B.
WAGE FIXING MACHINERY
1. Rationale for Wage Rationalization
RA 6727, Sec. 2. It is hereby declared the policy of the State to
rationalize the fixing of minimum wages and to promote
productivity-improvement and gainsharing measures to ensure
a decent standard of living for the workers and their families; to
guarantee the rights of labor to its just share in the fruits of
production; to enhance employment generation in the
countryside through industry dispersal; and to allow business
and industry reasonable returns oninvestment, expansion and
growth.
The State shall promote collective bargaining as the primary
mode of settling wages and other terms and conditions of
employment; and whenever necessary, the minimum wage
rates shall be adjusted in a fair and equitable manner,
considering existing regional disparities in the cost of living and
other socio-economic factors and the national economic and
social development plans.
Const. Art. XIII, SEC. 3. The State shall afford full protection to
labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment
opportunities for all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law.
They shall be entitled to security of tenure, humane conditions
of work, and a living wage. They shall also participate in policy
and decision-making processes affecting their rights and
benefits as may be provided by law.
The State shall promote the principle of shared responsibility
between workers and employers and the preferential use of
voluntary modes in settling disputes, including conciliation, and
shall enforce their mutual compliance therewith to foster
industrial peace.
The State shall regulate the relations between workers and
employers, recognizing the right of labor to its just share in the
fruits of production and the right of enterprises to reasonable
returns to investments, and to expansion and growth
2. Agencies in Wage Fixing Machinery
a. National Wages and Productivity
Commission – Labor Code, Sec. 3; 120, 121,
and 126
b. Regional Tripartite Wages and Productivity
Board – Labor Code, Sec. 3; 122 and 126
NASIPIT LUMBER CO. V. NWPC
 The Regional Tripartite Wages and Productivity Board for
Northern Mindanao issued a wage order increasing the
minimum wage for worker in the private sector by 9 to 13
pesos a day.
 Nasipit Lumber Co. (NALCO), Philippine Wallboard Corp.
(PWC), and Anakan Lumber Co. (ALCO) jointly filed an
application for exemption from the wage order as
distressed establishments
o NOTE: in the guideline issued by the board,
distressed establishment = establishment
engaged in an industry that is distressed due to
conditions beyond its control as may be
determined by the board in consultation with DTI
and NWPC
 Being engaged in logging and wood processing,
applicants claim that they are distressed due to depressed
economic conditions worldwide, peace and order-related
problems, environmental fees on top of forest charges,
logging moratorium in the region, reduction in allowable
volume of cut logs, insufficient raw materials, increases in
cost of fuel, maintenance, etc, excessive labor cost
production ratio and lumber export ban.
o Unions oppose: companies not distressed since
their capitalization has not been impaired by 25%
 RTWPB approved application for exemption, noting the
financial condition of applicant firms, which was also
confirmed by DTI and NWPC. The cause of said financial
impairment was also beyond control of applicant firms.
 Private respondent unions appealed with NWPC which
affirmed the application of ALCO but reversed the
applications of NALCO and PWC
o The board did not have power to issue guidelines
for exemption; only the commission has that
power. The board has to ask for approval from
commission. The guidelines released by the
RTWPB in this case was not yet approved
o In guidelines by commission, to be exempted,
there must be accumulated losses of at least
25%
ISSUE: Is a guideline issued by an RTWPB without approval or
contrary to guidelines by NWPC valid?  NO
RATIO:
 Art.121 and 122 of LC as amended by RA2727 grants the
NWPC, not the RTWPB, the power to prescribe the rules
and guidelines for determination of minimum wage and
productivity measures.
o Wage orders issued by RTWPB are subject to
guidelines prescribed by NWPC
o Exemptions also subject to guidelines issued by
NWPC
 In this case, to allow RTWPB’s guideline to take effect
without approval of NWPC is to arrogate unto RTWPB a
power vested in the NWPC by the law (usurpation of
authority  the law cannot be broadened by a mere
admin issuance)
o There is no vested right on petitioners because
of invalidity of the guideline
 Definition of distressed in the guideline = ambiguous. All
doubts in implementation and interpretation of LC
provisions must be resolved in favour of labor.
o By exempting all establishments belonging to a
distressed industry, the guideline surreptitiously
and irregularly took away the mandatory increase
in minimum wage  contrary to State policy of
rationalizing the fixing of minimum wage...
