS
Facts
It appears that respondent Europhil Industries Corporation was formerly one of the tenants in
Trinity Building at T.M. Kalaw Street, Manila, while petitioner Rosario A. Gaa was then the
building administrator. On December 12, 1973, Europhil Industries commenced an action (in the
Court of First Instance of Manila for damages against petitioner for having perpetrated certain
acts that Europhil Industries considered a trespass upon its rights, namely, cutting of its
electricity, and removing its name from the building directory and gate passes of its officials and
employees", On June 28, 1974, said court rendered judgment in favor of respondent Europhil
Industries, ordering petitioner to pay the former the sum of P10,000.00 as actual damages,
P5,000.00 as moral damages, P5,000.00 as exemplary damages and to pay the costs. The said
decision having become final and executory, a writ of garnishment was issued pursuant to which
Deputy Sheriff Cesar A. Roxas on August 1, 1975 served a Notice of Garnishment upon El
Grande Hotel, where petitioner was then employed, garnishing her "salary, commission and/or
remuneration." Petitioner then filed with the Court of First Instance of Manila a motion to lift
said garnishment on the ground that her "salaries, commission and or remuneration" are
exempted from execution under Article 1708 of the New Civil Code. Said motion was denied by
the lower Court. Court of Appeals dismissed the petition. In dismissing the petition, the Court of
Appeals held that petitioner is not a mere laborer as contemplated under Article 1708 as the term
laborer does not apply to one who holds a managerial or supervisory position like that of
petitioner, but only to those laborers occupying the lower strata.
Issue
Whether or not the Petitioner is covered by Article 1708 of the New Civil Code.
Ruling
Petitioner is not covered by Article 1708 since she does not fall within the criteria of laborer.
Article 1708 of the Civil Code provides: The laborer's wage shall not be subject to execution
or attachment, except for debts incurred for food, shelter, clothing and medical attendance." It is
beyond dispute that petitioner is not an ordinary or rank and file laborer but a responsibly place
employee, of El Grande Hotel, responsible for planning, directing, controlling, and coordinating
the activities of all housekeeping personnel so as to ensure the cleanliness, maintenance and
orderliness of all guest rooms, function rooms, public areas, and the surroundings of the hotel.
Considering the importance of petitioner's function in El Grande Hotel, it is undeniable that

petitioner is occupying a position equivalent to that of a managerial or supervisory position. We

do not think that the legislature intended the exemption in Article 1708 of the New Civil Code to
operate in favor of any but those who are laboring men or women in the sense that their work is
manual. Persons belonging to this class usually look to the reward of a day's labor for immediate
or present support, and such persons are more in need of the exemption than any others.
Petitioner is definitely not within that class.
Garnishment/Attachment
Special Steel Products vs Villareal (2004) G.R. 143304
Facts:
Special Steel Products, Inc., is a domestic corporation engaged in the principal business of
importation, sale, and marketing of BOHLER steel products. Respondents worked
for petitioner as assistant manager and salesman. Villareal obtained a car loan from
Bank of Commerce with petitioner as surety wherein they are jointly and severally
agreed to p a y t h e b a n k i n i n s t a l l m e n t b a s i s . I n J a n u a r y 1 9 9 7 , V i l l a r e a l
r e s i g n e d a n d j o i n e d H i - Grade Industrial and Technical Products as Executive vicepresident. Respondent So was sponsored by petitioner to attend a training course in
Kapfenberg, Austria conducted by BOHLER. It rewarded Sos outstanding sales
performance. When So returned, the petitioner asked respondent So to sign a memorandum to
work for the company for three years. After 2 years and 4 months, So resigned from
the company. Petitioner ordered respondents an accounting of the various Christmas
giveaways they received. In return, respondents also de manded payment of their
separation benefits, commissions, monetary benefits but petitioner refused and withheld the
13Th month pay and other benefits.
Issue:
WON the employer can withhold its employees wages and benefits as lien to protect
its interest as surety in the car loan and for expenses in the training abroad.
Held:
The employer cannot withhold respondents 13th month pay and other monetary benefits.
Article 116 of the Labor Code, as amended, provides:
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, s t e a l t h , i n t i m i d a t i o n ,
t h r e a t o r b y a n y o t h e r m e a n s w h a t s o e v e r without the workers consent.
The above provision is clear and needs no further elucidation. Indeed, petitioner has no legal
authority to withhold respondents 13 th month pay and other benefits. What an
e m p l o ye e h a s w o r k e d f o r , h i s e m p l o ye r m u s t p a y. T h u s , a n e m p l o ye r
c a n n o t s i m p l y refuse to pay the wages or benefits of its employee because he has
either defaulted in p a y i n g a l o a n g u a r a n t e e d b y h i s e m p l o y e r ; o r
v i o l a t e d t h e i r m e m o r a n d u m o f agreement; or failed to render an accounting of
his employers property.

Record Keeping
SOUTH MOTORISTS ENTERPRISES V TOSOC [SECOF DOLE]
181 SCRA 386MELENCIO-HERRERA; January 23, 1990
FACTS
-January 1983, complaints for non-payment of emergency cost of living allowances were
filed by 46 workers, Tosoc, et als., against SOUTH MOTORISTS(SM) before the Naga
City District Office of Regional Office No. 5 of the then Ministry of Labor
-10 January 1983 a Special Order was issued by the District Labor Officer directing its
Labor Regulation Officers to conduct a n i n s p e c t i o n a n d v e r i f i c a t i o n o f
S O U T H M O T O R I S T S ' employment records.
- O n t h e d a t e o f t h e i n s p e c t i o n a n d v e r i f i c a t i o n , S O U T H MOTORISTS
was unable to present its employment records on the allegation that they had been sent to
the main office in Manila.
-The case was then set for conference on 25 January 1983 but was reset twice.
-SM kept on requesting for postponements on the ground that the documents were still being prepared
and collated and that a formal manifestation or motion would follow. Nothing did.
-After the submission of an Inspection Report on the basis of which an Order dated 14 April
1983 was issued by Labor Officer Domingo Reyes directing SM to pay Tosoc, et als.,
the total amount of P184,689.12 representing the latter's corresponding emergency cost of living
allowances.
-SM FILED a Motion for Reconsideration BUT was denied.
ISSUE
WON Regional Directors of DOLE have jurisdiction to validly acton/ award money claims
HELD
YES
-Regional Directors are empowered to hear and decide, in a summary proceeding, claims for recovery of
wages and other monetary claims and benefits, including legal interest, subject to the concurrence of
the following requisites:
1) the claim is presented by an employee or person employed in domestic or household
service, or house helper under the Code;
2) the claim arises from employer-employee relations;
3 ) t h e c l a i m a n t n o l o n g e r b e i n g e m p l o y e d , d o e s n o t s e e k reinstatement; and
4) the aggregate money claim of each employee or house helper does not exceed P5,000.00
(Art. 129, Labor Code, as amended by R.A. 6715).But where these requisites do not
concur, the Labor Arbiters shall have exclusive original jurisdiction over claims arising from employeremployee relationship except claims for employees' compensation, social security, medicare and
maternity benefits
- Two provisions of law are crucial to the issueA129 and A217o f t h e L C , a s r e c e n t l y
a m e n d e d b y R e p u b l i c A c t N o . 6 7 1 5 , approved on 2 March 1989. Said amendments,
being curative in nature, have retroactive effect and, thus, should apply in this c a s e ( B R I A D
AGRO vs. DE LA CERNA, G.R. No. 82805, and CAMUS ENGINEERING
v s . D E L A C E R N A , G . R . N o . 8 3 2 2 5 , 9 November 1989).- The aforesaid Articles, as
amended, respectively read as follows:

Art. 129. Recovery of wages, simple money claims and other benefits.
U p o n c o m p l a i n t o f a n y i n t e r e s t e d p a r t y, t h e Regional Director o f t h e
D e p a r t m e n t o f L a b o r a n d Employment or any of the duly authorized hearing
officers of the Department is empowered, through summary proceeding and after due notice, to
hear and decide cases involving the recovery of wages and other monetary claims and benefits,
including legal interest, owing to an employee or person employed in domestic or
household service and house helper under this Code, arising from employer-employee relations:
Provided, That such complaint does not include a claim for reinstatement: Provided,
further, That the aggregate claim of each employee or house helper does not exceed five
thousand pesos (P5,000.00). . . .and 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, within thirty (30) calendar days after the
submission of the case by the parties for decision without extension, even in the
absence of stenographic notes, the following cases involving all workers, whether
agricultural or non-agricultural:
Except claims for employees compensation, social security, medicare and maternity
benefits, all other claims arising from employer-employee relations, including those
of persons in domestic or household service, involving an a m o u n t e x c e e d i n g
five thousand pesos (P5,000),w h e t h e r o r n o t a c c o m p a n i e d
w i t h a c l a i m f o r reinstatement.
- I n a c c o r d a n c e s a i d a r t i c l e s , t h o s e a w a r d s i n e x c e s s o f P5,000.00, particularly
those given to Gavino, Euste, Brequillo,Cis, Agreda, Galona, Tosoc, Guinoo, Cea,
Guinoo, and Osoc, each of which exceeds P5,000.00, should be ventilated in a
proceeding before the LAs.
-SM also caused the resetting of all subsequent hearings on the g r o u n d t h a t t h e
d o c u m e n t s w e r e s t i l l b e i n g p r e p a r e d a n d collated.
-Having been given the opportunity to put forth its case, SM has only itself to blame for
having failed to avail of the same
-What is more, its repeated failure to attend the hearings and to submit any motion as
manifested may be construed as a waiver of its right to adduce evidence to controvert the worker's
claims.
-The award P l84,689.12 was MODIFIED. The i n d i v i d u a l c l a i m s o f G a v i n o , E u s t e
, B r e q u i l l o , C i s , A g r e d a , Galona, Tosoc, Guinoo, Cea, Guinoo, and Osoc, each of which
exceeds P5,000.00, were remanded to the LA for proper disposition. All
o t h e r i n d i v i d u a l a w a r d s n o t i n e x c e s s o f P5,000.00 were AFFIRMED.
321 - MARANAW HOTELS AND RESORT CO. VS NLRC AND EDDIE DAMALERIO
(SERVICE CHARGES)
Facts:
On April 2, 1992, Damalerio was caught by one of the hotel guests, Jaime Glaser, when the
formers left hand was inside the latters suitcase. When he was asked by Glaser what he was
doing, he said that he is just cleaning Glasers room. Glaser filed a complaint to the Chief of

Security of the Hotel against Damalerio. After hearing and investigation of the hotel
management, he was found to have committed a qualified theft in violation of their House Rule
No. 1. He received a memorandum on April 13, 1992 which serves as a Notice of Termination.
He filed a complaint of illegal dismissal against the Hotel. Labor Arbiter ruled in favor of
Damalerio and ordered his reinstatement and other benefits including share in charges and tips.
Petitioner appealed. NLRC modified the ruling by giving the petitioner the option of payment of
separation pay instead of reinstating Damalerio.
Issue: Whether or not Damalerio is entitled to a share on the service charge.
Ruling:
Yes. Since dismissal has been adjudged to be illegal, he is entitled not only to the full backwages
but also to other benefits, including a just share in the service charges, to be computed from the
start of his preventive suspension until his reinstatement. However, since a strained relation
might occur due to the litigation, petitioner should be given an option to give Damalerio his
separation pay instead of reinstating the latter. Should petitioner opt in favor of separation pay,
Damalerio shall no longer be entitled to share in the service charge collected during his
preventive suspension.

322- ACE NAVIGATION CO. VS COURT OF APPEALS, NLRC AND ORLANDO

ALONSAGAY
(TIPS)
Facts:

Ace Navi hired Alonsagay as a bartender in the vessel owned by its principal, Conning Shipping
Ltd with a monthly basic salary of USD 450.00, flat rate, including overtime pay for 12 hours of
daily work plus tips of USD 2.00 per passenger per day. He was also entitled to 2.5 days of
vacation leave with pay each month. His contract started from June 13, 1994 up to June 13,
1995. After the termination of his contract, he claimed for his unpaid vacation leave pay
amounting to USD 450.00 and unpaid tips amounting to USD 36,000.00
Issue: Whether or not petitioner is liable to pay the tips to Alonsagay.
Ruling:
No. Tip denotes a voluntary act and generosity of the giver. The contract of employment
between petitioners and Orlando is categorical that the monthly salary of Orlando is
US$450.00 flat rate. This already included his overtime pay which is integrated in his 12 hours
of work. The words "plus tips of US$2.00 per passenger per day" were written at the line for
overtime. Since payment for overtime was included in the monthly salary of Orlando, the
supposed tips mentioned in the contract should be deemed included thereat. As a bartender,
Orlando cannot feign ignorance on the practice of tipping and that tips are normally paid by
customers and not by the employer.
It is also absurd that petitioners intended to give Orlando a salary higher than that of the ship
captain. As petitioners point out, the captain of M/V "Orient Princess" receives US$3,000.00 per
month while Orlando will receive US$3,450.00 per month if the tip of US$2.00 per passenger
per day will be given in addition to his US$450.00 monthly salary. It will be against common
sense for an employer to give a lower ranked employee a higher compensation than an employee
who holds the highest position in an enterprise.

323 ULTRA VILLA FOOD HAUS and ROSE TIO VS GENISTON

(13TH MONTH PAY COVERAGE)
Facts:

Geniston was allegedly hired as do it all guy in the Ultra Villa. He allegedly acts as waiter,
driver and maintenance in said restaurant. His employment therein spanned from March 1, 1989
until he was dismissed on May 13, 1992 by petitioner Tio. It appears that on May 11-12, 1993,
Geniston acted as Poll Watcher in the election instead of reporting to work as a driver to Tio.
Respondent prayed before the Labor Arbiter to order Tio to pay his overtime pay, premium pay,
service incentive leave pay and his 13th month pay, as well as damages. The Labor Arbiter
concluded that he is a personal driver of Tio and not an employee of Ultra Villa. Thus, he is not
entitled to overtime pay, premium pay, service incentive leave pay and his 13th month pay.
NLRC reversed the decision and ordered Tio to pay Genistons monetary claims as the court
determined.
Issue:
1. Whether or not private respondent is a personal driver of Tio. (for Case No. 327)
2. Whether or not private respondent is entitled to 13th month pay. (for Case No. 323)
Ruling:
1. Yes. The Labor Arbiter correctly ruled that private respondent was petitioner's personal driver
and not an employee of the subject establishment. Accordingly, the terms and conditions of
private respondent's employment are governed by Chapter III, Title III, Book III of the Labor
Code as well as by the pertinent provisions of the Civil Code. Thus, Article 141 of the Labor
Code provides:
Art. 141. Coverage - This Chapter shall apply to all persons rendering services in
households for compensation.
Domestic or household service" shall mean services in the employers home which is usually
necessary or desirable for the maintenance and enjoyment thereof and includes ministering to the
personal comfort and convenience of the members of the employers household, including
services of family drivers.
Moreover, the specific provisions mandating these benefits are found in Book III, Title I of the
Labor Code , Article 82, which defines the scope of the application of these provisions, expressly
excludes domestic helpers from its coverage. Clearly then, petitioner is not obliged by law to
grant private respondent any of these benefits.
2. Yes. It would seem that in the Revised Guidelines on the Implementation of the 13th month
pay, it excludes employers of household helpers from the coverage of P.D. No. 851.
Nevertheless, the court deemed it just to award the private respondent 13th month pay in view of
petitioners practice of according private respondent such benefit. Indeed, petitioner admitted
that she gave private respondent 13th month pay every December.

324 PETROLEUM SHIPPING LTD. VS NLRC and FLORELLO TANCHICO

(13TH MONTH PAY COVERAGE)

Facts:
Private respondent was hired by Petitioner as First Assistant Engineer in 1978. He was then
promoted as Chief Engineer in 1981. Tanchico returned to the Philippines for his 2 month
vacation in 1992. However, when private respondent underwent to standard medical examination
prior boarding, it was found out that he was suffering from Heart Disease, Hypertension and
Diabetes. Petitioner no longer deployed him instead offered to pay him benefits under the Career
Employment Incentive Plan to which he accepted.
On 1993, he filed a complaint against petitioner for illegal dismissal with claims of other
monetary benefits including 13th month pay.
Issue: Whether or not a seafarer is entitled to 13th month pay.
Ruling:
No. The Court of Appeals rely its grant of 13th month pay to Tanchico on the premise that the
latter is a regular employee. It was traced in the Courts previous rulings that seafarers are
contractual employees whose employments are terminated every time their contracts of
employment expire. Further, P.D. 851 does not apply to seafarers. P.D. 85 contemplates the
situation of land based workers and not of seafarers who generally earn more than domestic landbased workers. Tanchichos employment is governed by the Contract of Employment which is a
standard contract of the POEA, which likewise does not provide for the payment of 13th month
pay.

325 JACKSON BLDG. ETC VS NLRC and FERDINAND GUMOGDA

(MANNER OF WAGE PAYMENT)

Facts:
Gumogda was employed as janitor on the petitioner corporation. He then filed a 45-day leave of
absence since he will undergo an appendectomy, which would necessitate complete bed rest for
about 30 days from the date of the operation as shown by his medical certificate to which the
petitioner agreed. On January 3, 1992, private respondent informed petitioner Razul Requesto,
President of petitioner corporation, that he was physically fit to assume his work. However,
petitioners refused to accept him back contending that he had abandoned his work.
On March 24, 1992, private respondent filed with the Labor Arbiter a complaint against
petitioners for illegal dismissal, underpayment of wages and non-payment of thirteenth-month
pay and service-incentive leave pay.
Issue: Whether petitioners are liable for the payment of private respondent's 13th month pay.
Ruling:
Private respondent is entitled to the thirteenth-month pay. Presidential Decree No. 851, as
amended by Memorandum Order No. 28, provides that employees are entitled to the thirteenthmonth pay benefit regardless of their designation and irrespective of the method by which their
wages are paid.

326 JPL MARKETING PROMOTIONS VS CA, NLRC, NOEL GONZALES, RAMON

ABESA III AND FAUSTINO ANINIPOT
(WAGE DIFFERENCE)

Facts:
Petitioner is engaged on a business of recruitment and placement of workers. The 3 private
respondents were employed by JPL as merchandisers in Bicol Region as attendants for the
display of California Marketing Corporation (CMC). On August 13, 1996, JPL informed the
private respondents that CMC would stop its direct merchandising activity in Bicol Region
effective August 15, 1996. Private respondents were advised to wait for further notice as they
will be assigned to other clients. On October 17, 1996, respondents filed a complaint of illegal
dismissal against JPL, praying for separation pay, 13th month pay, service incentive leave pay
and payment of moral damages. It appears that JPL is providing the respondents salaries which
were over and above the minimum claiming that 13th month and service incentive leave pay
should not be given to the latter.
Issue: Whether or not private respondents are entitled to 13th month pay.
Ruling:
Yes. Admittedly, private respondents were not given their 13th month pay and service incentive
leave pay while they were under the employ of JPL. Instead, JPL provided salaries which were
over and above the minimum wage. The Court rules that the difference between the minimum
wage and the actual salary received by private respondents cannot be deemed as their 13th month
pay and service incentive leave pay as such difference is not equivalent to or of the same import
as the said benefits contemplated by law. Thus, as properly held by the Court of Appeals and by
the NLRC, private respondents are entitled to the 13th month pay and service incentive leave
pay.

327 ULTRA VILLA FOOD HAUS VS GENISTON

(HOUSEHELPERS)

Facts:
Geniston was allegedly hired as do it all guy in the Ultra Villa. He allegedly acts as waiter,
driver and maintenance in said restaurant. His employment therein spanned from March 1, 1989
until he was dismissed on May 13, 1992 by petitioner Tio. It appears that on May 11-12, 1993,
Geniston acted as Poll Watcher in the election instead of reporting to work as a driver for Tio.
Respondent prayed before the Labor Arbiter to order Tio to pay his overtime pay, premium pay,
service incentive leave pay and his 13th month pay, as well as damages. The Labor Arbiter
concluded that he is a personal driver of Tio and not an employee of Ultra Villa. Thus, he is not
entitled to overtime pay, premium pay, service incentive leave pay and his 13th month pay.
NLRC reversed the decision and ordered Tio to pay Genistons monetary claims as the court
determined.
Issue:
1. Whether or not private respondent is a personal driver of Tio. (for Case No. 327)
2. Whether or not private respondent is entitled to 13th month pay. (for Case No. 323)
Ruling:
1. Yes. The Labor Arbiter correctly ruled that private respondent was petitioner's personal driver
and not an employee of the subject establishment. Accordingly, the terms and conditions of
private respondent's employment are governed by Chapter III, Title III, Book III of the Labor
Code as well as by the pertinent provisions of the Civil Code. Thus, Article 141 of the Labor
Code provides:
Art. 141. Coverage - This Chapter shall apply to all persons rendering services in
households for compensation.
Domestic or household service" shall mean services in the employers home which is usually
necessary or desirable for the maintenance and enjoyment thereof and includes ministering to the
personal comfort and convenience of the members of the employers household, including
services of family drivers.
Moreover, the specific provisions mandating these benefits are found in Book III, Title I of the
Labor Code , Article 82, which defines the scope of the application of these provisions, expressly
excludes domestic helpers from its coverage. Clearly then, petitioner is not obliged by law to
grant private respondent any of these benefits.
2. Yes. It would seem that in the Revised Guidelines on the Implementation of the 13th month
pay, it excludes employers of household helpers from the coverage of P.D. No. 851.
Nevertheless, the court deemed it just to award the private respondent 13th month pay in view of
petitioners practice of according private respondent such benefit. Indeed, petitioner admitted
that she gave private respondent 13th month pay every December.

