BECEIRA, ROWENA M.

1.
THE MANILA ELECTRIC COMPANY, petitioner,
vs.
THE PUBLIC UTILITIES EMPLOYEES' ASSOCIATION, respondent.

FACTS:

This case an appeal that has been interposed by the Manila Electric Company against the Court of
Industrial Relations which came up with a decision which states that although the practice of the company,
according to the manifestations of counsel for said company, has been to grant one day vacation with pay to
every workingman who had worked for seven consecutive days including Sundays, the Court considers
justified the opposition presented by the workingmen to the effect that they need Sundays and holidays for the
observance of their religion and for rest. The Court, therefore, orders the respondent company to pay 50 per
cent increase for overtime work done on ordinary days and 50 per cent increase for work done during Sundays
and legal holidays irrespective of the number of days they work during the week. They argued that the Court of
Industrial Relations is against the provision of section 4, Commonwealth Act No. 444, which provides that no
person, firm, or corporation, business establishment or place or center of labor shall compel an employee or
laborer to work during Sundays and legal holidays, unless he is paid an additional sum of at least twenty-five
per centum of his regular remuneration: Provided, however, That this prohibition shall not apply to public
utilities performing some public service such as supplying gas ,electricity, power, water, or providing means of
transportation or communication.

The power of the Court to settle industrial disputes between capital and labor, which include the fixing
of wages of employees or laborers, granted by the general provisions of section 1 of Commonwealth Act No.
103, has been restricted by the above quoted special provisions of Commonwealth Act No. 444, in the sense
that public utilities supplying electricity, gas, power, water, or providing means of transportation or
communication may compel their employees or laborers to work during Sundays and legal holidays without
paying them an additional compensation of not less than 25 per cent of their regular remuneration on said
days.

Section 1 consists of two parts: the first, which is the enactment clause, prohibits a person, firm or
corporation, business establishment, or place or center of labor from compelling an employee or laborer to
work during Sundays and legal holidays, unless the former pays the latter an additional sum of at least twenty
five per centum of his regular remuneration; and the second part, which is an exception, exempts public utilities
performing some public service, such as supplying gas, electricity, power, water or providing means of
transportation or communication, from the prohibition established in the enactment clause. As the appellant is
a public utility that supplies the electricity and provides means of transportation to the public, it is evident that
the appellant is exempt from the qualified prohibition established in the enactment clause, and may compel its
employees or laborers to work during Sundays and legal holidays without paying them said extra
compensation.

The prohibition to compel a laborer or employee to work during those days is qualified by the clause "unless he
is paid an additional sum of at least twenty five per centum of his regular remuneration," which is inseparable
from the prohibition which they qualify and of which they are a part and parcel. The second portion of section 1
is in reality an exception and not a proviso although it is introduced by the word "provided"; and it is elemental
that an exception takes out of an enactment something which would otherwise be part of the subject matter of
it.

ISSUE:

Whether or not the public utilities employers are entitled to an additional compensation for rendering
services on Sundays and legal holiday,
RULING:

NO, Public utilities exempted from the prohibition set forth in the enactment clause of section 4,
Commonwealth Act No. 444, are required to perform a continuous service including Sundays andlegal holidays
to the public, since the public good so demands, and are not allowed to collect an extra charge for services
performed on those days; while the others are not required to do so and are free to operate or not their shops,
business, or industries on Sundays and legal holidays. If they operate and compel their laborers to work on
those days it is but just and natural that they should pay an extra compensation to them, because it is to be
presumed that they can make money or business by operating on those days even if they have to pay such
extra remuneration. It would be unfair for the law to compel public utilities like the appellant to pay an additional
or extra compensation to laborers whom they have to compel to work during Sundays and legal holidays, in
order to perform a continuous service to the public. To require public utilities performing service to do so, would
be tantamount to penalize them for performing public service during said days in compliance with the
requirement of the law and public interest.

It is evident that the principal purpose of the Legislature in enacting said section 4, is not only to restrict
the general power of the Court of Industrial Relations granted by Act No. 103, to fix the minimum additional
compensation which an employer may be required to pay a laborer compelled to work on those days, but
principally to exempt public utilities affected with public interest, from the payment of such additional
compensation. If it were the intention of the lawmakers in enacting section 4 of the Act No. 444 to fix the limit of
the minimum of additional compensation of laborers working on those days, without exempting the public
utilities, that is, leaving intact the general power of the court to require the public utilities to pay said additional
compensation, the law would have only provided, in substance, that all employers are prohibited from
compelling their laborers to work on Sundays and legal holidays without paying them an additional
compensation of not less than 50 per cent of their regular remuneration.
The intention of the Legislature is to exempt the public utilities under consideration from the prohibition set forth
in the enactment clause of section 4, Act No. 444, is supported by the provision of section 19 of Act No. 103.

2.
MANTRADE/FMMC DIVISION EMPLOYEES AND WORKERS UNION (represented by PHILIPPINE
SOCIAL SECURITY LABOR UNION — PSSLU Fed. — TUCP), Petitioner, v. ARBITRATOR FROILAN M.
BACUNGAN and MANTRADE DEVELOPMENT CORPORATION, Respondents.

FACTS:

This is a petition for Certiorari and Mandamus filed by petitioner against arbitrator Froilan M. Bacungan
and Mantrade Development Corporation arising from the decision of respondent arbitrator, the dispositive part
of which reads as follows:

CONSIDERING ALL THE ABOVE, We rule that Mantrade Development Corporation is not under legal
obligation to pay holiday pay to its monthly paid 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.

On the other hand, respondent corporation has raised procedural and substantive objections. It
contends that petitioner is barred from pursuing the present action in view of Article 263 of the Labor Code,
which provides in part that "voluntary arbitration awards or decisions shall be final, inappealable, and
executory," as well as the rules implementing the same. Respondent corporation further contends that the
special civil action of certiorari does not lie because respondent arbitrator is not an "officer exercising judicial
functions" within the contemplation of Rule 65, Section 1, of the Rules of Court. Article 262 of the Labor Code
making voluntary arbitration awards final, inappealable and executory, except where the money claims exceed
P100,000.00 or 40% of the paid-up capital of the employer or where there is abuse of discretion or gross
incompetence refers to appeals to the National Labor Relations Commission and not to judicial review.
ISSUE:

Whether or not 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 is entitled of holiday
pay.

RULING:

YES, ART. 94. Right to holiday pay. — (a) Every worker shall be paid his regular daily wage during
regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; (b)
The employer may require an employee to work on any holiday but such employee shall be paid
compensation equivalent to twice his regular rate; and (c) As used in this Article, "holiday" includes: New
Year’s Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of
July, the thirtieth of November, the twenty-fifth and the thirtieth of December, and the day designated by law for
holding a general election.

They appear to be excluded under Sec. 2, Rule IV, Book III of the Rules and Regulations implementing
said provision which reads; SEC. 2. 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.

Petitioner’s contention that Section 2, Rule IV, Book III of the implementing rules and Policy Instruction
No. 9, issued by the then Secretary of Labor are null and void since in the guise of clarifying the Labor Code’s
provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion

The coverage and scope of exclusion of the Labor Code’s holiday pay provisions is spelled out under
Article 82 thereof which reads: Art. 82. Coverage. — The provision of this Title shall apply to employees
in all establishments and undertakings, whether for profit or not, but not to government employees, managerial
employees, field personnel, members of the family of the employer who are dependent on him for support,
domestic helpers, persons, in the personal service of another, and workers who are paid by results as
determined by the Secretary of Labor in appropriate regulations. 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 III 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.’

The questioned Sec. 2, Rule IV, Book III of the Integrated Rules and the Secretary’s Policy Instruction
No. 9 add another excluded group, namely ‘employees who are uniformly paid by the month.’ While the
additional exclusion is only in the form of a presumption that all monthly paid employees have already been
paid holiday pay, it constitutes a taking away or a deprivation which must be in the law if it is to be valid

3.

TRANS-ASIA PHILS. EMPLOYEES ASSOCIATION (TAPEA) and ARNEL GALVEZ, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, TRANS-ASIA (PHILS.) and ERNESTO S. DE
CASTRO, respondents.
FACTS:

Trans-Asia Philippines Employees Association the duly-recognized collective bargaining agent of the
monthly-paid rank-and-file employees of Trans-Asia entered into a Collective Bargaining Agreement with their
employer. The CBA, provided for, the payment of holiday pay with a stipulation that if an employee is permitted
to work on a legal holiday, the said employee will receive a salary equivalent to 200% of the regular daily wage
plus a 60% premium pay.

Petitioner filed a complaint before the labor arbiter for the payment of their holiday pay in arrears.
Petitioner contended that their claim for holiday pay in arrears is based on the non-inclusion of the same in
their monthly pay. In this regard, petitioners cited certain circumstances which, according to them, would
support their claim for past due holiday pay. First, petitioners presented Trans-Asia's Employees' Manual which
requires, as a pre-condition for the payment of holiday pay, that the employee should have worked or was on
authorized leave with pay on the day immediately preceding the legal holiday. Second, petitioners proffered as
evidence their appointment papers which do not contain any stipulation on the inclusion of holiday pay in their
monthly salary. Third, petitioners noted the inclusion of a provision in the CBA for the payment of an amount
equivalent to 200% of the regular daily wage plus 60% premium pay to employees who are permitted to work
on a regular holiday. Petitioners claimed that this very generous provision was the remedy availed of by Trans-
Asia to allow its employees to recoup the holiday pay in arrears and, as such, is a tacit admission of the non-
payment of the same during the period prior to the current CBA. Finally, petitioners cited the current CBA
provision which obligates Trans-Asia to give holiday pay. Petitioners asserted that this provision is an
acknowledgment by Trans-Asia of its failure to pay the same in the past since, if it was already giving holiday
pay prior to the CBA, there was no need to stipulate on the said obligation in the current CBA.

As a response, Trans-Asia argued that with regard to the pre-condition for the payment of holiday pay
stated in the Employees' Manual and the absence of a stipulation on holiday pay in the employees'
appointment papers, Trans-Asia asserted that the above circumstances are not indicative of its non-payment of
holiday pay since it has always honored the labor law provisions on holiday pay by incorporating the same in
the payment of the monthly salaries of its employees. In support of this claim, Trans-Asia pointed out that it has
long been the standing practice of the company to use the divisor of "286" days in computing for its employees'
overtime pay and daily rate deductions for absences. Trans-Asia explained that this divisor is arrived at
through the following formula:

52 x 44

———— = 286 days

Where: 52 = number of weeks in a year

44 = number of work hours per week

8 = number of work hours per day

Trans-Asia further clarified that the "286" days divisor already takes into account the ten (10) regular
holidays in a year since it only subtracts from the 365 calendar days the unworked and unpaid 52
Sundays and 26. Trans-Asia claimed that if the ten (10) regular holidays were not included in the
computation of their employees' monthly salary, the divisor which they would have used would only be
277 days which is arrived at by subtracting 52 Sundays, 26 Saturdays and the 10 legal holidays from
365 calendar days. Furthermore, Trans-Asia explained that the "286" days divisor is based on Republic
Act No. 6640, 2 wherein the divisor of 262 days is used in computing for the monthly rate of workers
who do not work and are not considered paid on Saturdays and Sundays or rest days. According to
 Trans-Asia, if the additional 26 working Saturdays in a year is factored-in to the divisor provided by
Republic Act No. 6640, the resulting divisor would be "286" days.

Trans-Asia explained that this holiday pay rate was included in the CBA in order to comply with Section
4, Rule IV, Book III of the Omnibus Rules Implementing the Labor Code. The aforesaid provision reads: Sec. 4.
Compensation for holiday work. — Any employee who is permitted or suffered to work on any regular holiday,
not exceeding eight (8) hours, shall be paid at least two hundred percent (200%) of his regular daily wage. If
the holiday falls on the scheduled rest day of the employee, he shall be entitled to an additional premium pay
of at least 30% of his regular holiday rate of 200% based on his regular wage rate.

ISSUE:

Whether or not employees are entitled with holiday pay and entitled to adjust its divisor.