 Thus, the guideline is void not only because it lacks
approval but because it is inconsistent with State policies
protective of labor
RULING: Petition DISMISSED. NWPC decision AFFIRMED.
3. Standards/Criteria for Minimum Wage Fixing – Sec. 3;
124
4. Wage Order – Sec. 3; 123-124
a. Methods of Fixing
i. Floor wage method
 ii. Salary-ceiling method
EMPLOYERS CONFEDERATION OF THE PHIL. V. NWPC
 Petitioner ECOP questions the validity of Wage Order No.
NCR-01-A (October 23, 1990) issued by the RTWPB
which granted an “across-the-board” wage increase by
P17.00 to all workers and employees in the private sector
in NCR already receiving wages above the statutory
minimum wage rates up to P125.00 a day.
o The Wage Order is pursuant to RA6727
o Prior to WO No. NCR-01-A is WO No. NCR-01,
which increased the minimum wage by P17/daily
in NCR. The questioned WO amended this by
also granting the increase to all other workers
earning more than the minimum wage.
 ECOP argues:
o The Board exceeded its authority under RA6727
to only prescribe “minimum wages”, not
determine “salary ceilings.”
o RA6727 promotes CBAs as the primary mode of
settling wages, and ECOP believes that the
Boards cannot preempt CBAs by establishing
ceilings.
 OSG argues:
o The across-the-board hike fixed minimum wages
according to the “salary-ceiling method,”
intended to correct “wage distortions.”
ISSUE: W/N the Board exceeded its authority in prescribing
“salary-ceilings”? NO
RATIO:
FLOOR WAGE METHOD SALARY CEILING
METHOD
fixing of a determinate wage adjustment is applied
amount that would be added to employees receiving a
to the prevailing statutory denominated salary ceiling
minimum wage
 The floor-wage method was adopted in earlier wage
orders, while the salary ceiling method was also used in
RAs 6640 and 6727 and also to a few earlier issuances.
The shift from floor wage method to the salary ceiling
method was brought about by labor disputes arising from
wage distortions, a consequence of the implementation
of the said wage orders. Apparently, the wage order
provisions that wage distortions shall be resolved through
grievance procedures was perceived by legislators as
ineffective in checking industrial arrest resulting from
wage order implementations. With the establishment of
the second method as a practice in minimum wage fixing,
wage distortion disputes were minimized.
 RA6727 is meant to rationalize wages by having
permanent boards decide the wages rather than leave it
up to the determination of Congress. As mentioned above,
the shift from floor wage method to the salary ceiling
method was brought about by labor disputes arising from
wage distortions. The salary ceiling method is intended to
prevent, or lessen, those disputes. The fact of the matter
is that RA6727 sought a “thinking” group of men and
women bound by statutory standards (standards listed
under Art 124 LC).
 There is no unlawful act of legislation done by the Board.
Congress may delegate the power to fix rates as long as it
leaves sufficient standards. The standards provided for
under Art 124 LC are sufficient, and in the light of the
floor-wage method’s failure, the Court believes that the
Commission correctly upheld the NCR Board.
 RA6727 DOES NOT INTEND TO DEREGULATE THE
RELATION BETWEEN LABOR AND CAPITAL:
1) The Constitution calls upon the State to
protect the rights of workers and promote
their welfare
2) The Constitution also makes it a duty of the
State “to intervene when the common goal
so demands” in regulating property and
property relations
3) The Charter urges Congress to give priority
to the enactment of measures, among other
things, to diffuse the wealth of the nation and
to regulate the use of property
4) The Charter recognizes the "just share of
labor in the fruits of production
5) Under the Labor Code, the State shall
regulate the relations between labor and
management
6) Under Republic Act No. 6727 itself, the State
is interested in seeing that workers receive
fair and equitable wages
7) The Constitution is primarily a document of
social justice, and although it has recognized
the importance of the private sector, it has
not embraced fully the concept of laissez
faire or otherwise, relied on pure market
forces to govern the economy
It is also another question whether the salary-cap method
utilized by the Board may serve the purposes of Republic Act
No. 6727 in future cases and whether that method is after all, a
lasting policy of the Board; however, it is a question on which
we may only speculate at the moment. At the moment, we find
it to be reasonable policy (apparently, it has since been
Government policy); and if in the future it would be perceptibly
unfair to management, we will take it up then.
