SLL INTERNATIONAL CABLES SPECIALIST vs.

NATIONAL LABOR RELATIONS COMMISSION

Wages; facilities and supplements. Wages; proof of payment

Facts Sometime in 1996, and January 1997, private respondents were hired by petitioner Lagon as apprentice or trainee cable/lineman. The three
were paid the full minimum wage and other benefits but since they were only trainees, they did not report for work regularly but came in as
substitutes to the regular workers or in undertakings that needed extra workers to expedite completion of work. Soon after they were engaged as
private employees for their Islacom project in Bohol. Private respondents started on March 15, 1997 until December 1997. Upon the completion of
their project, their employment was also terminated. Private respondents received the amount of P145.00, the minimum prescribed daily wage for
Region VII. In July 1997, the amount of P145 was increased to P150.00 and in October of the same year, the latter was increased to P155.00.
On May 21, 1999, private respondents for the 4th time worked with Lagons project in Camarin, Caloocan City with Furukawa Corporation
as the general contractor. Their contract would expire on February 28, 2000, the period of completion of the project. From May 21, 1997-December
1999, private respondents received the wage of P145.00. At this time, the minimum prescribed rate for Manila was P198.00. In January to February
28, the three received the wage of P165.00. The existing rate at that time was P213.00.
For reasons of delay on the delivery of imported materials from Furukawa Corporation, the Camarin project was not completed on the
scheduled date of completion. Face[d] with economic problem[s], Lagon was constrained to cut down the overtime work of its worker[s][,] including
private respondents. Thus, when requested by private respondents on February 28, 2000 to work overtime, Lagon refused and told private
respondents that if they insist, they would have to go home at their own expense and that they would not be given anymore time nor allowed to stay
in the quarters. This prompted private respondents to leave their work and went home to Cebu. On March 3, 2000, private respondents filed a
complaint for illegal dismissal, non-payment of wages, holiday pay, 13th month pay for 1997 and 1998 and service incentive leave pay as well as
damages and attorneys fees.
Issues:

1. Whether or not the respondent should be allowed to recover the differential due to the failure of the petitioner to pay the minimum wage.
2. Whether or not value of the facilities that the private respondents enjoyed should be included in the computation of the wages
received by them.

Ruling
As a general rule, on payment of wages, a party who alleges payment as a defense has the burden of proving it. Specifically with respect
to labor cases, the burden of proving payment of monetary claims rests on the employer, the rationale being that the pertinent personnel files,
payrolls, records, remittances and other similar documentswhich will show that overtime, differentials, service incentive leave and other claims of
workers have been paidare not in the possession of the worker but in the custody and absolute control of the employer.
In this case, petitioners, aside from bare allegations that private respondents received wages higher than the prescribed minimum, failed to
present any evidence, such as payroll or payslips, to support their defense of payment. Thus, petitioners utterly failed to discharge the onus
probandi.
On whether the value of the facilities should be included in the computation of the wages received by private respondents, Section 1 of
DOLE Memorandum Circular No. 2 provides that an employer may provide subsidized meals and snacks to his employees provided that the subsidy
shall not be less that 30% of the fair and reasonable value of such facilities. In such cases, the employer may deduct from the wages of the
employees not more than 70% of the value of the meals and snacks enjoyed by the latter, provided that such deduction is with the written
authorization of the employees concerned.
Moreover, before the value of facilities can be deducted from the employees wages, the following requisites must all be attendant: first,
proof must be shown that such facilities are customarily furnished by the trade; second, the provision of deductible facilities must be voluntarily
accepted in writing by the employee; and finally, facilities must be charged at reasonable value.[] Mere availment is not sufficient to allow deductions
from employees wages.[]
These requirements, however, have not been met in this case. SLL failed to present any company policy or guideline showing that
provisions for meals and lodging were part of the employees salaries. It also failed to provide proof of the employees written authorization, much
less show how they arrived at their valuations. At any rate, it is not even clear whether private respondents actually enjoyed said facilities.
In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and over his basic or ordinary
earning or wage is supplement; and when said benefit or privilege is part of the laborers basic wages, it is a facility. The distinction lies not so much
in the kind of benefit or item (food, lodging, bonus or sick leave) given, but in the purpose for which it is given. In the case at bench, the items
provided were given freely by SLL for the purpose of maintaining the efficiency and health of its workers while they were working at their respective
projects.
For said reason, the cases of Agabon and Glaxo are inapplicable in this case. At any rate, these were cases of dismissal with just and
authorized causes. The present case involves the matter of the failure of the petitioners to comply with the payment of the prescribed minimum
wage.
The Court sustains the deletion of the award of differentials with respect to respondent Roldan Lopez. As correctly pointed out by the CA, he did not
work for the project in Antipolo.

Gaa v CA (Patajo, 1985)

Petitioner: Rosario GaaRespondents: Ca, Europhil Industries Corporation and Cesar Roxas (deputy sheriff of Manila)
Facts: Europhil Industries Corporation was formerly one of the tenants in Trinity Building while Gaa was then the building administrator.
December 12, 1973 - Europhil Industries commenced an action in the CFI of Manila for damages against Gaa for trespassing upon its rights,
namely, cutting of its electricity, and removing its name from the building directory and gate passes of its officials and employees. June 28, 1974
CFI ruled in favor of Europhil ordering Gaa to pay the former actual damages, moral damages, exemplary damages and to pay the costs.
August 1, 1975 - A writ of garnishment was issued pursuant to which Deputy Sheriff Roxas served a Notice of Garnishment upon El Grande Hotel,
where Gaa was then employed, garnishing her "salary, commission and/or remuneration." Gaa then filed with the CFI 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.
CFI: denied Gaas motion and her subsequent MR.
CA: dismissed Gaas petition on the ground that Gaa is not a mere laborer as contemplated underArticle 1708 as the term laborer does not apply to
one who holds a managerial or supervisory position like that of petitioner, but only to those "laborers occupying the lower strata."
It also held that the term "wages" means the pay given" as hire or reward to artisans, mechanics,domestics or menial servants, and laborers
employed in manufactories, agriculture, mines, and othermanual occupation and usually employed to distinguish the sums paid to persons hired to
performmanual labor, skilled or unskilled, paid at stated times, and measured by the day, week, month, orseason.
Issue: WON Gaa may be considered a laborer as contemplated under Article 1708 of the CC.
Held/Ratio:
NO. Gaa is not an ordinary or rank and file laborer but a responsibly placed employee of El Grande Hotel. Considering the importance of Gaa's
function in El Grande Hotel, it is undeniable that Gaa is occupying aposition equivalent to that of a managerial or supervisory position.
The word "laborer" includes everyone who performs any kind of mental or physical labor, but as commonly and customarily used and understood, it
only applies to one engaged in some form of manual or physical labor
In Kline vs. Russell it was held that a laborer, within the statute exempting from garnishment the wages of a "laborer," is one whose work depends on
mere physical power to perform ordinary manual labor, and not one engaged in services consisting mainly of work requiring mental skill or business
capacity, and involving the exercise of intellectual faculties.
Article 1708 used the word "wages" and not "salary" in relation to "laborer" when it declared what are to be exempted from attachment and
execution. The term "wages" as distinguished from "salary", applies to the compensation for manual labor, skilled or unskilled, paid at stated times,
and measured by the day, week, month, or season, while "salary" denotes a higher degree of employment, or a superior grade of services, and
implies a position of office: by contrast, the term wages " indicates considerable pay for a lower and less responsible character of employment, while
"salary" is suggestive of a larger and more important service.
Bell vs. Indian Livestock Co it was held that salary is understood to relate to position of office, to be the compensation given for official or other
service, as distinguished from 'wages', the compensation for labor."
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.

Songco vs. NLRC [G.R. No. L-50999 March 23, 1990]

Facts: Zuellig (M) Inc. filed with the Department of Labor (Regional Office No. 4) a clearance to terminate the services of petitioners Jose Songco,
Romeo Cipres and Amancio Manuel due to alleged financial losses. However, the petitioners argued that the company is not suffering any losses
and the real reason for their termination was their membership in the union. At the last hearing of the case, the petitioner manifested that they no
longer contesting their dismissal, however, they argued that they should be granted a separation pay. Each of the petitioners was receiving a
monthly salary of P40, 000.00 plus commissions for every sale they made. Under the CBA entered by the Zuellig Inc. and the petitioners, in Article
XIV, Section 1(a), Any employee, who is separated from employment due to old age, sickness, death or permanent lay-off not due to the fault of said
employee shall receive from the company a retirement gratuity in an amount equivalent to one months salary per year of service. One month of
salary as used in this paragraph shall be deemed equivalent to the salary at date of retirement; years of service shall be deemed equivalent to total
service credits, a fraction of at least six months being considered one year, including probationary employment. Other basis for petitioners
contention are Article 284 of the Labor Code with regards to reduction of personnel and Sections 9(b) and 10 of Rule 1, Book VI of the Rules
Implementing the Labor Code. The Labor Arbiter rendered his decision directing the company to pay the complainants separation pay equivalent to
their one month salary (exclusive of commissions, allowances, etc.) for every year of service that they have worked with the company. The
petitioners appealed to the NLRC but it was denied. Petitioner Romeo Cipres filed a Notice of Voluntary Abandonment and Withdrawal of petition
contending that he had received, to his full and complete satisfaction, his separation pay. Hence, this petition.
Issue: Whether or not earned sales commissions and allowances should be included in the monthly salary of petitioners for the purpose of
computation of their separation pay.
Held: The petition is granted. Petitioners contention that in arriving at the correct and legal amount of separation pay due to them, whether under the
Labor Code or the CBA, their basic salary, earned sales commissions and allowances should be added together. Insofar as whether the allowances
should be included in the monthly salary of petitioners for the purpose of computation of their separation pay is concerned, this has been settled in
the case of Santos vs. NLRC, 76721, in the computation of backwages and separation pay, account must be taken not only of the basic salary of
petitioner but also of her transportation and emergency living allowances. In the issue of whether commission should be included in the computation
of their separation pay, it is proper to define first commission. Blacks Law Dictionary defined commission as the recompensed, compensation or
reward of an agent, salesman, executor, trustees, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of
his transactions or on the profit to the principal. The nature of the work of a salesman and the reason for such type of remuneration for services
rendered demonstrate clearly that the commission are part of petitioners wage and salary. Some salesmen do not receive any basic salary but
depend on commission and allowances or commissions alone, are part of petitioners wage and salary. Some salesman do not received any basic
salary but depend on commission and allowances or commissions alone, although an employer-employee relationship exist. In Soriano v. NLRC, it is
ruled then that, the commissions also claimed by petitioner (override commission plus net deposit incentive) are not properly includible in such base
figure since such commissions must be earned by actual market transactions attributable to petitioner. Applying this by analogy, since the
commissions in the present case were earned by actual market transactions attributable to petitioners, these should be included in their separation
pay. In the computation thereof, what should be taken into account is the average commissions earned during their last year of employment.