RULING:

YES, Trans-Asia's inclusion of holiday pay in petitioners' monthly salary is clearly established by its
consistent use of the divisor of "286" days in the computation of its employees' benefits and deductions. A
simple application of mathematics would reveal that the ten (10) legal holidays in a year are already accounted
for with the use of the said divisors explained by Trans-Asia, if one is to deduct the unworked 52 Sundays and
26 Saturdays (derived by dividing 52 Saturdays in half since petitioners are required to work half-day on
Saturdays) the 365 calendar days in a year, the resulting divisor would be 286 days (should actually be 287
days). Since the ten (10) legal holidays were never included in subtracting the unworked and unpaid days in a
calendar year, the only logical conclusion would be that the payment for holiday pay is already incorporated
into the said divisor.

The pre-condition stated in the Employees' Manual for entitlement to holiday pay, the absence of a
stipulation in the employees' appointment papers for the inclusion of holiday pay in their monthly salary, the
stipulation in the CBA recognizing the entitlement of the petitioners to holiday pay with a concomitant provision
for the granting of an "allegedly" very generous holiday pay rate, would appear to be merely inferences and
suppositions,

Sec. 1 of Executive Order No. 203 provides:

Sec. 1. Unless otherwise modified by law, order or proclamation, the following regular holidays
and special days shall be observed in the country:

A. Regular Holidays

New Year's Day — January 1

Maundy Thursday — Movable Date

Good Friday — Movable Date

Araw ng Kagitingan — April 9

(Bataan and Corregidor Day)

Labor Day — May 1

Independence Day — June 12

National Heroes Day — Last Sunday of August

 Bonifacio Day — November 30

Christmas Day — December 25

Rizal Day — December 30

B. Nationwide Special Days

All Saints Day — November 1

Last Day of the Year — December 31

Section 6 of the Implementing Rules and Regulations of Republic Act No. 6727 provides:

Sec. 6. Suggested Formula in Determining the Equivalent Monthly Statutory Minimum Wage
Rates. — Without prejudice from existing company practices, agreements or policies, the
following formulas may be used as guides in determining the equivalent monthly statutory
minimum wage rates:

d) For those who do not work and are not considered paid on Saturdays and Sundays or rest
days:

Equivalent Monthly = Average Daily Wage Rate x 262 days

Rate (EMR) 12

Where 262 days =

250 days — Ordinary working days

10 days — Regular holidays

2 days — Special days (If considered paid; if actually

worked, this is equivalent to 2.6 days)

————

262 days — Total equivalent number of days

Based on the above, the proper divisor that should be used for a situation wherein the employees do
not work and are not considered paid on Saturdays and Sundays or rest days is 262 days. In the present case,
since the employees of Trans-Asia are required to work half-day on Saturdays, 26 days should be added to the
divisor of 262 days, thus, resulting to 288 days. However, due to the fact that the rest days of petitioners fall on
a Sunday, the number of unworked but paid legal holidays should be reduced to nine (9), instead of ten (10),
since one legal holiday under E.O. No. 203 always falls on the last Sunday of August, National Heroes Day.
Thus, the divisor that should be used in the present case should be 287 days.

However, the Court notes that if the divisor is increased to 287 days, the resulting daily rate for
purposes of overtime pay, holiday pay and conversions of accumulated leaves would be diminished. To
illustrate, if an employee receives P8,000.00 as his monthly salary, his daily rate would be P334.49, computed
as follows:
 P8,000.00 x 12 months

—————————— = P334.49/day

287 days

Whereas if the divisor used is only 286 days, the employee's daily rate would be P335.66, computed as
follows:

P8,000.00 x 12 months

—————————— = P335.66/day

286 days

Clearly, this muddled situation would be violative of the proscription on the non-diminution of benefits
under Section 100 of the Labor Code. On the other hand, the use of the divisor of 287 days would be to
the advantage of petitioners if it is used for purposes of computing for deductions due to the employee's
absences. In view of this situation, the Court rules that the adjusted divisor of 287 days should only be
used by Trans-Asia for computations which would be advantageous to petitioners, i.e., deductions for
absences, and not for computations which would diminish the existing benefits of the employees, i.e.,
overtime pay, holiday pay and leave conversions.

Therefore, Trans-Asia is hereby ordered to adjust its divisor to 287 days and pay the resulting holiday
pay in arrears.

4.

WELLINGTON INVESTMENT AND MANUFACTURING CORPORATION, petitioner,

vs.
CRESENCIANO B. TRAJANO, Under-Secretary of Labor and Employment, ELMER ABADILLA, and 34
others, respondents.

FACTS:

Labor Enforcement Officer conducted a routine inspection on the Wellington Flour Mills, an
establishment owned and operated by Wellington Investment and Manufacturing Corporation. The officer came
up with a report and a copy of which was explained to and received by Wellington's personnel manager, in
which he set forth his finding of non-payment of regular holidays falling on a Sunday for monthly-paid
employees.

Wellington sought reconsideration of the Labor Inspector's report in which they argued that the monthly
salary of the company's monthly-salaried employees already includes holiday pay for all regular holidays there
is no legal basis for the finding of alleged non-payment of regular holidays falling on a Sunday. It expounded
on this thesis in a position paper subsequently submitted to the Regional Director, asserting that it pays its
monthly-paid employees a fixed monthly compensation using the 314 factor which undeniably covers and
already includes payment for all the working days in a month as well as all the 10 unworked regular holidays
within a year.

The Labor Code provides that every worker should be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly employing less than ten workers. The regular
holidays include: "New Year's Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the
twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth of December, and the day
designated by law for holding a general election.
 Particularly as regards employees who are uniformly paid by the month, the monthly minimum wage
shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve. This monthly
salary shall serve as compensation for all days in the month whether worked or not and irrespective of the
number of working days therein.

Apparently the monthly salary was fixed by Wellington to provide for compensation for every working
day of the year including the holidays specified by law and excluding only Sundays. In fixing the salary,
Wellington used the "314 factor;" that is to say, it simply deducted 51 Sundays from the 365 days normally
comprising a year and used the difference, 314, as basis for determining the monthly salary. The monthly
salary thus fixed actually covers payment for 314 days of the year, including regular and special holidays, as
well as days when no work is done by reason of fortuitous cause, as above specified, or causes not
attributable to the employees.

On the other hand, the Labor Undersecretary argued that: By using said 314 factor, the Wellington
assumes that all the regular holidays fell on ordinary days and never on a Sunday. Thus, the respondent failed
to consider the circumstance that whenever a regular holiday coincides with a Sunday, an additional working
day is created and left unpaid. In other words, while the said divisor may be utilized as proof evidencing
payment of 302 working days, 2 special days and the ten regular holidays in a calendar year, the same does
not cover or include payment of additional working days created as a result of some regular holidays falling on
Sundays. Wellington's 314 factor leaves no day unaccounted for it is paying for all the days of a year with the
exception only of 51 Sundays.

ISSUE:

Whether or not a monthly-paid employee, receiving a fixed monthly compensation, is entitled to an

additional pay aside from his usual holiday pay, whenever a regular holiday falls on a Sunday.

RULING:

No, There is no provision of law requiring any employer to make such adjustments in the monthly
salary rate set by him to take account of legal holidays falling on Sundays in a given year, or, contrary to the
legal provisions bearing on the point, otherwise to reckon a year at more than 365 days.

What the law requires of employers opting to pay by the month is to assure that the monthly minimum
wage shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve, and to pay
that salary for all days in the month whether worked or not and irrespective of the number of working days
therein. That salary is due and payable regardless of the declaration of any special holiday in the entire country
or a particular place therein, or any fortuitous cause precluding work on any particular day or days such as
transportation strikes, riots, or typhoons or other natural calamities or cause not imputable to the worker.

The legal provisions governing monthly compensation are evidently intended precisely to avoid re-
computations and alterations in salary on account of the contingencies just mentioned, which, by the way, are
routinely made between employer and employees when the wages are paid on daily basis.

In the case, the respondents argument assumes that there are some "labor standards provisions of the
Code and the other labor legislations" imposing on employers the obligation to give additional compensation to
their monthly-paid employees in the event that a legal holiday should fall on a Sunday in a particular month
with which compliance may be commanded by the Regional Director when the existence of said provisions is
precisely the matter to be established.

The public respondents have attempted to legislate, or interpret legal provisions in such a manner as to
create obligations where none are intended. They have acted without authority, or at the very least, with
grave abuse of their discretion. Their acts must be nullified and set aside.
 5.

SAN MIGUEL CORPORATION, petitioner, vs. THE HONORABLE COURT OF APPEALS-FORMER

THIRTEENTH DIVISION, HON. UNDERSECRETARY JOSE M. ESPAOL, JR., Hon. CRESENCIANO
B. TRAJANO, and HON. REGIONAL DIRECTOR ALLAN M. MACARAYA, respondents.
FACTS:
Department of Labor and Employment conducted a routine inspection in the premises of San Miguel
Corporation. In the course of the inspection, it was discovered that there was underpayment by SMC of regular
Muslim holiday pay to its employees. DOLE sent a copy of the inspection result to SMC and it was received by
and explained to its personnel officer Elena dela Puerta. SMC contested the findings and DOLE conducted
summary hearings, however SMC failed to submit proof that it was paying regular Muslim holiday pay to its
employees. As a result, Alan M. Macaraya, Director IV of DOLE issued a compliance order, directing SMC to
consider Muslim holidays as regular holidays and to pay both its Muslim and non-Muslim employees holiday
pay within thirty (30) days from the receipt of the order.
SMC went to Court of Appeals for relief via a petition for certiorari. The appellate court, modified the Order
Director Macaraya with regards the payment of Muslim holiday pay from 200% to 150% of the employee's
basic salary.
As a response, SMC filed a petition for certiorari before this Court, alleging that: public respondents
seriously erred and committed grave abuse of discretion when they granted Muslim holiday to non-Muslim
employees of SMC
ISSUE:
Whether or not Muslim holiday should also be granted to non-Muslim employees.
RULING:
YES, Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of Presidential Decree
No. 108 otherwise known as the Code of Muslim Personal Laws, which states:

Art. 169. Official Muslim holidays. - The following are hereby recognized as legal Muslim holidays:

(a) Amun Jadīd (New Year), which falls on the first day of the first lunar month of Muharram;
(b) Maulid-un-Nabī (Birthday of the Prophet Muhammad), which falls on the twelfth day of the third
lunar month of Rabi-ul-Awwal;
(c) Lailatul Isrā Wal Mirāj (Nocturnal Journey and Ascension of the Prophet Muhammad), which falls
on the twenty-seventh day of the seventh lunar month of Rajab;
(d) Īd-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar month of Shawwal,
commemorating the end of the fasting season; and
(e) Īd-ūl-Adhā (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month of Dhūl-Hijja.

Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays shall be officially observed in
the Provinces of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North Cotabato, Iligan, Marawi,
Pagadian, and Zamboanga and in such other Muslim provinces and cities as may hereafter be created;

(2) Upon proclamation by the President of the Philippines, Muslim holidays may also be officially observed in
other provinces and cities.

The foregoing provisions should be read in conjunction with Article 94 of the Labor Code, which provides:

Art. 94. Right to holiday pay. -

 (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and
service establishments regularly employing less than ten (10) workers;

(b) The employer may require an employee to work on any holiday but such employee shall be
paid a compensation equivalent to twice his regular rate; x x x.

There should be no distinction between Muslims and non-Muslims as regards payment of benefits for
Muslim holidays.
In addition, the 1999 Handbook on Workers Statutory Benefits, approved by then DOLE Secretary
Bienvenido E. Laguesma on 14 December 1999 categorically stated: Considering that all private corporations,
offices, agencies, and entities or establishments operating within the designated Muslim provinces and cities
are required to observe Muslim holidays, both Muslim and Christians working within the Muslim areas
may not report for work on the days designated by law as Muslim holidays

6.

MAKATI HABERDASHERY, INC., JORGE LEDESMA and CECILIO G. INOCENCIO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA (Labor Arbiter, Department of
Labor and Employment, National Capital Region), SANDIGAN NG MANGGAGAWANG PILIPINO
(SANDIGAN)-TUCP and its members, JACINTO GARCIANO, ALFREDO C. BASCO, VICTORIO Y.
LAURETO, ESTER NARVAEZ, EUGENIO L. ROBLES, BELEN N. VISTA, ALEJANDRO A. ESTRABO,
VEVENCIO TIRO, CASIMIRO ZAPATA, GLORIA ESTRABO, LEONORA MENDOZA, MACARIA G.
DIMPAS, MERILYN A. VIRAY, LILY OPINA, JANET SANGDANG, JOSEFINA ALCOCEBA and MARIA
ANGELES, respondents.