RULING: PETITION DENIED
b. Validity
METROBANK V. NWPC AND RTWPB
• RTWPB Cagayan issued a wage order. Sec. 1 thereof
granted an across-the-board increase of P15 to all
employees and workers in the private sector in Region II.
Sec 13 states that any party aggrieved by it may file an
appeal before the NWPC, through the board, within 10
days from publication of the WO.
• The Bankers' Council for Personnel Management sent a
letter inquiry to the NWPC, seeking exemption from the
WO on behalf of its member banks with head offices
outside Region II. According to the council, such member
banks were already paying more than the prevailing
miminum wage rate in NCR, which is the principal place of
their business. The next letter inquiry from petitioner Metro
bank asked for an interpretation of the applicability of the
WO.
• NWPC replied that the WO covers all establishments in
Region II, regardless of their voluntary adoption of wage
orders applicable in Metro Manila, and irrespective of the
amounts they are already paying their employees.
• Metrobank filed a petition for certiorari and prohibition with
the CA, averring that the board, in issuing the WO, acted
beyond its authority and praying for nullification of WO as
its implementation would cause financial losses and labor
unrest
• CA denied petition:
1. writ of prohibition can’t be issued as WO and IRR have
already become fait accompli as both have already
taken effect
 2. writ of certiorari is an improper remedy as it may only
issue in relation to the exercise of judicial and quasi-
judicial, not administrative functions
3. Metrobank didn’t utilize right to appeal under Sec 13 of
WO
ISSUE 1: W/N the WO is valid — partly YES
 Pursuant to the state policy to rationalize the fixing of
minimum wages, RA6727 created NWPC, vesting it with
vesting it with the power to prescribe guidelines for the
determination of appropriate minimum wages; and
authorized RTWPB to determine and fix the minimum
wage rates in their respective regions, provinces, or
industries.
 In this case, the board did not fix the minimum wage using
any of the two methods cited in ECOP v. NWPC (the floor
wage method and the salary ceiling method). Instead, it
granted an across the board wage increase of P15 to all
employees and workers of Region II, whether earning
minimum wage or not. The Board exceeded its authority in
doing so.
 The WO granted additional benefits not contemplated by
RA6727
o WO ultra vires and unreasonable: admin
issuance that changed the intended scope of the
law
o Thus, Sec. 1 is void insofar as it grants a wage
increase to employees earning more than the
minimum wage rate
o BUT pursuant to the separability clause, Sec. 1 is
declared valid with respect to employees earning
the prevailing minimum wage rate.
Note: the Court no longer ordered the employees who wrongly
received the increase mandated by the Wage Order to refund
the amounts received by them since they received the increase
in good faith, in the honest belief that they were entitled to it.
ISSUE 2: W/N Metrobank's resource to a petition for certiorari
and prohibition was proper -- NO
• The issuance of WO was done in the Board's rule-making
power as delegated by RA6727. . Thus it is not the proper
subject of a certiorari or prohibition as both actions are
resorted to only if the disputed acts are performed in the
exercise of judicial or quasi-judicial power.
• Also, Metrobank should have availed of remedy provided
by Sec 13 of WO. Metro bank failed to invoke power of
NWPC to review wage levels set by the Board. It went to
CA right away, mistakenly impleading NWPC. Metrobank
failed to exhaust remedies available to it.
Note: SC dismissed respondents claim that issues raised have
become moot as Order and IRR have already taken effect. SC
notes that such implementation does not in any way render the
case moot, since the issue of the validity of the Order subsists
even after the implementation.
RULING: PETITION PARTIALLY GRANTED.
c. Wage distortion – Sec. 3; Sec. 124
PRUBANKERS ASSOC. V. PRUDENTIAL BANK & TRUST
CO.
RTWPB of Region V issued Wage Order No. RB 05-03 which
provided for a Cost of Living Allowance (COLA) to workers in
the private sector who ha[d] rendered service for at least three
(3) months before its effectivity, and for the same period
[t]hereafter, in the following categories: -
- (P17.50) in the cities of Naga and Legaspi;
- (P15.50) in the municipalities of Tabaco, Daraga, Pili
and the city of Iriga; and
- (P10.00) for all other areas in the Bicol Region.