328 ALLIANCE OF GOVERNMENT WORKERS VS NLRC

(GOVERNMENT EMPLOYEES)

Facts:
Petitioner is a registered labor federation while the others are its affiliate unions which members
are employees of the government and other GOCCs. According to petitioners, P.D. No. 851
requires ALL EMPLOYERS to pay the 13th month pay to their employees with one sole
exception found in Section 2, which states that EMPLOYERS ALREADY PAYING THEIR
EMPLOYEES A 13TH MONTH PAY OR ITS EQUIVALENT ARE NOT COVERED BY THIS
DECREE. Petitioners contend that Section 3 of the Rules and Regulations Implementing P.D.
851 included other types of employers not exempted by the decree. They further contend that the
secretary of Labor is not authorized to exempt other types of employers from the requirement.
Issue: Whether or not branches, subd., and instrumentalities of the Government including
GOCCs employees are entitled to 13th month pay.
Ruling:
No. Personnel of the Government including any political subdivision or instrumentality thereof
and GOCCs are covered by the Civil Service and are governed by law. It would not be fair to
allow them to engage in concerted activities to wring higher salaries or fringe benefits from
Government.
As in other countries, government salaries and wages have always been lower than salaries,
wages, and bonuses in the private sector. However, civil servants have no cause for despair.
Service in the government may at times be a sacrifice but it is also a welcome privilege. Apart
from the emotional and psychic satisfactions, there are various material advantages.

329 ARCHILLES MANUFACTURING VS NLRC, GERONIMO MANUEL, ARNULFO

DIAZ, JAIME CARUNUNGAN AND BENJAMIN RINDON
(TERMINATED EMPLOYEES)

Facts:
Archilles Manufacturing hired the private respondents as laborers in its steel factory in
Meycauayan, Bulacan. Petitioner is maintaining a bunkhouse in the work area which serves as
resting place for the laborers. A mauling incident happened involving a relative of the employee.
As a result, petitioner disallowed its workers from bringing their families to the bunkhouse.
However, private respondents continued to bring their families which cause discomfort to the
other employees. The management ordered the private respondents to remove their families and
to explain their violation to the rule. They consequently removed their families but failed to
submit their explanation, instead, they absented themselves for 5 days. Archilled terminated their
employment for abandonment. NLRC ordered the payment of the withheld salaries of the
respondents including their 13th month pay. Petitioner appealed.
Issue: Whether or not private respondents are entitled of 13th month pay.
Ruling:
Yes. Paragraph 6 of the Revised Guidelines on the Implementation of the 13th Month Pay Law
(P. D. 851) provides that "an employee who has resigned or whose services were terminated at
any time before the payment of the 13th month pay is entitled to this monetary benefit in
proportion to the length of time he worked during the year, reckoned from the time he started
working during the calendar year up to the time of his resignation or termination from the
service. The payment of the 13th month pay may be demanded by the employee upon the
cessation of employer-employee relationship. Furthermore, Sec. 4 of the original Implementing
Rules of P.D. 851 mandates employers to pay their employees a 13th month pay not later than
the 24th of December every year provided that they have worked for at least one (1) month
during a calendar year. Such benefit may not be lost or forfeited even in the event of the
employee's subsequent dismissal for cause without violating his property rights.

330 BOIE TAKEDA VS DE LA SERNA

(BASIC WAGE/COMMISSION)
Facts:

A routine inspection was conducted on the premises of the petitioner by the Labor and
Development Officer Ramos. It was found out by Ramos that petitioner had not been including
the commissions earned by its medical representatives in computing their 13th month pay.
Issue: Whether or not commissions should be included in the computation of the 13th month pay.
Ruling:
No. The term "basic salary" is to be understood in its common, generally-accepted meaning, i.e.,
as a rate of pay for a standard work period exclusive of such additional payments as bonuses and
overtime. In remunerative schemes consisting of a fixed or guaranteed wage plus commission,
the fixed or guaranteed wage is patently the "basic salary" for this is what the employee receives
for a standard work period. Commissions are given for extra efforts exerted in consummating
sales or other related transactions. They are, as such, additional pay, which this Court has made
clear do not form part of the "basic salary."
In including commissions in the computation of the 13th month pay, the second paragraph of
Section 5(a) of the Revised Guidelines on the Implementation of the 13th Month Pay Law
unduly expanded the concept of "basic salary" as defined in P.D. 851. It is a fundamental rule
that implementing rules cannot add to or detract from the provisions of the law it is designed to
implement. Administrative regulations adopted under legislative authority by a particular
department must be in harmony with the provisions of the law they are intended to carry into
effect. They cannot widen its scope. An administrative agency cannot amend an act of Congress.
BASIC WAGE/COMMISSIONS

Philippine Duplicators Inc. vs. NLRC 241 SCRA 380 (1995)

Facts:

A previous case also petitioned by the Duplicators resulted in the directing of petitioner
to pay 13th month pay to private respondent employees computed on the basis of their
fixed wages plus sales commissions.
Petitioner Duplicators filed (a) a Motion for Leave to Admit Second Motion for
Reconsideration and (b) a Second Motion for Reconsideration. They submit that the
decision in the Duplicators case should now be considered as having been abandoned or
reversed by the Boie-Takeda decision, considering that the latter went "directly opposite
and contrary to" the conclusion reached in the former. Petitioner prays that the decision
rendered in Duplicators be set aside and another be entered directing the dismissal of the
money claims of private respondent Philippine Duplicators' Employees' Union.

Issue: W/N sales commissions of employees are included in the computation of their 13 month
pay?

Held:

The Third Division in Durplicators found that:

o In the instant case, there is no question that the sales commission earned by the
salesmen who make or close a sale of duplicating machines distributed by
petitioner corporation, constitute part of the compensation or remuneration paid to
salesmen for serving as salesmen, and hence as part of the "wage" or salary of
petitioner's salesmen. Indeed, it appears that petitioner pays its salesmen a small
fixed or guaranteed wage; the greater part of the salesmen's wages or salaries
being composed of the sales or incentive commissions earned on actual sales
closed by them. No doubt this particular galary structure was intended for the
benefit of the petitioner corporation, on the apparent assumption that thereby its
salesmen would be moved to greater enterprise and diligence and close more sales
in the expectation of increasing their sales commissions. This, however, does not
detract from the character of such commissions as part of the salary or wage paid
to each of its salesmen for rendering services to petitioner corporation.
In other words, the sales commissions received for every duplicating machine sold
constituted part of the basic compensation or remuneration of the salesmen of Philippine
Duplicators for doing their job.
Especially significant here also is the fact that the fixed or guaranteed portion of the
wages paid to the Philippine Duplicators' salesmen represented only 15%-30% of an
employee's total earnings in a year.
Considering the above circumstances, the Third Division held, correctly, that the sales
commissions were an integral part of the basic salary structure of Philippine Duplicators'
employees salesmen. These commissions are not overtime payments, nor profit-sharing
payments nor any other fringe benefit. Thus, the salesmen's commissions, comprising a
pre-determined percent of the selling price of the goods sold by each salesman, were
properly included in the term "basic salary" for purposes of computing their 13th month
pay.
In the Boie-Takeda case, productivity bonuses are included in the basic salary of the
employees and are therefore not part of the computation of the 13-month.

Iran vs. NLRC 289 SCRA 433 (1998)

Facts:

Petitioner Antonio Iran is engaged in softdrinks merchandising and distribution in

Mandaue City, Cebu. He hired private respondents as truck drivers who double as
salesmen, truck helpers, and non-field personnel in pursuit thereof.
As part of their compensation, the driver/salesmen and truck helpers of petitioner
received commissions per case of softdrinks sold.
Pending the investigation of irregularities and settlement of the cash shortages, upon
audit operations, petitioner required private respondents to report for work every day but

they were not allowed to go on their respective routes. However, private respondents
stopped reporting for work, prompting petitioner to conclude that the former had
abandoned their employment. Consequently, petitioner terminated their services and filed
a case of estafa against private respondents
On the other hand, private respondents filed complaints against petitioner for illegal
dismissal, illegal deduction, and underpayment of wages, premium pay for holiday and
rest day, holiday pay, service incentive leave pay, 13th month pay, allowances, separation
pay, and recovery of cash bond, damages and attorney's fees.
According to the labor arbiter, the petitioner validly terminated the private respondents
services but ruled that petitioner did not comply with minimum wage requirements
(commissions paid not computed within the employees wages) and failed to pay their
13-month pay as well.
Both appealed from decision. NLRC affirmed the decision of the labor arbiter.

Issue: W/N the commissions paid by petitioner is included as actual wages of the private
respondents?
Held:

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

Art. 97 explicitly includes commissions as part of wages. These commissions are direct
remunerations for services rendered. The nature of the work of a salesman and the reason
for such type of remuneration for services rendered demonstrate clearly that commissions
are part of a salesman's wage or salary.
Thus, the commissions earned by private respondents in selling softdrinks constitute part
of the compensation or remuneration paid to drivers/salesmen and truck helpers for
serving as such, and hence, must be considered part of the wages paid them.
Likewise, there is no law mandating that commissions be paid only after the minimum
wage has been paid to the employee. Verily, the establishment of a minimum wage only
sets a floor below which an employee's remuneration cannot fall, not that commissions
are excluded from wages in determining compliance with the minimum wage law.
Drivers and conductors who are compensated purely on a commission basis are
automatically entitled to the basic minimum pay mandated by law should said

commissions be less than their basic minimum for eight hours work. It can, thus, be
inferred that were said commissions equal to or even exceed the minimum wage, the
employer need not pay, in addition, the basic minimum pay prescribed by law. It follows
then that commissions are included in determining compliance with minimum wage
requirements.
Honda Phils. Inc. vs. Samahan ng Malayang Manggagawa sa Honda 460 SCRA 185 (2005)
Facts:

Petitioner entered into a Collective Bargaining Agreement (CBA) with respondents

stating that:
o Section 3. 13th Month Pay
The COMPANY shall maintain the present practice in the implementation
[of] the 13th month pay.
o Section 6. 14th Month Pay
The COMPANY shall grant a14th Month Pay, computed on the same
basis as computation of 13th Month Pay.
o Section 7. The COMPANY agrees 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.
The CBA is effective until 2000. And in 1998, the parties entered into negotiations
regarding a new CBA but failed because talks bogged down. With this in mind,
respondents initiated a strike against the petitioner and the petitioner in turn filed a Notice
of Lockout. DOLE Secretary intervened and gave the case to NLRC for compulsory
arbitration and ordered the employees to go back to work and management accepted
them.
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.
The union opposed the pro-rated computation of the bonuses and the matter was
submitted for voluntary arbitration where the arbitrator ruled that the pro-ration is invalid.

Issue: W/N the pro-rated computation of the 13th month pay and the other bonuses in question is
valid and lawful.
Held:

A cursory reading of the provisions will show that the stipulations in the CBA 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 pro-rated 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.
The "basic salary" of an employee for the purpose of computing the 13th 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-ofliving 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 done on rest days and special
holidays.

SUBSTITUTE PAYMENTS
Framanlis Farms Inc. vs. MOLE 171 SCRA 87 (1989)
Facts:

18 employees of petitioners filed a case against their employers alleging that in 1977 to
1979 they were not paid emergency cost of living allowance (ECOLA) minimum wage,
13th month pay, holiday pay, and service incentive leave pay.
In their answer to the amended complaint, petitioners alleged that the private respondents
were not regular workers on their hacienda but were migratory (sacadas) or pakyaw
workers who worked on-and-off and were hired seasonally, or only during the milling
season, to do piece-work on the farms, hence, they were not entitled to the benefits
claimed by them.
The claims for holiday pay, service incentive leave pay, social amelioration bonus and
underpayment of minimum wage were not controverted. With respect to the
complainants' other claims, the petitioners submitted only random payrolls which showed
that the women workers were underpaid as they were receiving an average daily wage of
P5.94 only, although the male workers received P10 more or less, per day.
Minister of Labor ruled against petitioner but upon appeal modified the ruling and
ordering the employer to pay:
o 1. all non-pakyaw workers their claim for holiday and incentive leave pay for the
years 1977, 1978 and 1979;

2. all complainants their 13th month pay for the years 1978 and 1979;
3. all 'pakyaw' workers for the same period on days they worked for at least eight
(8) hours and earned below P8.06 daily, their pay differentials.

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

Issue: W/N the enumerated items can be substitutes for payment of 13th month pay.
Held:

Unfortunately, under Section 3 of PD No. 851, such benefits in the form of food or free
electricity, assuming they were given, were not a proper substitute for the 13th month pay
required by law. PD 851 provides:
Section 3. Employees covered The Decree shall apply to all employees except
to:
The term 'its equivalent' as used in paragraph (c) hereof shall include Christmas
bonus, mid-year bonus, profit-sharing payments and other cash bonuses
amounting to not less than 1/12 of the basic salary but shall not include cash and
stock dividends, cost of living allowances and all other allowances regularly
enjoyed by the employee, as well as non-monetary benefits.
Where an employer pays less than 1/12 of the employee's basic salary, the
employer shall pay the difference."

Neither may year-end rewards for loyalty and service be considered in lieu of 13th month
pay. Section 10 of the Rules and Regulations Implementing Presidential Decree No. 851
provides:
o Section 10. Prohibition against reduction or elimination of benefits-Nothing
herein shall be construed to authorize any employer to eliminate, or diminish in

any way, supplements, or other employee benefits or favorable practice being

enjoyed by the employee at the time of promulgation of this issuance."
14TH MONTH PAY
Kamaya Port Hotel vs. NLRC 177 SCRA 160 (1989)
Facts:

Respondent Memia Quiambao with thirty others who are members of private respondent
Federation of Free Workers (FFW) were employed by petitioner as hotel crew.
On the basis of the profitability of the company's business operations, management
granted a 14th month pay to its employees starting in 1979.
In January 1982, operations ceased to give way to the hotel's conversion into a training
center for Libyan scholars. However, due to technical and financing problems, the
Libyans pre-terminated the program on July 7, 1982, and petitioner allegedly suffered
losses amounting to P2 million and in the end totally closed its business.
Private respondent Federation of Free Workers (FFW), filed with the Ministry of Labor
and Employment a complaint against petitioner for illegal suspension, violation of the
CBA and non-payment of the 14th month pay. Records however show that the case was
submitted for decision on the sole issue of alleged non-payment of the 14th month pay
for the year 1982.
Labor Arbiter ordered petitioner to pay the 14th month pay to respondents for the year
1982. And NLRC, on appeal affirmed the payment of the 14th month pay saying: we
believe that individual complainants herein are still entitled to the 14th month pay for
1982 because to our mind, the granting of this 14th month pay has already ripened into a
company practice which respondent company cannot withdraw unilaterally. This 14th
month pay is now an existing benefit which cannot be withdrawn without violating article
100 of the Labor Code. To allow its withdrawal now would certainly amount to a
diminution of existing benefits which complainants are presently enjoying. Premised on
the above, the individual complainants are entitled to the 14th month pay for 1982 and
respondent should pay the same.

Issue: W/N the 14th Month Pay can be withdrawn without violating article 100 of the Labor
Code.
Held:

Article 100 of the Labor Code which states:

o Prohibition against elimination or diminution of benefits.- Nothing in this Book
shall be construed to eliminate or in any way diminish supplements, or other
employee benefits being enjoyed at the time of promulgation of this Code

It is patently obvious that Article 100 is clearly without applicability. The date of
effectivity of the Labor Code is May 1, 1974. In the case at bar, petitioner extended its
14th month pay beginning 1979 until 1981. What is demanded is payment of the 14th

month pay for 1982. Indubitably from these facts alone, Article 100 of the Labor Code
cannot apply.
Moreover, there is no law that mandates the payment of the 14th month pay. This is
emphasized in the grant of exemption under Presidential Decree 851 (13th Month Pay
Law) which states: "Employers already paying their employees a 13th month pay or its
equivalent are not covered by this Decree." Necessarily then, only the 13th month pay is
mandated.
Also contractually, as gleaned from the collective bargaining agreement between
management and the union, there is no stipulation as to such extra remuneration.
Verily, a 14th month pay is a misnomer because it is basically a bonus and, therefore,
gratuitous in nature. The granting of the 14th month pay is a management prerogative
which cannot be forced upon the employer. It is something given in addition to what is
ordinarily received by or strictly due the recipient. It is a gratuity to which the recipient
has no right to make a demand.

DIMUNUTION
Davao Fruits Corp. vs. Associated Labor Unions 225 SCRA 562 (1993)
Facts:

Respondent Associated Labor Unions (ALU), for and in behalf of all the rank-and-file
workers and employees of petitioner, filed a complaint before the Ministry of Labor and
Employment, against petitioner, for "Payment of the Thirteenth-Month Pay
Differentials." Respondent ALU sought to recover from petitioner the thirteenth month
pay differential for 1982 of its rank-and-file employees, equivalent to their sick, vacation
and maternity leaves, premium for work done on rest days and special holidays, and pay
for regular holidays which petitioner, allegedly in disregard of company practice since
1975, excluded from the computation of the thirteenth month pay for 1982.
In its answer, petitioner claimed that it erroneously included items subject of the
complaint in the computation of the thirteenth month pay for the years prior to 1982,
upon a doubtful and difficult question of law namely P.D. 851 and the Supplementary
Rules and Regulations issued by DOLE.
A decision was rendered in favor of respondent ALU ordering petitioner to pay the 13th
month pay differential of their rank and file employees for the year 1982.

Issue: W/N the inclusion of payments for sick, vacation and maternity leaves, premiums for work
done on rest days and special holidays, and pay for regular holidays for the computation of the
thirteenth month pay given by employers to their employees under P.D. No. 851 can be excluded
after discovery of the contrary practice.
Held:

Presidential Decree No. 851, promulgated on December 16, 1975, mandates all
employers to pay their employees a thirteenth month pay. How this pay shall be

computed is set forth in Section 2 of the "Rules and Regulations Implementing

Presidential Decree No. 851," thus:
o SECTION 2. . . .
(a) "Thirteenth month pay" shall mean one twelfth (1/12) of the basic
salary of an employee within a calendar year.
(b) "Basic Salary" shall include all renumerations or earnings paid by an
employer to an employee for services rendered but may not include cost of
living allowances, profit-sharing payments, and all allowances and
monetary benefits which are not considered or integrated as part of the
regular or basic salary of the employee at the time of the promulgation of
the Decree on December 16, 1975.
The Department of Labor and Employment issued on January 16, 1976 the
"Supplementary Rules and Regulations Implementing P.D. No. 851" which in paragraph
4 thereof further defines the term "basic salary," thus:
o 4. Overtime pay, earnings and other renumerations which are not part of the basic
salary shall not be included in the computation of the 13th month pay.
It follows therefore, that payments for sick, vacation and maternity leaves, premium for
work done on rest days special holidays, as well as pay for regular holidays, are likewise
excluded in computing the basic salary for the purpose of determining the thirteen month
pay.
However petitioner computed and paid the thirteenth month pay, without excluding the
subject items therein until 1981. From 1975 to 1981, petitioner had freely, voluntarily and
continuously included in the computation of its employees' thirteenth month pay, the
payments for sick, vacation and maternity leaves, premiums for work done on rest days
and special holidays, and pay for regular holidays. The considerable length of time the
questioned items had been included by petitioner indicates a unilateral and voluntary act
on its part, sufficient in itself to negate any claim of mistake.
Company practice favorable to the employees had indeed been established and the
payments made pursuant thereto, ripened into benefits enjoyed by them. And any benefit
and supplement being enjoyed by the employees cannot be reduced, diminished,
discontinued or eliminated by the employer, by virtue of Section 10 of the Rules and
Regulations Implementing P.D. No. 851, and Article 100 of the labor of the Philippines,
which prohibit the diminution or elimination by the employer of the employees' existing
benefits.