FACTS:
The private respondents in this case have been working for Makati Haberdashery, Inc. as tailors,
seamstress, sewers, basters and plantsadoras. They are paid on a piece-rate basis except Maria Angeles and
Leonila Serafina who are paid on a monthly basis. In addition to their piece-rate, they are given a daily
allowance of three (P 3.00) pesos provided they report for work before 9:30 a.m. everyday. Private
respondents are required to work from or before 9:30 a.m. up to 6:00 or 7:00 p.m. from Monday to Saturday
and during peak periods even on Sundays and holidays.

Sandigan ng Manggagawang Pilipino, a labor organization of the respondent workers, filed a complaint
docketed as NLRC NCR Case No. 7-2603-84 for underpayment of the basic wage; underpayment of living
allowance; non-payment of overtime work; non-payment of holiday pay; non-payment of service incentive
pay; 13th month pay; and benefits

Labor Arbiter Ceferina J. Diosana rendered judgment, the dispositive portion of which reads: the
complainants' claims for underpayment of violation of the minimum wage law is hereby ordered dismissed for
lack of merit. Respondents are hereby found to have violated the decrees on the cost of living allowance,
service incentive leave pay and the 13th Month Pay. In view thereof, the economic analyst of the Commission
is directed to compute the monetary awards due each complainant based on the available records of the
respondents retroactive as of three years prior to the filing of the instant case.

Based from the foregoing decision, petitioners filed the instant petition raising that the subject decisions
erroneously concluded that respondent workers are entitled to monetary claims specifically service incentive
leave.

ISSUE:

Whether or not the respondents are entitled with service incentive leave.
RULING:

NO, respondents are not entitled to service incentive leave pay because as piece-rate workers being
paid at a fixed amount for performing work irrespective of time consumed in the performance thereof, they fall
under one of the exceptions stated in Section 1(d), Rule V, Implementing Regulations, Book III, Labor Code.
For the same reason private respondents cannot also claim holiday pay Section 1(e), Rule IV, Implementing
Regulations, Book III, Labor Code.

7.
AUTO BUS TRANSPORT SYSTEMS, INC., petitioner, vs. ANTONIO BAUTISTA, respondent
FACTS:
Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc. as driver-conductor
with travel routes Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila and Manila-Tabuk via
Baguio. Bautista was paid on commission basis, seven percent (7%) of the total gross income per travel, on a
twice a month basis.
On January 2000, while Bautista was driving Autobus No. 114 the bus he was driving accidentally bumped
the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without giving any
warning.
Bautista argued that accident happened because he was compelled by the management to go back to
Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived in Manila
from Roxas, Isabela. Respondent further alleged that he was not allowed to work until he fully paid the amount
of P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged buses and that despite
respondents pleas for reconsideration, the same was ignored by management. After a month, management
sent him a letter of termination.
As a result, Bautista instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of
13th month pay and service incentive leave pay against Autobus.
Labor Arbiter Monroe C. Tabingan came up with a decision which dismissed the complaint for illegal
dismissal and ordered the respondent to pay Bautista’s 13th month pay from the date of his hiring to the date of
his dismissal, presently computed at P78,117.87 and his service incentive leave pay for all the years he had
been in service with the respondent, presently computed at P13,788.05.
Auto Bus Transport Systems, Inc appealed the decision to the NLRC which rendered its decision which
deleted the award of 13th month pay and affirmed the award of service incentive leave pay. Furthermore, the
Auto Bus Transport Systems, Inc sought the review of said decision with the Court of Appeals. Hence, the
instant petition.
ISSUE:
Whether or not respondent is entitled to service incentive leave;
RULING:
YES, in this case Bautista is a regular employee and not a field personnel. Thus, he must be entitled
with service incentive leave.

Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE

(a) Every employee who has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay.

However, Book III, Rule V: SERVICE INCENTIVE LEAVE

SECTION 1. Coverage. This rule shall apply to all employees except:

 (d) Field personnel and other employees whose performance is unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those
who are paid in a fixed amount for performing work irrespective of the time consumed in the
performance thereof; . . .

The grant of service incentive leave has been delimited by the Implementing Rules and Regulations of the
Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the
Implementing Rules, Service Incentive Leave shall not apply to employees classified as field personnel. The
phrase other employees whose performance is unsupervised by the employer must not be understood as a
separate classification of employees to which service incentive leave shall not be granted. Rather, it serves as
an amplification of the interpretation of the definition of field personnel under the Labor Code as those whose
actual hours of work in the field cannot be determined with reasonable certainty.
The same is true with respect to the phrase those who are engaged on task or contract basis, purely
commission basis. Said phrase should be related with field personnel, applying the rule on ejusdem
generis that general and unlimited terms are restrained and limited by the particular terms that they follow.
Therefore, employees engaged on task or contract basis or paid on purely commission basis are not
automatically exempted from the grant of service incentive leave, unless, they fall under the classification of
field personnel.
According to Article 82 of the Labor Code, field personnel shall refer to non-agricultural employees who
regularly perform their duties away from the principal place of business or branch office of the employer and
whose actual hours of work in the field cannot be determined with reasonable certainty.

As a general rule, field personnel are those whose performance of their job/service is not supervised by the
employer or his representative, the workplace being away from the principal office and whose hours and days
of work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering
specific service or performing specific work. If required to be at specific places at specific times, employees
including drivers cannot be said to be field personnel despite the fact that they are performing work away from
the principal office of the employee.

Field personnel are those who regularly perform their duties away from the principal place of business of
the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.
Thus, in order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual
hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry
must be made as to whether or not the employees time and performance are constantly supervised by the
employer.

It is of judicial notice that along the routes that are plied by these bus companies, there are its inspectors
assigned at strategic places who board the bus and inspect the passengers, the punched tickets, and the
conductors reports. There is also the mandatory once-a-week car barn or shop day, where the bus is regularly
checked as to its mechanical, electrical, and hydraulic aspects, whether or not there are problems thereon as
reported by the driver and/or conductor. They too, must be at specific place as specified time, as they generally
observe prompt departure and arrival from their point of origin to their point of destination. In each and every
depot, there is always the Dispatcher whose function is precisely to see to it that the bus and its crew leave the
premises at specific times and arrive at the estimated proper time. These, are present in the case at bar. The
driver, was therefore under constant supervision while in the performance of this work. He cannot be
considered a field personnel.

8.

SENTINEL SECURITY AGENCY, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,
ADRIANO CABANO, JR., VERONICO C. ZAMBO, HELCIAS ARROYO, RUSTICO ANDOY, and MAXIMO
ORTIZ, respondents.

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

PHILIPIPPINE AMERICAN LIFE INSURANCE COMPANY, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, VERONICO ZAMBO, HELCIAS ARROYO, ADRIANO CABANO, MAXIMO ORTIZ, and
RUSTICO ANDOY, respondents.
FACTS:

The complainants were employees of Security Agency, Inc. The complainants were assigned to render
guard duty at the premises of Philippine American Life Insurance Company. Sometime in 1993 Philippine
American Life Insurance Company sent notice to all concerned that the Agency was again awarded the
contract of security services together with a request to replace all the security guards in the companys
offices. In compliance therewith, he Agencyissued a Relief and Transfer Order replacing the complainants as
guards and for then to be re-assigned to other clients. The complainants reported but were never given new
assignments but instead they were told you were replaced because you are already old. As a response, the
complainants lost no time but filed the subject illegal dismissal cases on and prayed for payment of separation
pay and other labor standard benefits.

The Client and the Agency maintained there was no dismissal on the part of the complainants,
constructive or otherwise, as they were protected by the contract of security services which allows the recall of
security guards from their assigned posts at the will of either party. It also advanced that the complainants
prematurely filed the subject cases without giving the Agency a chance to give them some assignments.

Respondent Commission ruled that the complainants were constructively dismissed, as the recall of the
complainants from their long time post without any good reason is a scheme to justify or camouflage illegal
dismissal.
In the present case, the complainants case, the complainants were told by the Agency that they lost their
assignment at the Clients premises because they were already old, and not because they had committed any
infraction or irregularity.

ISSUE:

Whether petitioner is jointly and severally liable with Sentinel Security Agency, Inc., in the payment of
backwages, 13th month pay and service incentive leave pay to its employees

RULING:
YES, it should not be held liable for separation pay and back wages. But even if the Client is not
responsible for the illegal dismissal of the complainants, it is jointly and severally liable with the Agency for the
complainants service incentive leave pay. Notwithstanding the service contract between the client and the
security agency, the two are solidarily liable for the proper wages prescribed by the Labor Code, pursuant to
Article 106, 107 and 109 thereof, which we quote hereunder:

ART. 106. Contractor or subcontractor.Whenever an employer enters into a contract with another person
for the performance of the former[s] work, the employees of the contractor and of the latter[s] subcontractor, if
any, shall be paid in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance
with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such
employees to the extent of the work performed under the contract, in the same manner and extent that he is
liable to employees directly employed by him. The Secretary of Labor may, by appropriate regulations, restrict
or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so
prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job
contracting as well as differentiations within these types of contracting and determine who among the parties
involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention
of any provision of this Code.
 In such cases labor-only contracting, the person or intermediary shall be considered merely as an agent of
the employer who shall be responsible to the workers in the same manner and extent as if the latter were
directly employed by him.

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.

ART. 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every employer
or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any
provision of this Code. For purpose of determining the extent of their civil liability under this Chapter, they shall
be considered as direct employers.

Under these provisions, the indirect employer, who is the Client in the case at bar, is jointly and
severally liable with the contractor for the workers wages, in the same manner and extent that it is liable to
its direct employees. This liability of the Client covers the payment of the service incentive leave pay of the
complainants during the time they were posted at the Cebu branch of the Client. As service had been
rendered, the liability accrued, even if the complainants were eventually transferred or reassigned.
The service incentive leave is expressly granted by these pertinent provisions of the Labor Code:

ART. 95. Right to service incentive leave.(a) Every employee who has rendered at least one year of service
shall be entitled to a yearly service incentive leave of five days with pay. (b) This provision shall not apply to
those who are already enjoying the benefit herein provided, those enjoying vacation leave with pay of at least
five days and those employed in establishments regularly employing less than ten employees or in
establishments exempted from granting this benefit by the Secretary of Labor after considering the viability or
financial condition of such establishment. (c) The grant of benefit in excess of that provided herein shall not be
made a subject of arbitration or any court [or] admnistrative action.

Under the Implementing Rules and Regulations of the Labor Code, an unused service incentive leave is
commutable to its money equivalent, viz.:

Sec. 5. Treatment of Banefit. - The service incentive leave shall be commutable to its money equivalent if not
used or exhausted at the end of the year.

9.

LABOR CONGRESS OF THE PHILIPPINES (LCP) petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, EMPIRE FOOD PRODUCTS, its Proprietor/President & Manager, MR. GONZALO
KEHYENG and MRS. EVELYN KEHYENG,respondents.
FACTS:

The petitioners in this case were rank-and-file employees of respondent Empire Food Products, which
hired them on various dates Petitioners filed against private respondents a complaint for payment of money
claims and for violation of labor standards laws. The petitioners represented by LCP President Benigno B.
Navarro, Sr. and private respondents Gonzalo Kehyeng and Evelyn Kehyeng in behalf of Empire Food
Products, Inc. entered into a Memorandum of Agreement

Petitioners filed a complaint docketed against private respondents for unfair labor practice by way of
Illegal Lockout and/or Dismissal; Union busting thru Harassments threats, and interfering with the rights of
employees to self-organization; Violation of the Memorandum of Agreement dated October 23,
1990; Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as Wages promulgated
by the Regional Wage Board; Actual, Moral and Exemplary Damages
 Complainants failed to present with definiteness and clarity the particular act or acts constitutive of
unfair labor practice. Also the complainants failed to specify what type of threats or intimidation was committed
and who committed the same.Insofar as violation of Memorandum of Agreement is concerned, both parties
agreed that: parties jointly and mutually agreed that the issues thereof shall be discussed by the parties and
resolved during the negotiation of the CBA.