 RTWPB of Region VII issued Wage Order No. RB VII-03,
which directed the integration of the COLA mandated
pursuant to Wage Order No. RO VII-02-A into the basic
pay of all workers.
- established an increase in the minimum wage rates
for all workers and employees in the private sector as
follows:
o (P10.00) in the cities of Cebu, Mandaue and
Lapulapu; (P5.00) in the municipalities of
Compostela, Liloan, Consolacion, Cordova,
Talisay, Minglanilla, Naga and the cities of
Davao, Toledo, Dumaguete, Bais, Canlaon
and Tagbilaran.
 The petitioner then granted a COLA of P17.50 to its
employees at its Naga Branch, the only branch covered
by Wage Order No. RB 5-03, and integrated the P150.00
per month COLA into the basic pay of its rank-and-file
employees at its Cebu, Mabolo and P. del Rosario
branches, the branches covered by Wage Order No. RB
VII-03.
 Prubankers Association wrote the company requesting
that the Labor Management Committee be immediately
convened to discuss and resolve the alleged wage
distortion created in the salary structure upon the
implementation of the said wage orders. The association
then demanded that the company extend the application
of the wage orders to its employees outside Regions V
and VII.
 VOLUNTARY ARBITRATION COMMITTEE: the Bank's
separate and regional implementation of Wage Order No.
VII-03 at its Cebu, Mabolo and P. del Rosario branches
created a wage distortion in the Bank nationwide which
should be resolved in accordance with Art. 124 of the
Labor Code.
 CA REVERSED: the variance in the salary rates of
employees in different regions of the country was justified
by RA 6727.
o the underlying considerations in issuing the wage
orders are diverse, based on the distinctive
situations and needs existing in each region.
Hence, there is no basis to apply the salary
increases imposed by Wage Order No. VII-03 to
employees outside of Region VII
o the distinctions between each employee group in
the region are maintained, as all employees were
granted an increase in minimum wage rate
ISSUE: WON there is a wage distortion - NO
RATIO:
 In the said branches, there was an increase in the salary
rates of all pay classes. Furthermore, the hierarchy of
positions based on skills, length of service and other
logical bases of differentiation was preserved.
 In other words, the quantitative difference in
compensation between different pay classes remained the
same in all branches in the affected region. Put differently,
the distinction between Pay Class 1 and Pay Class 2, for
 example, was not eliminated as a result of the
implementation of the two Wage Orders in the said region.
Hence, it cannot be said that there was a wage distortion.
 A disparity in wages between employees holding similar
positions but in different regions does not constitute wage
distortion as contemplated by law.
 A wage distortion arises when a wage order engenders
wage parity between employees in different rungs of the
organizational ladder of the same establishment. It bears
emphasis that wage distortion involves a parity in the
salary rates of different pay classes which, as a result,
eliminates the distinction between the different ranks in
the same region.
 RA6727 recognizes "existing regional disparities in the
cost of living”. Based on Sec. 2 of RA6727 and Art.124,
LC as amended, a disparity in wages between employees
with similar positions in different regions is necessarily
expected.
 a uniform national wage structure is antithetical to the
purpose of RA 6727. It must be understood that varying
in each region of the country are controlling factors such
as the cost of living; supply and demand of basic goods,
services and necessities; and the purchasing power of the
peso. Other considerations underscore the necessity of
the law. Wages in some areas may be increased in order
to prevent migration to the NCR and, hence, to decongest
the metropolis. Therefore, what the petitioner herein
bewails is precisely what the law provides in order to
achieve its purpose.
 On the equal-pay-for-equal-work principle: RA 6727
recognizes that there are different needs for the different
situations in different regions of the country. The fact that
a person is receiving more in one region does not
necessarily mean that he or she is better off than a person
receiving less in another region
 On the meaning of “establishment”: the statutory provision
does not support petitioner's view that "establishment"
includes all branches and offices in different regions
because Sec. 13 of RA6727 provides that “minimum wage
rates of workers working in branches or agencies of
establishments in or outside the NCR shall be those
applicable in the place where they are sanctioned”.
