LIDUVINO M. MILLARES v. NLRC, GR No.

122827, 1999-03-29
Facts:
Petitioners numbering one hundred sixteen (116) occupied the positions of Technical Staff,
Unit Manager, Section Manager, Department Manager, Division Manager and Vice
President in the mill site of respondent Paper Industries Corporation of the Philippines
(PICOP) in Bislig, Surigao del Sur.
In 1992 PICOP suffered a major financial setback allegedly brought about by the joint
impact of restrictive government regulations on logging and the economic crisis. To avert
further losses, it undertook a retrenchment program and terminated the services of
petitioners. Accordingly, petitioners received separation pay computed at the rate of one (1)
month basic pay for every year of service. Believing however that the allowances they
allegedly regularly received on a monthly basis during their employment should have been
included in the computation thereof they lodged a complaint for separation pay differentials.
The allowances in question pertained to the following -
Staff/Manager's Allowance -
Transportation Allowance -
Bislig Allowance -
Labor Arbiter opined that the subject allowances, being customarily furnished by respondent
PICOP and regularly received by petitioners, formed part of the latter's wages. Thus
respondent PICOP was ordered to pay P4,481,000.00 representing separation pay
differentials
The NLRC set aside the assailed decision by decreeing that the allowances did not form
part of the salary base used in computing separation pay. NLRC likewise found that
petitioners' allowances were contingency-based and thus not included in their salaries.
In this petition for certiorari, petitioners submit that their allowances are included in the
definition of "facilities" in Art. 97, par. (f), of the Labor Code, being necessary and
indispensable for their existence and subsistence. Furthermore they claim that their
availment of the monetary equivalent of those "facilities" on a monthly basis was
characterized by permanency, regularity and customariness.
Issues:
Whether allowances should be included in the computation of separation pay
Ruling:
NO
when an employer customarily furnishes his employee board, lodging or other facilities, the
fair and reasonable value thereof, as determined by the Secretary of Labor and
Employment, is included in "wage."
In order to ascertain whether the subject allowances form part of petitioner's "wages," we
divide the discussion on the following - "customarily furnished;" "board, lodging or other
facilities;" and, "fair and reasonable value as determined by the Secretary of Labor."
"Customary" is founded on long-established and constant practice connoting regularity.
The receipt of an allowance on a monthly basis does not ipso facto characterize it as
regular and forming part of salary because the nature of the grant is a factor worth
considering. We agree with the observation of the Office of the Solicitor General- that the
subject allowances were temporarily, not regularly, received by petitioners because -
In the case of the housing allowance, once a vacancy occurs in the company-
provided housing accommodations, the employee concerned transfers to the
company premises and his housing allowance is discontinued
On the other hand, the transportation allowance is in the form of advances for actual
transportation expenses subject to liquidation x x x given only to employees who
have personal cars.
The Bislig allowance is given to Division Managers and corporate officers assigned
in Bislig, Surigao del Norte. Once the officer is transferred outside Bislig, the
allowance stops.
The finding of the NLRC along the same line likewise merits concurrence, i.e., petitioners'
continuous enjoyment of the disputed allowances was based on contingencies the
occurrence of which wrote finis to such enjoyment.
The Staff /Manager's allowance may fall under "lodging" but the transportation and Bislig
allowances are not embraced in "facilities" on the main consideration that they are granted
as well as the Staff/Manager's allowance for respondent PICOP's benefit and convenience,
i.e., to insure that petitioners render quality performance. In determining whether a privilege
is a facility, the criterion is not so much its kind but its purpose.
That the assailed allowances were for the benefit and convenience of respondent company
was supported by the circumstance that they were not subjected to withholding tax subject
allowances did not form part of petitioners' wages.
WHEREFORE, The resolution of public respondent National Labor Relations Commission
holding that the Staff /Manager's, transportation and Bislig allowances did not form part of
the salary base used in computing the separation pay of petitioners is AFFIRMED.