G.R. No. 168654 March 25, 2009

ZAYBER JOHN B. PROTACIO, Petitioner, vs. LAYA MANANGHAYA & CO. and/or MARIO MANANGHAYA, Respondents
TINGA, J.:
FACTS:
Respondent KPMG Mananghaya & Co. hired petitioner Zayber John B. Protacio as Tax Manager in 1996. He was subsequently promoted as Senior
Tax Manager then as Tax Principal in 1 October 1997. However, petitioner resigned effective 30 September 1999. On 1 December 1999, petitioner
sent a letter to responded firm demanding the immediate payment of his 13th month pay, the cash commutation of his leave credits and the issuance
of his 1999 Certificate of Income Tax Withheld on Compensation. He sent two more demand letters for the payment of his reimbursement claims
under pain of a legal action.
Respondent firm failed to act upon the demand letters. Thus, on 15 December 1999, petitioner filed before the NLRC a complaint for the nonissuance of petitioners W-2 tax form for 1999 and the non-payment of the following benefits: 1) cash equivalent of petitioners leave credits in the
amount of P55,467.60; 2) proportionate 13th month pay for 1999; 3) reimbursement claims of P19,012; and 4) lump sum pay for the FY 1999 of
P674,756.7. He also sought moral and exemplary damages and attorneys fees.
During the pendency of the case, respondent firm on three occasions sent check payments to petitioner in the following amounts: 1) P17,250 13th
month pay; 2) P54,824.18 cash equivalent of his leave credits and reimbursement claims; and 3) P10,762.57 refund of taxes withheld on his
vacation leave credits. Petitioner acknowledged the receipt of the 13th month pay but disputed the computation of the cash value of his vacation
leave credits and reimbursement claims.
The Labor Arbiter rendered a decision, ordering respondent to pay complainant the following: P12,681 reimbursement claims; P28,407.08 for
underpayment of cash equivalent of the unused leave credits; P573,000 year-end lump sum payment for 1999, and; 10% of total judgment awards
way of attorneys fees.
The Labor Arbiter held that the respondent firm had erroneously based the computation of the cash equivalent of the leave credits on a basic pay of
P61,000. He held that evidence showed that petitioners monthly basic salary was P95,000 inclusive of the other benefits that were deemed included
and integrated in the basic salary and that respondent firm had computed petitioners 13 th month pay based on a monthly basic pay of P95,000, thus
the cash commutation of the leave credits should also be based on this figure.
The Labor Arbiter also ruled that petitioner was entitled to a year-end payment of P573,000 on the basis of the company policy of granting yearly
lump sum payments to petitioner during all the years of service and that respondent firm had failed to give petitioner the same benefit for 1999
without any explanation.
Respondent firm appealed to the NLRC which rendered a judgment affirming its earlier ruling with the modification that complainant is only entitled to
receive P2,301 as reimbursement claims. The award of P12,681 was set aside for lack of basis while affirming the findings on the issues of lump
sum payments and cash equivalents of leave credits. After being denied by NLRC its petition for reconsideration, respondent elevated the matter to
the Court of Appeals.
The CA further reduced total money award to petitioner to P2,301 for reimbursement claims, P9,8012.83 for underpayment of cash equivalent of
unused leave credits, and P10,000 attorneys fees.
With respect to the award of the year-end lump sum, the CA held that while the lump sum payment which petitioner was entitled, the payment thereof
was contingent upon the financial position of the firm. Petitioner brought the matter to the Supreme Court.
ISSUE:
Whether or not petitioner is entitled to the year-end lump sum as part of his compensation package.
RULING:
The evidence on record establishes that aside from the basic monthly compensation, petitioner received a yearly lump sum amount during the first
two years of his employment, with payments made to him after the annual net incomes of the firm had been determined. Thus, the amounts thereof
varied and were dependent on the firms cash position and financial performance. In one of the letters of Mananghaya to petitioner, the amount was
referred to as petitioners share in the incentive compensation program.
While the amount was drawn from the annual net income of the firm, the distribution to non-partners of employees of the firm was not a profit-sharing
arrangement contrary to CAs finding. The payment to non-partners like the petitioner was discretionary on the part of the chairman and managing
chairman coming from their authority to fix compensation of any employee based on a share in the partnerships net income. The distribution being
merely discretionary, the year-end lump sum payment may properly be considered as a year-end bonus or incentive. Contrary to petitioners claim,
the granting of the year-end lump sum amount was payable only after the firms annual net income and cash position were determined.
A bonus is a gratuity, or act of liberality of the giver. It is something given in addition to what is ordinarily received by or strictly due the recipient. A
bonus is granted and paid to an employee for his industry and loyalty which contributed to the success of the employers business and made

possible the realization of profits. Generally, a bonus is not a demandable and enforceable obligation. It is so only when it is made part of the wage
or salary or compensation. When considered as part of the compensation and therefore demandable and enforceable, the amount is usually fixed. If
the amount would be dependent upon the realization of profits, the bonus is also not demandable and enforceable.
Thus, petitioners claim that the year-end lump sum represented the balance of his total compensation package is incorrect. The fact remains that
the amount paid to petitioner on the two occasions varied and were always dependent upon the firms financial position.
In Philippine Duplicators, Inc. v. NLRC, the Court held that if the bonus is paid only if profits are realized or a certain amount of productivity achieved,
it cannot be considered part of wages. Only when the employer promises and agrees to give without any conditions imposed for its payment, does
the bonus become part of the wage.
The granting of the bonus is basically a management prerogative which cannot be enforced upon the employer who may not be obliged to assume
the onerous burden of granting bonuses or other benefits aside from the employees basic salaries or wages. Respondents had consistently
maintained that petitioner was not entitled to the bonus as a matter of right. The payment of the year-end lump sum bonus based upon the firms
productivity or the individual performance of tis employees was well within respondent firms prerogative. Thus, respondent was also justified in
declining to give the bonus to petitioner on account of the latters unsatisfactory performance. The granting of the year-end lump sum bonus was
discretionary and conditional, thus, petitioner may not question the basis for the granting of a mere privilege.
The monthly compensation of P71,250 used as base figure by the CA is totally without basis. As correctly held by the Labor Arbiter and the NLRC,
the evidence on record reveals that petitioner was receiving a monthly compensation of P95,000 consisting of a basic salary of P61,000, advance
incentive pay of P15,000, transportation allowance of P15,000, and representation allowance of P4,000, totalling to P95,000 and are all deemed part
of petitioners monthly compensation package, and as such, should be the basis in the cash commutation of his leave credits. These allowances
were customarily furnished by respondent firm and regularly received by the petitioner on top of the basic monthly pay of P61,000. Moreover,
respondent firms act of paying petitioner a 13th month pay at the rate of P95,000 was as admission that petitioners basic monthly salary was
P95,000.
The Court was also perplexed on the use of the CA, the Labor Arbiter and the NLRC of a 30-working day divisor instead of 26 days which petitioner
insists and which even the respondent firm used in the cash commutation of leave credits. The reliance of CA on Section 2, Rule IV, Book III of the
Implementing Rules of Labor Code in using the 30-day working divisor is inapplicable to the instant case because it referred to the computation of
holiday pay for monthly-paid employees.
Thus, with a monthly compensation of P95,000 and using a 26-working day divisor, petitioners daily rate is P3,653.85. Based on this rate,
petitioners cash equivalent of his leave credits of 23.5 is P85,865.48. Since he has already received the amount of P46,009.67, a balance of
P39,855.80 remains payable to petitioner.
Wherefore, the instant petition for review on certiorari is partly granted. The Decision of the CA is affirmed with the modification that respondents are
liable for the underpayment of the cash equivalent of petitioners leave credits in the amount of P39,855.80.
13TH mo-pay

Protacio

Cash equivalent of leave

credits (23.5)

55,467.6

Reimbursement claims

19,012.0

Year-end lump sum

Exemplary damages/ Atty.s
fees

674,756.7

KPMG
P71,250 (based on
P95K rate)
54,824.18 (of w/c
P46,009.67 cash
equiv. of leave
credits) 10,762.57
(refund)
X

LA

NLRC

CA

28,407.08
(95K/30days x
23.5-46,009.67)
12,681

Affirmed LA

9,802.83 (71,250/30
day-divisorx23.546,009.67)
Affirmed NLRC

573,000
10% of total award

Affirmed LA

2,301

X
10K

SC

39,855.8 (95K/26 days x

23.5 = 85,865.4846,009.67)
Affirmed CA
Affirmed CA
Affirmed CA

Grant of Bonus per CBA

LEPANTO CERAMICS, INC., vs. LEPANTO CERAMICS EMPLOYEES ASSOCIATION G.R. No. 180866 March 2, 2010 PEREZ, J.
COMPANY GAVE SMALLER AMOUNT OF BONUS AND NOT IN CASH DESPITE WHAT THE CBA STATES: Findings of labor officials, who are
deemed to have acquired expertise in matters within their respective jurisdictions, generally bind the Court when supported by substantial evidence,
more so when findings of both the arbitrator and the Court of Appeals coincide.
An arbitrator is confined to the interpretation and application of the CBA.: his award is legitimate if it draws its essence from the CBA.
A "bonus" is a gratuity or act of liberality of the giver, given in addition to what is ordinarily received by or strictly due the recipient. It is paid to an
employee for his contribution to the success of the employers business and the realization of profits. It is also granted to spur the employee to
greater efforts for the success of the business and realization of bigger profits.
It is generally not a demandable and enforceable obligation. To be enforceable, it must have been promised by the employer and expressly agreed
upon by the parties, such as this case where Christmas bonus is integrated in the CBA.
The CBA is the law between the parties and have the obligation to comply with its provisions . The CBA provides for the giving of a "Christmas gift
package/bonus" without qualification. It did not state that it is dependent on the employers financial standing.
Business losses are a feeble ground to repudiate its obligation under the CBA. The principle of non-diminution of benefits is based on the
constitutional mandate to protect the rights of workers , promote their welfare and afford labor full protection. It is presumed that Lepanto entered into
the CBA voluntarily with full knowledge of its contents and commitments under the contract.
The implementation of the subject CBA provision may further deplete petitioners resources, but the remedy is the Courts invalidation of the
provision but in the clarification in subsequent CBA negotiations.