 The nationwide uniform wage policy of the Bank had been
adopted prior to the enactment of RA 6727. After the
passage of said law, the Bank was mandated to
regionalize its wage structure.
Wage distortion involves four elements:
1. An existing hierarchy of positions with corresponding
salary rates
2. A significant change in the salary rate of a lower pay class
without a concomitant increase in the salary rate of a
higher one
3. The elimination of the distinction between the two levels
4. The existence of the distortion in the same region of the
country
RULING: Petition DENIED. CA Decision AFFIRMED.
5. Freedom to bargain – Art. 125; RA6727, Sec. 2, 2nd par.
6. Non-diminution of benefits – Art. 126
7. Penalty for violation/Double indemnity
RA8188. SEC. 1. Section 12 of Republic Act Numbered Sixty-
seven hundred twenty-seven is hereby amended to read to as
follows:
"Section 12. Any person, corporation, trust, firm, partnership,
association or entity which refuses or fails to pay any of the
prescribed increases or adjustments in the wage rates made in
accordance with this Act shall be punished by a fine not less
than Twenty five thousand pesos (P25,000) nor more than One
hundred thousand pesos (P100,000) or imprisonment of not
less than two (2) years nor more than four (4) years, or both
such fine and imprisonment at the discretion of the court:
Provided, That any person convicted under this Act shall not be
entitled to the benefits provided for under the Probation Law.
"The employer concerned shall be ordered to pay an amount
equivalent to double the unpaid benefits owing to the
employees: Provided, That payment of indemnity shall not
absolve the employer from the criminal liability imposable
under this Act.
"If the violation is committed by a corporation, trust or firm,
partnership, association or any other entity the penalty of
imprisonment shall be imposed upon the entity's responsible
officers, including, but not limited to, the president, vice-
president, chief executive officer, general manager, managing
director or partner."
C. WAGE PAYMENT AND PROTECTION
1. Form of payment – Labor Code Art. 102
NCC, ART. 1705. The laborer's wages shall be paid in legal
currency
a. Rule - Omnibus Rules Book III, Rule VIII, Sec. 1
b. Exception - Omnibus Rules Book III, Rule VIII, Sec. 2
Omnibus Rules Book III, Rule VIII
SEC. 1. Manner of wage payment. - As a general rule, wages
shall be paid in legal tender and the use of tokens, promissory
notes, vouchers, coupons, or any other form alleged to
represent legal tender is absolutely prohibited even when
expressly requested by the employee.
SEC. 2. Payment by check. - Payment of wages by bank
checks, postal checks or money orders is allowed where such
manner of wage payment is customary on the date of the
effectivity of the Code, where it is so stipulated in a collective
agreement, or where all of the following conditions are met: (a)
There is a bank or other facility for encashment within a radius
of one (1) kilometer from the workplace; (b) The employer or
any of his agents or representatives does not receive any
pecuniary benefit directly or indirectly from the arrangement;
(c) The employees are given reasonable time during banking
hours to withdraw their wages from the bank which time shall
be considered as compensable hours worked if done during
working hours; and (d) The payment by check is with the
written consent of the employees concerned if there is no
collective agreement authorizing the payment of wages by
bank checks.
See: CONGSON VS NLRC (1995)
Dominico owns Southern Fishing Industry and he pays his
workers on a piece-rate wage, while also allowing them to
claim the tuna liver and intestines. In 1990, there was a
proposal to lower the rate because of the scarcity of tuna, but
this was resisted by workers Noe, Roger, Raymundo, Patricio,
Nehil, Joel, and Emmanuel. The next day, they were informed
that they were replaced so they filed a complaint for
underpayment of wages, nonpayment of overtime pay, etc.
HELD: Dominico’s practice of paying respondents their wages
plus the tuna liver and intestines does not run counter to Art
102 of the Labor Code. The fact that the respondents agreed to
the methoddoes not excuse Dominico from carrying on with it,
as specifically provided by the law. Absent the tuna liver and
intestines, the wages would fall under the P1,000 minimum
required by law. (from C2017 reviewer)
2. Time of Payment – Labor Code, Art.103
Omnibus Rules Book III, Rule VIII
SEC. 3.Time of payment. -(a) Wages shall be paid not less
than once every two (2) weeks or twice a month at intervals not
exceeding sixteen (16) days, unless payment cannot be made
with such regularity due to force majeure or circumstances
beyond the employer's control in which case the employer shall
pay the wages immediately after such force majeure or
circumstances have ceased. (b) In case of payment of wages
by results involving work which cannot be finished in two (2)
weeks, payment shall be made at intervals not exceeding
sixteen days in proportion to the amount of work completed.