BONUS
MANAGEMENT FUNCTION
Business Information Systems and Services Inc. vs. NLRC 221 SCRA 91 (1993)
Facts:

BSSI was engaged in the manufacture and sale of computer forms. Due to financial
reverses, its creditors, the Development Bank of the Philippines (DBP) and the Asset
Privatization Trust (APT), took possession of its assets, including a manufacturing plant
in Marilao, Bulacan.
As a retrenchment measure, some plant employees, including the private respondents,
were laid off and were paid separation pay equivalent to one-half (1/2) month pay for
every year of service. Upon receipt of their separation pay, the private respondents signed
individual releases and quitclaims in favor of BSSI.
BSSI retained some employees but after two months discharged them as well BUT their
separation pay is equivalent to a full month's salary for every year of service plus midyear bonus.
Protesting against the discrimination in the payment of their separation benefits, the
twenty-seven (27) private respondents filed three (3) separate complaints against the
BSSI and Raul Locsin.
Petitioner of course denied the unlawful discrimination in the payment of separation
benefits. They argued that the first batch of employees was paid "retrenchment" benefits
mandated by law, while the remaining employees were granted higher "separation"
benefits because their termination was on account of the closure of the business.
Labor Arbirter ruled in favor of private respondents ordering the petitioner to pay the
respondents their separation pay differentials and their mid-year bonus. NLRC, upon
appeal by petitioner affirmed the Labor Arbiters decision.

Issue: Whether or not petitioner should also give the mid-year bonuses to their employees.
Held:

It is settled doctrine that the grant of a bonus is a prerogative, not an obligation, of the
employer (Traders Royal Bank vs. NLRC, 189 SCRA 274).
The matter of giving a bonus over and above the worker's lawful salaries and allowances
is entirely dependent on the financial capability of the employer to give it. The fact that
the company's business was no longer profitable (it was in fact moribund) plus the fact
that the private respondents did not work up to the middle of the year (they were
discharged in May 1988) were valid reasons for not granting them a mid-year bonus.
Requiring the company to pay a mid-year bonus to them also would in effect penalize the
company for its generosity to those workers who remained with the company till the end"
of its days. (Traders Royal Bank vs. NLRC, supra.) The award must therefore be deleted.

Asian Transmission Corporation vs. CA 425 SCRA 478 (2004)

Facts:

The Department of Labor and Employment (DOLE), through Undersecretary

Cresenciano B. Trajano, issued an Explanatory Bulletin dated March 11, 1993
wherein it clarified, inter alia, that employees are entitled to 200% of their basic wage

on April 9, 1993, whether unworked, which[,] apart from being Good Friday [and,
therefore, a legal holiday], is also Araw ng Kagitingan [which is also a legal
holiday]. Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was
both Maundy Thursday and Araw ng Kagitingan.
Despite the explanatory bulletin, petitioner [Asian Transmission Corporation] opted
to pay its daily paid employees only 100% of their basic pay on April 9, 1998.
Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested.
The Office of the Voluntary Arbitrator rendered a decision directing petitioner to pay
its covered employees "200% and not just 100% of their regular daily wages for the
unworked April 9, 1998.
o He ruled that Article 94 of the Labor Code provides for holiday pay for every
regular holiday, the computation of which is determined by a legal formula
which is not changed by the fact that there are two holidays falling on one
day, like on April 9, 1998 when it was Araw ng Kagitingan and at the same
time was Maundy Thursday; and that that the law, as amended, enumerates
ten regular holidays for every year should not be interpreted as authorizing a
reduction to nine the number of paid regular holidays "just because April 9
(Araw ng Kagitingan) in certain years, like 1993 and 1998, is also Holy
Friday or Maundy Thursday."
The Court of Appeals, on appeal, upheld the findings of the Voluntary Arbitrator,
holding that the Collective Bargaining Agreement (CBA) between petitioner and
BATLU, the law governing the relations between them, clearly recognizes their intent
to consider Araw ng Kagitingan and Maundy Thursday, on whatever date they may
fall in any calendar year, as paid legal holidays during the effectivity of the CBA and
that "[t]here is no condition, qualification or exception for any variance from the clear
intent that all holidays shall be compensated."

Issue: W/N holiday pay is a bonus meaning optional and should be paid under managements
prerogative.
Held:

Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that
the State shall afford protection to labor. Art. 94 of the Labor Code, as amended, affords
a worker the enjoyment of ten paid regular holidays.
Unlike a bonus, which is a management prerogative, holiday pay is a statutory benefit
demandable under the law. Since a worker is entitled to the enjoyment of ten paid regular
holidays, the fact that two holidays fall on the same date should not operate to reduce to
nine the ten holiday pay benefits a worker is entitled to receive.
In the case at bar, there is nothing in the law which provides or indicates that the
entitlement to ten days of holiday pay shall be reduced to nine when two holidays fall on
the same day.

NATURE-BONUS-WHEN-DEMANDABLE

American Wire & Cable Daily Rated Employees Union vs. American Wire & Cable Co., Inc.
457 SCRA 684 (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).
Petitioner filed an original action against respondent. They alleged that the private
respondent, without valid cause, suddenly and unilaterally withdrew and denied certain
benefits and entitlements, which they have long enjoyed. These are the following:
o a. Service Award;
o b. 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;
o c. Christmas Party; and
o d. Promotional Increase.
Voluntary Arbitrator ruled in favor of private respondents stating that they did not violate
Article 100 of the Labor Code.
Petitioners insisted that said benefits have been given them since time immemorial, as a
matter of long established company practice.
Respondent corporation avers that 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.
Upon several appeals made by the petitioners, CA affirmed the ruling of the Voluntary
Arbitrator.

Issue: W/N private respondent is violated Article 100 of the Labor Code, as amended, when the
benefits/entitlements given to the members of petitioner union were withdrawn.
Held:

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.
From the case Producers Bank of the Philippines vs. NLRC, it is obvious that 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 petitioner-union, 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.
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 amount and 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).
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.
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.
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.

Luzon Stevedoring Corp. vs. CIR 15 SCRA 660 (1965)

Facts:

Petitioner Lusteveco Employees Association-CCLU (LEA) moved for reconsideration of

the SCs decision of December 31, 1965.
Respondent Luzon Stevedoring Corporation (LUZON) filed an opposition to the motion
for reconsideration.
Pertinent to the topic amidst a multitude of issues in this case: Anent the reduction of
Christmas bonus, LEA contends that there is no evidence on decrease in percentage of
profit as of December 31, 1958 to justify said reduction.

Issue: W/N the Christmas bonus was legally reduced.

Held:

The Christmas bonus not having been included in the Collective Bargaining Agreement,
it cannot be demanded by the union.
Even assuming that Christmas bonus is a concession within the purview of Article 10 of
the Collective Bargaining Agreement, providing that "the Company agrees to maintain in
effect all concessions presently being extended to its employees, whenever practicable,"
still the same cannot demanded in view of the phrase "whenever practicable."
Furthermore, the Collective Bargaining Agreement expired sometime in September 1958
whereas the Christmas bonus in question was granted in December 1958, three months
after.

June 27, 1968

G.R. No. L-25389

LIBERATION STEAMSHIP CO., INC., petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS and THE UNLICENSED CREW
MEMBERS OF THE THREE (3) DONA VESSELS, ALL AFFILIATES WITH
THE PHILIPPINE MARITIME INDUSTRIAL UNION (PMIU), et al., respondents.
G.R. No. L-25390
NATIONAL DEVELOPMENT COMPANY, petitioner,
vs.
UNLICENSED CREW MEMBERS of THREE (3) DONA VESSELS (PMIU) and
the COURT OF INDUSTRIAL RELATIONS, respondents.

Facts:three shipping vessels owned by NDC (a GOCC) was sold to Liberation Steamship.
The contract of sale failed to stipulate the retention of seamen employed by NDC so upon
the transfer of ownership, Liberation ordered the dismissal of all seamen who were
employed by NDC. CIR ordered Liberation to reinstate the dismissed seamen and refrain
from firing them.
The unlicensed crew members of the three vessels thus petitioned the Industrial Court for
an order to restrain LISTCO from carrying out its ejection threat of the officers and/or
crew members of the M/S "Dona Alicia" and of the two other vessels upon their delivery
to the new owner. A restraining order was accordingly issued on June 30, 1961 against
therein respondent NDC and/or its successor, the LISTCO, directing the maintenance
of status quo during the pendency of the dispute. During this juncture, the petitioners
demand payments from the NDC, including gratuity pay equivalent to one month of
service from their employment up to the termination of their services on account of the
sale of the vessels to Liberation.
Thereafter, an agreement was reached between the petitioning officers and crew members
of the M/S "Dona Alicia" and the LISTCO, duly approved by the court on November 29,
1961, by virtue of which those who were laid off in June, 1961 were readmitted to work.
On August 14, 1962, however, the NDC again took possession of the vessels and resumed
their operation.
Issue:whether or not the petitioners are entitled to a gratuity pay
Held: Petitioner contends such reopening to be error because gratuity is not demandable
by an employee as a matter of right, being a reward given by an employer in recognition
of the services rendered by the employee; consequently, it is a proper subject for
negotiation or collective bargaining. It is argued further that there being no showing that
the collective bargaining contract between the employees and the NDC provides for
payment of gratuity by the employer upon termination of the employee's services, the
order to remand the case for reception of evidence on Demand 1 lacks legal basis.

To this reasoning we can not agree. While normally discretionary, the grant of a gratuity
or bonus, by reason of its long and regular concession, may become regarded as part of
regular compensation (Philippine Education Co., Inc. vs. C.I.R., 92 Phil. 382, 385, and
cases cited therein). In order to determine whether such conditions operated in the instant
case, the reopening of the trial for receiving evidence on the point was evidently proper.
Case was remanded to the lower court for determination whether gratuity pay is part of
regular compensation.

G.R. No. 111744 September 8, 1995

LOURDES G. MARCOS, ALEJANDRO T. ANDRADA, BALTAZARA J. LOPEZ
AND VILMA L. CRUZ, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and INSULAR LIFE
ASSURANCE CO., LTD., respondents.
Facts: petitioners were under the employ of insular life assurance co for more than 20
years, but were dismissed because their positions were declared redundant. They were
given benefits upon dismissal, all were either provided by the company or required by the
law. Petitioners are claiming that they are entitled to receive their service awards. In the
same year of the petitioners dismissal, private respondent celebrated its 80th anniversary
and granted anniversary bonus equivalent to one (1) month salary only to permanent and
probationary employees as of November 15, 1990. On March 26, 1991, respondent
company announced the grant of performance bonus to both rank and file employees and
supervisory specialist grade and managerial staff equivalent to two (2) months salary and
2.75 basic salary, respectively, as of December 30, 1990. The performance bonus,
however, would be given only to permanent employees as of March 30, 1991.
petitioners contended that they are likewise entitled to the performance and anniversary
bonuses because, at the time the performance bonus was announced to be given, they
were only short of two (2) months service to be entitled to the full amount thereof as they
had already served the company for ten (10) months prior to the declaration of the grant
of said benefit. Also, they lacked only fifteen (15) days to be entitled to the full amount
of the anniversary bonus when it was announced to be given to employees as of
November 15, 1990.
In a decision dated October 8, 1992, the labor arbiter ordered respondent company to pay
petitioners their service awards, anniversary bonuses and prorated performance bonuses,
including ten percent (10%) thereof as attorney's fees.
Respondent company appealed to public respondent NLRC claiming grave abuse of
discretion committed by the labor arbiter in holding it liable to pay said service award,
performance and anniversary bonuses, and in not finding that petitioners were estopped
from claiming the same as said benefits had already been given to them and the
petitioners have already signed a quitclaim.
Issue:whether or not the petitioners are entitled to the bonuses that they are claiming
Held: Under prevailing jurisprudence, the fact that an employee has signed a satisfaction
receipt for his claims does not necessarily result in the waiver thereof. A deed of release
or quitclaim cannot bar an employee from demanding benefits to which he is legally
entitled.
The grant of service awards in favor of petitioners is more importantly underscored in the
precedent case of Insular Life Assurance Co., Ltd., et al. vs. NLRC, et al., 24 where this
Court ruled that "as to the service award differentials claimed by some respondent union
members, the company policy shall likewise prevail, the same being based on the
employment contracts or collective bargaining agreements between the parties. As the
petitioners had explained, pursuant to their policies on the matter, the service award

differential is given at the end of the year to an employee who has completed years of
service divisible by 5.
A bonus is not a gift or gratuity, but is paid for some services or consideration and is in
addition to what would ordinarily be given. The term "bonus" as used in employment
contracts, also conveys an idea of something which is gratuitous, or which may be
claimed to be gratuitous, over and above the prescribed wage which the employer agrees
to pay.
While there is a conflict of opinion as to the validity of an agreement to pay additional
sums for the performance of that which the promisee is already under obligation to
perform, so as to give the latter the right to enforce such promise after performance, the
authorities hold that if one enters into a contract of employment under an agreement that
he shall be paid a certain salary by the week or some other stated period and, in addition,
a bonus, in case he serves for a specified length of time, there is no reason for refusing to
enforce the promise to pay the bonus, if the employee has served during the stipulated
time, on the ground that it was a promise of a mere gratuity.
This is true if the contract contemplates a continuance of the employment for a definite
term, and the promise of the bonus is made at the time the contract is entered into. If no
time is fixed for the duration of the contract of employment, but the employee enters
upon or continues in service under an offer of a bonus if he remains therein for a certain
time, his service, in case he remains for the required time, constitutes an acceptance of
the offer of the employer to pay the bonus and, after that acceptance, the offer cannot be
withdrawn, but can be enforced by the employee.

PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, petitioner,

vs. NATIONAL LABOR RELATIONS COMMISSION, ROLANDO S. ANGELES
and RICARDO P. PABLO, JR., respondents.
Facts:Private respondents were validly dismissed due to serious misconduct (bribery).
The tollway general manager conducted an entrapment operation and found out that the
respondents were taking bribe from motorists who were smuggling dogs to Baguio city.
Private respondents filed for a complaint of illegal dismissal and the Labor Arbiter ruled
in their favor. He also ordered petitioner to pay respondents backwages and midyear
bonus.
On appeal, the NLRC modified the decision of the Labor Arbiter. It held that private
respondents act of receiving a sum of money and a dog from motorists constituted
bribery which was a sufficient ground for their dismissal. The NLRC nonetheless
ordered petitioner to pay private respondents their separation pay on the ground of
equity. It also retained the award of private respondents mid-year bonus for 1994.
Issue: whether private respondents are entitled to separation pay and mid-year bonus.
Held:no. An employee who is dismissed for just cause is generally not entitled to
separation pay. In some cases, however, the Court awards separation pay to a legally
dismissed employee on the grounds of equity and social justice. This is not allowed,
though, when the employee has been dismissed for serious misconduct or some other
cause reflecting on his moral character.
Likewise, private respondents are not entitled to the mid-year bonus they are
claiming. We do not agree with the Solicitor Generals contention that private
respondents have already earned their mid-year bonus at the time of their dismissal. A
bonus is a gift from the employer and the grant thereof is a management
prerogative. Petitioner may not be compelled to award a bonus to private respondents
whom it found guilty of serious misconduct.
The general rule is that a bonus is a gratuity or an act of liberality which the recipient
has no right to demand as a matter of right. A bonus, however, is a demandable or
enforceable obligation when it is made part of the wage or salary or compensation of the
employee. Whether or not a bonus forms part of wages depends upon the circumstances
and conditions for its payment. If it is additional compensation which the employer
promised and agreed to give without any conditions imposed for its payment, such as
success of business or greater production or output, then it is part of the wage. But if it is
paid only if profits are realized or if a certain level of productivity is achieved, it cannot
be considered part of the wage. Where it is not payable to all but only to some employees
and only when their labor becomes more efficient or more productive, it is only an
inducement for efficiency, a prize therefor, not a part of the wage.

G.R. No. 100701

March 28, 2001
PRODUCERS BANK OF THE PHILIPPINES, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and PRODUCERS BANK
EMPLOYEES ASSOCIATION,1respondents.
Facts:private respondents filed a case against producers bank before the nlrc charging
petitioner with diminution of benefits, non-compliance with Wage Order No. 6 and non-

payment of holiday pay and midyear and Christmas bonuses. The labor arbiter ruled in
favor of the petitioner herein but the NLRC reversed the decision, ruling in favor of the
producers bank employees association. The petitioner herein filed a motion for partial
reconsideration.
According to respondents, 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.
On the other hand, petitioner asserts that 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, petitioner points out that the collective
bargaining agreement of the parties does not provide for the payment of any mid-year or
Christmas bonus.
Issue:whether or not the respondents are entitled to bonuses
Held: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.12 The granting of a bonus is a management
prerogative, something given in addition to what is ordinarily received by or strictly due
the recipient.13 Thus, a bonus is not a demandable and enforceable obligation,14 except
when it is made part of the wage, salary or compensation of the employee.15
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.
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.

G.R. No. 110068 February 15, 1995

PHILIPPINE DUPLICATORS, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE
DUPLICATORS EMPLOYEES UNION-TUPAS,respondents.
Facts:a decision was rendered by the Third Division directing Philippine Duplicators to
pay its employees their 13th month pay based on their fixed wages plus sales
commissions. A first motion for reconsideration was filed by the petitioner.
During the pendency of the MoR, another case was decided upon, this time by the second
division in the two (2) consolidated cases of Boie-Takeda Chemicals,
Inc. vs. Hon. Dionisio de la Serna and Philippine Fuji Xerox Corp. vs. Hon. Cresenciano
B.Trajano. according to petitioners, the decision in the latter directly opposes the decision
in the former. Because of this, Philippine Duplicators filed for another motion for
reconsideration, this time anchoring their assertions to the recently concluded case of
Boie-Takeda Chemicals.
*in boie-takeda, the second paragraph of section 5a of the revised guidelines issued by
labor secretary drilon was declared null and void. Section 5a, paragraph 2 states that
Employees who are paid a fixed or guaranteed wage plus commission are also entitled to
the mandated 13th month pay, based on their total earnings during the calendar year, i.e.,
on both their fixed or guaranteed wage and commission.
Issue:whether or not sales commission shall be considered in the computation of 13th
month pay
Held: the sales commission earned by the salesmen who make or close a sale of
duplicating machines distributed by petitioner corporation, constitute part of the
compensation or remuneration paid to salesmen for serving as salesmen, and hence as
part of the "wage" or salary of petitioner's salesmen. Indeed, it appears that petitioner
pays its salesmen a small fixed or guaranteed wage; the greater part of the salesmen's
wages or salaries being composed of the sales or incentive commissions earned on actual
sales closed by them. No doubt this particular galary structure was intended for the
benefit of the petitioner corporation, on the apparent assumption that thereby its salesmen
would be moved to greater enterprise and diligence and close more sales in the
expectation of increasing their sales commissions. This, however, does not detract from
the character of such commissions as part of the salary or wage paid to each of its
salesmen for rendering services to petitioner corporation.
In other words, the sales commissions received for every duplicating machine sold
constituted part of the basic compensation or remuneration of the salesmen of Philippine
Duplicators for doing their job. The portion of the salary structure representing
commissions simply comprised an automatic increment to the monetary value initially
assigned to each unit of work rendered by a salesman. Especially significant here also is
the fact that the fixed or guaranteed portion of the wages paid to the Philippine
Duplicators' salesmen represented only 15%-30% of an employee's total earnings in a
year.

Sales commissions, such as those paid in Duplicators, are intimately related to or directly
proportional to the extent or energy of an employee's endeavors. Commissions are paid
upon the specific results achieved by a salesman-employee. It is a percentage of the sales
closed by a salesman and operates as an integral part of such salesman's basic pay.