MANILA JOCKEYS CLUB EMPLOYEES LABOR UNION vs. MANILA JOCKEY CLUB

Facts
Manila Jockey Club, Inc., a corporation with a legislative franchise to conduct, operate and maintain horse races, entered into a Collective
Bargaining Agreement (CBA) with Manila Jockey Club Employees Labor Union-PTGWO. Under Section 1 Article IV of their CBA, the parties agreed
to a 7-hour work schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. on a work week of Monday to Saturday. All work performed
in excess of seven (7) hours work schedule and on days not included within the work week shall be considered overtime and paid as such with
exception to those monthly compensation which includes work performed during Saturday, Sunday, and Holiday when races are held at the Club.
The CBA likewise reserved in management prerogatives including the determination of the work schedule. An inter-office memorandum was later
issued declaring that the hours of work of regular monthly-paid employees shall be from 1:00 p.m. to 8:00 p.m. when horse races are held, that is,
every Tuesday and Thursday. The memorandum, however, sustained the 9:00 a.m. to 5:00 p.m. schedule for non-race days.
Before the voluntary arbitrators of the National Conciliation and Mediation Board, petitioners questioned the memorandum as violative of
the prohibition against non-diminution of wages and benefits guaranteed the CBA which specified the work schedule of respondents employees to
be from 9:00 a.m. to 5:00 p.m. They claimed that as a result of the memorandum, the employees are precluded from rendering their usual overtime
work from 5:00 p.m. to 9:00 p.m.
Issue
Whether or not the change in the work schedule violated Article 100 of the Labor Code on the non-diminution of wages and benefits
guaranteed under the parties CBA.
Ruling
No. It was evident that the change in work schedule was justified, it being a management prerogative. Respondent, as employer, cited the
change in the program of horse races as reason for the adjustment of the employees work schedule. It rationalized that when the CBA was signed,
the horse races started at 10:00 a.m. When the races were moved to 2:00 p.m., there was no other choice for management but to change the
employees work schedule as there was no work to be done in the morning. It is true that Section 1, Article IV of the CBA provides for a 7-hour work
schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. from Mondays to Saturdays. However, Section 2, Article XI expressly
reserves on respondent the prerogative to change existing methods or facilities to change the schedules of work.
Moreover, Manila Jockey Club was not obliged to allow all its employees to render overtime work everyday for the whole year, but only
those employees whose services were needed after their regular working hours and only upon the instructions of management. The overtime pay
was not given to each employee consistently, deliberately and unconditionally, but as a compensation for additional services rendered. Thus,
overtime pay does not fall within the definition of benefits under Article 100 of the Labor Code on prohibition against elimination or diminution of
benefits.

VERGARA, JR. vs. COCA-COLA BOTTLERS PHILS INC.

Facts
Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers Philippines, Inc. from May 1968 until he retired on
January 31, 2002 as a District Sales Supervisor (DSS) for Las Pias City, Metro Manila.
As stipulated in respondents existing Retirement Plan Rules and Regulations at the time, the Annual Performance Incentive Pay of RSMs,
DSSs, and SSSs shall be considered in the computation of retirement benefits, as follows: Basic Monthly Salary + Monthly Average Performance
Incentive (which is the total performance incentive earned during the year immediately preceding 12 months) No. of Years in Service.
Claiming his entitlement to an additional PhP474,600.00 as Sales Management Incentives (SMI) and to the amount of PhP496,016.67 which
respondent allegedly deducted illegally, representing the unpaid accounts of two dealers within his jurisdiction, petitioner filed a complaint before the
NLRC on June 11, 2002 for the payment of his Full Retirement Benefits, Merit Increase, Commission/Incentives, Length of Service, Actual, Moral
and Exemplary Damages, and Attorneys Fees.
Apparently, Petitioner argued that the granting of SMI to all retired DSSs regardless of whether or not they qualify to the same had ripened into
company practice. The only two pieces of evidence that he stubbornly presented throughout the entirety of this case are the sworn statements of
Renato C. Hidalgo (Hidalgo) and Ramon V. Velazquez (Velasquez), former DSSs of respondent who retired in 2000 and 1998, respectively. They
claimed that the SMI was included in their retirement package even if they did not meet the sales and collection qualifiers. Therefore, the failure of
employer to grant him his SMI is a violation on the principle of non-diminution of benefits.)
Issue
Whether or not the granting of SMI to all retired DSSs regardless of whether or not they qualify to the same had ripened into company
practice
Ruling
Generally, employees have a vested right over existing benefits voluntarily granted to them by their employer. Thus, any benefit and
supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of nondiminution of benefits is actually founded on the Constitutional mandate to protect the rights of workers, to promote their welfare, and to afford them
full protection. In turn, said mandate is the basis of Article 4 of the Labor Code which states that all doubts in the implementation and interpretation
of this Code, including its implementing rules and regulations, shall be rendered in favor of labor. Chanroblesvirtualawlibrary.
There is diminution of benefits when the following requisites are present: (1)
the grant or benefit is founded on a policy or has ripened
into a practice over a long period of time; (2)
the practice is consistent and deliberate; (3) the practice is not due to error in the construction or
application of a doubtful or difficult question of law; and (4) the diminution or discontinuance is done unilaterally by the employer.
To be considered as a regular company practice, the employee must prove by substantial evidence that the giving of the benefit is done over a
long period of time, and that it has been made consistently and deliberately. Jurisprudence has not laid down any hard-and-fast rule as to the length
of time that company practice should have been exercised in order to constitute voluntary employer practice. The common denominator in previously
decided cases appears to be the regularity and deliberateness of the grant of benefits over a significant period of time. It requires an indubitable
showing that the employer agreed to continue giving the benefit knowing fully well that the employees are not covered by any provision of the law or
agreement requiring payment thereof. In sum, the benefit must be characterized by regularity, voluntary and deliberate intent of the employer to
grant the benefit over a considerable period of time.blesvirtualawlibrary
Upon review of the entire case records, We find no substantial evidence to prove that the grant of SMI to all retired DSSs regardless of whether
or not they qualify to the same had ripened into company practice.
The granting of the SMI in the retirement package of Velazquez was an isolated incident and could hardly be classified as a company practice
that may be considered an enforceable obligation. To repeat, the principle against diminution of benefits is applicable only if the grant or benefit is
founded on an express policy or has ripened into a practice over a long period of time which is consistent and deliberate; it presupposes that a
company practice, policy and tradition favorable to the employees has been clearly established; and that the payments made by the company
pursuant to it have ripened into benefits enjoyed by them. Certainly, a practice or custom is, as a general rule, not a source of a legally demandable
or enforceable right. Company practice, just like any other fact, habits, customs, usage or patterns of conduct, must be proven by the offering party
who must allege and establish specific, repetitive conduct that might constitute evidence of habit or company practice.

Aklan Electric Corp. Inc. vs NLRC

FACTS: January 22, 1991 by way of a resolution of the Board of Directors of AKELCO it allowed the temporary holding of office at Amon Theater,
Kalibo, Aklan upon the recommendation of Atty. Leovigildo Mationg, then project supervisor, on the ground that the office at Lezo, Aklan was
dangerous and unsafe. Majority of the employees including the herein complainants, continued to report for work at Lezo, Aklan and were paid of
their salaries. The complainants claimed that transfer of office from Lezo, Aklan to Kalibo, Aklan was illegal because it failed to comply with the legal
requirements under P.D. 269, thus the they remained and continued to work at the Lezo Office until they were illegally locked out therefrom by the
respondents. Despite the illegal lock out however, complainants continued to report daily to the location of the Lezo Office, prepared to continue in
the performance of their regular duties. Complainants who continuously reported for work at Lezo, Aklan were not paid their salaries from June 1992
up to March 18, 1993.
LA dismissed the complaints. NLRC reversed and set aside the LAs decision and RULING that private respondents are entitled to unpaid wages.
NLRC based its conclusion on the following: (a) the letter of Leyson, Office Manager of AKELCO addressed to AKELCOs General Manager, Atty.
Mationg, requesting for the payment of private respondents unpaid wages from June 16, 1992 to March18, 1993; (b) the memorandum of said Atty.
Mationg in answer to the letter request of Leyson where he made an assurance that he will recommend such request; (c) the private respondents
own computation of their unpaid wages.Petitioner AKELCO claims
compensable service is best shown by timecards, payslips and other similar documents and it was an error for public respondent to consider the
computation of the claims for wages and benefits submitted merely by private respondents as substantial evidence
ISSUE: WON the refusal of private respondents to work under the lawful orders of AKELCO management are covered by the no work, no pay
principle (thus not entitled to the claim for unpaid wages)
RULING: The above bases of the NLRC does not constitute substantial evidence to support the conclusion that private respondents are entitled to
the payment of wages from June 16, 1992 to March18, 1993. Substantial evidence is that amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion. These evidences relied upon by public respondent did not establish the fact that private
respondents actually rendered services in the Kalibo office during the stated period.
It has been established that the petitioners business office was transferred to Kalibo and all its equipments, records and facilities were transferred
thereat and that it conducted its official business in Kalibo during the period in question. It was incumbent upon private respondents to prove that
they indeed rendered services for petitioner, which they failed to do.
It would neither be fair nor just to allow private respondents to recover something they have not earned and could not have earned because they did
not render services at the Kalibo office during the stated period.

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS vs. QUISUMBING

Facts
International School, Inc., pursuant to PD 732, is a domestic educational institution established primarily for dependents of foreign
diplomatic personnel and other temporary residents. To enable the School to continue carrying out its educational program and improve its standard
of instruction, Section 2 of the same decree authorizes the School to employ its own teaching and management personnel selected by it either
locally or abroad, from Philippine or other nationalities, such personnel being exempt from otherwise applicable laws and regulations attending their
employment, except laws that have been or will be enacted for the protection of employees.
The School hires both foreign and local teachers as members of its faculty, classifying the same into two: (1) foreign-hires and (2) localhires. The School employs four tests to determine whether a faculty member should be classified as a foreign-hire or a local hire: (a) What is ones
domicile? (b) Where is ones home economy? (c) To which country does one owe economic allegiance? (d) Was the individual hired abroad
specifically to work in the School and was the School responsible for bringing that individual to the Philippines? Should the answer to any of these
queries point to the Philippines, the faculty member is classified as a local hire; otherwise, he or she is deemed a foreign-hire.
The School grants foreign-hires certain benefits not accorded local- hires. These include housing, transportation, shipping costs, taxes,
and home leave travel allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-hires. The School justifies the
difference on two significant economic disadvantages foreign-hires have to endure, namely: (a) the dislocation factor and (b) limited tenure. The
compensation scheme is simply the Schools adaptive measure to remain competitive on an international level in terms of attracting competent
professionals in the field of international education.
Issue
Whether or not local hire teachers shall enjoy same salary as foreign hire teachers where they perform the same work.
Ruling
Employees are entitled to same salary for performance of equal work. Notably, the International Covenant on Economic, Social, and
Cultural Rights, supra, in Article 7 thereof, provides: The States Parties to the present Covenant recognize the right of everyone to the enjoyment of
just and favorable conditions of work, which ensure, in particular: ( a) Remuneration which provides all workers, as a minimum, with: (i)
Fair
wages and equal remuneration for work of equal value without distinction of any kind, in particular women being guaranteed conditions of work not
inferior to those enjoyed by men, with equal pay for equal work; The foregoing provisions impregnably institutionalize in this jurisdiction the long
honored legal truism of equal pay for equal work. Persons who work with substantially equal qualifications, skill, effort and responsibility, under
similar conditions, should be paid similar salaries. This rule applies to the School.
The School contends that petitioner has not adduced evidence that local-hires perform work equal to that of foreign-hires. The Court finds
this argument a little inconsiderate. If an employer accords employees the same position and rank, the presumption is that these employees perform
equal work. If the employer pays one employee less than the rest, it is not for that employee to explain why he receives less or why the others
receive more. The employer has discriminated against that employee; it is for the employer to explain why the employee is treated unfairly.
In this case, the employer has failed to discharge this burden. There is no evidence here that foreign-hires perform 25% more efficiently or
effectively than the local-hires. Both groups have similar functions and responsibilities, which they perform under similar working conditions.