The charge that there was underpayment of wages, the evidence points to the contrary. The enumeration
of complainants wages in their consolidated Affidavits of merit and position paper which implies underpayment
has no legal to stand on in the light of the fact that complainants admission that they are piece workers or paid
on a pakiao for example, a certain amount for every thousand pieces of cheese curls or other products
repacked. The only limitation for piece workers or pakiao workers is that they should receive compensation no
less than the minimum wage for an eight (8) hour. Finally, the claim for moral and exemplary damages has no
legal to stand on when no malice, bad faith or fraud was ever proven to have been perpetuated by
respondents.

On appeal, the NLRC sustained the Labor Arbiters findings that: (a) there was a dearth of evidence to
prove the existence of unfair labor practice and union busting on the part of private respondents; (b) the
agreement of 23 October 1990 could not be made the basis of an obligation within the ambit of the NLRCs
jurisdiction, as the provisions thereof, particularly Section 2, spoke of a resolutory condition which could or
could not happen; (c) the claims for underpayment of wages were without basis as complainants were
admittedly pakiao workers and paid on the basis of their output subject to the lone limitation that the payment
conformed to the minimum wage rate for an eight-hour workday; and (d) petitioners were not underpaid.
Hence, this petition.
ISSUE:
Whether or not the employers are entitled with service incentive leave provided that the employers are
pakiao or piece workers.
RULING:
YES, petitioner employees are pakyao or piece workers does not imply that they are not regular
employees entitled to reinstatement. Private respondent Empire Food Products, Inc. is a food and fruit
processing company. The work of merchandisers of processed food, who coordinate with grocery stores and
other outlets for the sale of the processed food is necessary in the day-to-day operation of the company. With
more reason, the work of processed food repackers is necessary in the day-to-day operation of respondent
Empire Food Products.
Petitioners, although piece-rate workers, were regular employees of private respondents. In the sense that
they comply the following requirements: First, as to the nature of petitioners tasks, their job of repacking snack
food was necessary or desirable in the usual business of private respondents, who were engaged in the
manufacture and selling of such food products; second, petitioners worked for private respondents throughout
the year, their employment not having been dependent on a specific project or season; and third, the length of
time[16] that petitioners worked for private respondents. Thus, while petitioners mode of compensation was on a
per piece basis, the status and nature of their employment was that of regular employees.
The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as
nighttime pay, holiday pay, service incentive leave and 13th month pay. Field personnel and other employees
whose time and performance is unsupervised by the employer, including those who are engaged on task or
contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective
of the time consumed in the performance thereof. However, petitioners as piece-rate workers do not fall
within this group. Not only did petitioners labor under the control of private respondents as their employer,
likewise did petitioners toil throughout the year with the fulfillment of their quota as supposed basis for
compensation. Furthermore, Section 8 (b), Rule IV, Book III which we quote hereunder, piece workers are
specifically mentioned as being entitled to holiday pay.

SEC. 8. Holiday pay of certain employees.-

 (b) Where a covered employee is paid by results or output, such as payment on piece work, his holiday
pay shall not be less than his average daily earnings for the last seven (7) actual working days
preceding the regular holiday: Provided, however, that in no case shall the holiday pay be less than
the applicable statutory minimum wage rate.

In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, in view of the
modifications to P.D. No. 851[19] by Memorandum Order No. 28, clearly exclude the employer of piece rate
workers from those exempted from paying 13th month pay, to wit:

2. EXEMPTED EMPLOYERS

The following employers are still not covered by P.D. No. 851:

d. Employers of those who are paid on purely commission, boundary or task basis, and those who are
paid a fixed amount for performing specific work, irrespective of the time consumed in the
performance thereof, except where the workers are paid on piece-rate basis in which case the
employer shall grant the required 13th month pay to such workers.

The Revised Guidelines as well as the Rules and Regulations identify those workers who fall under the piece-
rate category as those who are paid a standard amount for every piece or unit of work produced that is more or
less regularly replicated, without regard to the time spent in producing the same.
10.

PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY, Petitioner, v. NATIONAL LABOR RELATIONS

COMMISSION, and ODIN SECURITY AGENCY, as representative of its Security Guards, Respondents.

FACTS:

Philippine Fisheries Development Authority is a government-owned or controlled corporation created by

P.D. No. 977. It entered into a contract with the Odin Security Agency for security services of its Iloilo Fishing
Port Complex in Iloilo City. The pertinent provision of the contract provides:

OBLIGATION OF THE FISHING PORT COMPLEX

For and in consideration of the services to be rendered by the AGENCY to the FISHING PORT COMPLEX, the
latter shall pay to the former per month for eight (8) hours work daily as follows: OUTSIDE METRO MANILA:
Security Guard P1,990.00; Security Supervisor 2,090.00; Det. Commander 2,190.00.

The Security Group of the AGENCY will be headed by a detachment commander whose main function shall
consist of the administration and supervision control of the AGENCY’s personnel in the FISHING PORT
COMPLEX. There shall be one supervisor per shift who shall supervise the guards on duty during a particular
shift.

The above schedule of compensation includes among others, the following:

(a) Minimum wage (Wage Order No. 5), (b) Rest Day Pay, (c) Night Differential Pay, (d) Incentive Leave Pay,
(e) 13th Month Pay, (f) Emergency Cost of Living Allowance (up to Wage Order No. 5), (g) 4% Contractor’s
Tax, (h) Operational Expenses, (i) Overhead

The contract for security services also provided for a one year renewable period unless terminated by either of
the parties. During the effectivity of the said Security Agreement, the private respondent requested the
petitioner to adjust the contract rate in view of the implementation of Wage Order No.
The private respondent’s request for adjustment was anchored on the provision of Wage Order No. 6 which
provides that in the case of contracts for construction projects and for security, janitorial and similar services,
the increases in the minimum wage and allowance rates of the workers shall be borne by the principal or client
of the construction/service contractor and the contracts shall be deemed amended accordingly, subject to the
provisions of Section 3(c) of this Order.
Requests for adjustment of the contract price were reiterated but were ignored by the petitioner. The private
respondent filed a complaint for unpaid amount of re-adjustment rate under Wage Order No. 6 together with
wage salary differentials arising from the integration of the cost of living allowance under Wage Order No. 1, 2,
3 and 5

ISSUE:

Whether or not security guards are entitled for the unpaid wages.

RULING:

YES, Wage Orders are explicit that payment of the increases are to be borne by the principal or client.The
Wage Orders are statutory and mandatory and cannot be waived. The petitioner cannot escape liability since
the law provides the joint and solidary liability of the principal and the contractor for the protection of the
laborers. There can be no question that the security guards are entitled to wage adjustments. The computation
of the amount due to each individual guard can be made during the execution of the decision where hearings
can be held.
Security personnel should not be deprived of what is lawfully due them, it bears emphasis that it was the
private respondent which first deprived the security personnel of their rightful wage under Wage Order No. 6.
Furthermore, the private respondent should also be faulted for the unpaid wage differentials of the security
guards. By filing the complaint in its own behalf and in behalf of the security guards, the private respondent
wishes to exculpate itself from liability. Therefore, the petitioner and the private respondent jointly and severally
liable to the security guards for the unpaid wage differentials under Wage Order No. 6.

11.

AKLAN ELECTRIC COOPERATIVE INCORPORATED (AKELCO), petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION (Fourth Division), RODOLFO M. RETISO and 165 OTHERS, respondents.

Facts:

These are consolidated cases/claims for non-payment of salaries and wages, 13th month pay, ECOLA
and other fringe benefits as rice, medical and clothing allowances, submitted by complainant Rodolfo M. Retiso
and 163 others, Lyn E. Banilla and Wilson B. Sallador against respondents Aklan Electric Cooperative, Inc.
(AKELCO), Atty. Leovigildo Mationg in his capacity as General Manager; Manuel Calizo, in his capacity as
Acting Board President, Board of Directors, AKELCO.

On January 22, 1992, by way of resolution of the Board of Directors of AKELCO allowed the temporary
transfer holding of office at Amon Theater, Kalibo, Aklan per information by their Project Supervisor, Atty.
Leovigildo Mationg, that their head office is closed and that it is dangerous to hold office thereat. Nevertheless,
majority of the employees including herein complainants continued to report for work at Lezo Aklan and were
paid of their salaries. The administrator of NEA, Rodrigo Cabrera, wrote a letter addressed to the Board of
AKELCO, that he is not interposing any objections to the action taken by respondent Mationg

On February 11, 1992, unnumbered resolution was passed by the Board of AKELCO withdrawing the
temporary designation of office at Kalibo, Aklan, and that the daily operations must be held again at the main
office of Lezo, Aklan. That complainants who were then reporting at the Lezo office from January 1992 up to
May 1992 were duly paid of their salaries, while in the meantime some of the employees through the
instigation of respondent Mationg continued to remain and work at Kalibo, Aklan. From June 1992 up to March
18, 1993 complainants who continuously reported for work at Lezo, Aklan in compliance with the
aforementioned resolution were not paid their salaries.

However, the respondent claims that these complainants voluntarily abandoned their respective
work/job assignments, without any justifiable reason and without notifying the management of the Aklan
Electric Cooperative, Inc. (AKELCO), hence the cooperative suffered damages and systems loss and that the
complainants herein wilfully and maliciously defied the lawful orders and other issuances by the General
Manager and the Board of Directors of the AKELCO as a protest for the appointment of respondent Mationg.

Labor Arbiter dismissed the complaints. On appeal, NLRC reversed and set aside the LA’s 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 AKELCO’s 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.

Issue: Whether or not private respondents are entitled to compensation

Held:

No. The Supreme Court affirmed the LA’s finding that the complainants were requested to report to
work at the Kalibo office but despite these lawful orders of the General Manager, the complainants did not
follow such order; hence they are covered by the "no work, no pay" principle and are thus not entitled to the
claim for unpaid wages from June 16, 1992 to March 18, 1993.

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 petitioner’s 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.

The age-old rule governing the relation between labor and capital, or management and employee of a
"fair days wage for a fair days labor" remains as the basic factor in determining employees wages. If there is
no work performed by the employee there can be no wage or pay unless, of course, the laborer was able,
willing and ready to work but was illegally locked out, suspended or dismissed, or otherwise illegally prevented
from working, a situation which is not present in the instant case. 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.

Hence, the Supreme Court reversed NLRC’s decision, and affirmed the Labor Arbiter’s decision.

12.

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner, vs. HON. LEONARDO A.

QUISUMBING in his capacity as the Secretary of Labor and Employment; HON. CRESENCIANO B.
TRAJANO in his capacity as the Acting Secretary of Labor and Employment; DR. BRIAN MACCAULEY
in his capacity as the Superintendent of International School-Manila; and INTERNATIONAL SCHOOL,
INC., respondents.

Facts:

Private respondent International School, Inc. (the School, for short), pursuant to Presidential Decree
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, the School hires both foreign and local teachers as members of its faculty,
classifying the same into two: (1) foreignhires and (2) local-hires.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.

When negotiations for a new collective bargaining agreement were held on June 1995, petitioner
International School Alliance of Educators, "a legitimate labor union and the collective bargaining
representative of all faculty members" of the School, contested the difference in salary rates between foreign
and local-hires Thereafter, petitioner filed a notice of strike. The failure of the National Conciliation and
Mediation Board to bring the parties to a compromise prompted the Department of Labor and Employment
(DOLE) to assume jurisdiction over the dispute. The DOLE Acting Secretary, Crescenciano B. Trajano, issued
an Order resolving the parity and representation issues in favor of the School which ruled that both groups
received the same benefits and that equal pay for equal work does not apply due to differences in culture. The
augmented salary is a form of enticement so that the school remains competitive in the international market
and a limited contract of employment for the foreign hires as compared to the security of tenure enjoyed by the
Local Hires

Then DOLE Secretary Leonardo A. Quisumbing subsequently denied petitioner's motion for
reconsideration.

Issue: Whether or not equal work for equal pay applies in the case.

Held:

Yes. Public policy abhors inequality and discrimination is beyond contention. Our Constitution and laws
reflect the policy against these evils. The Constitution in the Article on Social Justice and Human Rights
exhorts Congress to "give highest priority to the enactment of measures that protect and enhance the right of
all people to human dignity, reduce social, economic, and political inequalities. The very broad Article 19 of the
Civil Code requires every person, "in the exercise of his rights and in the performance of his duties, to act with
justice, give everyone his due, and observe honesty and good faith."