MANILA ELECTRIC COMPANY, petitioner, vs. THE HONORABLE

SECRETARY OF LABOR LEONARDO QUISUMBING AND MERALCO
EMPLOYEES AND WORKERS ASSOCIATION (MEWA), respondents.
Facts: mewa and meralco renegotiated the last two years of their CBA, but failed to arrive
at the terms acceptable to both parties. Afterwards, mewa filed a notice of strike and the
national conciliation and mediation board also failed to reconcile both parties. Thereafter,
the labor secretary took cognizance of the case and resolved the issue containing awards
in favor of the workers. Among those awards were bonuses which will be given to the
workers such as Christmas bonus and signing bonus. Meralco countered the order of the
secretary, saying that it will gravely affect the meralcos financial viability
Issue:whether or not the labor secretary erred in granting Christmas bonus and signing
bonus to the employees
Held: as to the Christmas bonus, the secretary did not err in granting Christmas bonus in
favor of the employees but he erred in granting the two-month bonus instead of one. The
one time meralco granted two-month bonus in 1955 is only because of the employees
prompt and efficient response during the calamities .
As a rule, a bonus is not a demandable and enforceable obligation; it may nevertheless be
granted on equitable consideration as when the giving of such bonus has been the
companys 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.
In the case at bar, the record shows the 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 employees existing benefits.
Regarding the signing bonus, the labor secretary erred in granting the same to the
employees. On the signing bonus issue, the court agrees with the positions commonly
taken by MERALCO and by the Office of the Solicitor General that 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. In the present case, this goodwill does not
exist since the CBA was not ratified by both parties.
In contractual terms, a signing bonus is justified by and is the consideration paid for the
goodwill that existed in the negotiations that culminated in the signing of a
CBA. Without the goodwill, the payment of a signing bonus cannot be justified and any
order for such payment, to our mind, constitutes grave abuse of discretion. This is more
so where the signing bonus is in the not insignificant total amount of P16 Million.

PHILIPPINE APPLIANCE CORPORATION (PHILACOR), petitioner, vs. THE

COURT OF APPEALS, THE HONORABLE SECRETARY OF LABOR
BIENVENIDO E. LAGUESMA and UNITED PHILACOR WORKERS UNIONNAFLU, respondents.

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-andfile employees of petitioner. An early signing bonus of 4000 pesos was given by the
petitioner to its employees upon the conclusion of the negotiations. The CBA expired and
the respondents expressed their willingness to negotiate for a new CBA. They were able
to agree on some terms of the CBA but disagreed on the others such as the bonus due to
them. The union conducted a strike, but was mandated by the labor secretary to get back
to work. The labor secretary also mandated the petitioner to take the workers back and
give them 3000 signing bonus.
Petitioner argued that 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. The court of appeals however affirmed the
decision of the labor secretary.
Issue: whether or not the employees are entitled to a signing bonus even if the CBA was
not ratified.
Held:no they are not. 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.
The first signing bonus was an incentive for a swift finish regarding the CBA
negotiations. Since on the second time, there was no consensus between the parties there
is no signing bonus due the employees.

Verily, a signing bonus is justified by and is the consideration paid for the goodwill that
existed in the negotiations that culminated in the signing of a CBA.

In the case at bar, the CBA negotiation between petitioner and respondent union failed
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.

SENTINEL SECURITY AGENCY, INC., petitioner, vs. NATIONAL LABOR

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

[G.R. No. 122716. September 3, 1998]

PHILIPIPPINE AMERICAN LIFE INSURANCE COMPANY, petitioner,

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

Facts:the complainants in this case are employees of sentinel security agency who are
assigned to guard the premises of philamlife insurance company in cebu city. Upon
expiration of their contract, philamlife renewed its contract with sentinel with the order
that the guards on duty in their offices should be replaced by the security agency. The
agency complied and reassigned the complainants to other clients. However, they were
not given any assignment so they filed a complaint for illegal dismissal and prayed for
payment of separation pay and other benefits.
The client and the agency averred that there was no illegal dismissal and that the
complainants did not give them the chance to give them a new assignment. Moreover, the
client argued that there is no employer-employee relationship existing between the client
and the complainants. Simply put, the client maintains that the complainants have no
cause of action against it.
The commission ruled that the complainants are indeed constructively dismissed.
Issue:whether or not the philamlife and sentinel security agency are jointly and severally
liable in paying the complainants their backwages, 13th month pay and service incentive
Held: The Client did not, as it could not, illegally dismiss the complainants. Thus, it
should not be held liable for separation pay and back wages. But even if the Client is not
responsible for the illegal dismissal of the complainants, it is jointly and severally liable
with the Agency for the complainants service incentive leave pay.

In the event that the contractor or subcontractor fails to pay the wages of his employees
in accordance with this Code, the employer shall be jointly and severally liable with his
contractor or subcontractor to such employees to the extent of the work performed under
the contract, in the same manner and extent that he is liable to employees directly
employed by him.

Under articles 106, 107, 109 and 95, the indirect employer, who is the Client in the case
at bar, is jointly and severally liable with the contractor for the workers wages, in the
same manner and extent that it is liable to its direct employees. This liability of the
Client covers the payment of the service incentive leave pay of the complainants during
the time they were posted at the Cebu branch of the Client. As service had been

rendered, the liability accrued, even if the complainants were eventually transferred or
reassigned.

[G.R. No. 112139. January 31, 2000]

LAPANDAY AGRICULTURAL DEVELOPMENT CORPORATION, petitioner,
vs. THE HONORABLE COURT OF APPEALS (Former Eighth Division) and
COMMANDO SECURITY SERVICE AGENCY, INC., respondents.
Facts:lapanday and commando entered into a guard service contract whereby commando
provided security guards to man the lapanday plantation in exchange for payments.
Lapanday complied with the minimum wage prescribed but in june and November 1984,
wage order 5 and 6 were passed increasing the wage for security services. Commando
demanded that its Guard Service Contract with defendant be upgraded in compliance
with Wage Order Nos. 5 and 6. Defendant refused. Their Contract expired on June 6,
1986 without the rate adjustment called for Wage Order Nos. 5 and 6 being implemented,
accruing a large sum of money amounting to P462,346.25 which is due to commando.
The trial court ruled in favor of the security agency.
Issue: whether or not lapanday is liable to commando for the wage adjustments provided
under wage orders 5 and 6
Held:no, it is not. It will be seen that the liability of the petitioner to reimburse the
respondent only arises if and when respondent actually pays its employees the increases
granted by Wage Order Nos. 5 and 6. The security agency did not actually pay its
security guards the wage increase due them as mandated by wage orders 5 and 6 and if
the security agency may go after lapanday for the same, it will be unjustly enriching
itself. Private respondent has no cause of action against petitioner to recover the wage
increases. Needless to stress, the increases in wages are intended for the benefit of the
laborers and the contractor may not assert a claim against the principal for salary wage
adjustments that it has not actually paid to its employees.

OSM SHIPPING PHILIPPINES, INC., vs. NLRC, 2003 (Liability of employer and other
parties)
Facts:
Guerrero (private respondent) was hired by OSM for and behalf its principal Phil. Carrier
Shipping Agency Services Co. to board its vessel for a contract period of ten months. He boarded
the vessel on July 1994 and complied faithfully with the duties assigned to him. Guerrero alleged
that from the start of his employment, he was not paid any compensation and was forced to
disembark the vessel sometime in 1995. Hence, he filed a case for illegal dismissal, nonpayment of salaries, over time pay and vacation pay.
The American company which owns said vessel, then a foreign registered vessel, appointed PCSASCO as ship manager particularly to negotiate with any third persons, entities or corporations
in the planning of crewing selection. OSM entered into a crew agreement with PC-SASCO for

the purpose of processing the documents of crew members of said vessel. The initial plan of the
ship owner was to use the vessel in the overseas trade. Thereafter, the contract of Guerrero was
processed before the POEA on September 1994.
OSM alleged that the ship owner changed its plans on the use of the vessel. The ship owner
converted it into Philippine registry by way of bareboat chartering it out to another entity named
Philippine Carrier Shipping Lines Co. (PCSLC), and to do this, the owner had to terminate its
management agreement with PC-SASCO. Consequently, PC-SASCO terminated its crew
agreement with OSM in a letter dated December 1994. OSM argues that as a disponent
owner/employer, PCSLC is now responsible for the payment of complainants wages.
The Labor Arbiter rendered a Decision in favor of Private Respondent Guerrero. On appeal, the
NLRC affirmed the LAs decision, with modifications. Petitioner filed with the CA a Petition to
set aside the NLRC judgment. The petition was dismissed.
Issue: Whether or not OSM, as manning agent, may be held liable for the unpaid wages.
Held:
On behalf of its principal, PC-SASCO, petitioner does not deny hiring Private Respondent
Guerrero as master mariner. However, it argues that since he was not deployed overseas, his
employment contract became ineffective, because its object was allegedly absent. Petitioner
contends that using the vessel in coastwise trade and subsequently chartering it to another
principal had the effect of novating the employment contract. We are not persuaded. As
approved by the Philippine Overseas Employment Agency (POEA), petitioner was the legitimate
manning agent of PC-SASCO. As such, it was allowed to select, recruit, hire and deploy seamen
on board the vessel M/V Princess Hoa, which was managed by its principal, PC-SASCO. It was
in this capacity that petitioner hired private respondent as master mariner. They then executed
and agreed upon an employment contract.
An employment contract, like any other contract, is perfected at the moment (1) the parties come
to agree upon its terms; and (2) concur in the essential elements thereof: (a) consent of the
contracting parties, (b) object certain which is the subject matter of the contract and (c) cause of
the obligation. Based on the perfected contract, Guerrero complied with his obligations and
rendered his services on board the vessel.
Petitioner, as manning agent, is jointly and severally liable with its principal, PC-SASCO, for
private respondents claim. This conclusion is in accordance with Section 1 of Rule II of the
POEA Rules and Regulations. Joint and solidary liability is meant to assure aggrieved workers of
immediate and sufficient payment of what is due them. The fact that petitioner and its principal
have already terminated their agency agreement does not relieve the former of its liability.
This must be so, because the obligations covenanted in the manning agreement between the
local agent and its foreign principal are not coterminus with the term of such agreement so that if
either or both of the parties decide to end the agreement, the responsibilities of such parties
towards the contracted employees under the agreement do not at all end, but the same extends up

to and until the expiration of the, employment contracts of the employees recruited and
employed pursuant to the said recruitment agreement. Otherwise, this will render nugatory the
very purpose for which the law governing the employment of workers for foreign jobs abroad
was enacted.

Meralco vs Benamira, 2005(Labor-only contracting; liabilities)

Facts:
The individual respondents are licensed security guards formerly employed by PSI, and deployed
as such at Meralcos head office. After the security service agreement between PSI and Meralco
was terminated, the security service agreement between ASDAI and Meralco took effect and the
individual respondents were absorbed by ASDAI.
After 2 years, the contract between Meralco and ASDAI expired. Meralco subsequently
contracted AFSISI. AFSISI did not schedule any work for individual respondents which was
interpreted as constructive dismissal.
The individual respondents filed a complaint to allege that AFSISI terminated their
services without notice and just cause and therefore guilty of illegal dismissal. The individual
respondents alleged that MERALCO and ASDAI never paid their overtime pay, service
incentive leave pay, premium pay for Sundays and Holidays, monthly uniform allowance and
underpaid their 13th month pay.
On the other hand, MERALCO denied liability on the ground of lack of employer-employee
relationship with individual respondents. It averred that the individual respondents are the
employees of the security agencies it contracted for security services.
The Labor Arbiter rendered a Decision holding ASDAI and MERALCO jointly and solidarily
liable to the monetary claims of individual respondents and dismissing the complaint against
AFSISI. The NLRC affirmed the decision of the LA. In petition for certiorari the CA affirmed
the decision of the NLRC but with modification in the sense that Meralco is declared the
employer of the individual respondents.
Issue: Whether or not Meralco is the employer of the individual respondents and the security
agencies are labor-only contractors acting merely as agents of the principal Meralco.
Held:
Under the contract between ASDAI and MERALCO, it can be seen that ASDAI is indeed the
employer of the guards. Applying the 4 Fold Test: ASDAI employed the guards when it
absorbed them from PSI. ASDAI provided the salaries of the guards (MERALCO merely pays
ASDAI for providing the guards). ASDAI has control over the guards because they are being
inspected (MERALCO has the right to conduct its own inspection as per contract with ASDAI
only). ASDAI has the power to terminate the guards, as when they did not provide any tours or
schedules to them.

Moreover, ASDAI and AFSISI are not labor-only contractors. There is labor only contract
when the person acting as contractor is considered merely as an agent or intermediary of the
principal who is responsible to the workers in the same manner and to the same extent as if they
had been directly employed by him. On the other hand, job (independent) contracting is
present if the following conditions are met: (a) the contractor carries on an independent business
and undertakes the contract work on his own account under his own responsibility according to
his own manner and method, free from the control and direction of his employer or principal in
all matters connected with the performance of the work except to the result thereof; and (b) the
contractor has substantial capital or investments in the form of tools, equipment, machineries,
work premises and other materials which are necessary in the conduct of his business. Given the
above distinction and the provisions of the security service agreements entered into by petitioner
with ASDAI and AFSISI, we are convinced that ASDAI and AFSISI were engaged in job
contracting.
The individual respondents cannot be considered as regular employees of the MERALCO for,
although security services are necessary and desirable to the business of MERALCO, it is not
directly related to its principal business and may even be considered unnecessary in the conduct
of MERALCOs principal business, which is the distribution of electricity.

Republic vs. Peralta, 1987 (Labor Code- Civil Code)

Facts:
In the voluntary proceedings commenced by Quality Tobacco Corp.(private respondent), claims
were filed by the creditors namely, USTC Assoc.of employees and Workers Union-PGTWO,
FOITAF(Unions), BIR and Bureau of customs. The trial court held that the claims of the Unions
for separation pay of their respective members embodied in final awards of the National Labor
Relations Commission were to be preferred over the claims of the Bureau of Customs and the
Bureau of Internal Revenue. The trial court, in so ruling, relied primarily upon Article 110 of the
Labor Code.
The Solicitor General, in seeking the reversal of the questioned Orders, argues that Article 110 of
the Labor Code is not applicable as it speaks of "wages," a term which he asserts does not
include the separation pay claimed by the Unions. "Separation pay," the Solicitor General
contends, is given to a laborer for a separation from employment computed on the basis of the
number of years the laborer was employed by the employer; it is a form of penalty or damage
against the employer in favor of the employee for the latter's dismissal or separation from service
is given to a laborer for a separation from employment computed on the basis of the number of
years the laborer was employed by the employer; it is a form of penalty or damage against the
employer in favor of the employee for the latter's dismissal or separation from service.

Issue: Whether the trial court is correct in preferring the Unions over other claimants relying
primarily upon Article 110 of the Labor Code.
Held:
We continue to believe that, for the specific purposes of Article 110 and in the context of
insolvency termination or separation pay is reasonably regarded as forming part of the
remuneration or other money benefits accruing to employees or workers by reason of their
having previously rendered services to their employer; as such, they fall within the scope of
"remuneration or earnings for services rendered or to be rendered ." Liability for
separation pay might indeed have the effect of a penalty, so far as the employer is concerned. So
far as concerns the employees, however, separation pay is additional remuneration to which they
become entitled because, having previously rendered services, they are separated from the
employer's service.
However, Article 110 of the Labor Code, in determining the reach of its terms, cannot be viewed
in isolation. Rather, Article 110 must be read in relation to the provisions of the Civil Code
concerning the classification, concurrence and preference of credits, which provisions find
particular application in insolvency proceedings where the claims of all creditors, preferred or
non-preferred, may be adjudicated in a binding manner.
Philippine Export and Guarantee Loan Corp. vs. CA, 1995 (Civil Code-Labor Code)
Facts:
Private respondent Raimund Diehl filed a complaint for illegal dismissal against the Philippine
German Wire Mesh Reinforcing Corporation ("FILFORCE") with the NLRC. Five years earlier,
FILFORCE had mortgaged its plant and other property located in favor of herein petitioner, a
government owned and controlled corporation, to secure a guarantee which the latter executed in
favor of Kuwait Asia Bank.
A judgment favorable to respondent Diehl was rendered by the Labor Arbiter ordering Filforce
et. al, to pay private respondent a certain amount. Failing to collect the sum due, Sheriff was
directed to cause the satisfaction of the award by levying on the property of FILFORCE. The
Deputy Sheriff effected the levy and scheduled a public auction sale.
Since the assets had previously been mortgaged to it, PHILGUARANTEE filed a third-party
claim which resulted in the suspension of the scheduled auction sale. Upon the submission by
Diehl of an indemnity bond issued by Plaridel Surety and Insurance Company, the Deputy
Sheriff issued a notice resetting the auction sale. PHILGUARANTEE promptly filed a
petition/manifestation before the Labor Arbiter questioning, among other things, asserting its
superior right and prior lien over the levied property. The Deputy Sheriff proceeded, nonetheless,
with the auction sale at which Diehl was declared the sole and winning bidder. Forthwith, a
Certificate of Sale was issued by the Deputy Sheriff in favor of respondent Diehl.
Issue:
Whether or not the right of workers under Art. 110 of the Labor Code may exist even before its
presentation during distribution proceedings.

Held:
The right to preference given to workers under Article 110 of the Labor Code cannot exist in any
effective way prior to the time of its presentation in distribution proceedings. It will find
application when, in proceedings such as insolvency, such unpaid wages shall be paid in full
before the "claims of the Government and other creditors" may be paid. But, for an orderly
settlement of a debtor's assets, all creditors must be convened, their claims ascertained and
inventoried, and thereafter the preferences determined in the course of judicial proceedings
which have for their object the subjection of the property of the debtor to the payment of his
debts or other lawful obligations. Thereby, an orderly determination of preference of creditors'
claims is assured (Philippine Savings Bank vs. Lantin, No. L-33929, September 2, 1983, 124
SCRA 476); the adjudication made will be binding on all parties-in-interest, since those
proceedings are proceedings in rem; and the legal scheme of classification, concurrence and
preference of credits in the Civil Code, the Insolvency Law, and the Labor Code is preserved in
harmony.

Barayoga vs APT, 2005 (Bankruptcy; Civil Code-Labor Code)

A.O. No. 14 was issued identifying certain assets of government institutions that were to be
transferred to the Government. Among the assets transferred was the financial claim of the PNB
against BISUDECO in the form of a secured loan. By virtue of a Trust Agreement executed
between the National Government and APT, the latter was constituted as trustee over
BISUDECOs account with the PNB.
Because of the continued failure of BISUDECO to pay its outstanding loan with PNB, its
mortgaged properties were foreclosed and subsequently sold in a public auction to APT,
as the sole bidder.
The union filed a complaint for unfair labor practice, illegal dismissal, illegal deduction
and underpayment of wages and other labor standard benefits plus damages.
APTs Board of Trustees agreed to sell the sugar plantation and mill to Bicol-AgroIndustrial Cooperative (BAPCI). The board authorized the payment of separation benefits
to BISUDECOs employees in the event of the companys privatization. Then, BAPCI
purchased the foreclosed assets of BISUDECO from APT and took over its sugar milling
operations under the trade name Peafrancia Sugar Mill (Pensumil).
The Union filed an amended complaint impleading as additional party respondents APT
and Pensumil.
After due proceedings, The Labor Arbiter ordered APT to pay herein complainants of the
mandated employment benefits. APT elevated the labor arbiters decision before NLRC.
The NLRC affirmed APTs liability for petitioners money claims. Respondent sought
relief from the CA via a Petition for Certiorari. The CA ruled that APT should not be held
liable for petitioners claims.

Issue: Whether or not employees monetary claims have preference over mortgage credits in
case of bankruptcy of the employer.
Held:
The liabilities of the previous owner to its employees are not enforceable against the buyer or
transferee, unless (1) the latter unequivocally assumes them; or (2) the sale or transfer was made
in bad faith. Thus, APT cannot be held responsible for the monetary claims of petitioners who
had been dismissed even before it actually took over BISUDECOs assets.
Moreover, it should be remembered that APT merely became a transferee of BISUDECOs
assets for purposes of conservation because of its lien on those assets -- a lien it assumed as
assignee of the loan secured by the corporation from PNB. Subsequently, APT, as the highest
bidder in the auction sale, acquired ownership of the foreclosed properties.
Relevant to this transfer of assets is Article 110 of the Labor Code, as amended by Republic Act
No. 6715, which reads:
Article 110. Workers preference in case of bankruptcy. In the event of
bankruptcy or liquidation of the employers business, his workers shall enjoy first
preference as regards their unpaid wages and other monetary claims shall be paid
in full before the claims of the Government and other creditors may be paid.[23]

Under Articles 2241 and 2242 of the Civil Code, a mortgage credit is a special preferred
credit that enjoys preference with respect to a specific/determinate property of the
debtor. On the other hand, the workers preference under Article 110 of the Labor Code
is an ordinary preferred credit. While this provision raises the workers money claim to
first priority in the order of preference established under Article 2244 of the Civil Code,
the claim has no preference over special preferred credits.
Thus, the right of employees to be paid benefits due them from the properties of their
employer cannot have any preference over the latters mortgage credit. In other words, being a
mortgage credit, APTs lien on BISUDECOs mortgaged assets is a special preferred lien that
must be satisfied first before the claims of the workers.