DEVELOPMENT BANK OF THE PHILIPPINES, vs.THE HON. SECRETARY OF LABOR, CRESENCIA DIFONTORUM, ET AL.,
Facts of the case:
Private respondents won a case for illegal dismissal, unfair labor practice, illegal deductions from salaries and violation of the minimum wage law
against Riverside Mills Corporation. Consequently, a writ of execution was issued, on October 22, 1985 , against the goods and chattel of RMC. Said
assets however had already been foreclosed by petitioner Development Bank of the Philippines (DBP) through an extra-judicial proceedings as early
as 1983. Private respondents, in a motion, moved for the delivery of RMC properties in possession of DBP, relying on the provisions of Article 110 of
the Labor Code giving them first preference over the mortgaged properties of RMC for the satisfaction of the judgment rendered in their favor. Which
motion was granted. On appeal, the decision was affirmed.
Issue:
Whether or not Article 110 of the Labor Code finds application on the instant case. Article 110 provides that in case of bankruptcy or liquidation of an
employer's business, his workers enjoy first preference as regards wages due them for services rendered during the period prior to the bankruptcy or
liquidation.
Ruling:
The Supreme Court held that Article 110 cannot be applied in the instant case because the important requisite that employer's business must be
bankrupt is lacking. The Supreme Court ruled that in the Philippine jurisdiction, bankruptcy, insolvency and general judicial liquidation proceedings
are the only means to establish that a business is bankrupt or insolvent. Absent of such judicial declaration, the business cannot be considered
bankrupt for the purpose of applying the provisions of Article 110.

RADA VS NLRC 205 SCRA 69 Labor Law Labor Standards Hours of Work OT Pay of a Project Based Employee
FACTS: In 1977, Hilario Rada was contracted by Philnor Consultants and Planners, Inc as a driver. He was assigned to a specific project in Manila.
The contract he signed was for 2.3 years. His task was to drive employees to the project from 7am to 4pm. He was allowed to bring home the
company vehicle in order to provide a timely transportation service to the other project workers. The project he was assigned to was not completed
as scheduled hence, since he has a satisfactory record, he was re-contracted for an additional 10 months. After 10 months the project was not yet
completed. Several contracts thereafter were made until the project was finished in 1985.
At the completion of the project, Rada was terminated as his employment was co-terminous with the project. He later sued Philnor for non payment
of separation pay and overtime pay. He said he is entitled to be paid OT pay because he uses extra time to get to the project site from his home and
from the project site to his home everyday in total, he spends an average of 3 hours OT every day.
ISSUE: Whether or not Rada is entitled to separation pay and OT pay.
HELD: Separation pay NO. Overtime pay Yes.
Separation Pay
The SC ruled that Rada was a project employee whose work was coterminous with the project for which he was hired. Project employees, as
distinguished from regular or non-project employees, are mentioned in Section 281 of the Labor Code as those where the employment has been
fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the
employee.
Project employees are not entitled to termination pay if they are terminated as a result of the completion of the project or any phase thereof in which
they are employed, regardless of the number of projects in which they have been employed by a particular construction company. Moreover, the
company is not required to obtain clearance from the Secretary of Labor in connection with such termination.
OT Pay
Rada is entitled to OT pay. The fact that he picks up employees of Philnor at certain specified points along EDSA in going to the project site and
drops them off at the same points on his way back from the field office going home to Marikina, Metro Manila is not merely incidental to Radas job
as a driver. On the contrary, said transportation arrangement had been adopted, not so much for the convenience of the employees, but primarily for
the benefit of Philnor. As embodied in Philnors memorandum, they allowed their drivers to bring home their transport vehicles in order for them to
provide a timely transport service and to avoid delay not really so that the drivers could enjoy the benefits of the company vehicles nor for them to
save on fair.

G.R. No. L-31341 March 31, 1976

PHILIPPINE AIR LINES EMPLOYEES ASSOCIATION (PALEA) and PHILIPPINE AIR LINES SUPERVISORS' ASSOCIATION (PALSA),
petitioners,
vs.
PHILIPPINE AIR INES, INC., respondent.
G.R. No. L-31341-43 March 31, 1976
PHILIPPINE AIR LINES, INC., petitioner,
vs.
PHILIPPINE AIR LINES EMPLOYEES' ASSOCIATION, PHILIPPINE AIR LINES SUPERVISORS' ASSOCIATION, and the COURT OF
INDUSTRIAL RELATIONS, respondents.
Siguion Reyna, Montecillo, Belo & Ongsiako for Philippines Air lines, Inc.
Laquihon & Legayada for Philippine Air Lines Supervisors' Association (PALEA).
MAKASIAR, J.:
Before US are consolidated petitions to review the Court of industrial Relations en banc resolution dated October 9, 1969 in CIR Case No. 43-IPA.
In G.R. No. L-31341 (PALEA vs. PAL), petitioners question the date of effectivity of the adjudicated pay differentials due to the monthly-salaried
employees of Philippine Air Lines, Inc.
In G.R. No. L-31343 (PAL vs. PALEA), petitioner assails the reversal by the Court of Industrial Relations of its earlier resolution on the method
employed by the Philippine Air Lines in computing the basic daily and hourly rate of its monthly salaried employees.
On February 14, 1963, the Philippine Air Lines Employees' Association (PALEA) and the Philippine Air Lines Supervisors' Association (PALSA)
petitioners in G.R. No. L-31341 and respondents in G.R. No. 31343 commenced an action against the Philippine Air Lines (PAL) in the Court of
Industrial Relations, praying that PAL be ordered to revise its method of computing the basic daily and hourly rate of its monthly salaried employees,
and necessarily, to pay them their accrued sala differentials.
Sought to be revised is PAL's formula in computing wages of its employees:
Monthly salary x 12 365 (No. of calendar = x (Basic dailr rate) days in a year)
x 8 = Basic hourly rate
The unions would like PAL to modify the above formula in this wise:
Monthly salary x 12 No. of actual working = x (Basic daily rate) days
x 8 = Basic hourly rate
On May 23, 1964, the Court of Industrial Relations, through Presiding Judge Jose S. Bautista, issued an order denying the unions' prayer for a
modified wage formula. Pertinent portion of the order reads:
On the issue of rate of pay, PALSA and PALEA seek to change the long standing method in PAL of computing the basic daily
and hourly rate of monthly salaried employees for the purpose of determining overtime pay, Sunday and legal holiday premium
pay, night differential pay, vacation and sick leave pay, to wit, the monthly salary multiplied by 12 and dividing the product thereof
by 365 and then the quotient by 8. PALEA and PALSA claim that the method of computing the basic daily and hourly rate of
monthly salaried employees of PAL prior to the implementation of the 40-hour week schedule in PAL should be by dividing the
monthly salary by 26 working days, and after the 40-hour week schedule, by dividing the monthly salary by 20 working days, and
then dividing the quotient thereof in each case by 8. From the records, however, it appears that for may years since 1952, and
even previously, PAL has been consistently and regularly determining the basic and hourly rates of monthly salaried employees
by multiplying the monthly salary by 12 momths and dividing the product by 365 days to arive at the basic daily rate, and dividing
the quotient by 8 to compute the basic hourly rate. There has been no attempt to revise this formula notwithstanding the various

negotiations PAL and with the unions ever since its operations, and it was only on July 18, 1962, when PALSA, for the first time,
proposed that it be changed in accordance with what is now alleged in the petition. This, however, was a mere proposal by
PALSA for the adoption of a new formula; it was not a demand for the application of a formula claimed to be correct under the
law. Under this circumstance, PALSA and PALEA are estopped from questioning the correctness and propriety of PAL's method
of determining the basic hourly and daily rate of pay of its monthly salaried personnel, and considering the long period of time
that elapsed before they brought their petition, are barred from insisting or demanding a different rate of pay formula.
xxx xxx xxx
Upon the foregoing, the Court, therefore, declares PAL's method of computing the basic daily and hourly rate of its monthly
salaried employees as legal and proper, and denies the petition of PALSA and PALEA.
xxx xxx xxx
(pp. 47-48, 49, rec. G.R. No. L-31343).
On May 30, 1964, complaining unions promptly moved for the reconsideration of the above-sais order (p. 51, rec. G.R. No. L-31343).
On June 9, 1964, the unions filed their memorandum in support of their motion for reconsideration alleging that the questioned order is (a) contrary to
law, and (b) contrary to evidence adduced during the trial (p. 53, ree G.R. No. L-31343).
The unions attributed error to PAL's wage formula, particularly in the use of 365 days as divisor. The unions contended that the use of 365 days as
divisor would necessarily include off-days which, under the terms of the collective bargaining agreements entered into between the parties, were not
paid days. This is so since for work done on an off-day, an employee was paid 100% plus 25%, or 100% plus 37- of his regular working hour rate.
On the issue of prescription, the unions pointed out:
With respect to the period of prescription, it is clear that since the claim arises from the written contracts or collective bargaining
agreements between the petitioner unions and the PAL, the action thereon prescribes in ten years from the time the right of
action accrues, in accordance with Article 1144 of the New Civil Code. .... (p. 68, rec., G.R. No. L-31343).
On June 26, 1964, the Philippine Air Lines answered point by point the unions' memorandum, in a prompt reply.
On October 9, 1969, the Court of Industrial Relations, through Presiding Judge Arsenio I. Martinez, ordered the reversal of its decision dated May 34,
1964 and sustained the unions' method of age computation.
The industrial court, however, ordered the computation of pay differentials in accordance with the sustained method of computation effective only
July 1, 1957.
Said the Court of Industrial Relations in this regard:
... In this connection, however, it will be noted as previously stated, that this case was considered as an incident of Case No. 39IPA, in which the issues involved were related to the respondent PAL of the 40-Hour Week Law (Rep. Act 1880) from the date of
its effectivity July 1, 1957. ...
This Cout therefore belives that in justice and equity and substantial merits of the case, the aforesaid pay differentials due to the
employees involved herein by the application of the correct methods of computation of the rate of pay should be paid by the
respondent also beginning July 1, 1957 (p. 117, rec., G.R. No. L-31343).
From the above resolution, both parties appealed to this COURT. The Philippine Air Lines filed its appeal petition on December 13, 1969, while
PALEA filed its petition for review on certiorari on January 3, 1970.
I
For easy comprehension, WE start with the Philippine Air Lines, Inc. versus Philippine Air Lines Employees Association, Philippine Air Lines
Supervisors Association, and the Court of Industrial Relations, G.R. No. L-31343.
In this appeal PAL emphasizes three assignments of error, to wit:

1. RESPONDENT CIR ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN HOLDING THAT THE METHOD OF
COMPUTATION USED BY PAL IN DETERMINING TIIE BASIC DAILY OR HOURLY RATE OF ITS MONTLY SALARIED
EMPLOYEES WHICH IS:
MONTHLY SALARY x 1 365 (NO. OF CALENDAR DAYS IN YEAR) = x (BASIC DAILY RATE)
x 8 = BASIC HOURLY RATE 8
IS NOT CORRECT, CONSIDERING THAT PAL, A PUBLIC UTILITY WHERE THERE IS WORK EVERYDAY OF THE WEEK
FOR MANY YEARS EVEN BEFORE REPUBLIC ACT 602 AND WITH THE CONSENT AND APPROVAL OF THE
EMPLOYEES, CONSISTENT WITH SECTION 19 OF REPUBLIC ACT 602 PROHIBITING REDUCTION OF WAGES FOR OFF
DAYS-WHICH WAS SUSTAINED BY THIS HONORABLE COURT IN AUTOMOTIVE PARTS & EQUIPMENT CO., INC. VS.
JOSE B. LINGAD, G.R. NO. L- 26406, OCTOBER 31, 1969 HAS BEEN TREATING OFFSITE DAYS, 11 AS SATURDAYS,
SUNDAYS, COMPANY OBSERVED HOLIDAYS OR ANY OTHER DESIGNATED HOLIDAYS AS PAID DAYS.
2. RESPONDENT CIR ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN NOT FINDING. THAT RESPONDENT
UNIONS, BY THEIR LONG PERIOD OF CONSENT, ACQUIESCENCE, INACTION AND ACCEPTANCE OF BENEFITS
THEREUNDER, ARE ESTOPPED AND BARRED FROM CLAIMING THAT PAL'S FORMULA FOR DETERMINING THE BASIC
DAILY AND HOURLY RATE OF PAY IS INCORRECT.
3. RESPONDENT CIR ERED AND ACTED IN EXCESS OF ITS JURISDICTION IN SENTENCING PAL TO PAY
DIFFERENTIALS FOR OVERTIME WORK, NIGHTWORK, HOLIDAY AND SUNDAY PAY FROM JULY 1, 1957 CONSIDERING
THAT UNDER THE THREE-YEAR PRESCRIPTIVE PERIOD PROVIDED IN SECTION 7-a OF COMMONWEALTH ACT NO.
444, AS AMENDED, THE EIGHT-HOUR LABOR LAW, RESPONDENT UNIONS, ASSUMING THEY HAD ANY CAUSE OF
ACTION, COULD RECOVER ONLY FROM FEBRUARY 14, 1960 UP TO THE PRESENT, SINCE RESPONDENT UNIONS
FILED THEIR ACTION ONLY ON FEBRUARY 14, 1963.
A
PAL's maiden argument has a strong tendency to mislead. In an effort to emphasize that off-days are paid and therefore should be reckoned with in
determing the divisor for computing daily and hourly rate, PAL leans heavily on what it considers as additional payment of 125% or 137 %, as the
case may be, of an employee's basic hourly rate, given to a worker who worked on his off-days. PAL would like us to believe that the word
"Additional" all but accentuates the existence of a regular basic rate; otherwise, the 125% or 137% shall be in addition to what?
The industrial court, however, had this to say:
Moreover, it will be noted that before September 4, 1961, a monthly salaried employee of PAL had to work 304 days only in a
year,a nd after said date, he had to work only 258 days in ayear, to be entitled to his equivalent yearly salary. When he worked
on his off-day, he was paid accordingly (125% or 137%), indicating that his off-days were not with pay. It seems illogical for said
employe to be paid 125% or 137 % of his basic daily rate, if such off-days are already wtih pay, as indicated by the company
(p. 107, rec., G.R. No. L-31343, emphasis supplied).
WE agree.
There should hardly be any doubt that off-days are not paid days, Precisely, off-days are rest days for the worker. He is not required to work on such
days. This finds support not only in the basic principle in labor that the basis of remuneration or compensation is actual service rendered, but in the
ever pervading labor spirit aimed at humanizing the conditions of hie working man.
Since during his off-days an employee is not compelled to work he cannot, conversely, demand for his corresponding pay. If, however, a worker
works on his off-day, our welfare laws duly reward him with a premium higher than what he would receive when he works on his regular working day.
Such being the case, the divisor in computing an employee's basic daily rate should be the actual working days in a yar The number of off-days are
not to be counted precisely because on such off-days, an employee is not required to work.
Simple common sense dictates that should an employee opt not to work which he can legally do on an off-day, and for such he gets no pay, he
would be unduly robbed of a portion of his legitimate pay if and when in computing his basic daily and hourly rate, such off-day is deemed subsumed
by the divisor. For it is elementary in the fundamental process of division that with a constant dividend, the bigger your divisor is, the smaller our
quotient will be.

It bears emphasis that OUR view above constitutes the rationale behind the landmark ruling, surprisingly, by the same trial Judge Jose S. Bautista of
the Court of Industrial Relations, in National Waterworks and Sewerage Authority vs. NWSA Consolidated Unions, et al., (G.R. No. L-18938, August
31, 1964, 11 SCRA 766, 793-794), to which decision WE gave OUR affirmance.
PAL maintains that the NAWASA doctrine should not apply to a public utility like PAL which, from the nature of its operations, requires a whole-yearround, uninterrupted work by personnel. What PAL apparently forgets is that just like it, NAWASA is also a public utility which likewise requires its
workers to work the whole year round. Moreover, the NAWASA is a government-owned corporation to which PAL is akin, it being a governmentcontrolled corporation.
As will later be stated herein, PAL inked with the representative unions of the employees collective bargaining agreements wherein it bound itself to
duly compensate employer working on their off-days. The same situation obtained in the NAWASA case, wherein WE held:
And in the collective bargaining agreement entered into between the NAWASA and respondent unions it was agreed that all
existing benefits enjoyed by the employees and laborers prior to its effectivity shall remain in force and shall form part of the
agreement, among which certainly is the 25% additional compensation for work on Sundays and legal holidays theretofore
enjoyed by said laborers and employees. It may, therefore, be said that while under Commonwealth Act No. 444 a public utility is
not required to pay additional compensation to its employees and workers for work done on Sundays and legal holidays, there is,
however, no prohibition ofr it to pay such additional compensation if it voluntarily agrees to do so. The NAWASA committed itself
to pay this additional compensation. It must pay not because of compulsion of law but because of contractual obligation (11
SCRA 766, 776).
The settled NAWASA doctrine should not be disturbed.
B
PAL also vigorously argues that the unions' longstanding silence with respect, and acquiescence, to PAL's method of computation has placed them
in estoppel to impugn the correctness of the questioned wage formula. PAL furthermore contends that laches has likewise set in precisely because
of stich long-standing inaction.
Our jurisprudence on estoppel is, however, to the effect that:
... (I)t is meet to recall that "mere innocent silence will not work estoppel. There must also be some element of turpitude or
neglignece connected with the silence by which another is misled to his injury" (Civil Code of the philippines by Tolentino, Vol. IV,
p. 600) ... [Beronilla vs. GSISK, G.R. No. L-21723, Nov. 26, 1970, 36 SCRA 44, 46, 55, emphasis supplied].
In the case befor US, it is not denied that PAL's formula of determining daily and hourly rate of pay has been decided and adopted by it unilaterally
without the knowedge and express consent of the employees. It was only later on that the employees came to know of the formula's irregularity and
its being violative of the collective bargaining agreements previously executed by PAL and the unions. Precisely, PALSA immediately proposed that
PAL and the unions. Precisely, PALSA immediately proposed that PAL use the correct method of computation, which proposa PAL chose to ignore.
Clearly, therefore, the alleged long-standing silence by the PAL employees is in truth and in fact innocent silence, which cannot place a party in
estoppel.
The rationale for this is not difficult to see. The doctrine of estoppel had its origin in equity. As such, its applicability depends, to a large extent, on the
circumstances surrounding a particular case. Where, therefore, the neglect or omission alleged to haveplaced a party in estoppel cannot be invoked.
This was the essence of OUR ruling in the case of Mirasol vs. Municipality of Tabaco (43 Phil. 610, 614). And this, in quintessence, was the
compelling reason why in Lodovica vs. Court of Appeals (L-29678, July 18, 1975, 65 SCRA 154, 158), WE held that a party who had no knowledge
of or gave no consent to a transaction may not be estopped by it.
Furthermore, jurisprudence likewise fortifies the position that in the interest of public policy, estoppel and laches cannot arrest recover of evertime
compensation. The case of Manila Terminal Co. vs. CIR (G.R. NO. L-9265, April 29, 1957, 91 Phil. 625), is squarely in point. In this case We
intoned.
The principle of estoppel and laches cannot well be invoked agains the Association. In the first place, it would be contrary to the
spirit of the Eight-Hour Labor Law, under which, as already seen, the laborers cannot waive their right to extra compensation. In
the second place, the law principally obligates the employer to observe it, as much so that it punishes the employer for its
employer for its violation and leaves the employee or laborer is in such a disadvantageous position as to be naturally reluctant or
even apprehensive in asserting any claim which may cause the employher to devise a way for exercising his right to terminate
the employment.