TSPIC CORPORATION v. TSPIC EMPLOYEES UNION, GR No. 163419, 2008-02-13

Facts:
TSPIC is engaged in the business of designing, manufacturing, and marketing integrated
circuits to serve the communication, automotive, data processing, and aerospace industries.
Respondent TSPIC Employees Union (FFW) (Union), on the other hand, is the registered
bargaining agent of the rank-and-file employees of TSPIC. The respondents, are all
members of the Union.
TSPIC and the Union entered into a Collective Bargaining Agreement (CBA) for the years
2000 to 2004. The CBA included a provision on yearly salary increases starting January
2000 until January 2002. Consequently, all the regular rank-and-file employees of TSPIC
received a 10% increase in their salary.
The CBA also provided that employees who acquire regular employment status within the
year but after the effectivity of a particular salary increase shall receive a proportionate part
of the increase upon attainment of their regular status.
Then the Regional Tripartite Wage and Productivity Board, National Capital Region, issued
Wage Order (WO No. 8) which raised the daily minimum wage from PhP 223.50 to PhP 250
Conformably, the wages of 17 probationary employees were increased to PhP 250.00
during the last quarter of 2000, the above named 17 employees attained regular
employment and received 25% of 10% of their salaries as granted under the provision on
regularization increase under the CBA.
In 2001, TSPIC implemented the new wage rates as mandated by the CBA. As a result, the
nine employees (first group), who were senior to the above-listed recently regularized
employees, received less wages.
a few weeks after the salary increase for the year 2001 became effective, TSPIC's Human
Resources Department notified 24 employees, that due to an error in the automated payroll
system, they were overpaid and the overpayment would be deducted from their salaries
The Union, on the other hand, asserted that there was no error and the deduction of the
alleged overpayment from employees constituted diminution of pay.
Consequently, TSPIC and the Union agreed to undergo voluntary arbitration on the solitary
issue of whether or not the acts of the management in making deductions from the salaries
of the affected employees constituted diminution of pay.
Arbitrator rendered a Decision, holding that the unilateral deduction made by TSPIC
violated Art. 100 of the Labor Code.
Aggrieved, TSPIC filed before the CA a petition for review. The appellate court dismissed
the petition saying that TSPIC failed to convince the appellate court that the deduction was
a result of a system error in the automated payroll system.
TSPIC filed the instant petition
maintains that charging the overpayments made to the 16 respondents through staggered
deductions from their salaries does not constitute diminution of benefits.
Issues:
Does the TSPIC's decision to deduct the alleged overpayment from the salaries of the
affected members of the Union constitute diminution of benefits in violation of the Labor
Code?
Ruling:
We find TSPIC's contention meritorious.
A Collective Bargaining Agreement is the law between the parties and they are obliged to
comply with its provisions.
Here, TSPIC wants to credit the increase granted by WO No. 8 to the increase granted
under the CBA. According to TSPIC, it is specifically provided in the CBA that "the
salary/wage increase for the year 2001 shall be deemed inclusive of the mandated
minimum wage increases under future wage orders that may be issued after Wage Order
No. 7." The Union, on the other hand, insists that the "crediting" provision of the CBA finds
no application in the present case, since at the time WO No. 8 was issued, the probationary
employees (second group) were not yet covered by the CBA, particularly by its crediting
provision.
The last paragraph of Art X of the CBA states the specific condition that the
wage/salary increases for the years 2001 and 2002 shall be deemed inclusive of the
mandated minimum wage increases under future wage orders, that may be issued
after WO No. 7, and shall be considered as correction of the wage distortions that may be
brought about by the said future wage orders. Thus, the wage/salary increases in 2001 and
2002 shall be deemed as compliance to future wage orders after WO No. 7.
Respondents should not be allowed to receive benefits from the CBA while avoiding the
counterpart crediting provision. They have received their regularization increases under the
CBA and the yearly increase for the year 2001. They should not then be allowed to avoid
the crediting provision which is an accompanying condition.
As correctly pointed out by TSPIC, the overpayment of its employees was a result of
an error. This error was immediately rectified by TSPIC upon its discovery. We have ruled
before that an erroneously granted benefit may be withdrawn without violating the
prohibition against non-diminution of benefits.
Here, no vested right accrued to individual respondents when TSPIC corrected its error by
crediting the salary increase for the year 2001 against the salary increase granted under
WO No. 8, all in accordance with the CBA.
Hence, any amount given to the employees in excess of what they were entitled to, as
computed above, may be legally deducted by TSPIC from the employees' salaries. It
was also compassionate and fair that TSPIC deducted the overpayment in
installments over a period of 12 months starting from the date of the initial deduction
to lessen the burden on the overpaid employees. TSPIC, in turn, must refund to
individual respondents any amount deducted from their salaries which was in excess of
what TSPIC is legally allowed to deduct from the salaries based on the computations
discussed in this Decision.
As a last word, it should be reiterated that though it is the state's responsibility to afford
protection to labor, this policy should not be used as an instrument to oppress management
and capital.
In resolving disputes between labor and capital, fairness and justice should always prevail.