RubberWorld vs NLRC, 2000 (Receivership)

Petitioner Rubberworld, is a corporation engaged in manufacturing footwear, bags and garments
while private respondents Magsalin, Manibo, Borja, Camitan, San Pedro, and Tolin were
employed as dispatcher, warehouseman, issue monitor, foreman, jacks cementer and outer sole
attacher, respectively.

Rubberworld filed with the Department of Labor and Employment a notice of temporary
shutdown of operations to take effect on September 1994. Before the effectivity date however,
Rubberworld was forced to prematurely shutdown its operations. Private respondents filed with
the National Labor Relations Commission a complaint against petitioner for illegal dismissal and
non-payment of separation pay.
Rubberworld filed with the Securities and Exchange Commission a petition for declaration of
suspension of payments with a proposed rehabilitation plan. SEC issued an order suspending all
actions for claims against RubberWorld pending before any court, tribunal, office, board, body,
commission or sheriff. Consequently, all pending incidents for preliminary injunctions, writ of
attachments, foreclosures and the like are rendered moot and academic.
On the other hand, the labor arbiter rendered a decision declaring RubberWorld guilty of illegal
shutdown and ordered to pay herein private respondents the separation pay.
Petitioner appealed to the NLRC alleging abuse of discretion and serious errors in the findings of
facts of the labor arbiter, but NLRC affirmed the LAs decision. A motion for reconsideration
was filed but was later on denied.
Held:
Presidential Decree No. 902-A is clear that "all actions for claims against corporations,
partnerships or associations under management or receivership pending before any court,
tribunal, board or body shall be suspended accordingly." The law did not make any exception in
favor of labor claims.
The justification for the automatic stay of all pending actions for claims is to enable the
management committee or the rehabilitation receiver to effectively exercise its/his powers free
from any judicial or extra judicial interference that might unduly hinder or prevent the 'rescue' of
the debtor company. To allow such other actions to continue would only add to the burden of the
management committee or rehabilitation receiver, whose time, effort and resources would be
wasted in defending claims against the corporation instead of being directed toward its
restructuring and rehabilitation.
Thus, the labor case would defeat the purpose of an automatic stay. To rule otherwise would
open the floodgates to numerous claims and would defeat the rescue efforts of the management
committee. Besides, even if an award is given to private respondents, the ruling could not be
enforced as long as petitioner is under management committee.
This finds ratiocination in that the power to hear and decide labor dispute is deemed suspended
when the Securities and Exchange Commission puts the corporation under rehabilitation.
Placewell Int. Services Corp. vs. Camote, 2006 (Wage recovery and attorneys fees)
Petitioner Placewell deployed respondent Camote to work as building carpenter for SAAD
Trading and Contracting Co. (SAAD) in Saudi Arabia for with contract duration of two years.

The respondent was allegedly found incompetent by his foreign employer; thus the latter decided
to terminate his services. However, respondent pleaded for his retention and consented to accept
a lower salary. SAAD retained respondent until his return to the Philippines two years after.
Upon his return, respondent filed a sworn complaint for monetary claims against petitioner
alleging that when he arrived at the job site, he and his fellow Filipino workers were required to
sign another employment contract written in Arabic under the constraints of losing their jobs if
they refused. As stipulated in the new contract, he would be paid less than the amount agreed
upon in the first contract. He further alleged that he was not given his overtime pay.
The labor arbiter rendered a decision holding that the modification of respondents employment
contract is not allowed thus, he should have received the original contracted salary. The LA
ordered herein petitioner to pay Camote a certain amount plus attorneys fees for being
compelled to hire a counsel.
On appeal by the petitioner, the NLRC set aside the Decision of the Labor Arbiter. A petition for
certiorari was filed by Camote in the CA which set aside the resolution of the NLRC, reinstating
and affirming with modifications the decision of the LA.
Issue: Whether or not the CA erred in affirming LAs decision granting wage recovery and
attorneys fees in favor of the respondent.
Held:
The doctrine of laches is based upon grounds of public policy which requires, for the peace of
society, the discouragement of stale claims, and is principally a question of the inequity or
unfairness of permitting a right or claim to be enforced or asserted. There is no absolute rule as
to what constitutes laches; each case is to be determined according to its particular
circumstances. The question of laches is addressed to the sound discretion of the court, and since
it is an equitable doctrine, its application is controlled by equitable considerations. It cannot be
worked to defeat justice or to perpetrate fraud and injustice.
In the instant case, respondent filed his claim within the three-year prescriptive period for the
filing of money claims set forth in Article 291 of the Labor Code from the time the cause of
action accrued. Thus, we find that the doctrine of laches finds no application in this case.
The labor arbiter and the Court of Appeals did not err in awarding attorneys fees to respondent.
It is settled that in actions for recovery of wages or where an employee was forced to litigate and
incur expenses to protect his rights and interests, he is entitled to an award of attorneys fees.
However, with regard to Unauthorized Deductions amounting to P171,780.00; we note that the
appellate court did not state any basis for its award, thus, the same is deleted for lack of factual
and legal basis.

ATOK-BIG WEDGE MINING CO., INC.,vs.ATOK-BIG WEDGE MUTUAL BENEFIT

ASSOCIATION, 1953 (Minimum wages)

Facts:
A demand was submitted to petitioner by respondent union through its officers for various
concessions, among which is an increase of P0.50. Some of the demands were granted by the
petitioner, and the others were rejected. And so hearings were held and evidence submitted on
the latter. After the hearing the respondent court rendered a decision, the most important
provisions of which were those fixing the minimum wage for the laborers at P3.20. The
petitioner contended that as the respondent court found that the laborer and his family at least
need the amount of P2.58 for food, this should be the basis for the determination of his wage, not
what he actually spends; that it is not justifiable to fix a wage higher than that provided by
Republic Act No. 602
Issue: Whether the court erred in fixing the minimum wage for laborers higher than that
provided by law.
Held:
The respondent court found that P2.58 is the minimum amount actually needed by the laborer
and his family. That does not mean that it is his actual expense. A person's needs increase as his
means increase. This is true not only as to food but as to everything else education, clothing,
entertainment, etc. The law guarantees the laborer a fair and just wage. The minimum must be
fair and just. The "minimum wage" can by no means imply only the actual minimum. Some
margin or leeway must be provided, over and above the minimum, to take care of contingencies
such as increase of prices of commodities and desirable improvement in his mode of living.
That the P3 minimum wage fixed in the law is still far below what is considered a fair and just
minimum is shown by the fact that this amount is only for the year after the law takes effect, as
thereafter the law fixes it at P4. Neither may it be correctly contended that the demand for
increase is due to an alleged pernicious practice. Frequent demands for increase are indicative of
a healthy spirit of wakefulness to the demands of a progressing and an increasingly more
expensive world. We, therefore, find no reason or ground for disturbing the finding contained in
the decision fixing the amount of P3.20 as the minimum wage.

People vs Gatchalian, 1958? (?)

Gatchalian is an owner of the New Life Drug Store, and having under his employ one Expedito
Fernandez as salesman in the said establishment. Fernandez filed a complaint against herein
accused alleging that he was being paid less than that provided by law.
Alfonso Gatchalian was charged before the Court of First Instance of Zamboanga with a
violation of Section 3 of Republic Act No. 602
His counsel, in his behalf, filed a written motion to dismiss based on two grounds which in
substance merely consist in that the violation charged does not constitute a criminal offense but
carries only a civil liability, and even if it does, the section of the law alleged to have been
violated does not carry any penalty penalizing it.

The City Attorney of Zamboanga filed his answer to the motion to dismiss contending that the
law which was violated by the accused carries with it both civil and criminal liability, the latter
being covered by Section 15 which provides for the penalty for all willful violations of any of the
provisions of the Minimum Wage Law.
The Court, after hearing the arguments of both parties issued an order dismissing the
information. A motion for reconsideration having been denied, the Government took the appeal.
Issue: Whether or not violation of Sec. 3 of R.A. No. 602 constitutes a criminal offense.
Held:
While Section 3 of the Minimum Wage Law under which appellee was charged does not state
that it shall be unlawful for an employer to pay his employees wages below the minimum wage
but merely requires that the employer shall pay wages not below the minimum wage, however,
Section 15 of the same Act imposes both a criminal penalty for a willful violation of any of the
provisions of the law and a civil liability for any underpayment of wages due en employee. Thus,
the intention of the law is clear: to slap not only a criminal liability upon an erring employer for
any willful violation of the acts sought to be enjoined but to attach concurrently a civil liability
for any underpayment he may commit as a result thereof. The law speaks of a willful violation of
"any of the provisions of this Act", which is all-embracing, and the same must include what is
enjoined in Section 3 thereof which embodies the very fundamental purpose for which the law
has been adopted.

Phil. Apparel Workers Union vs NLRC, 1981 (Effect of Inability to pay)

In anticipation of the expiration of their collective bargaining agreement, and as an initial step for
its renewal, petitioner submitted to the respondent company a set of bargaining proposals.
Negotiations were held thereafter between the parties.
The private respondent and petitioner concluded and signed a collective bargaining agreement
which, among other things, provided for a 3-stage wage increase for all rank and file employees.
(a) Effective April 1, 1977, EIGHTY CENTAVOS [P0.80] will be added to the basic
daily wages of all said employees.
(b) Effective April 1, 1978, FIFTY CENTAVOS [P0.50] will be added to the basic daily
wages of all said employees.
(c) Effective April 1, 1979, FIFTY CENTAVOS [P0.50] will be added to the basic daily
wages of all said employees.

Meanwhile, P.D. 1123 was enacted to take effect on May 1, 1977 providing for an increase by
P60.00 in the living allowance. This increase was implemented effective May 1, 1977 by the
respondent company.
The controversy arose when the petitioner union sought the implementation of the negotiated
wage increase of P0.80 as provided for in the collective bargaining agreement. The respondent
company alleges that it has opted to consider the P0.80 daily wage increase as partial compliance
with the requirements of said decree.
On the other hand, petitioner maintains that the living allowance under P.D. 1123 is distinct and
separate from the negotiated wage increase of P0.80 daily. It adds, when the CBA was signed by
the parties, the respondent company was fully aware of the effectivity of P.D. 1123 and had
already been paying the increased allowance provided therein. Hence, the respondent company
acted in bad faith when it refused to pay the negotiated wage increase in violation of the
collective bargaining agreement and the respondent company is guilty of unfair labor practice.
Issue: Whether or not respondent company is guilty of unfair labor practice.
Held:
Consequently, its refusal to implement the P0.80 wage increase for the first year of the CBA
constitutes a violation thereof and makes the respondent company guilty of unfair labor practice.
The respondent company is also guilty of bad faith when it signed the CBA on September 3,
1977 without in any way letting the petitioner union know that it was going to apply part of the
allowances being paid under P.D. 1123 to the wage increases provided for in the CBA.
A collective bargaining agreement is the law between the parties. In the construction or
interpretation of such a contract, the primary purpose and guideline and indeed the very
foundation of all the rules for such construction or interpretation is the intention of the parties.
Moreover, in case of doubt, all labor legislation and all labor contracts shall be construed in favor
of the safety and decent living for the laborer.
Cases #361-370

AGENCIES FOR WAGE FIXING MACHINERY

(Functions)

#361
NASIPIT LUMBER COMPANY, INC.
vs.
NATIONAL LABOR RELATIONS COMMISSION

Facts:

Petitioner Nasipit Lumber Company, Inc. (NALCO for brevity) is a domestic corporation
organized and existing under the laws of the Philippines. It is engaged in the business of
logging, lumber manufacturing and wood processing with field offices at Nasipit, Agusan
del Norte.

Private respondent Juanita Collado was employed by petitioner as a security guard on

September 9, 1970. He was assigned as lst Sergeant of the NALCO Security Force at
Nasipit. In the course of Collado's employment or on August 20, 1976, four (4) crates of
lawanit boards containing 1,000 panels were stolen from petitioner's premises,
particularly the crating section of the Philippine Wallboard Corporation, a NALCO
affiliate.

Collado was implicated in the theft and was thereafter placed under preventive
suspension. On September 8, 1976, NALCO filed a petition (application) for clearance to
dismiss Collado with the Regional Office No. X of the Department of Labor in Cagayan
de Oro City.

Issue:

Whether or not the termination/dismissal of the respondent as a security guard from

employment was valid.

Held:

Yes. The requirement of a clearance to terminate employment was a creation of the

Department of Labor to carry out the Labor Code provisions on security of tenure and
termination of employment. The proceeding subsequent to the filing of an application for
clearance to terminate employment was outlined in Book V, Rule XIV of the Rules and
Regulations Implementing the Labor Code. The fact that said rule allowed a procedure
for the approval of the clearance with or without the opposition of the employee
concerned (Secs. 7 & 8), demonstrates the non-litigious and summary nature of the
proceeding. The clearance requirement was therefore necessary only as an expeditious
shield against arbitrary dismissals without the knowledge and supervision of the
Department of Labor. Hence, a duly approved clearance implied that the dismissal was
legal or for cause (Sec. 2).

Proof beyond reasonable doubt of an employee's misconduct is not required when loss of
confidence is the ground for dismissal. It is sufficient if the employer has "some basis" to
lose confidence or that the employer has reasonable ground to believe or to entertain the
moral conviction that the employee concerned is responsible for the misconduct and that
the nature of his participation therein rendered him absolutely unworthy of the trust and
confidence demanded by his position.

The decision of the NLRC is hereby reversed and set aside. Juanita Collado's dismissal
from employment is hereby declared valid.

WAGE OF ORDER
(Methods of Fixing)
#362
EMPLOYERS CONFEDERATION OF THE PHILIPPINES vs. NATIONAL WAGES
AND PRODUCTIVITY COMMISSION
Facts:

On October 15, 1990, the Regional Board of NCR issued Wage Order No. NCR-01
increasing the minimum wage by P17 daily.

The Trade Union Congress of the Philippines (TUCP) and Personnel Management
Association
of
the
Philippines
(PMAP)
moved
for
r e c o n s i d e r a t i o n . P e t i t i o n e r Employers Confederation of the Philippines
(ECOP) opposed.
Board then issued Wage Order No. NCR -01-A, amending the wage order
b y stating that all workers and employees in the private sector alread y
receiving wages above the statutory minimum wage rates up to P125 per
day shall also receive the P17 daily increase.
Petitioner ECOP appealed to respondent National Wages and
P r o d u c t i v i t y Commission (NWPC).
NWPC: Appeal dismissed for lack of merit. Motion for reconsideration denied. Hence,
this petition.

ISSUE:

Whether or not the wage order was valid.

HELD:

Yes. There are two ways of fixing wage - the floor wage method and the salary ceiling
method. The floor wage method involves the fixing of determinate amount that would be
added to the prevailing statutory minimum wage, while the salary ceiling method
involves the application of the wage adjustment to employees receiving a certain
denominated salary ceiling used in RAs 6640 and 6727 as well as 11 COLA issuances.
The Wage Order No. NCR -01-A is an excess of authorit y as under RA
6727, the boards may only prescribe minimum wages, not determine salary ceilings.
RA 6727 is meant to promote collective bargaining as the primary mode
of settling wages, so boards cannot preempt CBAs by establishing ceilings
Boards may only adjust floor wages Solicitor-General (for NWPC) comments.
The across-the-board hike did not grant additional or other benefits to workers and

employees, but rather fixed minimum wages acco rding to the salary-ceiling
method.
RA 6727 is to correct wage distortions and the salary-ceiling method does just that.

(Requirements Validity)

#363
CAGAYAN SUGAR MILLING COMPANY vs. SECRETARY OF LABOR
Facts:

On September 12 and 13, 1994, labor inspectors from the DOLE Regional Office
examined the books of petitioner to determine its compliance with the wage order. They
found that petitioner violated the wage order as it did not implement an across the board
increase in the salary of its employees.

At the hearing at the DOLE Regional Office for the alleged violation, petitioner
maintained that it complied with Wage Order No. RO2-02 as it paid the mandated
increase in the minimum wage.

In an Order dated December 16, 1994, public respondent Regional Director Ricardo S.
Martinez, Sr. ruled that petitioner violated Wage Order RO2-02 by failing to implement
an across the board increase in the salary of its employees. He ordered petitioner to pay
the deficiency in the salary of its employees in the total amount of P555,133.41.

On January 6, 1995, petitioner appealed to public respondent Labor Secretary Leonardo

A. Quisumbing. On the same date, the Regional Wage Board issued Wage Order No.
RO2-02-A,[2] amending the earlier wage order.

Cagayan Sugar Milling Co. violated the wage order issued by the RTWPB, having failed
to implement the across the board increase in the salary of its employees. Another wage
order was issued, amending the earlier wage order and providing that the across the board
wage increased shall retroact to the date of the effectively of the earlier wage order.

ISSUE:
Whether or not the amendatory wage order violated CSMCs right to due process.
HELD:

Yes. The amendatory wage order was invalid for lack of public consultations and hearings and non-publication
in a newspaper of general circulation, in violation of the Labor Code. Cagayan Sugar Milling Co. was deprived
of due process as it was not given the opportunity to ventilate its position regarding the proposed wage increase.

Considering that RO2-02-A is invalid, the next issue to settle is whether petitioner could
be held liable under the original wage order, RO2-02.

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

The contention is absurd. Petitioner clearly complied with Wage Order RO2-02 which
provided for an increase in statutory minimum wage rates for employees in Region II. It
is not just to expect petitioner to interpret Wage RO2-02 to mean that it granted an across
the board increase as such interpretation is not sustained by its text. Indeed, the
Regional Wage Board had to amend Wage Order RO2-02 to clarify this alleged intent.

In sum, we hold that RO2-02-A is invalid for lack of public consultations and hearings
and non-publication in a newspaper of general circulation, in violation of Article 123 of
the Labor Code. We likewise find that public respondent Secretary of Labor committed
grave abuse of discretion in upholding the findings of Regional Director Ricardo S.
Martinez, Sr. that petitioner violated Wage Order RO2-02.

(Price Worker)
#364
LAMBO vs. NATIONAL LABOR RELATIONS COMMISSION
Facts:

Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private
respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3,
1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays
and holidays. As in the case of the other 100 employees of private respondents,
petitioners were paid on a piece-work basis, according to the style of suits they
made. Regardless of the number of pieces they finished in a day, they were each given a
daily pay of at least P64.00.

On January 17, 1989, petitioners filed a complaint against private respondents for illegal
dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and
rest day, service incentive leave pay, separation pay, 13th month pay, and attorneys fees.

On appeal by private respondents, the NLRC reversed the decision of the Labor
Arbiter. It found that petitioners had not been dismissed from employment but merely
threatened with a closure of the business if they insisted on their demand for a straight
payment of their minimum wage, after petitioners, on January 17, 1989, walked out of a
meeting with private respondents and other employees. According to the NLRC, during
that meeting, the employees voted to maintain the company policy of paying them
according to the volume of work finished at the rate of P18.00 per dozen of tailored
clothing materials. Only petitioners allegedly insisted that they be paid the minimum
wage and other benefits. The NLRC held petitioners guilty of abandonment of work and

accordingly dismissed their claims except that for 13th month pay.

The appealed decision is hereby vacated and a new one entered ordering respondents to
pay each of the complainants their 13th month pay in the amount of P4,992.00.

Issue:

Whether or not the petitioners although piece-rate workers were regular employees of
private respondents.

Held:

Yes. The awards for overtime pay, holiday pay and 13th month pay are in accordance
with our finding that petitioners are regular employees, although paid on a piece-rate
basis.

As petitioners were illegally dismissed, they are entitled to reinstatement with

backwages. Considering that petitioners were dismissed from the service on January 17,
1989, i.e., prior to March 21, 1989, the Labor Arbiter correctly applied the rule in
the Mercury Drug case,[19] according to which the recovery of backwages should be
limited to three years without qualifications or deductions. Any award in excess of three
years is null and void as to the excess.

The Labor Arbiter correctly ordered private respondents to give separation

pay. Considerable time has lapsed since petitioners dismissal, so that reinstatement
would now be impractical and hardly in the best interest of the parties. In lieu of
reinstatement, separation pay should be awarded to petitioners at the rate of one month
salary for every year of service, with a fraction of at least six (6) months of service being
considered as one (1) year.

The decision of the National Labor Relations Commission is SET ASIDE and another
one is RENDERED ordering private respondents to pay petitioners the total amount of
One Hundred Eighty-One Thousand One Hundred Two Pesos and 40/100 (P181,102.40).