If the principle of estoppel and laches is to be applied, it may bring about a situation, whereby the employee or laborer, who
cannot expressly renounce their right to extra compensation under the Eight-Hour Labor Law, may be compelled to accomplish
the same thing by mere silence or lapse of time, thereby frustrating the purpose of the law by indirection (91 Phil. 625, 633,
emphasis supplied).
In another count, the unilateral adoption by PAL of an irregular wage formula being an act against public policy, the doctrine of estoppel cannot give
validity to the same (Auyong Hian vs. Court of Tax Appeals, 59 SCRA 110, 112).
II
G.R. No. L-31341 is an appeal from that portion of the en banc resolution of the Court of Industrial Relations dated October 9, 1969 in case 43-IPA
making the payment of the adjudicated pay differentials effective only from July 1, 1957.
In their lone assignment of error, February 14, 1953, or ten (10) years from the date of the filing of their original complaint; because the claim for pay
differentials is based on written contracts i.e., the collective bargaining agreements between PAL and the employees' representative uniuons
and under Article 1144(1) of the Civil Code, actions based on written contracts prescribe in ten (10) years.
PAL, on the other hand, maintains that the employees' claim for pay differential is"an action to enforce a cause of action under the Eight-Hour Labor
Law (CA No. 444, as amended): (p. 592, rec., G.R. No. L-31341). As such, the applicable provision is Section 7-a of CA No. 4444, which reads:
Sec. 7-a. Any action to enforce any cause of action under this Act shall be commenced within three years after the cause of
action accrued, otherwise such action shall be forever barred; provided, however, that actions already commenced before the
effecitve date of this Act shall not be affected by the period herein prescribed (As amended by Rep. Act No. 1993, approved
June 22, 1957, emphasis supplied).
Moreover, PAL argues that even assuming that the issue calls for the application of Article 1144(1) of the New Civil Code, a general law, still in case
of conflict, Commonwealth ACt No. 444, as amended, should prevail because the latter is a special law.
WE believe that the present case calls for the application of the Civil Code provisions on the prescriptive period in the filing of actions based on
written contracts. The rason should be fairly obvious. Petitioners' claim fundamentally involves the strict compliance by PAL of the pvosions on wage
computation embodied in the collective bargaining agreements inked between it and the employees representative unions. These collective
bargaining agreements were: the PAS-PALEA collective bargaining agreement of 1952-53; the PAL-PALEA collective bargaining agreement of
1956-59; the PAL-PALEA collective bargaining agreement of 1959-61 (with Article VI as supplement); the PAL-PALEA agreement of September 4,
1961; the PAL-ACAP collective bargaining agreement of 1952-54; the PAL-ACAP collective bargaining agreement of September 6, 1955; the PALACAP collective bargaining agreement of 1959-61; the PAL-PALSA collective bargaining agreement of 1959-62; and the supplementary PAL-PALSA
collective bargaining agreement (pp. 54-55, rec., G.R. No. L-31343).
The three-year prescribed period fixed in the Eight-Hour Labor Law (CA No. 444, as amended) will apply, if the claim for differentials for overtime
work is solely based on said law, and not on a collective bargaining agreement or any other contract. In the instant cases, the claim for overtime
compensation is not so much because of Commonwealth Act No. 444, as amended, but because the claim is a demandable right of the employees,
by reason of the above-mentioned collective bargaining agreements. That is precisely why petitioners did not make any reference as to the
computation for overtime work under the Eight-Hour Labor Law (Secs. 3 and 4, CA No. 444), and instead inissited that work computation provided in
the collective bargaining agreements between the parties be observed. Since the claim for pay differentials is principally anchored on the written
contracts between the litigants, the ten-year prescriptive period between the litigants, the ten-year prescriptive period provided by Art. 1144(1) of the
New Civil Code should govern. (General Insurance and Surety Corp. vs. Republic, L-13873, January 31, 1963, 7 SCRA 4; Heirs of the Deceased
Juan Sindiong vs. Committee on Burnt Areas and Improvements of Cebu, L-15975, April 30, 1964, 10 SCRA 715; Conde vs. Cuenca and Malaga, L9405, July 31, 1956; Veluz vs. Veluz, L-23261, July 31, 1968, 24 SCRA 559).
Finally, granting arguendo that there is doubt as to what labor legislation to apply to the grievances of the employees in the cases at bar, it is OUR
view that that legislation which would enhance the plight of the workers should be followed, consonant with the express pronouncement of the New
Civil Code that:
In case of doubt, all labor legislation and labor contracts should be construed in favor of the safety and decent living of the
laborer (Article 1702).
WHEREFORE, THE APPEALED RESOLUTION IS HEREBY AFFIRMED, WITH THE MODIFICATION THAT PAY DIFFERENTIALS BE PAID
EFFECTIVE FEBRUARY 14, 1953. WITH COSTS AGAINST PHILIPPINE AIR LINES, INC. IN BOTH CASES.

INTERPHIL LABORATORIES EMPLOYEES UNION FFW V. INTERPHILLABORATORIES372 SCRA 658KAPUNAN, J.

FACTS1.Interphil Laboratories Employees Union -FFW is the sole and exclusive bargaining agent of the rank-and file employees of
Interphil Laboratories, Inc., a company engaged in the business of manufacturing and packaging pharmaceutical products.2.They had a
Collective Bargaining Agreement (CBA) effective from August 1, 1990 to July 31, 1993.3.Prior to the expiration of the CBA,
Allesandro Salazar, the vice -president of the HR Department and Nestor Ocampo, the union president and Hernando Clemente, a union
director had a meeting. The representatives of the union were asking to make the new CBA effective for 2 yeas.4.Salazar informed them tha t it
was still premature to discuss the new CBA.5.The following day, all the rank -and-file employees refused to follow their
regular two-shift work schedule 6:00am to 6:00pm and from 6:00pm to 6:00am.6.At 2:00 pm and 2:00 am respectively, the employees
stopped working without sealing the containers and securing the raw materials they were working on.7.Enrico Gonzales, a union
director, told Salazar that the employees would only return to their normal work schedule if the company would agree to their demands
as to the effectivity and duration of the new CBA.8.In addition, the employees started to engage in a work slowdown campaign
during the time they were working thus substantially delaying the production of thecompany.9.Respondent company filed with the NLRC to
declare illegal the petitioner unions overtime boycott and work slowdown which amounted to illegal strike.10.The respondent company filed
with the NCMB an urgent request for mediation. However the parties failed to arrive at an agreement.11.Petitioner union then filed with NCMB a
notice of strike citing unfair labor practice allegedly committed by respondent company.12.In the interim, the case before NLRC continued. The labor
arbiter then found that the overtime boycott and the work slowdown as illegal strike.13.Petitioner union contended that according to the provisions of
their CBA on working hours clearly state that the normal working hours were from 7:30 am to 4:30pm. The labor arbiter should not have admitted
other evidence than that stated in the CBA.
ISSUE : Whether or not the working hours of the petitioner is only from 7:30 am to 4:30 pm.
HELDNO. The parties in the CBA stipulated that: the schedule of shift work shall be maintained; however the company may change the prevailing
work time at its discretion, should change be necessary in the operations of the Company. All employees shall observe such rules as have been laid
down by the company for the purpose of effecting control over working hours.It is evident from the foregoing provisions that the working hours may
be changed, at the discretion of the company, should such change be necessary for its operations and that the employees shall observe such rules
as have been laid down by the company. The company had to adopt a continuous 24-hour work daily schedule by reason of the nature of its
business and the demands of its clients. It was established that the employees adhered to the said work schedule since 1988. The employees are
deemed to have waived the eight-hour schedule since they followed, without any question or complain, the two shift schedule while their CBA was
still in force and even prior thereto. As the employees assented by practice to this arrangement, they cannot now be heard to claim that the overtime
boycott is justified because they were not obliged to work beyond eight hours.

Acua vs CA (2006) G.R. 159832

Facts: Petitioners are Filipino overseas workers deployed by private respondent Join International Corporation (JIC), a licensed recruitment agency,
to its principal, 3D Pre-Color Plastic, Inc., (3D) in Taiwan, Republic of China, under a uniformly-worded employment contract for a period of two
years. Private respondent Elizabeth Alaon is the president of Join International Corporation. Sometime in September 1999, petitioners filed with
private respondents applications for employment abroad. After their papers were processed, petitioners claimed they signed a uniformly-worded
employment contract with private respondents which stipulated that they were to work as machine operators with a monthly salary of NT$15,840.00,
exclusive of overtime, for a period of two years.
On December 9, 1999, they left for Taiwan. Upon arriving at the job site, a factory owned by 3D, they were made to sign another contract which
stated that their salary was only NT$11,840.00. They were informed that the dormitory which would serve as their living quarters was still under
construction. They were requested to temporarily bear with the inconvenience but were assured that their dormitory would be completed in a short
time. Petitioners alleged that they were brought to a "small room with a cement floor so dirty and smelling with foul odor". Forty women were
jampacked in the room and each person was given a pillow. Since the ladies' comfort room was out of order, they had to ask permission to use the
men's comfort room. Petitioners claim they were made to work twelve hours a day, from 8:00 p.m. to 8:00 a.m.
On December 16, 1999, due to unbearable working conditions, they were constrained to inform management that they were leaving. They booked a
flight home, at their own expense. Before they left, they were made to sign a written waiver. In addition, petitioners were not paid any salary for work
rendered on December 11-15, 1999. Immediately upon arrival in the Philippines, petitioners went to private respondents' office, narrated what
happened, and demanded the return of their placement fees and plane fare. Private respondents refused.
On December 28, 1999, private respondents offered a settlement. Petitioner Mendez received P15,080. The next day, petitioners Acua and
Ramones went back and received P13,640 10 and P16,200, respectively. They claim they signed a waiver, otherwise they would not be refunded.
On January 14, 2000, petitioners Acua and Mendez invoking Republic Act No. 8042 filed a complaint for illegal dismissal and nonpayment/underpayment of salaries or wages, overtime pay, refund of transportation fare, payment of salaries/wages for 3 months, moral and
exemplary damages, and refund of placement fee before the National Labor Relations Commission (NLRC).
Issue: Whether or not petitioners were illegally dismissed under Rep. Act No. 8042, thus entitling them to benefits plus damages.
Held: No illegal dismissal. Constructive dismissal covers the involuntary resignation resorted to when continued employment becomes
impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or when a clear discrimination, insensibility
or disdain by an employer becomes unbearable to an employee. Court found that petitioners did not deny that the accommodations were not as
homely as expected. Petitioners' admitted that they were told by the principal, upon their arrival, that the dormitory was still under construction and
were requested to bear with the temporary inconvenience and the dormitory would soon be finished. Petitioners did not refute private respondents'
assertion that they had deployed approximately sixty other workers to their principal, and to the best of their knowledge, no other worker assigned to
the same principal has resigned, much less, filed a case for illegal dismissal. These cited circumstances do not reflect malice by private respondents
nor do they show the principal's intention to subject petitioners to unhealthy accommodations. Under these facts, we cannot rule that there was
constructive dismissal.
Overtime pay is granted despite petitioners lack of proof that they actually rendered overtime work, since their employment records were in the
custody of the principal employer. It is a time-honored rule that in controversies between a worker and his employer, doubts reasonably
arising from the evidence, or in the interpretation of agreements and writing should be resolved in the worker's favor. private respondents
are solidarily liable with the foreign principal for the overtime pay claims of petitioners.
On the award of moral and exemplary damages, we hold that such award lacks legal basis. Moral and exemplary damages are recoverable only
where the dismissal of an employee was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner
contrary to morals, good customs or public policy. The person claiming moral damages must prove the existence of bad faith by clear and
convincing evidence, for the law always presumes good faith. Petitioners failed to prove bad faith, fraud or ill motive on the part of private
respondents. Moral damages cannot be awarded.
Without the award of moral damages, there can be no award of exemplary damages, nor attorney's fees.
Quitclaims are valid. Quitclaims executed by the employees are commonly frowned upon as contrary to public policy and ineffective to bar claims for
the full measure of the workers' legal rights, considering the economic disadvantage of the employee and the inevitable pressure upon him by
financial necessity. Nonetheless, the so-called "economic difficulties and financial crises" allegedly confronting the employee is not an acceptable
ground to annul the compromise agreement unless it is accompanied by a gross disparity between the actual claim and the amount of the
settlement. Records reveal that petitioners were not in any way deceived, coerced or intimidated into signing a quitclaim waiver in the amounts of
P13,640, P15,080 and P16,200 respectively. Nor was there a disparity between the amount of the quitclaim and the amount actually due the
petitioners. After conversion to Philippine pesos, the amount of the quitclaim paid to petitioners was actually higher than the amount due them.
WHEREFORE, the petition is DISMISSED, without prejudice to the filing of illegal recruitment complaint against the respondents pursuant to Section
6(i) of The Migrant Workers and Overseas Filipino Act of 1995 (Rep. Act No. 8042).