Final settlement shall be made immediately upon completion of
the work.
BIENVENIDO GILLES V. CA, SCHEMA KONSULT
 Schema Konsult, Inc. (SKI) is a company engaged in
project consulting, management, and supervision of
services for all types of industrial plants, and installation,
infrastructure, and development projects.
 Respondent Edgardo Abores was the President of SKI.
On the other hand, petitioner Bienvenido Gilles was an
incorporator, stockholder, and member of the Board of
Directors as well as VP for Finance and Administration
and Principal Engineer of SKI.
 SKI entered into an agreement for a project with Carl Bro
International (CBI), involving the development of shrimp
farms in different parts of India, funded from a loan
extended to the Government.
 Gilles applied for, and was accepted as, Water
Systems/Irrigation Engineer of the Project for 2 years. For
the duration of Gilles assignment in India, he would be
considered as a regular employee of SKI, but all the
conditions in the Agreement between SKI and CBI would
apply. The Agreement provided that:
(1) CBI would pay SKI a monthly fee of US$4,000.00
(2) Gilles basic salary of US$2,500.00 would be taken
from the said fee
(3) during Gilles’ first 60 days in India, he would receive a
subsistence allowance of US$87.00 per calendar day to
defray his expenses for accommodation, board and
lodging, and hotel room accommodation during project
travels away from the duty station
 prior to Gilles’ departure for India, he received
US$5,000.00 from SKI as an advance of his subsistence
allowance to sustain him during his initial months in India.
While in India, he twice received 43,000 Indian Rupees
(INR), equivalent to Php43,000.00, to cover his expenses
from April 1-30, 1993 and from May 1-15, 1993.
 On May 10, 1993, Gilles tendered his Resignation Letter.
He cited as his reason his personal and financial problems
which require him to go back to the Philippines. The next
day, he left India
 CBI told Abores that even before Gilles left, his output was
already unsatisfactory. As a result, they had to hire a
substitute for Gilles
 In a letter of Gilles to the SKI Board, he said that he
resigned because of the pressure of the work in India
which required him to work 18 hours a day for 7 days a
week in order to meet deadlines. He also claimed that he
has not been paid his salary.
 Abores claimed that they never received communication
from Gilles during his stay in India. They decided to
terminate him.
 Gilles filed a complaint for illegal dismissal against
respondents, seeking reinstatement, moral damages, and
other monetary claims. Gilles alleged that there was a
deliberate scheme to ease him out of the Project and
ultimately out of SKI. He claimed that he tried to
communicate with Abores, about the difficulties he
encountered in India, but his calls were ignored.
 LA ordered SKI to reinstate Gilles with full backwages and
payment of moral damages.
 NLRC affirmed LA
 CA annulled LA and NLRC decisions. It stated that the
removal of Gilles as Vice-President of SKI was an intra-
corporate controversy that was within the jurisdiction of
the SEC. Furthermore, Gilles was not illegally dismissed
from service, considering that he resigned from his
assignment in India even before a replacement was found
ISSUE: WoN Gilles was illegally dismissed  YES
 Gilles: he only resigned as a consultant for the Project in
India and not as a regular employee of SKI. Furthermore,
he denies that he was given the opportunity to explain his
side.
 SKI: Gilles was terminated for willful disobedience and
gross neglect of his duties, just causes recognized in
Article 282 of the Labor Code. Gilles resignation from CBI
and sudden departure from India was not approved by
SKI. When he asked the companys permission to return to
Manila, the management instructed him to stay in India
until a suitable replacement was found. Thus, when he left
the Project, despite the clear and lawful instructions of the
management for him to stay, his act constituted willful
disobedience and gross neglect of duty
 SC: SKI was guilty of violating Article 103 of the Labor
Code. SKI was remiss in paying the compensation of
Gilles as Aquaculture Engineer of the Project on time. He
was not paid for his 3.5 months stay in India. Article 103 of
the Labor Code mandates that wages shall be paid at
least once every 2 weeks or twice a month at intervals not
exceeding 16 days and that no employer shall make
payment with less frequency than once a month.