#365
PULP INC. vs. NATIONAL LABOR RELATIONS COMMISSION
Facts:

In filing the present complaint, complainant in her position paper alleges that she was a
regular employee of the corporation having served thereat as Wrapper sometime in
September 1975. On November 29, 1991, for unknown reasons, she was advised
verbally of her termination and was given a prepared form of Quitclaim and Release
which she refused to sign. Instead she brought the present complaint for illegal dismissal.

In charging the petitioner of underpayment of wages, complainant in the same position

paper alleges that, rarely during her employment with the respondent she received her
salary, a salary which was in accordance with the minimum wage law. She was not paid
overtime pay, holiday pay and five-day service incentive leave pay, hence she is claiming
for payments thereof by instituting the present case.

Respondent on the other hand denied having terminated the services of the complainant

and alleges inter alia that starting 1989 the orders from customers became fewer and
dwindled to the point that it is no longer practical to maintain the present number of
packer/wrappers. Maintaining the same number of packers/wrappers would mean less
pay because the work allocation is no longer the same as it was. Such being the case, the
respondent has to reduce temporarily the number of packers/wrappers. Complainant was
among those who were temporarily laid-off from work. Complainant last worked with
the company on June 29, 1991.

As regards complainants allegation that on November 29, 1991, she was forced to sign a
quitclaim and release by the respondent, the latter clarified that considering that five
months from the time the complainant last worked with the company, the management
decided to release the complainant and give her a chance to look for another job in the
meantime that no job is available for her with the company. In other words, complainant
was given the option and considering that she did not sign the documents referred to as
the Quitclaim and Release, the respondent did not insist, and did not terminate the
services of the complainant. It was just surprise [sic] to receive the present complaint. In
fact, respondent added that the reason why the complainant was called on November 29,
1991 was not to work but to receive her 13th month pay of P636.70 as shown by the
voucher she signed (Annex-A, Respondent).

As regards the claim of the complainant for underpayment, respondent did not actually
denied (sic) the same but give [sic] the reservation that should the same be determined by
this Office it is willing to settle the same considering the fact that complainant herein
being paid by results, it is not in a proper position to determine whether the complainant
was underpaid or not.

Issue:

Whether or not the respondent was a piece-rate worker and not a time-worker.

Held:

In the absence of wage rates based on time and motion studies determined by the labor
secretary or submitted by the employer to the labor secretary for his approval, wage rates
of piece-rate workers must be based on the applicable daily minimum wage determined
by the Regional Tripartite Wages and Productivity Commission. To ensure the payment
of fair and reasonable wage rates, Article 101 of the Labor Code provides that the
Secretary of Labor shall regulate the payment of wages by results, including pakyao,
piecework and other nontime work. The same statutory provision also states that the
wage rates should be based, preferably, on time and motion studies, or those arrived at in
consultation with representatives of workers and employers organizations. In the
absence of such prescribed wage rates for piece-rate workers, the ordinary minimum
wage rates prescribed by the Regional Tripartite Wages and Productivity Boards should
apply. This is in compliance with Section 8 of the Rules Implementing Wage Order Nos.
NCR-02 and NCR-02-A -- the prevailing wage order at the time of dismissal of private
respondent, viz.

SEC. 8. Workers Paid by Results. -- a) All workers paid by results including those
who are paid on piece work, takay, pakyaw, or task basis, shall receive not less than the
applicable minimum wage rates prescribed under the Order for the normal working hours

which shall not exceed eight (8) hours work a day, or a proportion thereof for work of
less than the normal working hours.

It is clear, therefore, that the applicable minimum wage for an eight-hour working day is
the basis for the computation of the separation pay of piece-rate workers like private
respondent. The computed daily wage should not be reduced on the basis of
unsubstantiated claims that her daily working hours were less than eight. Aside from its
bare assertion, petitioner presented no clear proof that private respondents regular
working day was less than eight hours. Thus, the labor arbiter correctly used the full
amount of P118.00 per day in computing private respondents separation pay.

(Wage Distortion)
#366
National Federation of Labor vs. National Labor Relations Commission
Facts:

Petitioners are employees of the Patalon Coconut Estate in Zamboanga. With the advent
of the RA No. 6657 or the Comprehensive Agrarian Reform Law, the government sought
the compulsory acquisition of the land for agrarian reform. Because of this, the private
respondents who are owners of the estate decided to shut down its operation. Petitioners
did not receive any separation pay. Now, the petitioners pray, with the representation of
their labor group, claiming that they were illegally dismissed. They cite Article 283 of the
Labor code where an employer may 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.

Issue:

Whether or not the Court should apply the legal maxim verbal legis in construing Article
283 of the Labor Code as regards its applicability to the case at bar.

Held:

Yes. The legal maxim is applicable in this case. The use of the word may, in its plain
meaning, denotes that it is directory in nature and generally permissive only. Also, Article
283 of the Labor Code does not contemplate a situation where the closure of the business
establishment is forced upon the employer and ultimately for the benefit of the
employees. The Patalon Coconut Estate was closed down because a large portion of the
said estate was acquired by the DAR pursuant to the CARP. The severance of employeremployee relationship between the parties came about involuntarily, as a result of an act
of the State. Consequently, complainants are not entitled to any separation pay.

Where the words of a statute are clear, plain and free from ambiguity, it must be given its
literal meaning and applied without attempted interpretation.

Article 283 of the Labor Code applies in cases of closures of establishment and reduction
of personnel. The peculiar circumstances in the case at bar, however, involves neither the
closure of an establishment nor a reduction of personnel as contemplated under the

article.
#367
PRUBANKERS ASSOCIATION vs. PRUDENTIAL BANK & TRUST COMPANY
Facts:

On November 18, 1993 the Regional Tripartite Wages and Productivity Board of Region
V issuedWage Order No. RB 05-03 which provided for a Cost of Living Allowance
(COLA) to workers in the private sector who had rendered service for at least 3 months
before its effectivity, and for the same period thereafter, in the following categories:
P17.50 in Naga & Legaspi;
P15.50 in the municipalities of Tabaco, Daraga & Pili and the city of Iriga;
P10.00 in all other areas of the Bicol Region. On Nov 23, 1993 the Regional Tripartite
Wages and Productivity Board of Region VII issued Wage Order No. RB VII-03, which
directed the integration of the COLA mandated pursuant to Wage Order No. RO VII-02A into the basic pay of all workers. The wage order also called for an increase in the
minimum wage rates for all workers and and employees in the private sector as follows:
P10.00 in Cebu, Mandaue & Lapulapu;
P5.00 in the municipalities of Compostela, Liloan, Consolacion, Cordova,
Talisay,Minglanilla, Naga and the cities of Davao, Toledo, Dumaguete, Bais, Canlaon
andTagbilaran.
Pursuant to the said wage orders, RESP granted a COLA of P17.50 to its employees at its
Nagabranch and integrated the P150.00 per month COLA into the basic pay of its rankand-fileemployees at its Cebu, Mabolo and P. del Rosario branches.
On June 7 1994, PET wrote to RESP requesting that a Labor Management Committee
beconvened to discuss and resolve the wage distortions that resulted from the
implementation of the wage orders. PET also demanded that PET extend the application
of the wage orders to itsemployees outside Region V & Region VII, claiming that the
regional implementation of the saidorders resulted in a wage distortion.
As the matter could not be settl ed by both parties, both agreed to submit
the matter to voluntaryarbitration.VA: Ruled that the regional implementation of the
wage orders by PET resulted in a wagedistortion nationwide which should be resolved in
accordance with Art. 124 of Labor Code.

Issue:

Whether or not a wage distortion resulted from respondents implementation of the

forfeited Wage Orders.

Held:
In ruling that there was no wage distortion, the Court of Appeals held that the variance in
the salary rates of employees in different regions of the country was justified by RA 6727. It
noted that the underlying considerations in issuing the wage orders are diverse, based on the
distinctive situations and needs existing in each region. Hence, there is no basis to apply the
salary increases imposed by Wage Order No. VII-03 to employees outside of Region VII.
Furthermore, the Court of Appeals ruled that the distinctions between each employee group in
the region are maintained, as all employees were granted an increase in minimum wage rate.

Wage distortion presupposes an increase in the compensation of the lower ranks in an office
hierarchy without a corresponding raise for higher-tiered employees in the same region of the
country, resulting in the elimination or the severe diminution of the distinction between the two
groups. Such distortion does not arise when a wage order gives employees in one branch of a
bank higher compensation than that given to their counterparts in other regions occupying the
same pay scale, who are not covered by said wage order. In short, the implementation of wage
orders in one region but not in others does not in itself necessarily result in wage distortion.
#368
ASSOCIATED LABOR UNIONS vs. NATIONAL LABOR RELATIONS COMMISSION
Facts:

On July 1, 1989, Republic Act No. 6727, otherwise known as the Wage Rationalization
Act, took effect, granting a P25.00/day increase in the statutory minimum wage of all
workers and employees in the private sector, subject to certain conditions.

In implementation of the law, private respondent Del Monte Philippines, Inc. gave a
P25.00/day increase to the P54.00/day wages of its temporary employees or "broilers."
Because the regular employees, members of petitioner union, who were then receiving
P100.80 a day, were not granted a similar increase, they complained to the management
of Private Respondent.

On February 14, 1990, the parties executed a Memorandum Agreement wherein private
respondent, "in positive response to the unions representations and notwithstanding that
it has no legal or contractual obligation," granted the members of petitioner union a
P10.00/day wage increase effective January 1, 1990, subject to the latters right to claim
P15.00/day as balance, through compulsory arbitration.

On June 5, 1990, petitioners (Associated Labor Union-TUCP, representing its members,

DMPIEU-ALU-TUCP, Local 302 and Geronimo de los Santos) filed a complaint against
private respondent in the National Labor Relations Commissions (NLRC) Regional
Arbitration Branch X in Cagayan de Oro City. They alleged that a wage distortion 3 had
been created by the grant to its temporary employees of a P25.00/day salary increase
under Republic Act No. 6727, thereby reducing to P21.80 from the previous P46.80, the
difference in salaries between the regular employees (herein petitioners) and the
temporary employees.

On November 27, 1990, the Labor Arbiter, Noel August S. Miranda, dismissed the
complaint for lack of merit. He found no wage distortion in view of a series of salary
increase which respondent had granted to petitioners vis-a-vis the temporary employees

Issue:

Whether or not a wage distortion exists by reason of the grant of a wage increase to
certain employees.

Held:

No. The findings of the Labor Arbiter, affirmed by the NLRC, that no wage

distortion exists being based on substantial evidence, are entitled to respect and
finality.

Art. 124 of the Labor Code, as amended by Republic Act No. 6727, expressly
provides that where the application of any prescribed wage increase by virtue of a
law or wage order issued by any Regional Board results in distortions of the wage
structure within an establishment, the employer and the union shall negotiate to
correct the distortions. The law recognizes, therefore, the validity of negotiated wage
increases to correct wage distortions. The legislative intent is to encourage the parties
to seek solution to the problem of wage distortions through voluntary negotiation or
arbitration, rather than strikes, lockouts, or other concerted activities of the
employees or management. Recognition and validation of wage increases given by
employers either unilaterally or as a result of collective bargaining negotiations for
the purpose of correcting wage distortions are in keeping with the public policy of
encouraging employers to grant wage and allowance increases to their employees
which are higher than the minimum rates of increase prescribed by statute or
administrative regulation.

To compel employers simply to add on legislated increases in salary or allowances

without regard to what is already paid, would be to penalize employers who grant
their workers more than the statutorily prescribed minimum rates of increases.
Clearly, this would be counterproductive so far as securing the interest of labor in
concerned.

There is thus, to use the language of the law, no "effective obliteration of the
distinction embodied in [private respondents] wage structure based on skills, length
of service, or other logical basis of differentiation" in this case. For it is undisputed
that the difference in wages between petitioners and the temporary employees is now
even greater than it used to be prior to the grant of the P25.00/day increase to the
latter
pay
pursuant
to
Republic
Act
No.
6727.

#369
BANKARD EMPLOYEES UNION vs. NATIONAL LABOR RELATIONS COMMISSION
Facts:

Bankard, Inc. (Bankard) classifies its employees by levels, to wit: Level I, Level II, Level
III, Level IV, and Level V. On May 28, 1993, its Board of Directors approved a New
Salary Scale, made retroactive to April 1, 1993, for the purpose of making its hiring rate
competitive in the industrys labor market. The New Salary Scale increased the hiring
rates of new employees, to wit: Levels I and V by one thousand pesos (P1,000.00), and
Levels II, III and IV by nine hundred pesos (P900.00). Accordingly, the salaries of
employees who fell below the new minimum rates were also adjusted to reach such rates
under their levels.

As a result, petitioner 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 aspects of unfair labor practice, and was treated as preventive mediation. Upon
the second notice of strike, it was certified for compulsory notice of arbitration.

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.

HELD:
No. Wage distortion is a factual and economic condition that may be brought about by
different causes. In Metro Transit, the reduction or elimination of the normal differential
between the wage rates of rank-and-file and those of supervisory employees was due to the
granting to the former of wage increase which was, however, denied to the latter group of
employees.
The mere factual existence of wage distortion does not, however, ipso facto result to an
obligation to rectify it, absent a law or other source of obligation which requires its rectification.
Bankards right to increase its hiring rate, to establish minimum salaries for specific jobs,
and to adjust the rates of employees affected thereby is embodied under Section 2, Article V
(Salary and Cost of Living Allowance) of the parties Collective Bargaining Agreement (CBA),
to wit:
Section 2. Any salary increase granted under this Article shall be without prejudice to the right of
the Company to establish such minimum salaries as it may hereafter find appropriate for specific
jobs, and to adjust the rates of the employees thereby affected to such minimum salaries thus
established.
This CBA provision, which is based on legitimate business-judgment prerogatives of the
employer, is a valid and legally enforceable source of rights between the parties.
In fine, absent any indication that the voluntary increase of salary rates by an employer was
done arbitrarily and illegally for the purpose of circumventing the laws or was devoid of any
legitimate purpose other than to discriminate against the regular employees, this Court will not
step in to interfere with this management prerogative. Employees are of course not precluded
from negotiating with its employer and lobby for wage increases through appropriate channels,
such as through a CBA.
This Court, time and again, has shown concern and compassion to the plight of workers in
adherence to the Constitutional provisions on social justice and has always upheld the right of
workers to press for better terms and conditions of employment. It does not mean, however, that

every dispute should be decided in favor of labor, for employers correspondingly have rights
under the law which needs to be respected.
EFFECT ON BENEFITS
#370
PRUBANKERS ASSOCIATION vs. PRUDENTIAL BANK & TRUST COMPANY
Facts:

On November 18, 1993 the Regional Tripartite Wages and Productivity Board of Region
V issued Wage Order No. RB 05-03 which provided for a Cost of Living Allowance
(COLA) to workers in the private sector who had rendered service for at least 3 months
before its effectively, and for the same period thereafter, in the following categories:
P17.50 in Naga & Legaspi;
P15.50 in the municipalities of Tabaco, Daraga & Pili and the city of Iriga;
P10.00 in all other areas of the Bicol Region. On Nov 23, 1993 the Regional Tripartite
Wages and Productivity Board of Region VII issued Wage Order No. RB VII-03, which
directed the integration of the COLA mandated pursuant to Wage Order No. RO VII-02A into the basic pay of all workers. The wage order also called for an increase in the
minimum wage rates for all workers and and employees in the private sector as follows:
P10.00 in Cebu, Mandaue & Lapulapu;
P5.00 in the municipalities of Compostela, Liloan, Consolacion, Cordova,
Talisay,Minglanilla, Naga and the cities of Davao, Toledo, Dumaguete, Bais, Canlaon
andTagbilaran.
Pursuant to the said wage orders, RESP granted a COLA of P17.50 to its employees at its
Naga branch and integrated the P150.00 per month COLA into the basic pay of its rankand-file employees at its Cebu, Mabolo and P. del Rosario branches.
On June 7 1994, PET wrote to RESP requesting that a Labor Management Committee be
convened to discuss and resolve the wage distortions that resulted from the
implementation of the wage orders. PET also demanded that PET extend the application
of the wage orders to its employees outside Region V & Region VII, claiming that the
regional implementation of the said orders resulted in a wage distortion.
As the matter could not b e settled by both parties, both agreed to submit
the matter to voluntaryarbitration.VA: Ruled that the regional implementation of the
wage orders by PET resulted in a wage distortion nationwide which should be resolved in
accordance with Art. 124 of Labor Code.

Issue:

Whether or not the existence of wage distortion, the historical classification of the
employees prior to the wage increase must be established .

Held:
In ruling that there was no wage distortion, the Court of Appeals held that the variance in
the salary rates of employees in different regions of the country was justified by RA 6727. It

noted that the underlying considerations in issuing the wage orders are diverse, based on the
distinctive situations and needs existing in each region. Hence, there is no basis to apply the
salary increases imposed by Wage Order No. VII-03 to employees outside of Region VII.
Furthermore, the Court of Appeals ruled that the distinctions between each employee group in
the region are maintained, as all employees were granted an increase in minimum wage rate.
Wage distortion presupposes an increase in the compensation of the lower ranks in an office
hierarchy without a corresponding raise for higher-tiered employees in the same region of the
country, resulting in the elimination or the severe diminution of the distinction between the two
groups. Such distortion does not arise when a wage order gives employees in one branch of a
bank higher compensation than that given to their counterparts in other regions occupying the
same pay scale, who are not covered by said wage order. In short, the implementation of wage
orders in one region but not in others does not in itself necessarily result in wage distortion.
WOMEN WORKERS
PHILIPPINE TELEGRAPH & TELEPHONE CO. v NLRC (1997)

FACTS:
Grace de Guzman (private respondent) was hired by PT&T (petitioner company) as reliever.
Under the contract, her employment was to be immediately terminated upon expiration of the
agreed period. In September 1991, private respondent was once more asked to join petitioner
company as a probationary employee, the probationary period to cover 150 days. In the job
application form that was furnished her to be filled up for the purpose, she indicated in the
portion for civil status therein that she was single although she had contracted marriage a few
months earlier. She made the same representation in the two successive reliever agreements she
has signed. When petitioner supposedly learned about the same later, its branch supervisor sent
to private respondent a memorandum requiring her to explain the discrepancy. In that
memorandum, she was reminded about the companys policy of not accepting married women
for employment. In her reply letter, private respondent stated that she was not aware of PT&Ts
policy regarding married women at the time, and that all along she had not deliberately hidden
her true civil status. Petitioner nonetheless remained unconvinced by her explanations. Private
respondent was dismissed from the company which she readily contested by initiating a
complaint for illegal dismissal, coupled with a claim for non-payment of cost of living
allowances (COLA), before NLRC.

At the preliminary conference conducted in connection therewith, private respondent volunteered

the information, and this was incorporated in the stipulation of facts between the parties, that she
had failed to remit the amount of P2,380.75 of her collections. She then executed a promissory
note for that amount in favor of petitioner.

LA Decision: Respondent De Guzman, who has already gained the status of a regular employee,
was illegally dismissed; for reinstatement, plus payment of the corresponding back wages and
COLA

NLRC Decision: Upheld the decision of the Labor Arbiter but was modified with the
qualification that De Guzman deserved to be suspended for three months in view of the dishonest
nature of her acts. Motion for Reconsideration was denied, hence the petition.

ISSUE: W/N De Guzman was illegally dismissed because of discrimination

HELD:
YES. PT&Ts policy of not accepting or disqualifying from work any woman worker who
contracts marriage is afoul of the right against discrimination provided to all women workers by
our labor laws and by our Constitution. The record discloses clearly that de Guzmans ties with
PT&T were dissolved principally because of the companys policy that married women are not
qualified for employment in the company, and not merely because of her supposed acts of
dishonesty.

Article 136 of the Labor Code, one of the protective laws for women, explicitly prohibits
discrimination merely by reason of marriage of a female employee. It is recognized that
company is free to regulate manpower and employment from hiring to firing, according to their
discretion and best business judgment, except in those cases of unlawful discrimination or those
provided by law.

ART. 136. Stipulation against marriage. It shall be unlawful for an employer to require as a
condition of employment or continuation of employment that a woman shall not get married, or
to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed
resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a
woman employee merely by reason of marriage.

The policy of PT&T is in derogation of the provisions stated in Art.136 of the Labor Code on the
right of a woman to be free from any kind of stipulation against marriage in connection with her
employment and it likewise is contrary to good morals and public policy, depriving a woman of
her freedom to choose her status, a privilege that is inherent in an individual as an intangible and
inalienable right. The kind of policy followed by PT&T strikes at the very essence, ideals and
purpose of marriage as an inviolable social institution and ultimately, family as the foundation of
the nation. Such policy must be prohibited in all its indirect, disguised or dissembled forms as
discriminatory conduct derogatory of the laws of the land not only for order but also
imperatively required.