EASTERN TELECOMMUNICATIONS PHILIPPINES v. EASTERN TELECOMS

EMPLOYEES UNION, GR No. 185665, 2012-02-08
Facts:
Eastern Telecommunications Phils., Inc. (ETPI) is a corporation engaged in the business of
providing telecommunications facilities. Eastern Telecoms Employees Union (ETEU) is the
certified exclusive bargaining agent of the company's rank and file employees with
147 regular members. It has an existing collective bargaining agreement with the company
to expire in the year 2004 with a Side Agreement signed on September 3, 2001.
the labor dispute was a spin-off of the company's plan to defer payment of the 14th, 15th
and 16th month bonuses. the company's main ground in postponing the payment of
bonuses is due to allege continuing deterioration of company's financial position
Invoking the Side Agreement of the existing Collective Bargaining Agreement for the period
2001-2004 between ETPI and ETEU which stated as follows:
"4. Employment Related Bonuses. The Company confirms that the 14th, 15th and
16th month bonuses (other than 13th month pay) are granted."
ETEU filed a Notice of Strike on the ground of unfair labor practice for failure of ETPI to pay
the bonuses in gross violation of the economic provision of the existing CBA.
(ETEU) claimed that Eastern Telecommunications Philippines, Inc. (ETPI) had consistently
and voluntarily been giving out 14th month bonus during the month of April, and 15th and
16th month bonuses every December of each year (subject bonuses) to its employees from
1975 to 2002, even when it did not realize any net profits. ETEU posited that by reason of
its long and regular concession, the payment of these monetary benefits had ripened into a
company practice which could no longer be unilaterally withdrawn. ETEU added that this
long-standing company practice had been expressly confirmed in the Side Agreements of
the 1998-2001 and 2001-2004 Collective Bargaining Agreements (CBA) which provided for
the continuous grant of these bonuses ETEU theorized that the grant of the subject
bonuses is not only a company practice but also a contractual obligation of ETPI to the
union members.
NLRC issued its Resolution dismissing ETEU's complaint and held that ETPI could not be
forced to pay the union bonus inasmuch as the payment of these additional benefits was
basically a management prerogative, being an act of generosity and munificence on the part
of the company and contingent upon the realization of profits.
CA declared that the Side Agreements of CBA created a contractual obligation
Dissatisfied, ETPI now comes to this Court via Rule 45
ETPI insists that it is under no legal compulsion to pay 14th, 15th and 16th month bonuses
for the year 2003 and 14th month bonus for the year 2004 contending that t their grant is
conditional based on successful business performance and the availability of company
profits from which to source the same
Issues:
Whether or not petitioner ETPI is liable to pay 14th, 15th and 16th month bonuses for the
year 2003 and 14th month bonus for the year 2004 to the members of respondent union
Ruling:
YES
it is indubitable that ETPI and ETEU agreed on the inclusion of a provision for the grant of
14th, 15th and 16th month bonuses in CBA Side Agreement
A reading of the reveals that the same provides for the giving of 14th, 15th and 16th
month bonuses without qualification.
There were no conditions specified in the CBA Side Agreements for the grant of the
benefits contrary to the claim of ETPI that the same is justified only when there are profits
earned by the company. Terse and clear, the said provision does not state that the subject
bonuses shall be made to depend on the ETPI's financial standing or that their payment
was contingent upon the realization of profits. Neither does it state that if the company
derives no profits, no bonuses are to be given to the employees. In fine, the payment of
these bonuses was not related to the profitability of business operations.
if ETPI and ETEU intended that the subject bonuses would be dependent on the company
earnings, such intention should have been expressly declared in the Side Agreements or
the bonus provision should have been deleted altogether.
Verily, by virtue of its incorporation in the CBA Side Agreements, the grant of 14th,
15th and 16th month bonuses has become more than just an act of generosity on the
part of ETPI but a contractual obligation it has undertaken.
Granting arguendo that the CBA Side Agreement does not contractually bind petitioner
ETPI to give the subject bonuses, nevertheless, the Court finds that its act of granting the
same has become an established company practice such that it has virtually become
part of the employees' salary or wage. A bonus may be granted on equitable
consideration when the giving of such bonus has been the company's long and
regular practice.
The records show that ETPI, has been further giving its employees 14th month bonus every
April as well as 15th and 16th month bonuses every December of the year, without fail, for
27 years whether it earned profits or not.
The considerable length of time ETPI has been giving the special grants to its employees
indicates a unilateral and voluntary act on its part to continue giving said benefits knowing
that such act was not required by law.