 Gilles’ departure from India, despite the instruction of SKI
for him to stay, was impelled by the financial difficulties he
encountered thereat. The money given to him before he
left for India was already spent. The Chief Accountant of
SKI admitted on the witness stand that Gilles was paid his
salaries for the 3 months when he was already back in
Manila. Clearly, Gilles had a valid reason to leave India.
 Note that when Gilles was employed as Aquaculture
Engineer of the Project, he remained a regular employee
of SKI. As the principal employer of Gilles, SKI had the
responsibility to pay Gilles his salaries and to defray his
expenses while he was engaged in the Project in India.
SKI’s failure to pay Gilles salary on time was intolerable.
 For neglecting its duties as an employer, SKI may, thus,
be considered to have acted in bad faith. It may be
deemed as utter disregard by SKI of the welfare and well-
being of its employee, especially at a time when he was
far away from home.
 HENCE, Gilles was constructively dismissed from
employment.
 The disobedience committed by Gilles cannot be
characterized as wrongful or perverse per se, given the
conditions he was subjected to while in India. He left the
Project primarily because of the financial difficulties he
encountered, owing to his failure to receive his salary and
because of the adverse working conditions in India
 As a just cause for an employees dismissal, neglect of
duty must not only be gross but also habitual. A single or
isolated act of negligence does not constitute a just cause
for the dismissal of the employee. Prior to his abrupt
departure from India, Gilles had no derogatory record in
the company. Besides, if it was true that the performance
of Gilles was unsatisfactory or if he habitually neglected
his duties, SKI or CBI should have initiated his removal
prior to his departure from India.
RULING: CA decision set aside. Gilles is awarded separation
pay equivalent to one month pay for every year of service and
full backwages, other privileges and benefits, or the monetary
equivalent thereof, computed from the date of his illegal
dismissal. SKI also ORDERED to pay Gilles moral damages
3. Place of Payment – Labor Code, Art. 104
Omnibus Rules Book III, Rule VIII
SEC. 4.Place of payment. - As a general rule, the place of
payment shall be at or near the place of undertaking. Payment
in a place other than the work place shall be permissible only
under the following circumstances: (a) 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; (b) When the employer provides free transportation
to the employees back and forth; and (c) Under any other
analogous circumstances; Provided, That the time spent by the
employees in collecting their wages shall be considered as
compensable hours worked; (d) No employer shall pay his
employees in any bar, night or day club, drinking
establishment, massage clinic, dance hall, or other similar
places or in places where games are played with stakes of
money or things representing money except in the case of
persons employed in said places.
RADIO PHILIPPINES NETWORK, INC. V. RUTH YAP
 RPN and RPN Employees Union (RPNEU) entered into a
CBA with a union security clause providing that a member
who has been expelled from the union shall also be
terminated from the company
 RPNEU submitted a letter to the president of RPN
demanding the respondents’ termination of employment
due to a conflict between the respondents and the union’s
other members
 RPN notified the respondents that their employment would
be terminated
 respondents filed with the Labor Arbiter (LA) a complaint
for illegal dismissal and non-payment of benefits
o LA Decision: found RPN failed to establish legal
basis for termination of employment, ordered the
reinstatement of the respondents with payment
of backwages and full benefits and without loss
of seniority rights
o RPN submitted a Manifestation and Compliance
to LA stating it has complied with the
reinstatement of the complainants by way of
payroll reinstatement
 Respondents went to RPN to collect their salaries but
were barred entry upon orders of the president. They tried
to force their way but the guards manhandled them and
forcibly evicted them from the building.
 Respondents then filed with the LA a Manifestation and
Urgent Motion to Cite for Contempt
o The respondents want RPN to give them their
salaries every 15th and 30th of the month at the
Cashier Office, and that they should not be
prevented from entering the premises of RPN
o RPN’s Answer: Respondents were not allowed
inside the company’s premises to prevent any
more untoward incidents. RPN asked them to
open an ATM account where they’ll receive their
salaries on the 5th and 20th of the month, but
they refused.To prove their good faith, they
stated that the respondents’ salaries shall
henceforth be deposited at the NLRC-Cashier on
the 5th and 20th of every month.
o LA’s Order: cited petitioners for indirect
contempt for "committing disobedience to lawful
order” and ordered RPN to pay the salaries at
the company’s premises.