NORTH DAVAO MINING vs. NATIONAL LABOR RELATIONS COMMISSION

Facts
Respondent Wilfredo Guillema is one among several employees of North Davao who were separated by reason of the companys closure
on May 31, 1992, and who were the complainants in the cases before the respondent labor arbiter. On May 31, 1992, petitioner North Davao
completely ceased operations due to serious business reverses. From 1988 until its closure in 1992, North Davao suffered net losses averaging
three billion pesos per year, for each of the five years prior to its closure. All told five months prior to its closure, its total liabilities had exceeded its
assets by 20.392 billion pesos. When it ceased operations, its remaining employees were separated and given the equivalent of 12.5 days pay for
every year of service, computed on their basic monthly pay, in addition to the commutation to cash of their unused vacation and sick leaves.
However, it appears that, during the life of the petitioner corporation, from the beginning of its operations in 1981 until its closure in 1992, it had been
giving separation pay equivalent to thirty days pay for every year of service. Moreover, the employees had to collect their salaries at a bank in
Tagum, Davao del Norte, some 58 kilometers from their workplace and about 2 hours travel time by public transportation; this arrangement lasted
from 1981 up to 1990.
Subsequently, a complaint was filed with respondent labor arbiter by respondent Wilfredo Guillema and 271 other seperated employees for
additional separation pay; back wages; transportation allowance; hazard pay; etc., amounting to P58,022,878.31.
Issue
Whether or not the time spent in collecting wages in a place other than the place of employment is compensable notwithstanding that the
same is done during official time.
Ruling
Hours spent by complainants in collecting salaries shall be considered compensable hours worked. It is undisputed that because of
security reasons, from the time of its operations, petitioner NDMC maintained its policy of paying its workers at a bank in Tagum, Davao del Norte,
which usually took the workers about two and a half (2 1/2) hours of travel from the place of work and such travel time is not official. Records also
show that on February 12,1992, when an inspection was conducted by the Department of Labor and Employment at the premises of petitioner
NDMC at Amacan, Maco, Davao del Norte, it was found out that petitioners had violated labor standards law, one of which is the place of payment of
wages. Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides that: Place of payment. - (a) As a general rule, the
place of payment shall be at or near the place of undertaking. Payment in a place other than the workplace shall be permissible only under the
following circumstances: (1) When payment cannot be effected at or near the place of work by reason of the deterioration of peace and order
conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or other calamity rendering payment thereat impossible;
(2) When the employer provides free transportation to the employees back and forth; and (3) Under any analogous circumstances; provided that the
time spent by the employees in collecting their wages shall be considered as compensable hours worked.
Considering further the distance between Amacan, Maco to Tagum which is 2 hours by travel and the risks in commuting all the time in
collecting complainants salaries, would justify the granting of backwages equivalent to 2 days in a month.

Lagatic vs. NLRC G.R. No. 121004

January 28, 1998

Facts:
Petitioner Romeo Lagatic was employed in May 1986 by Cityland. As a marketing specialist, he was tasked with soliciting sales for the company,
with the corresponding duties of accepting call-ins, referrals, and making client calls and cold calls (the practice of prospecting for clients through the
telephone directory). Cityland, believing that the same is an effective and cost-efficient method of finding clients, requires all its marketing specialists
to make cold calls but nonetheless requires submission of daily progress reports on the same in order to assess to determine the results thereof.
On November 1992, petitioner was suspended for three days for failing to submit cold call reports on various dates of September and October 1992
notwithstanding a written reprimand for infraction of the same committed a year earlier and a warning that further non-compliance would result to
termination.
Notwithstanding the aforesaid suspension and warning, petitioner again failed to submit cold call reports for five (5) days of February 1993. He was
verbally reminded to submit the same and was even given up to February 17, 1993 to do so. Instead of complying with said directive, Petitioner, on
February 16, 1993, wrote a note, TO HELL WITH COLD CALLS! WHO CARES? and exhibited the same to his co-employees. To worsen matters,
he left the same lying on his desk where everyone could see it.
On February 23, 1993, petitioner received a memorandum requiring him to explain why Cityland should not make good its previous warning for his
failure to submit cold call reports, as well as for issuing the written statement aforementioned. On February 24, 1993, he sent a letter-reply alleging
that his failure to submit cold call reports should not be deemed as gross insubordination. He denied any knowledge of the damaging statement, TO
HELL WITH COLD CALLS!
Finding petitioner guilty of gross insubordination, Cityland served a notice of dismissal upon him on February 26, 1993. Aggrieved by such dismissal,
petitioner filed a complaint against Cityland for illegal dismissal, illegal deduction, underpayment, overtime and rest day pay, damages and attorneys
fees. The labor arbiter dismissed the petition for lack of merit. On appeal, the same was affirmed by the NLRC; hence the present recourse.
Issue: Whether or not the respondent NLRC gravely abused its discretion in not finding the petitioner illegally dismissed.
Held:
The petition lacks merit.
To constitute a valid dismissal from employment, two requisites must be met, namely: (1) the employee must be afforded due process, and (2) the
dismissal must be for a valid cause.
Petitioner loses sight of the fact that except as provided for, or limited by, special laws, an employer is free to regulate, according to his discretion
and judgment, all aspects of employment. Employers may, thus, make reasonable rules and regulations for the government of their employees, and
when employees, with knowledge of an established rule, enter the service, the rule becomes a part of the contract of employment. It is also generally
recognized that company policies and regulations, unless shown to be grossly oppressive or contrary to law, are generally valid and binding on the
parties and must be complied with.
Corollarily, an employee may be validly dismissed for violation of a reasonable company rule or regulation adopted for the conduct of the company
business. An employer cannot rationally be expected to retain the employment of a person whose x x x lack of regard for his employers rules x x x
has so plainly and completely been bared. Petitioners continued infraction of company policy requiring cold call reports, as evidenced by the 28
instances of non-submission of aforesaid reports, justifies his dismissal. He cannot be allowed to arrogate unto himself the privilege of setting
company policy on the effectivity of solicitation methods. To do so would be to sanction oppression and the self-destruction of the employer.
More than that, his written statement shows his open defiance and disobedience to lawful rules and regulations of the company. Likewise, said
company policy of requiring cold calls and the concomitant reports thereon is clearly reasonable and lawful, sufficiently known to petitioner, and in
connection with the duties which he had been engaged to discharge. There is, thus, just cause for his dismissal.
Decision:
WHEREFORE, premises considered, the assailed Resolution is AFFIRMED and this petition is hereby DISMISSED for lack of merit. Costs against
petitioner. SO ORDERED.
Narvasa, C.J., (Chairman), Melo, Francisco, and Panganiban, JJ., concur.

G.R. No. L-65482 December 1, 1987

JOSE RIZAL COLLEGE, vs. NATIONAL LABOR RELATIONS COMMISSION AND NATIONAL ALLIANCE OF TEACHERS/OFFICE WORKERS,
respondents.
FACTS: Petitioner is a non-stock, non-profit educational institution duly organized and existing under the laws of the Philippines. It has three groups
of employees categorized as follows: (a) personnel on monthly basis, who receive their monthly salary uniformly throughout the year, irrespective of
the actual number of working days in a month without deduction for holidays; (b) personnel on daily basis who are paid on actual days worked and
they receive unworked holiday pay and (c) collegiate faculty who are paid on the basis of student contract hour. Before the start of the semester they
sign contracts with the college undertaking to meet their classes as per schedule.
Unable to receive their corresponding holiday pay, as claimed, from 1975 to 1977, private respondent National Alliance of Teachers and Office
Workers (NATOW) in behalf of the faculty and personnel of Jose Rizal College filed with the Ministry of Labor a complaint against the college for said
alleged non-payment of holiday pay, docketed as Case No. R04-10-81-72. Due to the failure of the parties to settle their differences on conciliation,
the case was certified for compulsory arbitration where it was docketed as RB-IV-23037-78.
ISSUE: Whether or not the school faculty who according to their contracts are paid per lecture hour are entitled to unworked holiday pay.
HELD: After the parties had submitted their respective position papers, the Labor Arbiter ** rendered a decision on February 5, 1979, the dispositive
portion of which reads:
WHEREFORE, judgment is hereby rendered as follows:
1. The faculty and personnel of the respondent Jose Rizal College who are paid their salary by the month uniformly in a school year, irrespective of
the number of working days in a month, without deduction for holidays, are presumed to be already paid the 10 paid legal holidays and are no longer
entitled to separate payment for the said regular holidays;
2. The personnel of the respondent Jose Rizal College who are paid their wages daily are entitled to be paid the 10 unworked regular holidays
according to the pertinent provisions of the Rules and Regulations Implementing the Labor Code;
3. Collegiate faculty of the respondent Jose Rizal College who by contract are paid compensation per student contract hour are not entitled to
unworked regular holiday pay considering that these regular holidays have been excluded in the programming of the student contact hours. (Rollo.
pp. 26-27)
On appeal, respondent National Labor Relations Commission in a decision promulgated on June 2, 1982, modified the decision appealed from, in
the sense that teaching personnel paid by the hour are declared to be entitled to holiday pay (Rollo. p. 33).
Hence, this petition.
The decision of the NLRC was set aside and a new one was rendered to wit:
(a) exempting petitioner from paying hourly paid faculty members their pay for regular holidays, whether the same be during the regular semesters of
the school year or during semestral, Christmas, or Holy Week vacations;
(b) but ordering petitioner to pay said faculty members their regular hourly rate on days declared as special holidays or for some reason classes are
called off or shortened for the hours they are supposed to have taught, whether extensions of class days be ordered or not; in case of extensions
said faculty members shall likewise be paid their hourly rates should they teach during said extensions.