International law, which springs from general principles of law, likewise proscribes discrimination.
General principles of law include principles of equity, i.e., the general principles of fairness and justice, based
on the test of what is reasonable. The Constitution specifically provides that labor is entitled to "humane
conditions of work." These conditions are not restricted to the physical workplace - the factory, the office or the
field but include as well the manner by which employers treat their employees.

The Constitution also directs the State to promote "equality of employment opportunities for all."
Similarly, the Labor Code provides that the State shall "ensure equal work opportunities regardless of sex, race
or creed." It would be an affront to both the spirit and letter of these provisions if the State, in spite of its
primordial obligation to promote and ensure equal employment opportunities, closes its eyes to unequal and
discriminatory terms and conditions of employment. Discrimination, particularly in terms of wages, is frowned
upon by the Labor Code. Article 135, for example, prohibits and penalizes the payment of lesser compensation
to a female employee as against a male employee for work of equal value. Article 248 declares it an unfair
labor practice for an employer to discriminate in regard to wages in order to encourage or discourage
membership in any labor organization.

There is no evidence here that foreignhires perform 25% more efficiently or effectively than the local-
hires. Both groups have similar functions and responsibilities, which they perform under similar working
conditions. The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the
distinction in salary rates without violating the principle of equal work for equal pay. While we recognize the
need of the School to attract foreign-hires, salaries should not be used as an enticement to the prejudice of
local-hires. The local-hires perform the same services as foreign-hires and they ought to be paid the same
salaries as the latter. For the same reason, the "dislocation factor" and the foreign-hires' limited tenure also
cannot serve as valid bases for the distinction in salary rates. The dislocation factor and limited tenure affecting
foreign-hires are adequately compensated by certain benefits accorded them which are not enjoyed by local-
hires, such as housing, transportation, shipping costs, taxes and home leave travel allowances.
 13.

BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS, petitioner, vs. NATIONAL

LABOR RELATIONS COMMISSION and BANKARD, INC., respondents.
Facts:

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

As a result, the duly certified exclusive bargaining agent of the regular rank and file employees of
Bankard(Bankard Employees Union-WATU) pressed for the increase in the salary of its old, regular
employees. Bankard maintained that there was no obligation on the part of the management to grant to all its
employees the same increase in an across-the-board manner.

A Notice of Strike was filed on the ground of discrimination and other acts of Unfair Labor Practice
(ULP). This was initially treated as a preventive mediation case on the ground that the issues raised were not
strikable. Petitioner filed another Notice of Strike on October 8, 1993 on the grounds of refusal to bargain,
discrimination, and other acts of ULP - union busting. The strike was averted, however, when the dispute was
certified by the Secretary of Labor and Employment for compulsory arbitration.

The Second Division of the NLRC, by Order of May 31, 1995, finding no wage distortion, dismissed the
case for lack of merit.

Issue: Whether or not the wage scheme increase used by Bankard constitutes wage distortion.

Held:

NO. In Prubankers Association v. Prudential Bank and Trust Company, the court has laid down the four
elements of wage distortion, to wit:

(1.) An existing hierarchy of positions with corresponding salary rates;

(2) A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate
of a higher one;

(3) The elimination of the distinction between the two levels; and

(4) The existence of the distortion in the same region of the country.

Normally, a company has a wage structure or method of determining the wages of its employees. In a
problem dealing with wage distortion, the basic assumption is that there exists a grouping or classification of
employees that establishes distinctions among them on some relevant or legitimate bases. For purposes of
determining the existence of wage distortion, employees cannot create their own independent classification
and use it as a basis to demand an across-the-board increase in salary.

Absent any indication that the voluntary increase of salary rates by an employer was done arbitrarily
and illegally for the purpose of circumventing the laws or was devoid of any legitimate purpose other than to
discriminate against the regular employees, this Court will not step in to interfere with this management
prerogative.

Petitioner cannot make a contrary classification of private respondent’s employees without encroaching
upon recognized management prerogative of formulating a wage structure, in this case, one based on level.
While seniority may be a factor in determining the wages of employees, it cannot be made the sole basis in
cases where the nature of their work differs. Moreover, for purposes of determining the existence of wage
distortion, employees cannot create their own independent classification and use it as a basis to demand an
across-the-board increase in salary.

Apart from the findings of fact of the NLRC and the Court of Appeals that some of the elements of wage
distortion are absent, petitioner cannot legally obligate Bankard to correct the alleged "wage distortion" as the
increase in the wages and salaries of the newly-hired was not due to a prescribed law or wage order. The
wordings of Article 124 are clear. If it was the intention of the legislators to cover all kinds of wage adjustments,
then the language of the law should have been broad, not restrictive as it is currently phrased.

Moreover, Bankard’s right to increase its hiring rate, to establish minimum salaries for specific jobs, and
to adjust the rates of employees affected thereby is embodied under Section 2, Article V (Salary and Cost of
Living Allowance) of the parties’ Collective Bargaining Agreement (CBA).
Petition is hereby DENIED.

14.

ARMS TAXI v. NATIONAL LABOR RELATIONS COMMISSION

Facts:

The spouses Norberto and Dorothea Tanongon own and operate taxicabs under the names of "Arms
Taxi" and "Lin-lin Taxi." However, the taxicabs are registered under the "kabit" system in the name of Aida dela
Cruz who holds a certificate of public convenience to operate a taxicab service.

In the early part of 1980, Culla was hired by the Tanongon spouses to work as mechanic, shop
manager, garage caretaker, dispatcher, and liaison man in their taxi business, at a monthly salary of P5,000.00
plus commission on the daily or monthly gross income of the business in addition to the payment of his Social
Security System (SSS) premiums. On June 11, 1986, without Culla's consent, the Tanongon spouses asked
one of their taxi drivers to force open his quarters in the Tanongon compound at the St. Francis Subdivision in
Cainta, Rizal. They removed his personal belongings and brought them to his residence in Sta. Ana, Manila.

Culla filed with the Arbitration Branch of the then Ministry of Labor and Employment, a complaint
alleging that his ejectment from his living quarters and dismissal from employment were illegal because there
was no prior investigation or written notice of the charges against him. His dismissal was allegedly due to his
demands "for the payment of the benefits, percentage and privileges and premiums to the SSS" He prayed for
reinstatement with backwages, plus his commission of fifteen percent (15%) of the gross income of the taxi
business, in the amount of P480.000.00 with legal interest, plus moral, nominal and exemplary damages in the
total sum of P300,000.00 and actual or compensatory damages and litigation expenses.

Tanongon spouses denied that they were the operators of the Arms Taxi and Lin-lin Taxi. They denied
the existence of an employer-employee relationship between them and Culla. They averred that Arms Taxi is
owned and operated by Aida dela Cruz. They also contend that they bought Lin-lin Taxi from one Jose Lim, but
its ownership has not yet been transferred to them as their application with the Land Transportation Office is
still pending. For her part, Aida dela Cruz admitted ownership and operation of a fleet of taxicabs under the
name Arms Taxi and that she had entered into an agreement with Dorothea Tanongon for the latter to manage
for a fee the operation of several of her taxi units. Denying that she hired Culla, Dela Cruz averred that at most.
Culla could be considered as an independent contractor paid on a piece-work basis and therefore, he was not
entitled to regular benefits, much less to the alleged 15% commission.

Labor Arbiter declared that Culla was illegally dismissed and an employee of the Tanongon spouses
making them solidary liable with Aida Dela Cruz the aggregate sum of ONE HUNDRED NINETY-FIVE
THOUSAND (P195,000.00) PESOS representing complainant's backwages for three (3) year: (P5,000.00/mo.
x 36 mos. plus P2,500.00/mo. (1/2 mo/yr. of service x 6 years) and separation pay computed at one-half (1/2)
for every year of service within ten (10) days from receipt of this decision. However, the Labor Arbiter also
denied Culla's claim for 15% commission on the gross earnings of the taxi business.

The parties appealed to the NLRC. Culla was dissatisfied with the monetary awards, because he was
not given full backwages nor the 15% commission, incentive leave pay, damages, and attorney's fees. NLRC
affirmed the decision of the Labor Arbiter

Issue: Whether or not Culla is entitled to a commission as part of his wage and/or in addition to his basic pay.

Held:

No. He cannot claim the 15% commission. They ruled that there is nothing on record to substantiate
this claim. If, as complainant claims, he is entitled to a commission as part of his wage and/or in addition to his
basic pay, we cannot understand why he never made any claims therefor during his six years of service." Culla
argues in his petition that the payment to him of P5,000.00 a month for his services was in partial fulfillment of
Tanongon's promise to pay him a 15% commission removing said agreement from coverage of the Statute of
Frauds. Culla's reference to the Statute of Frauds under Art. 1403, par. 2 of the Civil Code is misplaced. An
agreement for compensation of services rendered is not one of the contracts mentioned in Art. 1403 which
must be in writing to be enforceable by action.

The payment of a P5,000.00 monthly salary to the petitioner for his services may not be considered as
partial compliance by his employers with the alleged agreement to pay him a commission or percentage of the
daily earnings of their taxi business because, as correctly pointed out by the Solicitor General a salary is
differrent from a commission. While a salary is a fixed compensation for regular work or for continuous service
rendered over a period of time, a commission is a percentage or allowance made to a factor or agent for
transacting business for another. Thus, before invoking the exception to the Statute of Frauds, petitioner
should have proven that he had received a commission, or part of it, in the past.

As petitioner's dismissal was effected without prior notice and investigation of the charges against him,
in violation of his right to due process, his employers should indemnify him for damages in the sum of One
Thousand Pesos (P1,000.00) pursuant to Rule XIV. Secs. 2, 5 and 6 of the rules implementing Batas Pamban-
sa Blg. 130.

15.

IRAN VS NLRC

Facts:

Petitioner Antonio Iran is engaged in softdrinks merchandising and distribution in Mandaue City, Cebu,
employing truck drivers who double as salesmen, truck helpers, and non-field personnel in pursuit thereof. Iran
hired private respondents Godofredo Petralba, Moreno Cadalso, Celso Labiaga and Fernando Colina as
drivers/salesmen while private respondents Pepito Tecson, Apolinario Gimena, Jesus Bandilao, Edwin Martin
and Diosdado Gonzalgo were hired as truck helpers.
Drivers/salesmen drove petitioner’s delivery trucks and promoted, sold and delivered softdrinks to
various outlets in Mandaue City. The truck helpers assisted in the delivery of softdrinks to the different outlets
covered by the driver/salesmen. As part of their compensation, the driver/salesmen and truck helpers of
petitioner received commissions per case of softdrinks sold at a following rates.
Sometime in June 1991, Antonio Iran, while conducting an audit of his operations, discovered cash
shortages and irregularities allegedly committed by private respondents. Pending the investigation of
irregularities and settlement of the cash shortages, petitioner required private respondents to report for work
everyday. They were not allowed, however, to go on their respective routes. A few days thereafter, despite
aforesaid order, private respondents stopped reporting for work, prompting Antonio Iran to conclude that the
former had abandoned their employment. Consequently, petitioner terminated their services. He also filed on
November 7, 1991, a complaint for estafa against private respondents.
Furthermore, private respondents filed complaints against petitioner for illegal dismissal, illegal deduction,
underpayment of wages, premium pay for holiday and rest day, holiday pay, service incentive leave pay,
13th month pay, allowances, separation pay, recovery of cash bond, damages and attorney’s fees.
The labor arbiter found that petitioner had validly terminated private respondents, there being just cause for
the latter’s dismissal. Nevertheless, he also ruled that petitioner had not complied with minimum wage
requirements in compensating private respondents, and had failed to pay private respondents their 13 th month
pay.
The NLRC, in its decision of December 21, 1994, affirmed the validity of private respondents dismissal, but
found that said dismissal did not comply with the procedural requirements for dismissing
employees. Furthermore, it corrected the labor arbiters award of wage differentials to Jesus Bandilao.
Issue: Whether or not commissions are included in determining compliance with the minimum wage
requirement.