SEXUAL HARASSMENT
LIBRES v NLRC (1999)

FACTS:
Petitioner Libres was an Assistant Manager at National Steel Corporation. On Aug. 3, 1993, he
received a Notice of Investigation from his immediate superior (Hynson) relative to the charge of
sexual harassment made to the latters secretary (Capiral), which allegedly happened sometime
in May 1992 . He was requested to submit a written explanation and subsequently to answer
clarificatory questions on the matter. The notice also warned him that failure to file his written
statement would be construed as a waiver of his right to be heard. Petitioner submitted his
explanation denying the accusation and offered to submit himself for clarificatory interrogation.

Hynson conducted an internal investigation to which the secretary and Libres participated.
Thereafter, Hynson submitted his report to the Management Evaluation Committee (MEC).
MEC, after deliberation, concluded that the charges against Libres constituted a violation of the
Plants Rules and Regulations and further opined that touching a female subordinates hand and
shoulder, caressing her nape and telling other people that Capiral was the one who hugged and
kissed or that she responded to the sexual advances are unauthorized acts that damages her
honor. MEC concluded that Libress actions clearly constituted sexual harassment and
recommended his suspension for 30 days. Libres requested reconsideration from the VP for
Manufacturing but the same was denied.

Libres filed a complaint for illegal suspension, unjust discrimination, and denial of due process
before the Labor Arbiter.

LA Decision: There was a positive finding of sexual harassment, due process was observed.
Affirmed L.As decision

NLRC:

Undaunted, petitioner resorted to this recourse questioning the findings of the NLRC and further
claiming that his acts of fondling the hand and massaging the shoulders of Capiral did not fall
within the definition and criteria of sexual harassment laid down in Section 3 of RA No. 7877.

ISSUE:

(1) W/N the petitioners actions constitute sexual harassment to justify his suspension

(2) W/N petitioner was afforded due process

HELD:
(1) Yes.
RA No. 7877 was not yet in effect at the time of the occurrence of the act complained of.
It has no retroactive application, hence, cannot be applied to this case. The Labor Arbiter
have to rely on the MEC report and the common connotation of sexual harassment as it is
generally understood by the public in resolving the case brought before it.

The Court disagrees with the petitioners allegation that the delay in instituting the
complaint shows that it was only an afterthought. As pointed out by the Solicitor General,
it could be expected since Libres was Capirals immediate superior. Fear of retaliation
and backlash, not to forget the social humiliation and embarrassment that victims of this
human frailty, usually suffer, are all realities that Capiral had to contend with. Moreover,
the delay did not detract from the truth derived from the facts. Petitioner Libres never
questioned the veracity of Capirals allegations. In fact his narration even corroborated
the latters assertion in several material points. He only raised issue on the complaints
protracted filing.

(2) Yes.
On the question of due process, we find that the requirements thereof were sufficiently
complied with. Due process as a constitutional precept does not always and in all
situations require a trial type proceeding. Due process is satisfied when a person is
notified of the charge against him and given an opportunity to explain or defend himself.

The essence of due process is simply to be heard, or as applied to administrative

proceedings, an opportunity to explain ones side, or an opportunity to seek a
reconsideration of the action or ruling complained of. It is undeniable that petitioner was
given a Notice of Investigation informing him to submit a written explanation regarding
the matter; that he submitted his written explanation to his superior, Isidro F. Hynson Jr.;
that Hynson Jr. further allowed him to air his grievance in a private session; and that
upon release of the suspension order made by the MEC petitioner requested its
reconsideration but was denied. From the foregoing it can be gleaned that petitioner was
given more than adequate opportunity to explain his side and air his grievances.

SEXUAL HARASSMENT
PHILIPPINE AEOLUS AUTOMOTIVE v NLRC (2000)

FACTS:
Private respondent Rosalinda Cortez was a company nurse of petitioner corporation until her
termination on 7 November 1994. Prior to the termination, she a memorandum requiring her to
explain in writing why no disciplinary action should be taken against her for throwing a stapler at
the Plant Manager William Chua, her superior, and uttering invectives against him; for losing the
amount entrusted to her by Chua to be given to another department; for asking a co-employee to
punch-in for her time card when she in fact did not report to office.

While Cortez was still under preventive suspension, another memorandum was issued by
petitioner corporation giving her seventy-two (72) hours to explain why no disciplinary action
should be taken against her for allegedly failing to process the ATM applications of her nine (9)
co-employees with the Allied Banking Corporation.

Cortez to receive both memoranda although it was read to her by a co-employee. A copy of the
second memorandum was also sent by the Personnel Manager to private respondent at her last
known address by registered mail.

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

On 3 November 1994 a third memorandum was issued to private respondent, this time informing
her of her termination from the service effective 7 November 1994 on grounds of gross and
habitual neglect of duties, serious misconduct and fraud or willful breach of trust.
On 6 December 1994 private respondent filed with the Labor Arbiter a complaint for illegal
dismissal, non-payment of annual service incentive leave pay, 13th month pay and damages
against PAAUC and its president Francis Chua.

LA: Held the termination of Cortez as valid and legal, at the same time dismissing her claim for
damages for lack of merit.

NLRC: reversed the decision of the LA and found petitioner corporation guilty of illegal
dismissal of private respondent Cortez.

ISSUES
1. WON the NLRC gravely abused its discretion in holding as illegal the dismissal of private
respondent
2. WON she is entitled to damages in the event that the illegality of her dismissal is sustained

HELD
1. NO
- Cortez claims that as early as her first year of employment her Plant Manager, William Chua,
already manifested a special liking for her, so much so that she was receiving special treatment
from him who would oftentimes invite her "for a date," which she would as often refuse. On
many occasions, he would make sexual advances - touching her hands, putting his arms around
her shoulders, running his fingers on her arms and telling her she looked beautiful. The special
treatment and sexual advances continued during her employment for four (4) years but she never
reciprocated his flirtations, until finally, she noticed that his attitude towards her changed. He
made her understand that if she would not give in to his sexual advances he would cause her
termination from the service; and he made good his threat when he started harassing her. She just
found out one day that her table which was equipped with telephone and intercom units and
containing her personal belongings was transferred without her knowledge to a place with

neither telephone nor intercom, for which reason, an argument ensued when she confronted
William Chua resulting in her being charged with gross disrespect.

The Supreme Court, in a litany of decisions on serious misconduct warranting dismissal of

an employee, has ruled that for misconduct or improper behavior to be a just cause for
dismissal (a) it must be serious; (b) must relate to the performance of the employees
duties; and, (c) must show that the employee has become unfit to continue working for the
employer. The act of private respondent in throwing a stapler and uttering abusive language
upon the person of the plant manager may be considered, from a lay man's perspective, as a
serious misconduct. However, in order to consider it a serious misconduct that would justify
dismissal under the law, it must have been done in relation to the performance of her duties as
would show her to be unfit to continue working for her employer. The acts complained of, under
the circumstances they were done, did not in any way pertain to her duties as a nurse. Her
employment identification card discloses the nature of her employment as a nurse and no other.
Also, the memorandum informing her that she was being preventively suspended pending
investigation of her case was addressed to her as a nurse.

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

Private respondent admittedly allowed four (4) years to pass before finally coming out with her
employer's sexual impositions. Not many women, especially in this country, are made of the
stuff that can endure the agony and trauma of a public, even corporate, scandal. If petitioner
corporation had not issued the third memorandum that terminated the services of private
respondent, we could only speculate how much longer she would keep her silence. Moreover,
few persons are privileged indeed to transfer from one employer to another. The dearth of quality
employment has become a daily "monster" roaming the streets that one may not be expected to
give up one's employment easily but to hang on to it, so to speak, by all tolerable means.
Perhaps, to private respondent's mind, for as long as she could outwit her employer's ploys she
would continue on her job and consider them as mere occupational hazards. This uneasiness in
her place of work thrived in an atmosphere of tolerance for four (4) years, and one could only

imagine the prevailing anxiety and resentment, if not bitterness, that beset her all that time. But
William Chua faced reality soon enough. Since he had no place in private respondent's heart, so
must she have no place in his office. So, he provoked her, harassed her, and finally dislodged
her; and for finally venting her pent-up anger for years, he "found" the perfect reason to
terminate her.

As regards moral damages, it suffices to prove that the claimant has suffered anxiety, sleepless
nights, besmirched reputation and social humiliation by reason of the act complained of. [Art.
2217, New Civil Code of the Philippines.] Exemplary damages, on the other hand, are granted
in addition to, inter alia, moral damages "by way of example or correction for the public good"
[Art. 2229, id.] if the employer "acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner." [Art. 2232, id.]

Decision of NLRC finding the dismissal of private respondent without just cause and ordering
petitioners to pay her back wages computed from the time of her dismissal, which should be full
back wages, is AFFIRMED. However, in view of the strained relations between the adverse
parties, instead of reinstatement ordered by public respondent, petitioners should pay private
respondent separation pay equivalent to one (1) month salary for every year of service until
finality of this judgment. In addition, petitioners are ordered to pay private respondent
P25,000.00 for moral damages and P10,000.00 for exemplary damages.

NON-HOUSEHOLD WORK ASSIGNMENT

BARCENAS v NLRC (1990)

FACTS:
In 1978, Chua Se Su (Su) in his capacity as the Head Monk of the Buddhist Temple of Manila
and Baguio City and as President and Chairman of the Board of Directors of the Poh Toh
Buddhist Association of the Phils. Inc. hired the petitioner, Filomena Barcenas, who speaks the
Chinese language as secretary and interpreter. Her position required her to receive and assist
Chinese visitors to the temple, act as tourist guide for foreign Chinese visitors, attend to the
callers of the Head Monk as well as to the food for the temple visitors, run errands for the Head
Monk such as paying the Meralco, PLDT, MWSS bills and act as liaison in some government

offices. Aside from her pay and allowances under the law, she received an amount of P500 per
month plus free board and lodging in the temple.

In December, 1979, Su assumed the responsibility of paying for the education of Barcenas
nephew. In 1981, Su and Barcenas had amorous relations. In May, 1982, or five months before
giving birth to the alleged son of Su on October 12, 1982, she was sent home to Bicol. Upon the
death of Su in July, 1983, she remained and continued in her job.

In 1985, Manuel Chua (Chua) was elected President and Chairman of the Board of the Poh Toh
Buddhist Association of the Philippines, Inc. and Rev. Sim Dee (Dee) was elected Head
Buddhist Priest. Thereafter, Chua and Dee discontinued payment of her monthly allowance and
the additional P500 effective 1983. In addition, Barcenas and her son were evicted forcibly from
their quarters in the temple by six police officers. She was brought first to the Police precinct in
Tondo and then brought to Aloha Hotel where she was compelled to sign a written undertaking
not to return to the Buddhist temple in consideration of the sum of P10,000. She refused and
Chua shouted threats against her and her son. Her personal belongings including assorted
jewelries were never returned.

LA: ruled for Barcenas

NLRC Decision: Reversed LAs decision

ISSUES
1. WON Barcenas was a regular employee of the Manila Buddhist Temple
2. WON Barcenas was illegally dismissed

HELD
1. YES
The Court agreed with the petitioner's claim that she was a regular employee of the Manila
Buddhist Temple as secretary and interpreter of its Head Monk, Su. As Head Monk, President
and Chairman of the Board of Directors of the Poh Toh Buddhist Association of the Philippines,

Su was empowered to hire the petitioner under Article V of the By-laws of the Association
which states:

"The President or in his absence, the Vice President shall represent the Association in all its
dealings with the public, subject to the Board, shall have the power to enter into any contract or
agreement in the name of the Association, shall manage the active business operation of the
Association, shall deal with the bank or banks."

Chua and Dee, on the other hand, claimed that Barcenas was never an employee of the Poh Toh
Temple but a servant who confined herself to the temple and to the personal needs of the late
Chua Se Su and thus, her position is co-terminus with that of her master. However, the work
that she performed in the temple could not be categorized as mere domestic work.
Barcenas, being proficient in the Chinese language, attended to the visitors, mostly Chinese, who
came to pray or seek advice before Buddha for personal or business problems; arranged meetings
between these visitors and Su and supervised the preparation of the food for the temple visitors;
acted as tourist guide of foreign visitors; acted as liaison with some government offices; and
made the payment for the temple, Meralco, MWSS and PLDT bills. Indeed, these tasks may not
be deemed activities of a household helper. They were essential and important to the
operation and religious functions of the temple.

2. NO
Her status as a regular employee ended upon her return to Bicol in May, 1982 to await the birth
of her lovechild allegedly by Su. The records do not show that she filed any leave from work or
that a leave was granted her. Neither did she return to work after the birth of her child on October
12,1982, whom she named Robert Chua alias Chua Sim. The NLRC found that it was only in
July, 1983 after Su died that she went back to the Manila Buddhist Temple.

She herself supplied the reason for her return. She stated:
"It was the death-bed instruction to her by Chua Se So to stay at the temple and to take care of
the two boys and to see to it that they finish their studies to become monks and when they are
monks to eventually take over the two temples as their inheritance from their father."

Thus, her return to the temple was no longer as an employee but rather as Su's mistress who is
bent on protecting the proprietary and hereditary rights of her son and nephew. In her pleadings,
the petitioner claims that they were forcefully evicted from the temple, harassed and threatened
by respondents and that the Poh Toh Buddhist Association is a trustee corporation with the
children as cestui que trust. These claims are not proper in this labor case. They should be
appropriately threshed out in the complaints already filed by the petitioner before the civil courts.
Due to these claims, we view the respondents' offer of P10,000 as indicative more of their desire
to evict the petitioner and her son from the temple rather than an admission of an employeremployee relation.
The petitioner's claim for unpaid wages since May, 1982 which she filed only in 1986, has
already prescribed. Under Article 292 of the Labor Code, all money claims arising from
employer-employee relations must be filed within three years from the time the cause of action
accrued, otherwise they shall forever be barred.

Finally, while petitioner contends that she continued to work in the temple after Su died, there is,
however, no proof that she was re-hired by the new Head Monk. In fact, she herself manifested
that respondents made it clear to her in no uncertain terms that her services as well as her
presence and that of her son were no longer needed. However, she persisted and continued to
work in the temple without receiving her salary because she expected Chua and Dee to relent and
permit the studies of the two boys. Consequently, under these circumstances, no employeremployee relationship could have arisen.

Decision of the NLRC is AFFIRMED.

NON-HOUSEHOLD WORK ASSIGNMENT

APEX MINING COMPANY, INC. v NLRC (1991)

FACTS:
Private respondent Sinclita Candida was employed by petitioner Apex Mining Company, Inc. in
1973 to perform laundry services at its staff house in Davao del Norte. In the beginning, she was
paid on a piece rate basis. However, starting 1982, she was paid on a monthly basis.

On December 18, 1987, while she was attending to her assigned task and she was hanging her
laundry, she accidentally slipped and hit her back on a stone. She reported the accident to her
immediate supervisor and to the personnel officer. As a result of the accident she was not able to
continue with her work. She was permitted to go on leave for medication. The supervisor offered
her the amount of P2,000.00 which was eventually increased to P5,000.00 to persuade her to
quit her job, but she refused the offer and preferred to return to work. Petitioner did not allow her
to return to work and dismissed her on February 4, 1988.

LA: ordered the respondent, Apex Mining Company, Inc., to pay the complainant a total amount
of P55,161.42.

NLRC Decision: dismissed the appeal for lack of merit and affirmed the appealed decision. A
subsequent motion for reconsideration was likewise denied.

Hence, the herein petition for review by certiorari, with the main thrust that private respondent
should be treated as a mere househelper or domestic servant and not as a regular employee of
petitioner.

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

HELD:
The petition is devoid of merit. Under Rule XIII, Section l(b), Book 3 of the Labor Code, as
amended, the terms "househelper" or "domestic servant" are defined as follows:

The term "househelper" as used herein is synonymous to the term "domestic servant" and
shall refer to any person, whether male or female, who renders services in and about the
employer's home and which services are usually necessary or desirable for the maintenance
and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of
the employer's family.

The foregoing definition covers family drivers, domestic servants, laundry women, yayas,
gardeners, houseboys and other similar househelps. Hence, the definition cannot be interpreted to
include househelp or laundrywomen working in staffhouses of a company, like petitioner who
attends to the needs of the company's guest and other persons availing of said facilities.

The criteria is the personal comfort and enjoyment of the family of the employer in the
home of said employer. While it may be true that the nature of the work of a househelper,
domestic servant or laundrywoman in a home or in a company staffhouse may be similar in
nature, the difference in their circumstances is that in the former instance they are actually
serving the family while in the latter case, whether it is a corporation or a single proprietorship
engaged in business or industry or any other agricultural or similar pursuit, service is being
rendered in the staffhouses or within the premises of the business of the employer. In such
instance, they are employees of the company or employer in the business concerned entitled to
the privileges of a regular employee.

Private respondent Candida is therefore, entitled to appropriate relief as a regular employee of

petitioner. Inasmuch as private respondent appears not to be interested in returning to her work
for valid reasons, the payment of separation pay to her is in order.

The petition is DISMISSED and the appealed decision and resolution of public
respondent NLRC are hereby AFFIRMED.

NON-HOUSEHOLD WORK ASSIGNMENT, Conditions Employment

ULTRA VILLA FOOD HAUS, and/or ROSIE TIO v GENISTON (1999)

FACTS:
Private respondent Geniston filed a complaint for illegal dismissal against the Ultra Villa Food
Haus restaurant and/or its alleged owner Rosie Tio. Private respondent alleged that he was
employed as a "do it all guy," acting as waiter, driver, and maintenance man, in said restaurant.
His employment therein spanned from March 1, 1989 until he was dismissed on May 13, 1992.

Petitioner Rosie Tio, on the other hand, maintained that private respondent was her personal
driver, not an employee of the Ultra Villa Food Haus. As petitioner's personal driver, private
respondent was required to report for work at 7:00 a.m. to drive petitioner to Mandaue City
where petitioner worked as the Manager of the CFC Corporation. Private respondent was
likewise given free meals as well as 13th month pay at the end of the year. Petitioner denied
dismissing private respondent whom she claimed abandoned his job. During the elections of May
11, 1992, private respondent acted as a Poll Watcher for the National Union of Christian
Democrats. Though well aware that May 12, 1992 was a holiday, petitioner called up private
respondent that day to ask him to report for work as she had some important matters to attend to.
Private respondent's wife, however, coldly told petitioner that private respondent was helping in
the counting of ballots. Petitioner was thus forced to hire another driver to replace private
respondent. Private respondent came back a week after but only to collect his salary.

LA: concluded that private respondent, being a personal driver, was not entitled to overtime pay,
premium pay, service incentive leave pay and 13th month pay. The Labor Arbiter noted Private
respondent's admission that he was petitioner's driver.

NLRC : ruled that private respondent was an employee of the Ultra Villa Food Haus.
ISSUES:
(1) Whether private respondent was an employee of the Ultra Villa Food Haus or the personal
driver of petitioner
(2) Whether private respondent was illegally dismissed from employment.

HELD:
(1) The Supreme Court find that private respondent was indeed the personal driver of
petitioner, and not an employee of the Ultra Villa Food Haus.
There is substantial evidence to support such conclusion, such as Private respondent's admission
during the mandatory conference that he was petitioner's personal driver, Copies of the Ultra
Villa Food Haus payroll which do not contain private respondent's name and other pertinent
documents. Thus, Article 141 of the Labor Code applies, which provides:

Art. 141. Coverage. - This Chapter shall apply to all persons rendering services in
households for compensation. "Domestic or household service" shall mean services in
the employers home which is usually necessary or desirable for the maintenance and
enjoyment thereof and includes ministering to the personal comfort and
convenience of the members of the employers household, including services of
family drivers.