INSULAR BANK OF ASIA and AMERICAN EMPLOYEES UNION v. Hon. AMADO INCIONG
G.R. No. L- 52415 October 23, 1984
Ponente: MAKASIAR, J!1

FACTS: On June 20, 1975, the Union filed a complaint against the bank for the payment of holiday pay before the then Department of Labor, NLRC,
Regional Office IV in Manila. Conciliation having failed, and upon the request of both parties, the case was certified for arbitration on July 7, 1975.
On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a decision granting petitioners complaint for payment of holiday pay. Respondent
bank did not appeal from the said decision. Instead, it complied with the order of the Labor Arbiter by paying their holiday pay up to and including
January 1976.
P.D. 850 was promulgated amending the provisions of the Labor Code on the right to holiday pay. Accordingly by authority of Article 5 of the Labor
Code, the Department of Labor (now Ministry of Labor) promulgated the rules and regulations for the implementation of holidays with pay.
The section reads: Status of employees paid by the month. Employees who are uniformly paid by the month, irrespective of the number of
working days therein, with a salary of not less than the statutory or established minimum wage shall be presumed to be paid for all days in the month
whether worked or not. Policy Instruction 9 was issued by the then Secretary of Labor on April 23,1976, interpreting the said rule. The bank, by
reason of the ruling laid down by the rule implementing Article 94 of the Labor Code and by Policy Instruction 9, stopped the payment of holiday pay
to an its employees.
On August 30,1976, the Union filed a motion for a writ of execution to enforce the arbiters decision dated August 1975, which the bank opposed. On
October 18,1976, the Labor Arbiter, instead of issuing a writ of execution, issued an order enjoining the bank to continue paying its employees their
regular holiday pay. On November 17, 1976, the bank appealed from the order of the Labor Arbiter to the NLRC. On 20 June 1978, the NLRC
promulgated its resolution dismissing the banks appeal, and ordering the issuance of the proper writ of execution. On February 21,1979, the bank
filed with the Office of the Minister of Labor a motion for reconsideration/appeal with urgent prayer to stay execution. On August 13,1979 the NLRC
issued an order directing the Chief of Research and Information of the Commission to compute the holiday pay of the IBAA employees from April
1976 to the present in accordance with the Labor Arbiter dated August 25,1975.
On November 10, 1979, the Office of the Minister of Labor, through Deputy Minister Amado Inciong, issued an order setting aside the resolution of
the NLRC dated June 20, 1978, and dismissing the case for lack of merit.
Issue: Whether or not the Ministry of Labor is correct in determining that monthly paid employees are excluded from the benefits of holiday pay?
Held: From Article 92 of the Labor Code, as amended by Presidential Decree 850, and Article 82 of the same Code, it is clear that monthly paid
employees are not excluded from the benefits of holiday pay. However, the implementing rules on holiday pay promulgated by the then Secretary of
Labor excludes monthly paid employees from the said benefits by inserting, under Rule IV, Book Ill of the implementing rules, Section 2, which
provides that: employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the
statutory or established minimum wage shall be presumed to be paid for all days in the month whether worked or not. Even if contemporaneous
construction placed upon a statute by executive officers whose duty is to enforce it is given great weight by the courts, still if such construction is so
erroneous, the same must be declared as null and void. So long, as the regulations relate solely to carrying into effect the provisions of the law, they
are valid. Where an administrative order betrays inconsistency or repugnancy to the provisions of the Act, the mandate of the Act must prevail and
must be followed. A rule is binding on the Courts so long as the procedure fixed for its promulgation is followed and its scope is within the statutory
authority granted by the legislature, even if the courts are not in agreement with the policy stated therein or its innate wisdom. Further, administrative
interpretation of the law is at best merely advisory, for it is the courts that finally determine what the law means.
The Supreme Court granted the petition, set aside the order of the Deputy Minister of Labor, and reinstated the decision of the Labor Arbiter Ricarte
T. Soriano.

VILLUGA vs. NATIONAL LABOR RELATIONS COMMISSION

Facts
Petitioner Elias Villuga was employed as cutter in the Broad Street Tailoring owned by private respondent Rodolfo Zapanta. He was paid a
fixed monthly salary of P840.00 and a monthly transportation allowance of P40.00. In addition, Villuga was assigned the chore of distributing work to
the shops tailors or sewers when both the shops manager and assistant manager would be absent. The other petitioners were either ironers,
repairmen and sewers. They were paid a fixed amount for every item ironed, repaired or sewn, regardless of the time consumed in accomplishing
the task. Petitioners did not fill up any time record since they did not observe regular or fixed hours of work.
From February 17 to 22, 1978, Villuga failed to report for work allegedly due to illness. For not properly notifying his employer, he was
considered to have abandoned his work. Villuga claimed that he was refused admittance when he reported for work after his absence, allegedly due
to his active participation in the union organized by private respondents tailors. He further claimed that he was not paid overtime pay, holiday pay,
premium pay for work done on rest days and holidays, service incentive leave pay and 13th month pay. Petitioners Abistado, Mendoza, Brizuela and
Oro also claimed that they were dismissed from their employment because they joined the Philippine Social
Security Labor Union (PSSLU). The other petitioners claimed that they stopped working because private respondents gave them few
pieces of work to do after learning of their membership with PSSLU.
The Labor Arbiter rendered a decision ordering the dismissal of the complaint for unfair labor practices, illegal dismissal and other money claims
except petitioner Villugas claim for 13th month pay for the years 1976, 1977 and 1980. The NLRC affirmed the questioned decision.
Issue
Whether an employer-employee relationship exists and whether such employment is managerial in character or that of a rank and file
employee are primordial considerations before extending labor benefits.
HELD:
Rule 1, Section 2(c), Book III of the Implementing Rules of Labor Code, provides the Elements of Membership of a Managerial Staff:
(1) that his primary duty consists of the performance of work directly related to management policies;
(2) that he customarily and regularly exercises discretion and independent judgment in the performance of his functions;
(3) that he regularly and directly assists in the management of the establishment; and
(4) that he does not devote his twenty per cent of his time to work other than those described above.
Villugas primary work or duty is to cut or prepare patterns for items to be sewn.
The duty to lay down/implement any of the management policies lies in their manager and assistant manager. While he distributes and assigns work
to employees in the absence of the manager & the assistant manager, the duty is only occasional. Also, Villuga does not participate in policy-making.
Rather, his positions functions involve execution of approved and established policies.
In Franklin Baker Company of the Philippines v. Trajano, employees who do not participate in policy-making but are given ready policies to execute
and standard practices to observe are not managerial employees.
Villuga is definitely a rank and file employee hired to perform the work of the cutter and not hired to perform supervisory or managerial functions. The
fact that he is uniformly paid by the month does not exclude him from the benefits of holiday pay. He should also be paid in addition to the 13th
month pay, his overtime pay, holiday pay, premium pay for holiday and rest day, and service incentive leave pay.
For abandonment to constitute a valid cause for dismissal, there must be a deliberate and unjustified refusal of the employee to resume his
employment. Mere absence is not sufficient, it must be accompanied by overt acts unerringly pointing to the fact that the employee simply does not
want to work anymore. 8 At any rate, dismissal of an employee due to his prolonged absence without leave by reason of illness duly established by
the presentation of a medical certificate is not justified. 9 In the case at bar, however, considering that petitioner Villuga absented himself for four (4)
days without leave and without submitting a medical certificate to support his claim of illness, the imposition of a sanction is justified, but surely, not
dismissal, in the light of the fact that this is petitioners first offense. In lieu of reinstatement, petitioner Villuga should be paid separation pay where
reinstatement can no longer be effected in view of the long passage of time or because of the realities of the situation. 10 But petitioner should not
be granted back wages in addition to reinstatement as the same is not just and equitable under the circumstances considering that he was not
entirely free from blame.
As to the other eleven petitioners, there is no clear showing that they were dismissed because the circumstances surrounding their dismissal were
not even alleged. However, we disagree with the finding of respondent Commission that the eleven petitioners are independent contractors.
For an employer-employee relationship to exist, the following elements are generally considered: (1) the selection and engagement of the
employee; and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal and (4) the power to control the employees conduct.
The mere fact that petitioners were paid on a piece-rate basis is no argument that herein petitioners were not employees. The term wage has been
broadly defined in Article 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or
ascertained on a time, task, piece or commission
basis. . . . The facts of this case indicate that payment by the piece is just a method of compensation and does not define the essence of the

relation. 13 The petitioners were allowed to perform their work at home does not likewise imply absence of control and supervision. The control test
calls merely for the existence of a right to control the manner of doing the work, not the actual exercise of the right.
In determining whether the relationship is that of employer and employee or one of an independent contractor, each case must be determined on its
own facts and all the features of the relationship are to be considered. 15Considering that petitioners who are either sewers, repairmen or ironer,
have been in the employ of private respondent as early as 1972 or at the latest in 1976, faithfully rendering services which are desirable or
necessary for the business of private respondent, and observing managements approved standards set for their respective lines of work as well as
the customers specifications, petitioners should be considered employees, not independent contractors.
Independent contractors are those who exercise independent employment, contracting to do a piece of work according to their own methods and
without being subjected to control of their employer except as to the result of their work. By the nature of the different phases of work in a tailoring
shop where the customers specifications must be followed to the letter, it is inconceivable that the workers therein would not be subjected to control.
be followed to the letter, it is inconceivable that the workers therein would not be subjected to control.
In Rosario Brothers, Inc. v. Ople, 16 this Court ruled that tailors and similar workers hired in the tailoring department, although paid weekly wages on
piece work basis, are employees not independent contractors. Accordingly, as regular employees, paid on a piece-rate basis, petitioners are not
entitled to overtime pay, holiday pay, premium pay for holiday/rest day and service incentive leave pay. Their claim for separation pay should also be
defined for lack of evidence that they were in fact dismissed by private respondent. They should be paid, however, their 13th month pay under P.D.
851, since they are employees not independent contractors.