Held:

Yes. The petition is with merit. Article 97(f) of the Labor Code defines wage as follows:

Art. 97(f) Wage paid to any employee shall mean the remuneration or earnings, however designated, capable
of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission
basis, or other method of calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for services rendered or to be
rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board,
lodging, or other facilities customarily furnished by the employer to the employee.
The Court has taken judicial notice of the fact that some salesman do not receive any basic salary but
depend entirely on commissions and allowances or commissions alone, although an employer-employee
relationship exists.

This salary structure is intended for the benefit of the corporation establishing such, on the apparent
assumption that thereby its salesmen would be moved to greater enterprise and diligence and close more
sales in the expectation of increasing their sales commission. But this does not detract from the character of
such commissions as part of the salary or wage paid to each of its salesmen for rendering services to the
corporation.

While commissions are, indeed, incentives or forms of encouragement to inspire employees to put a
little more industry on the jobs particularly assigned to them, still these commissions are direct remunerations
for services rendered. In fact, commissions have been defined as the recompense, compensation or reward of
an agent, salesman, executor, trustee, 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
commissions are part of a salesmans wage or salary.
Thus, the commissions earned by private respondents in selling softdrinks constitute part of the
compensation or remuneration paid to drivers/salesmen and truck helpers for serving as such, and hence,
must be considered part of the wages paid them.
In one case it was acknowledged that “drivers and conductors who are compensated purely on a
commission basis are automatically entitled to the basic minimum pay mandated by law should said
commission be less than their basic minimum for eight hours work. It can thus be inferred that where said
commissions equal to or even exceed the minimum wage, the employer need not pay, in addition, the basic
minimum pay prescribed by law. It follow then that commissions are included in determining compliance with
minimum wage requirements.

There is no law mandating that commissions be paid only after the minimum wage has been paid to the
employee. Verily, the establishment of a minimum wage only sets a floor below which an employee’s
remuneration cannot fall, not that commissions are excluded from wages in determining compliance with the
minimum wage law.
WHEREFORE, in view of the foregoing, the decision of the NLRC dated July 31, 1995, insofar as it
excludes the commissions received by private respondents in the determination of petitioners compliance with
the minimum wage law, as well as its exclusion of the particular amounts received by private respondents as
part of their 13th month pay is REVERSED and SET ASIDE. This case is REMANDED to the Labor Arbiter for
a recomputation of the alleged deficiencies. For non-observance of procedural due process in effecting the
dismissal of private respondents, said decision is MODIFIED by increasing the award of nominal damages to
private respondents from P1,000.00 to P5,000.00 each. No costs.

16.

Millares vs. National Labor Relations Commission, 305 SCRA 500 (1999)

Facts:

Petitioners numbering one hundred sixteen (116)[1] 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.

PICOP provides for the petitioners a staff allowance/managers allowance to those who live in rented
houses near the mill site which ceases whenever a vacancy occurs in the company’s free housing facilities.
They also provided transportation allowance in the form of advances for actual transportation expenses subject
to liquidation is given to key officers and managers who use their own vehicles in the performance of their
duties. This privilege is discontinued when the conditions no longer obtain. Lastly, bislig allowance is given to
managers and officers on account of the hostile environment prevailing therein. Once the recipient is
transferred elsewhere, the allowance ceases.

Applying Art. 97, par (f) of the Labor Code which defines “wage”, the Executive Labor Arbiter opined
that the subject allowances, being customarily furnished by respondent PICOP and regularly received by
petitioners, formed part of the latter’s wage.

However, the NLRC decreed that the allowances did not form part of the salary base used in computing
separation pay since the same were contingency-based.

Issue: Whether or not the allowances in question are considered facilities customarily furnished.

Held:

No. “Customary” is founded on long established and constant practice connoting regularity. The receipt
of 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.

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. And to fortify their arguments
they insist on the applicability of Santos,[8] Soriano,[9] The Insular Life Assurance Company,[10] Planters
Products, Inc.[11] and Songco[12] which are all against the NLRC holding that the salary base in computing
separation pay includes not just the basic salary but also the regular allowances.
 We correlate Art. 283 with Art. 97 of the same Code on definition of terms. "Pay" is not defined therein
but "wage." In Songco the Court explained that both words (as well as salary) generally refer to one and the
same meaning, i.e., a reward or recompense for services performed. Specifically, "wage" is defined in letter (f)
as the remuneration or earnings, however designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same,
which is payable by an employer to an employee under a written or unwritten contract of employment for work
done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as
determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the
employer to the employee.

The subject allowances were temporarily, not regularly received by petitioners because once the
conditions for the availment ceased to exist, the allowance reached the cutoff point. The petitioners’ continuous
enjoyment of the disputed allowances was based on contingencies the occurrence of which wrote finis to such
enjoyment.

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 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 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.

Board and lodging allowances furnished to an employee not in excess of the latter's needs and given
free of charge, constitute income to the latter except if such allowances or benefits are furnished to the
employee for the convenience of the employer and as necessary incident to proper performance of his duties
in which case such benefits or allowances do not constitute taxable income.

The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules Implementing the
Labor Code may from time to time fix in appropriate issuances the "fair and reasonable value of board, lodging
and other facilities customarily furnished by an employer to his employees." Petitioners' allowances do not
represent such fair and reasonable value as determined by the proper authority simply because the
Staff/Manager's allowance and transportation allowance were amounts given by respondent company in lieu of
actual provisions for housing and transportation needs whereas the Bislig allowance was given in
consideration of being assigned to the hostile environment then prevailing in Bislig.
The inevitable conclusion is that, as reached by the NLRC, subject allowances did not form part of
petitioners' wages
WHEREFORE, the petition is DISMISSED. The resolution of public respondent National Labor
Relations Commission dated 7 October 1994 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, as well as
its resolution dated 26 September 1995 denying reconsideration, is AFFIRMED. No costs.
17.
Songco v. NLRC (1990)
Facts:

F.E. Zuellig (M), Inc., filed with the Department of Labor an application seeking clearance to terminate
the services of Jose Songco, Romeo Cipres, and Amancio Manuel allegedly on the ground of retrenchment
due to financial losses. This application was seasonably opposed by the employees alleging that the company
is not suffering from any losses. Songco, Cipres and Manile alleged that they are being dismissed because of
their membership in the union. At the last hearing of the case, they manifested that they are no longer
contesting their dismissal. However, they argued that they should receive separation pay.

Under the employment contract, each of the dismissed employees receive a monthly salary of P40,000
plus commissions for every sale they made. On the other hand, the CBA entered between Zuellig and the
union contained the provision that an employee who is permanent lay-off, should receive an amount equivalent
to one month's salary per year of service. On the other hand, Article 284 of the Labor Code and Implementing
Rules provide that the retrenched employees should receive a separation pay equivalent to one month pay or
at least one-half month pay for every year of service, whichever is higher.

The dismissed employees alleged that their earned sales commission should be included in their
monthly salary for the purpose of computation of their separation pay. In defense, Zuellig argued that if it were
really the intention of the Labor Code to include commission in the computation of separation pay, it could have
explicitly said so in clear and unequivocal terms. Furthermore, in the definition of the term "wage",
"commission" is used only as one of the features or designations attached to the word remuneration or
earnings.

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 the Labor Arbiter’s decision
was sustained. 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
Songco, et al. for the purpose of computing their separation pay.

Held:

Petition is granted. In the computation of backwages and separation pay, account must be taken not
only of the basic salary of the employee, but also of the transportation and emergency living allowances.

Article 97(f) of the Labor Code is explicit that commission is included in the definition of the term
"wage". It has been repeatedly declared that where the law speaks in clear and categorical language, there is
no room for interpretation or construction but only for application.
The words “salary” and “wage” are generally refer to one and the same meaning, that is, a reward or
recompense for services performed. Likewise, "pay" is the synonym of "wages" and "salary". Since the words
"wages", "pay" and "salary" have the same meaning, and commission is included in the definition of "wage", it
only follows that in the computation of the separation pay, the salary base should also include the earned sales
commissions.
Even if the commissions were in the form of incentives or encouragement, so that the salesman would
be inspired to put a little more industry on jobs particularly assigned to them, still these commissions are direct
remunerations for services rendered which contributed to the increase of income of the
employee. Commission is the recompense compensation or reward of an agent, salesman, executor, trustee,
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 that commissions are part of Songco, et al's wage or
salary.

The Court takes judicial notice of the fact that some salesmen do not receive any basic salary, but
depend on commissions and allowances or commissions alone, although an employer-employee relationships
exists.

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.

18.

BOIE-TAKEDA CHEMICALS v. DIONISIO C. DE LA SERNA

Facts:

A routine inspection was conducted in the premises of petitioner Boie-Takeda Chemicals Inc. by
Labor and Development officer Reynaldo B. Ramos . Finding that petitioner had not been including the
commissions earned by its medical representatives in the computation of their 1-month pay, a Notice of
Inspection Result was served on petitioner to effect restitution or correction of “the underpayment of 13-month
pay for the years, 1986 to 1988 of Medical representatives. Petitioner wrote the Labor Department contesting
the Notice of Inspection Results, and expressing the view that the commission paid to its medical
representatives are not to be included in the computation of the 13-moth pay since the law and its
implementing rules speak of REGULAR or BASIC salary and therefore exclude all remunerations which are not
part of the REGULAR salary.
Regional Dir. Luna Piezas issued an order for the payment of underpaid 13-month pay for the years
1986, 1987 and 1988. A motion for reconsideration was filed and the then Acting labor Secretary Dionisio de la
Serna affirmed the order with modification that the sales commission earned of medical representatives before
August 13, 1989 (effectivity date of MO 28 and its implementing guidelines) shall be excluded in the
computation of the 13-month pay.
Similar routine inspection was conducted in the premises of Phil. Fuji Xerox where it was found there
was underpayment of 13th month pay since commissions were not included. In their almost identically-worded
petitioner, petitioners, through common counsel, attribute grave abuse of discretion to respondent labor
officials Hon. Dionisio dela Serna and Undersecretary Cresenciano B. Trajano.

Issue: Whether or not commissions are included in the computation of 13-month pay.
Held:
No. The Supreme Court said that, including commissions in the computation of the 13th month pay, the
second paragraph of Section 5(a) of the Revised Guidelines on the Implementation of the 13th Month Pay Law
unduly expanded the concept of "basic salary" as defined in P.D. 851. It is a fundamental rule that
implementing rules cannot add to or detract from the provisions of the law it is designed to implement.
Administrative regulations adopted under legislative authority by a particular department must be in harmony
with the provisions of the law they are intended to carry into effect. They cannot widen its scope. An
administrative agency cannot amend an act of Congress.
Contrary to respondent’s contention, M.O No. 28 did not repeal, supersede or abrogate P.D. 851. As
may be gleaned from the language of MO No. 28, it merely “modified” Section 1 of the decree by removing the
P 1,000.00 salary ceiling. The concept of 13th Month pay as envisioned, defined and implemented under P.D.
851 remained unaltered, and while entitlement to said benefit was no longer limited to employees receiving a
monthly basic salary of not more than P 1,000.00 said benefit was, and still is, to be computed on the basic
salary of the employee-recipient as provided under P.D. 851.
Thus, the interpretation given to the term “basic salary” was defined in PD 851 applies equally to “basic
salary” under M.O. No. 28. The term “basic salary” is to be understood in its common, generally accepted
meaning, i.e., as a rate of pay for a standard work period exclusive of such additional payments as bonuses
and overtime. In remunerative schemes consists of a fixed or guaranteed wage plus commission, the fixed or
guaranteed wage is patently the “basic salary” for this is what the employee receives for a standard work
period. Commissions are given for extra efforts exerted in consummating sales of other related transactions.
They are, as such, additional pay, which the SC has made clear do not from part of the “basic salary.”

19.

PHILIPPINE DUPLICATORS, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE DUPLICATORS EMPLOYEES UNION -
TUPAS, respondents.

Facts:
Petitioner Corporation pays its salesmen a small fixed or guaranteed wage; the greater part of the
latter’s wages or salaries being composed of the sales or incentive commissions earned on actual sales of
duplicating machines closed by them. Thus the sales commissions received for every duplicating machine sold
constituted part of the basic compensation or remuneration of the salesmen of the Philippine Duplicators for
doing their job.