 NLRC affirmed LA decision
ISSUE 1: W/N the Court may order the manner of
reinstating a dismissed employee –NO, it involves an
exercise of management prerogative
 In case of strained relations or non-availability of
positions, the employer is given the option to reinstate
the employee merely in the payroll, precisely to avoid
the intolerable presence in the workplace of the
unwanted employee
 IN CASE AT BAR: The physical restoration of
respondents to their former positions would be impractical
and would hardly promote the best interest of both parties
o Relationship was so strained that physical
clashes ensued every time respondents tried to
enter RPN compound – their presence is not
only distracting but even disruptive.
 The proposal to pay the respondents’ salaries
through ATM cards, now a wide practice cannot be
said to be prejudicial or oppressive since it would not
entail any unusual effort by the respondents to
collect their money.
 As to the respondents’ demand to be paid their salaries
on the 15th and 30th of the month along with the other
employees, instead of on the 5th and 20th days, the law
only requires that the fortnightly intervals be
observed.
ISSUE 2: W/N RPN have substantially complied in good
faith with the terms of payroll reinstatement –YES
 The salaries for Oct 2006 to Jan 2007 were already
delivered. The salary checks for February to May 15,
2007 were deposited with the NLRC’s cashier
 RPN has been asking the respondents to open ATM
accounts to facilitate the deposit of their salaries, but they
have refused.
ISSUE 3: W/N RPN is guilty of indirect contempt – NO
sufficient basis for charge of indirect contempt, and that it
was made without due regard for their right to exercise
their management prerogatives to preserve the viability of
the company and the harmony of the workplace
 After the order of reinstatement of the respondents, RPN
forthwith restored respondents in its payroll without
diminution of their benefits and privileges, or loss of
seniority rights. They retained their entitlement to the
benefits under the CBA.
 Respondents regularly received their salaries and
benefits, notwithstanding that the company has been in
financial straits. Any delays appear to have been due to
misunderstandings as to the exact place and time of the
fortnightly payments, or because the respondents were
tardy in collecting them from the Bank of Commerce at
Broadcast City Branch or from the NLRC cashier. The
petitioners tried proposing opening an ATM accounts for
them, but the respondents rejected the idea.

4. Person to Pay – Labor Code, Art. 105

Omnibus Rules Book III, Rule VIII

SEC. 5. Direct payment of wages. — Payment of wages shall

be made direct to the employee entitled thereto except in the
following cases:
(a) Where the employer is authorized in writing by the
employee to pay his wages to a member of his family;
(b) Where payment to another person of any part of the
employee's wages is authorized by existing law, including
payments for the insurance premiums of the employee and
union dues where the right to check-off has been recognized
by the employer in accordance with a collective agreement or
authorized in writing by the individual employees concerned; or
(c) In case of death of the employee as provided in the
succeeding Section.

SEC. 6 Wages of deceased employee. — The payment of the

wages of a deceased employee shall be made to his heirs
without the necessity of intestate proceedings. When the heirs
are of age, they shall execute an affidavit attesting to their
relationship to the deceased and the fact that they are his heirs
to the exclusion of all other persons. In case any of the heirs is
a minor, such affidavit shall be executed in his behalf by his
natural guardian or next of kin. Upon presentation of the
affidavit to the employer, he shall make payment to the heirs as
representative of the Secretary of Labor and Employment.

See: BERMISO VS ESCANO (1959)

Eufrocio, along with other members of the union performed
stevedoring and arrastre functions for Escano, but the latter
has not directly paid Eufrocio or any of the other petitioners any
compensation for their services, paying the Union instead.
Union brought an action for several claims, including the direct
payment of the petitioners’ wages.
HELD: The work by the laborers was undertaken as a group,
and not in their individual capacities. The contract to perform
the service was made by the leader on behalf of the group.
Thus, the need to pay for the leadership was present. The
Court held that there was no basis to rule that the provision on
direct payment of wages was violated. If racketeering was
employed by the leaders, the remedy was not to file a case in
the SC but rather for the group to organize within them a union
that will secure their privileges. (from C2017 reviewer)