GOVERNMENT SERVICE INSURANCE SYSTEM v. NLRC, GR No. 180045, 2010-11-17

Facts:
Respondents were employed as security guards by DNL Security Agency (DNL Security).
By virtue of the service contract entered into by DNL Security and petitioner respondents
were assigned to petitioner's Tacloban City office, ea receiving a monthly income of
P1,400.00 Sometime 1989, petitioner voluntarily increased respondents' monthly salary to
P3,000.00.
DNL Security informed respondents that its service contract with petitioner was terminated.
This notwithstanding, DNL Security instructed respondents to continue reporting for work to
petitioner. Respondents worked as instructed but without receiving their wages; after which,
they were terminated from employment.
respondents filed with NLRC a complaint against DNL Security and petitioner for illegal
dismissal, separation pay, salary differential, 13th month pay, and payment of unpaid
salary.
Labor Arbiter rendered a decision against DNL Security and petitioner. LA awarded
respondents with separation pay equivalent to one (1) month salary for every year of
service, to be paid by DNL Security. The LA further granted respondents' claim of salary
differential, as they were paid wages below the minimum wage, as well as 13th month pay.
For these monetary awards, petitioner was made solidarily liable with DNL Security, as the
indirect employer of respondents.
NLRC dismissed petitioner's appeal, having been filed beyond the reglementary period.
petitioner filed a petition for certiorari before CA.
CA affirmedthe NLRC ruling.
Hence, the present petition
Issues:
Whether petitioner GSIS should be jointly and severally liable with DNL Security Agency for
payment of the unsubstantiated amounts of Salary Differentials and the 13th Month Pay to
the private respondent security guards.
Ruling:
The fact that there is no actual and direct employer-employee relationship between
petitioner and respondents does not absolve the former from liability for the latter's
monetary claims. When petitioner contracted DNL Security's services, petitioner became an
indirect employer of respondents, pursuant to Article 107 of the Labor Code, which reads:
ART. 107. Indirect employer. - The provisions of the immediately preceding Article
shall likewise apply to any person, partnership, association or corporation which, not
being an employer, contracts with an independent contractor for the performance of
any work, task, job or project.
After DNL Security failed to pay respondents the correct wages and other monetary
benefits, petitioner, as principal, became jointly and severally liable
Petitioner's liability covers the payment of respondents' salary differential and 13th month
pay during the time they worked for petitioner. In addition, petitioner is solidarily liable with
DNL Security for respondents' unpaid wages from February 1993 until April 20, 1993. While
it is true that respondents continued working for petitioner after the expiration of their
contract, based on the instruction of DNL Security, petitioner did not object to such
assignment and allowed respondents to render service. Thus, petitioner impliedly approved
the extension of respondents' services. Accordingly, petitioner is bound by the provisions of
the Labor Code on indirect employment. Petitioner cannot be allowed to deny its obligation
to respondents after it had benefited from their services.
Petitioner's liability, however, cannot extend to the payment of separation pay.
An order to pay separation pay is invested with a punitive character, such that an indirect
employer should not be made liable without a finding that it had conspired in the illegal
dismissal of the employees.