Private respondent union, for and on behalf of its member-salesmen, asked petitioner corporation for
payment of 13th month pay computed on the basis of the salesmen’s fixed or guaranteed
wages plus commissions.

The Labor Arbiter directed Petitioner Duplicators to pay 13th month pay to private respondent
employees computed on the basis of their fixed wages plus sales commission. Sec. 4 of the Supplementary
Rules and Regulations Implementing PD No. 851 (Revised Guidelines Implementing 13th Month Pay) provides
that overtime pay, earning and other remuneration which are not part of the basic salary shall not be included
in the computation of the 13th month pay.

On 17 November 1987, acting upon a request for opinion submitted by respondent union, Director
Augusto G. Sanchez of the Bureau of Working Conditions, MOLE, rendered an opinion to respondent union
declaring applicable the provisions of Explanatory Bulletin No. 86-12, Item No. 5 (a): Since the salesmen of
Philippine Duplicators are receiving a fixed basic wage plus commission on sales and not purely on
commission basis, they are entitled to receive 13th month pay provided they worked at least one (1) month
during the calendar year. May we add at this point that in computing such 13th month pay, the total
commissions of said salesmen for the calendar year shall be divided by twelve.

Petitioner Corporation contends that their sales commission should not be included in the computation
of the 13th month pay invoking the consolidated cases of Boie-Takeda Chemicals, Inc. vs Hon. Dionisio dela
Serna and Philippine Fuji Xerox Corp. vs Hon. Crecencio Trajano, were the so-called commissions of medical
representatives of Boie-Takeda Chemicals and rank-and-file employees of Fuji Xerox Co. were not included in
the term “basic salary” in computing the 13th month pay.

Issue: Whether or not sales commission is included in the coverage of basic salary for purposes of computing
13th month pay.

Held:

Yes. These commission which are an integral part of the basic salary structure of the Philippine
Duplicator’s employees-salesmen, are not overtime payments, nor profit-sharing payments nor any other fringe
benefit. Thus, salesmen’s commissions comprising a pre-determined percent of the selling price of the goods
were properly included in the term “basic salary” for purposes of computing the 13th month pay.

“Wage“ paid to any employee shall mean the remuneration or earnings, however designated, capable
of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission
basis, or other method of calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for services rendered or to be
rendered, and includes the fair and reasonable value, as determined by the Secretary of Labor, of board,
lodging, or other facilities customarily furnished by the employer to the employee. “Fair and reasonable value”
shall not include any profit to the employer or to any person affiliated with the employer.

In the instant case, there is no question that the sales commissions earned by salesmen who make or
close a sale of duplicating machines distributed by petitioner corporation constitute part of the compensation or
remuneration paid to salesmen for serving as salesmen, and hence as part of the “wage” or “salary” of
petitioner’s salesmen. Indeed, it appears that petitioner pays its salesmen a small fixed or guaranteed wage;
the greater part of the salesmen’s wages or salaries being composed of the sales or incentive commissions
earned on actual sales closed by them.

No doubt this particular salary structure was intended for the benefit of petitioner corporation, on the
apparent assumption that thereby its salesmen would be moved to greater enterprise and diligence and close
more sales in the expectation of increasing their sales commissions. This, however, does not detract from the
character of such commissions as part of the salary or wage paid to each of its salesmen for rendering
services to petitioner corporation.

Commissions of medical representatives of Boie-Takeda Chemicals and rank-and-file employees of

Fuji Xerox Co. were not included in the term “basic salary” because these were paid as “

20.
PEDRO CHAVEZ, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, SUPREME
PACKAGING, INC. and ALVIN LEE, Plant Manager, respondents.

Facts:

The respondent company, Supreme Packaging, Inc., is in the business of manufacturing cartons and
other packaging materials for export and distribution. It engaged the services of the petitioner, Pedro Chavez,
as truck driver on October 25, 1984. As such, the petitioner was tasked to deliver the respondent companys
products from its factory in Mariveles, Bataan, to its various customers, mostly in Metro Manila. The
respondent company furnished the petitioner with a truck. Most of the petitioners delivery trips were made at
nighttime, commencing at 6:00 p.m. from Mariveles, and returning thereto in the afternoon two or three days
after. The deliveries were made in accordance with the routing slips issued by respondent company indicating
the order, time and urgency of delivery. Initially, the petitioner was paid the sum of P350.00 per trip. This was
later adjusted to P480.00 per trip and, at the time of his alleged dismissal, the petitioner was receiving P900.00
per trip.

The petitioner expressed to respondent Alvin Lee, respondent company’s plant manager, his
desire to avail himself of the benefits that the regular employees were receiving such as overtime pay,
nightshift differential pay, and 13th month pay, among others. Although he promised to extend these benefits
to the petitioner, respondent Lee failed to actually do so. Petitioner filed a complaint for regularization with the
Regional Arbitration Branch. Before the case could be heard, respondent company terminated the services of
the petitioner. Consequently, the petitioner filed an amended complaint against the respondents for illegal
dismissal, unfair labor practice and non-payment of overtime pay, nightshift differential pay, and 13th month
pay, among others. The respondents, for their part, denied the existence of an employer-employee relationship
between the respondent company and the petitioner. They averred that the petitioner was an independent
contractor as evidenced by the contract of service which he and the respondent company entered into. The
relationship of the respondent company and the petitioner was allegedly governed by this contract of service.
The respondents insisted that the petitioner had the sole control over the means and methods by which
his work was accomplished. He paid the wages of his helpers and exercised control over them. As such, the
petitioner was not entitled to regularization because he was not an employee of the respondent company. The
respondents, likewise, maintained that they did not dismiss the petitioner. Rather, the severance of his
contractual relation with the respondent company was due to his violation of the terms and conditions of
their contract. Hence, the petitioner filed an amended complaint for illegal dismissal, unfair labor practice and
non-payment of overtime pay, nightshift differential, and 13th month pay, among others.
Labor Arbiter rendered the Decision dated February 3, 1997, finding the respondents guilty of illegal
dismissal. The Labor Arbiter declared that the petitioner was a regular employee of the respondent company
as he was performing a service that was necessary and desirable to the latters business. Moreover, it was
noted that the petitioner had discharged his duties as truck driver for the respondent company for a continuous
and uninterrupted period of more than ten years. The respondents seasonably interposed an appeal with the
NLRC in which the latter affirmed the decision of Labor Arbiter. However, NLRC rendered another decision
reversing its earlier decision and, this time, holding that no employer-employee relationship existed between
the respondent company and the petitioner. Court of Appeals upheld the contract of service between the
petitioner and the respondent company and reinstated the decision of NLRC dismissing the petitioner’s
complaint for illegal dismissal. Hence, the recourse to this Court by the petitioner.

Issue: Whether Chavez is a regular employee thus subject to certain benefits.

Held:
Yes an employer-employee do exist. The elements to determine the existence of an employment
relationship are: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the employer’s power to control the employee’s conduct. The most important element is the
employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to
the means and methods to accomplish it.

Wages are defined as remuneration or earnings, however designated, capable of being expressed in
terms of money, whether fixed or ascertained on a time, task, piece or commission basis, or other method of
calculating the same, which is payable by an employer to an employee under a written or unwritten contract of
employment for work done or to be done, or for service rendered or to be rendered. That the petitioner was
paid on a per trip basis is not significant. This is merely a method of computing compensation and not a basis
for determining the existence or absence of employer-employee relationship. One may be paid on the basis of
results or time expended on the work, and may or may not acquire an employment status, depending on
whether the elements of an employer-employee relationship are present or not. In this case, it cannot be
gainsaid that the petitioner received compensation from the respondent company for the services that he
rendered to the latter.
Moreover, under the Rules Implementing the Labor Code, every employer is required to pay his
employees by means of payroll. The payroll should show, among other things, the employees rate of pay,
deductions made, and the amount actually paid to the employee. Interestingly, the respondents did not present
the payroll to support their claim that the petitioner was not their employee, raising speculations whether this
omission proves that its presentation would be adverse to their case.
The Court agrees with the following findings and conclusion of the Labor Arbiter that complainant in his
right senses will not just abandon for that reason alone his work especially so that it is only his job where he
depends chiefly his existence and support for his family if he was not aggrieved by the respondent when he
was told that his services as driver will be terminated on February 23, 1995.
Thus, the lack of a valid and just cause in terminating the services of the petitioner renders his dismissal
illegal. Under Article 279 of the Labor Code, an employee who is unjustly dismissed is entitled to
reinstatement, without loss of seniority rights and other privileges, and to the payment of full backwages,
inclusive of allowances, and other benefits or their monetary equivalent, computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.[29] However, as found by the
Labor Arbiter, the circumstances obtaining in this case do not warrant the petitioners reinstatement. A more
equitable disposition, as held by the Labor Arbiter, would be an award of separation pay equivalent to one
month for every year of service from the time of his illegal dismissal up to the finality of this judgment in
addition to his full backwages, allowances and other benefits.
WHEREFORE, the instant petition is GRANTED. The Resolution dated December 15, 2000 of the Court of
Appeals reversing its Decision dated April 28, 2000 in CA-G.R. SP No. 52485 is REVERSED and SET ASIDE.
The Decision dated February 3, 1997 of the Labor Arbiter in NLRC Case No. RAB-III-02-6181-5, finding the
respondents guilty of illegally terminating the employment of petitioner Pedro Chavez, is REINSTATED.

21.

PLASTIC TOWN CENTER CORPORATION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION AND NAGKAKAISANG LAKAS NG MANGGAGAWA
(NLM)-KATIPUNAN, respondents.
FACTS: On September 7,1984, the respondent Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan filed a
complaint dated August 30, 1984 charging the petitioner with:

a. Violation of Wage Order No. 5, by crediting the Pl.00 per day increase in the CBA as part of the compliance
with said Wage Order No. 5, and y instead of thirty (30) days equivalent to one (1) month as gratuity pay to
resigning employees. (p. 3, Rollo)

b. Unfair labor practice thru violation of the CBA by giving only twenty-six (26) days pay instead of thirty (30)
days equivalent to one (1) month as gratuity pay to resigning employees. (p. 3, Rollo)

On July 25,1985, Labor Arbiter Ruben Alberto ruled in favor of Plastic Town Center Corporation. In this
particular case, the P1.00 increase was ahead of the implementation of the CBA provision or could be said
was advantageous to complainant members, chronologically stated. For the above cogent reason we can not
fault respondent for its refusal to grant a second Pl.00 increase on July 1, 1984.

On August 30, 1987, the respondent labor union appealed to the National Labor Relations Commission.

On June 30, 1987, the NLRC reversed the decision and the respondent is ordered to grant Pl.00 increase for
July 1, 1984 and the equivalent of thirty days salary in gratuity pay, as required by its CBA with the
complainants.

The motion for reconsideration of said decision was denied on December 7, 1987. Hence, this petition.

ISSUE: w/n there is a violation of age order No.5 on the part of the respondent by crediting the p1.00 per day
increase in the CBA and a violation of the CBA by giving only 26 days as gratuity pay for resigning employees?
YES.

HELD: Wage Order No. 4 provided for the integration of the mandatory emergency cost of living allowances
(ECOLA) under Presidential Decrees 1614,1634,1678 and 1713 into the basic pay of all covered workers
effective May 1, 1984. It further provided that after the integration, the applicable statutory minimum daily wage
rate must be complied with, which in this case is P32.00.

The petitioner incurred a deficiency of P1.00 in the wage rate after integrating the ECOLA with basic pay. So
the petitioner advanced to May 1, 1984 or two months earlier the implementation of the one-peso wage
increase provided for in the CBA starting July 1, 1984 for the benefit of the workers.

The petitioner argues that it did not credit the Pl.00 per day across the board increase under the CBA as
compliance with Wage Order No. 5 implemented on June 16,1984 since it gave an additional P3.00 per day to
the basic salary pursuant to said order. It, however, credited the Pl.00 a day increase to the requirement under
Wage Order No. 4 to which the private respondents allegedly did not object.

The petitioner alleges that one month salary for daily paid workers should be computed on the basis of twenty-
six (26) days and not thirty (30) days since daily wage workers do not work every day of the month including
Sundays and holidays.