The Labor Code is silent on the grant of overtime pay, holiday pay, premium pay and service
incentive leave to those engaged in the domestic or household service. Moreover, the specific
provisions of LC and Article 82, which defines the scope of the application of these
provisions, expressly excludes domestic helpers from its coverage:

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

Clearly then, petitioner is not obliged by law to grant private respondent any of these benefits.
Employing the same line of analysis, it would seem that private respondent is not entitled to13
month pay. Nevertheless, the SC deem it just to award private respondent 13th month pay in view
of petitioner's practice of according private respondent such benefit. Indeed, petitioner admitted
that she gave private respondent 13th month pay every December

(2) No. The Supreme Court disagrees with Petitioner which submits that private respondent
abandoned his job, preferring to work as an election watcher instead.
To constitute abandonment, two requisites must concur: (1) the failure to report to work or
absence without valid or justifiable reason, and (2) a clear intention to sever the employeremployee relationship as manifested by some overt acts, with the second requisite as the more
determinative factor. The burden of proving abandonment as a just cause for dismissal is on the
employer. Petitioner failed to discharge this burden. It is quite unbelievable that private
respondent would leave a stable and relatively well paying job as petitioner's family driver to
work as an election watcher. Consequently, we do not find private respondent to have abandoned

his job. His dismissal from petitioner's employ being unjust, petitioner is entitled to an indemnity
under Article 149 of the Labor Code:

Art. 149. Indemnity for unjust termination of services. If the period of household service
is fixed, neither the employer nor the househelper may terminate the contract before the
expiration of the term, except for a just cause. If the househelper is unjustly dismissed, he or she
shall be paid the compensation already earned plus that for fifteen (15) days by way of
indemnity. If the househelper leaves without justifiable reason he or she shall forfeit any unpaid
salary due him or her not exceeding fifteen (15) days.
381. Philips Semiconductors etc v Fadriquela, 427 SCRA 408 (2004) (Nature of Security of
Tenure)
FACTS:
Petitioner Philips Semiconductors (Phils.), Inc. is a domestic corporation engaged in the
production and assembly of semiconductors such as power devices, RF modules, CATV
modules, RF and metal transistors and glass diods. Respondent Eloisa Fadriquela executed a
Contract of Employment with the petitioner in which she was hired as a production operator. Her
contract was initially for three months but was renewed four times. She remained under the
employ of the petitioner without any interruption since May 8, 1992 to June 4, 1993 or for one
(1) year and twenty-eight (28) days. The employees were subjected to periodic performance
rating (passing rate: 3.0) which would be the basis for renewing the contract.
On the duration of Fadriquelas fourth contract, she incurred 12 absences. She was verbally
asked to explain but when she failed to, it resulted for her assessment grade of 2.8 and the nonrenewal of her contract. Fadriquela, then, filed a case of illegal dismissal against her employer
contending that she was already a regular employee and could not be terminated without
justifiable cause.
Philips Semiconductors positioned that Eloisa Fadriquela is not a regular employee because she
wasnt able to meet the standard of regularization of the company. In the companys policy, an
employee may become a regular employee if he maintains at least a grade of 3.0 and seventeen
months of service.
ISSUE
WON respondent-employee is a regular employee and is thus afforded security of tenure
HELD
YES. There are two kinds of regular employees under Art. 280: (1) those engaged to perform
activities which are necessary or desirable in the usual business or trade of the employer; and (2)

those casual employees who have rendered at least one year of service, whether continuous or
broken, with respect to the activities in which they are employed.
The employee remained under the employ of the petitioner without any interruption for 1 year
and 28 days . The law does not provide the qualification that the employee must first be issued a
regular appointment or must be declared as such before he can acquire a regular employee status.
By operation of law, then, the respondent had attained the regular status of her employment with
the petitioner, and is thus entitled to security of tenure as provided for in Article 279 of the Labor
Code.
Under Section 3, Article XVI of the Constitution, it is the policy of the State to assure the
workers of security of tenure and free them from the bondage of uncertainty of tenure woven by
some employers into their contracts of employment.
The Labor Code does not outlaw employment contracts under term employment unless it is
used to circumvent the law on security of tenure. In Romanes v NLRC, the Court cited the
criteria under which "term employment" cannot be said to be in circumvention of the law on
security of tenure, namely: (1) fixed period was knowingly and voluntarily agreed upon by the
parties (2) employer and the employee dealt with each other on more or less equal terms with no
moral dominance.

382. Quijano v Bartobalac, 380 SCRA 204 (2006) (Nature of Security of Tenure)
FACTS:
Danny Quijano was a warehouseman of Mercury Drug Corporation. He filed a case of illegal
dismissal against the corporation. After trial, the Court ordered for his reinstatement.
Respondent Labor Arbiter Bartolabac issued an order awarding Quijano backwages and
separation pay instead of reinstatement. The corporation explained the inability of reinstatement
of Quijano was due to abolishment of his previous position as warehouseman. Labor Arbiter
issued an order assigning the complainant to the position of self-service instead. Respondent
Commissioner Quimpo overturned the decision of the Labor Arbiter and directed the payment of
separation pay rather than reinstatement to a substantially similar position as ordered by this
Court.
Danny Quijano filed a complaint against Labor Arbiter Bartolabac and NLRC Commissioner
Alberto Quimpo for failing to execute the final and executor judgment of the Court to reinstate
him.
ISSUE
WON respondents Labor Arbiter and NLRC Commissioner are liable in deviating from the final
and executionary judgment of the Court.
HELD
YES. The Court is unyielding in its adjudication that complainant must be reinstated to his
former position as warehouseman or to a substantially equivalent position. Mercury Drug
Corporations contention, as upheld by Labor Arbiter, that there is no substantially equivalent
position for petitioners reinstatement is unacceptable. The corporation operates nationwide and
has numerous branches all over the Philippines. Petitioner, as warehouseman, occupied a
clerical/rank and file position in said company and we find it highly inconceivable that no other
substantially equivalent position exists to effect his reinstatement.

383. Gonzales v NLRC 313 SCRA 169 (1999) (Importance of Employment)

FACTS
Lorlene Gonzales, petitioner, has been a schoolteacher in the Elementary Department of private
respondent Ateneo de Davao University for 17 years. She was informed of the complaints of two
(2) parents alleged that she uses corporal punishment on her students. An investigation occurred
but the petitioner did not participate because her request to change the procedure was denied. She
contends that the procedure laid down by the corporation was a violation of her constitutional
right to due process. Out of the twenty-two (22) invitations sent out by ATENEO to petitioners
students and their parents to shed light on the matter of corporal punishment allegedly
"administered" by her, eleven (11) appeared and testified before the committee. The eleven (11)
witnesses also executed written statements denominated as "affidavits." After the investigation,
petitioner was informed of her dismissal.
ISSUE
WON the administration of Ateneo was able to prove the guilt of petitioner.
HELD
NO. In the instant case, ATENEO failed to prove by substantial evidence that petitioner had
inflicted corporal punishment on her students. It relied solely on the witnesses' affidavits with
questionable veracity.
On the other hand, petitioner adequately proved, by means of affidavits, letters of petition and
manifesto made by her students and co-teachers, that she was a competent and dedicated teacher
having spent seventeen (17) years of her life in the service of the very institution which is now
seeking her dismissal.
*Importance of Employment* Employment is not merely a contractual relationship; it has
assumed the nature of property right. It may spell the difference whether or not a family will
have food on their table, roof over their heads and education for their children. It is for this
reason that the State has taken up measures to protect employees from unjustified dismissals. It is
also because of this that the right to security of tenure is not only a statutory right but, more so, a
constitutional right.

384. Llosa-Tan v Silahis International Hotel 181 SCRA 738 (1990) (State Regulation-Rationale)
FACTS:
Anita Llosa-Tan, petitioner, was front office cashier of Silahis International Hotel. Corporate
Policy No.014 instructed cashiers to refuse the cashing of personal checks of employees and
officials due to the companys past experience of bouncing checks.
Mr. Fernando Gayondato, the general cashier of Puerto Azul Beach Resort (sister company of
Silahis International Hotel) approached petitioner to encash two US dollar checks with combined
value of US$1,200. Although petitioner politely explained the existence of Policy No. 014
prohibiting such transactions, Gayondato persisted and petitioner encashed the checks.
Thereafter, the said checks bounced.
The company asked petitioner to explain in writing why she should not be terminated for
encashing the two personal checks without proper authorization. She explained that previously
when she refused encashment of a check of Mr. Jahms in compliance with the Corporate Policy,
she almost got dismissed for being inflexible and not using her sound discretion on the matter.
Despite the petitioners explanation in the aforesaid letter, her services were terminated.
ISSUE
WON the acts of petitioner constitute gross negligence resulting in a valid ground for the
termination of her employment.
HELD
NO. Gross negligence has been defined as the want of any or slight care or the utter disregard
of consequences. It does not appear from the records, however, that the complainant had
intended to cause damage to the company in encashing the checks. Instead, what appears is that
complainant was motivated only by good faith. Neither do the respondents accuse complainant
of bad faith.
The power to dismiss is a normal prerogative of the employer, but it is without limitations. The
right of the employer must not be exercised arbitrarily and without just cause. Otherwise, the
constitutional guarantee of security of tenure of the workers would be rendered nugatory.
Furthermore, the right of employer to freely select or discharge his employees is regulated by the
State, because the preservation of the lives of the citizens is a basic duty of the State, more vital
than the preservation of the corporate profit. In addition, security of tenure is a right of
paramount value guaranteed by the Constitution and should not be denied on mere speculation.
Protection for labor and social justice provisions of the Constitution and the labor laws and rules
and regulations are interpreted in favor of the exercise of labor rights.

385. Labajo v Alejandro 165 SCRA 747 (1988) (Contract Employees)

FACTS
Six private respondents had all been contracted by petitioners to work as classroom teachers at
the San Andres High School. They filed a complaint against the school when they received a
letter from Fr. Emmanuel Labajo (Director of the school) terminating their services. Private
respondents alleged that their dismissal by petitioner High School was without justifiable cause
and in violation of their rights to due process and security of tenure.
The petitioner-institution positioned that the respondents were contractual employees and the
termination of services was due to the end of the term of the contract.
Private respondent Amar argued that the twelve years of teaching experience he had accumulated
prior to his acceptance of employment at petitioner-institution qualified him as a regular
employee. Private respondent Alejandro asserted that her appointment as "Night Principal" of the
San Andres High School amounted to a promotion which raised her status to that of a regular
employee at petitioner High School.
ISSUE
WON the respondent-employees were contract employees.
HELD
YES. paragraph 75 of the Manual of Regulations for Private Schools provides: Full-time
teacherswhohaverendered three years of satisfactory service shall be considered permanent.
Regarding Mr. Amars contention, it is the length of time he has been teaching at petitioner High
School that is material in determining whether or not he in fact qualified as a regular employee
thereof. It does not include time rendered teaching in another institution.
Regarding Ms. Alejandros contention, mere appointment as "Night Principal" is not, by itself
and absent any additional evidence, sufficient proof that her employment status had in fact been
upgraded from probationary to regular.
One of the stipulations in their employment contract reads that, that payment of that individual's
salary would be made "every month for 10 months." The court interpreted this to mean that such
contracts each had an effective term of ten (10) months. Respondents are, thus, contract
employees whose services were terminated due to the end of the contract.

386. Skillworld Management and Marketing Corporation v NLRC 186 SCRA 465 (1990)
(Probationary Employee)
FACTS
Respondent Francisco R. Manuel was deployed to Saudi Arabia to work as driver by petitioner
Skillworld Management and Marketing. Upon his arrival in Jeddah, Manuel signed a two (2)
year employment contract with his foreign employer, petitioner Shary Limousine. Two (2)
months later, respondent was repatriated to the Philippines. He alleged that while he was
employed as driver of Shary Limousine in its branch at Jeddah he was stopped, and his driver's
license sought for inspection, by Saudi Arabian police. He showed the police two documents
given to him by his employer, Shary Limousine who made him believe that these pertained to a
driver's temporary license. However, Manuel was informed that the documents were not valid for
a drivers license.
Respondent-employee Manuel filed a case against petitioner-employer for illegal dismissal.
Petitioner-employer contends that Manuel was under probationary employment at the time of his
dismissal. Because of the probationary status of the employment of private respondent Manuel,
he may be dismissed at any time. Furthermore, this agreement was contained in paragraph four
(4) of the employment contract signed by Manuel, The first three months of this contract will be
considered as a probational period
ISSUE
WON respondent Manuel was illegally dismissed.
HELD
YES. While it may be true that Manuel was a probationary employee at the time of his dismiss
he may not be dismissed without cause.
There is no dispute that as a probationary employee, private respondent had but a limited tenure.
Although on probationary basis, however, employee still enjoys the constitutional protection on
security of tenure. During his tenure of employment therefore, or before his contract expires,
respondent Cruz cannot be removed except for cause as provided for by law.
The alleged causes for which private respondent was dismissed, viz: disobedience, absenteeism,
refusal to work, and together to engage in a concerted activity against their employer and inciting
other employees towards the commission thereof were not established.

387. Interorient Maritime Enterprises Inc. v NLRC 235 SCRA 268 (1994) (Managerial
Employee)
FACTS
Private respondent Captain Rizalino Tayong, a licensed Master Mariner with experience in
commanding ocean-going vessels, was employed by petitioners Trenda World Shipping
(Manila), Inc. and Sea Horse Ship Management, Inc. through petitioner Inter-Orient Maritime
Enterprises, Inc. as Master of the vessel M/V Oceanic Mindoro, for a period of one year, as
evidenced by an employment contract. Captain Tayong assumed command of petitioners' vessel
at the port of Hongkong. His instructions were to replenish bunker and diesel fuel, to sail
forthwith to Richard Bay, South Africa, and there to load 120,000 metric tons of coal.
While at the Port of Hongkong and in the process of unloading cargo, Captain Tayong received a
weather report that a storm code-named "Gordon" would shortly hit Hongkong. Precautionary
measures were taken to secure the safety of the vessel, as well as its crew, considering that the
vessel's turbo-charger was leaking and the vessel was fourteen (14) years old. Captain Tayong
followed-up the requisition by the former captain of the Oceanic Mindoro for supplies of oxygen
and acetylene, necessary for the welding-repair of the turbo-charger and the economizer.
Sea Horse advised Captain Tayong to contact its Technical Director, Mr. Clark, who was in
Tokyo and who could provide a solution for the supply of said oxygen and acetylene. According
to Mr. Clark, Captain Tayong agreed with him that the vessel could sail as scheduled for South
Africa.
According to Captain Tayong, however, he communicated to Sea Horse his reservations
regarding proceeding to South Africa without the requested supplies.
When the vessel arrived in South Africa, Captain Tayong was instructed to turn-over his post to
the new captain. He was thereafter repatriated to the Philippines, after serving petitioners for a
little more than two weeks. He was not informed of the charges against him.
Petitioners, in their answer to the complaint, denied that they had illegally dismissed Captain
Tayong. Petitioners alleged that he had refused to sail immediately to South Africa to the
prejudice and damage of petitioners.
ISSUE
WON respondent-employee Captain Tayong was illegally dismissed.
HELD
YES. The captain of a vessel is a confidential and managerial employee within the meaning of
the above doctrine. A master or captain, for purposes of maritime commerce, is one who has
command of a vessel. It is well settled in this jurisdiction that confidential and managerial

employees cannot be arbitrarily dismissed at any time, and without cause as reasonably
established in an appropriate investigation. Such employees, too, are entitled to security of
tenure, fair standards of employment and the protection of labor laws.
It is plain from the records of the present petition that Captain Tayong was denied any
opportunity to defend himself. Petitioners curtly dismissed him from his command and
summarily ordered his repatriation to the Philippines without informing him of the charge or
charges levelled against him, and much less giving him a chance to refute any such charge.

388. Collegio de San Juan de Letran v Assn of Employees 340 SCRA 587 (2000) (Management
Rights and Security of Tenure)
FACTS:
Private Respondent Ambas was the Union Leader of the Association of Employees and Faculty
of Letran. Ambas wanted to continue the renegotiation of the CBA but petitioner, through Fr.
Edwin Lao, claimed that the CBA was already prepared for signing by the parties. The parties
agreed to disregard the unsigned CBA and to start negotiation on a new five-year CBA starting
1994-1999. In the meantime, Ambas was informed through a letter from her superior that her
work schedule was being changed from Monday to Friday to Tuesday to Saturday. Ambas
protested and requested management to submit the issue to a grievance machinery under the old
CBA. Ambas was dismissed for alleged insubordination.
The Union filed a request to strike due to the inaction of petitioner. The inaction was allegedly
due to the information received about a new group claiming to represent the majority of
employees filing for a petition for certification election.
Secretary of Labor and Employment assumed jurisdiction and ordered all striking employees
including the union president to return to work and for petitioner to accept them back. Petitioner
admitted the striking member except Ambas.
ISSUE
WON petitioner is guilty of unfair labor practice by refusing to bargain with the union.
HELD
YES. Article 252 of the Labor Code defines the meaning of the phrase "duty to bargain
collectively. Noteworthy in the definition is the requirement on both parties of the performance
of the mutual obligation to meet and convene promptly and expeditiously in good faith for the
purpose of negotiating an agreement. Undoubtedly, respondent union lived up to this requisite
when it presented its proposals for the CBA to petitioner. On the other hand, petitioner devised
ways and means in order to prevent the negotiation.
Article 250 states the Procedure in collective bargaining. It states that when a party serve a
written notice upon the other party of its desire to negotiate with a statement of its proposals, the
other party shall make a reply not later than 10 days. Petitioner's utter lack of interest in
bargaining with the union is obvious in its failure to make a timely reply to the proposals
presented by the latter. More than a month after the proposals were submitted by the union,
petitioner still had not made any counter-proposals. It is an indication of bad faith. Petitioner's
actuations show a lack of sincere desire to negotiate rendering it guilty of unfair labor practice.

389. San Miguel Brewery etc v Ople 170 SCRA 25 (1989) (Management Rights and Security of
Tenure)
FACTS
San Miguel Corporation introduced a marketing scheme known as the Complementary
Distribution System (CDS) whereby its beer products were offered for sale directly to
wholesalers through San Miguels sales offices.
Labor Union filed a complaint for unfair labor practice on the ground that CDS violates Sec 1
Art IV of CBA which states that, Employees shall be entitled to a basic monthly
compensation plus commission based on their respective sales. The union claims that
implementation of the new scheme would -reduce the take-home pay of the salesmen.
SMC positioned that they have an offer to compensate members who will be adversely affected
by paying them a back-adjustment commission to make up for the commissions they might
lose.
ISSUE
WON the CDS violates the collective bargaining agreement and whether it is an indirect way of
busting the union.
HELD
NO. CDS is a valid exercise of management prerogatives. So long as a company's management
prerogatives are 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 them.

390. Valiao v Court of Appeals 435 SCRA 543 (2004) (Guidelines on Imposition of Penalty)
FACTS
Petitioner Valiao was initially appointed by private respondent as Records Chief at the
Registrars Office but was re-assigned to different positions due to his tardiness and absences.
He was even caught one time manipulating the bundy clock. He was furnished copies of his
tardiness/absences reports along with a memo reguiring him to explain his absences, tardiness
and dishonesty in using the bundy clock. Petitioner wasnt able to justify his actions and was
suspended.
After suspension, the new college President Suzette Arbolario-Agustin gave petitioner another
chance. The petitioner was then appointed as Information Assistant and was allowed a part-time
teaching job in the same school to augment his income.
On January 18, 1993, petitioner was again absent from work without permission or notice to his
immediate superior. It turned out that he was one of those arrested during a raid in Bacolod
concerning illegal drugs.
Petitioner was asked to explain why he should not be terminated as a result of the raid and the
charges against him. Petitioner was not able to answer immediately since he was in jail, although
his wife had received the memorandum on January 28, 1993. Petitioner was dismissed for failure
to answer said memorandum. The petitioner wrote to the President of WNC explaining his side
and asking for due process. WNC cancelled its Notice of Termination and granted the
petitioners request.
After the investigation attended by the petitioner and his counsel, with proceedings duly
recorded, the investigation committee recommended the dismissal of petitioner. A notice of
termination was then sent to petitioner informing him of his termination from the service for
serious misconduct and gross and habitual neglect of duty.
Petitioner filed a Complaint against WNC for illegal suspension, illegal dismissal. He claims that
his outright dismissal from employment was not valid and too harsh and that he was not
dismissed from employment because of tardiness or absences but because he was among those
apprehended in a raid.
WNC alleged that petitioner was dismissed on charges of serious misconduct, and gross and
willful neglect of duty. WNC said his dismissal was effected after due notice and prior hearing.
ISSUE
WON the petitioner was dismissed due to his apprehension and not because of his absences and
tardiness; and WON the penalty was too harsh.
HELD

NO. NLRC did not base its conclusions on the fact of the arrest of petitioner for violation of Rep.
Act No. 6425 but on the totality of the number of infractions incurred by the petitioner during the
period of his employment in different positions he occupied at WNC. These unexplained
absences and tardiness were reflected on the summary reports submitted by WNC before the
labor arbiter, but petitioner failed to controvert said reports.
The repeated acts of misconduct and willful breach of trust by an employee justify his dismissal
and forfeiture of his right to security of tenure. The totality of infractions or the number of
violations committed during the period of employment shall be considered in determining the
penalty to be imposed upon an erring employee. The offenses committed by him should not be
taken singly and separately but in their totality.