In the case at bar, the petitioner alleges that on May 1, 1984, it granted a Pl.00 increase pursuant to Wage
Order No. 4 which in consonance with Section 3 of the CBA was to be credited to the July 1, 1984 increase
under the CBA. It was, therefore, a July increase. Section 3 of the CBA, however, clearly states that CBA
granted increases shall be credited against future allowances or wage orders. Thus, the CBA increase to be
effected on July 1, 1984 can not be retroactively applied to mean compliance with Wage Order No. 4 which
took effect on May 1, 1984. The words of the contract are plain and readily understandable so we find no need
for any further construction or interpretation petition.
The petitioner also maintains that under the principle of "fair day's wage for fair day's labor", gratuity pay
should be computed on the basis of 26 days for one month salary considering that the employees are daily
paid.

From the foregoing, gratuity pay is therefore, not intended to pay a worker for actual services rendered. It is a
money benefit given to the workers whose purpose is "to reward employees or laborers, who have rendered
satisfactory and efficient service to the company."

This is also in consonance with the principle enunciated in the Labor Code that all doubts should be resolved in
favor of the worker.

The Civil Code provides that when months are not designated by name, a month is understood to be thirty (30)
days. The provision applies under the circumstances of this case.

In view of the foregoing, the public respondent did not act with grave abuse of discretion when it rendered the
assailed decision which is in accordance with law and jurisprudence.

22.

DAVAO FRUITS CORPORATION, petitioner,

vs.
ASSOCIATED LABOR UNIONS (ALU) for in behalf of all the rank-and-file workers/employees of DAVAO
FRUITS CORPORATION and NATIONAL LABOR RELATIONS COMMISSION, respondents.

FACTS: On December 28, 1982 respondent Associated Labor Unions (ALU), for and in behalf of all the rank-
and-file workers and employees of petitioner, filed a complaint (NLRC Case No. 1791-MC-XI-82) before the
Ministry of Labor and Employment, Regional Arbitration Branch XI, Davao City, against petitioner, for
"Payment of the Thirteenth-Month Pay Differentials." Respondent ALU sought to recover from petitioner the
thirteenth month pay differential for 1982 of its rank-and-file employees, equivalent to their sick, vacation and
maternity leaves, premium for work done on rest days and special holidays, and pay for regular holidays which
petitioner, allegedly in disregard of company practice since 1975, excluded from the computation of the
thirteenth month pay for 1982.

In its answer, petitioner claimed that it erroneously included items subject of the complaint in the computation
of the thirteenth month pay for the years prior to 1982, upon a doubtful and difficult question of law. According
to petitioner, this mistake was discovered only in 1981 after the promulgation of the Supreme Court decision in
the case of San Miguel Corporation v. Inciong (103 SCRA 139).

A decision was rendered on March 7, 1984 by Labor Arbiter Pedro C. Ramos, in favor of respondent ALU.

Petitioner appealed the decision of the Labor Arbiter to the NLRC, which affirmed the said decision accordingly
dismissed the appeal for lack of merit.
Petitioner elevated the matter to this Court in a petition for review under Rule 45 of the Revised Rules of Court.

ISSUE: whether in the computation of the thirteenth month pay given by employers to their employees under
P.D. No. 851, payments for sick, vacation and maternity leaves, premiums for work done on rest days and
special holidays, and pay for regular holidays may be excluded in the computation and payment thereof,
regardless of long-standing company practice?

HELD: NO. Presidential Decree No. 851, promulgated on December 16, 1975, mandates all employers to pay
their employees a thirteenth month pay. How this pay shall be computed is set forth in Section 2 of the "Rules
and Regulations Implementing Presidential Decree No. 851," thus:
SECTION 2. . . .(a) "Thirteenth month pay" shall mean one twelfth (1/12) of the basic salary of an employee
within a calendar year.

(b) "Basic Salary" shall include all renumerations or earnings paid by an employer to an employee for services
rendered but may not include cost of living allowances granted pursuant to Presidential Decree No. 525 or
Letter of Instructions No. 174, profit-sharing payments, and all allowances and monetary benefits which are not
considered or integrated as part of the regular or basic salary of the employee at the time of the promulgation
of the Decree on December 16, 1975.

The Department of Labor and Employment issued on January 16, 1976 the "Supplementary Rules and
Regulations Implementing P.D. No. 851" which in paragraph 4 thereof further defines the term "basic salary,"
thus:

4. Overtime pay, earnings and other renumerations which are not part of the basic salary shall not be included
in the computation of the 13th month pay.

Clearly, the term "basic salary" includes renumerations or earnings paid by the employer to employee, but
excludes cost-of-living allowances, profit-sharing payments, and all allowances and monetary benefits which
have not been considered as part of the basic salary of the employee as of December 16, 1975.

In other words, whatever compensation an employee receives for an eight-hour work daily or the daily wage
rate in the basic salary. Any compensation or remuneration other than the daily wage rate is excluded. It
follows therefore, that payments for sick, vacation and maternity leaves, premium for work done on rest days
special holidays, as well as pay for regular holidays, are likewise excluded in computing the basic salary for the
purpose of determining the thirteen month pay.

Petitioner in the instant case, does not demand the return of what it paid respondent ALU from 1975 until 1981;
it merely wants to "rectify" the error it made over these years by excluding unilaterally from the thirteenth month
pay in 1982 the items subject of litigation. Solutio indebiti, therefore, is not applicable to the instant case.

WHEREFORE, finding no grave abuse of discretion on the part of the NLRC, the petition is hereby
DISMISSED, and the questioned decision of respondent NLRC is AFFIRMED accordingly.

23.

Nasipit Lumber Company, Inc. v. NLRC

FACTS: Petitioner Nasipit Lumber Company (Nasipit) and its affiliate, petitioner Philippine Wallboard
Corporation (Wallboard), employed, among others, thirty (30) individual workers at the Nasipit Processing
Plant. These workers were members of the respondent, the National Organization of Workingmen (NOWM),
which belonged to the Western Agusan Workers Union (WAWU-ALU-TUCP) which, in turn, was the certified
bargaining unit in the said plant.

Nasipit applied with the National Wage and Productivity Commission (NWPC) for exemption from compliance
with Wage Order Nos. RT-01 and RT-01-A. The NWPC rendered judgment on March 8, 1993 denying the
application. The corporation challenged the said decision in this Court.

On January 29, 1996, the officers of respondent NOWM, WAWU-ALU-TUCP, representatives of the
Department of Labor and Employment (DOLE) and the National Conciliation Mediation Board (NCMB) met and
discussed the complaint. The NOWM demanded for the balance of the health bonus of its members for the
year 1994, 13th month-pay, and the remaining backlog payables amounting to P1,800.000.00. Although no
agreement was arrived at by the conferees, the petitioners granted financial assistance to their rank-and-file
employees, security guards and company staff.

On February 18, 1996, the General Membership of WAWU-ALU-TUCP, approved and issued Resolution No.
02-96 in which it was stated that except for the rank-and-file workers assigned to the St. Christopher Hospital,
the thirty (30) members of respondent NOWM would not report for work effective February 19, 1996. .

In an Order dated September 4, 1996, the Regional Director directed petitioner Nasipit to pay to its employees
P7,629,490.00 as unpaid wages. Petitioner Nasipit filed a motion for reconsideration which was denied. It
appealed the Order to the DOLE.

In the meantime, respondents NOWM and its thirty (30) members filed a complaint on November 18, 1996
against the petitioners for illegal cessation of business operations, non-payment of separation pay,
underpayment of salary and salary arrears for one (1) year before the Sub-Regional Arbitration Branch of the
NLRC. The respondents claimed that the petitioners terminated their employment on the allegation that the
latter's operations were suspended effective January 1996.

ISSUE: W/N there is an illegal cessation on the part of the petitioners and is liable to private respondent of
separation fee? YES.

HELD: The cessation/suspension of NALCO's operations was not management initiated. The deliberate refusal
of the workers to work was stage-managed by the union hence Art. 286 of the Labor Code would surely not
apply and the complainants are not entitled to separation pay because there was no constructive dismissal. ...
In other words, complainants should have filed a case for non-payment of salaries or wages against the herein
respondents if this was the case, rather than resort to a concerted action resulting in the stoppage of
work/suspension of operations, as in the instant case and later on claim that they were constructively
dismissed. They should not blame respondents for the consequential effects of their own acts.9

The respondents appealed the decision to the NLRC, which rendered a Decision on March 31, 1998 setting
aside the decision of the labor arbiter and awarding separation pay to the thirty members of the respondent
union.

The petitioners moved for the reconsideration of the decision, but the NLRC denied the same, holding that the
separation pay was awarded as a matter of course to the respondents

On August 16, 2000, the CA affirmed the decision of the NLRC. We are not convinced. It must be borne in
mind that the services of the private respondents were terminated in January 1996, a month before the other
rank-and-file employees did not report to work. It seems to us that the petitioners made use of this event in
order to avoid the fulfillment of their obligation to the private respondents. Moreover, the petitioners' insistence
that the cessation of the operation was due to the union holds no water. As correctly observed by the union,
such is a mere offshoot of the petitioners' refusal to make good their obligation to the workers concerned.

Article 286 of the Labor Code which reads: Art. 286. When employment not deemed terminated - The bona
fide suspension of the operations of a business or undertaking for a period not exceeding six (6) months, or the
fulfillment by the employee of a military service or civic duty shall not terminate employment.

In all such cases, the employer shall reinstate the employee to his former position without loss of seniority
rights if he indicates his desire to resume his work not later than one (1) month from the resumption of
operations of his employer or from his relief from the military or civic duty.

Closure or suspension of operations for economic reasons is, therefore, recognized as a valid exercise of
management prerogative. The determination to cease or suspend operations is a prerogative of management,
which the State does not usually interfere with as no business or undertaking is required to continue operating
at a loss simply because it has to maintain its workers in employment. Such an act would be tantamount to a
taking of property without due process of law.27

However, the burden of proving, with sufficient and convincing evidence, that such closure or suspension is
bona fide falls upon the employer.

In the present case, the petitioners failed to prove with convincing evidence a bona fide suspension of their
operations in 1994, 1995 and even in January 1996 due to acute economic losses in their operations.

The petitioners are DIRECTED to pay, jointly and severally, each of the individual private respondents
separation pay equivalent to one-half (1/2) month pay for every year of service.

24.

EMPLOYERS CONFEDERATION OF THE PHILIPPINES, petitioner,

vs.
NATIONAL WAGES AND PRODUCTIVITY COMMISSION AND REGIONAL TRIPARTITE WAGES AND
PRODUCTIVITY BOARD-NCR, TRADE UNION CONGRESS OF THE PHILIPPINES, respondents.

FACTS: The Employers Confederation of the Philippines (ECOP) is questioning the validity of Wage Order No.
NCR-01-A dated October 23, 1990 of the Regional Tripartite Wages and Productivity Board, National Capital
Region, promulgated pursuant to the authority of Republic Act No. 6727, "AN ACT TO RATIONALIZE WAGE
POLICY DETERMINATION BY ESTABLISHING THE MECHANISM AND PROPER STANDARDS
THEREFORE, AMENDING FOR THE PURPOSE ARTICLE 99 OF, AND INCORPORATING ARTICLES 120,
121, 122, 123, 124, 126, AND 127 INTO, PRESIDENTIAL DECREE NO. 442 AS AMENDED, OTHERWISE
KNOWN AS THE LABOR CODE OF THE PHILIPPINES, FIXING NEW WAGE RATES, PROVIDING WAGE
INCENTIVES FOR INDUSTRIAL DISPERSAL TO THE COUNTRYSIDE, AND FOR OTHER PURPOSES,"
was approved by the President on June 9, 1989. Aside from providing new wage rates, 1 the "Wage
Rationalization Act" also provides, among other things, for various Regional Tripartite Wages and Productivity
Boards in charge of prescribing minimum wage rates for all workers in the various regions2 and for a National
Wages and Productivity Commission to review, among other functions, wage levels determined by the boards.3

On October 15, 1990, the Regional Board of the National Capital Region issued Wage Order No. NCR-01,
increasing the minimum wage by P17.00 daily in the National Capital Region.4 The Trade Union Congress of
the Philippines (TUCP) moved for reconsideration; so did the Personnel Management Association of the
Philippines (PMAP).5 ECOP opposed.

ECOP appealed to the National Wages and Productivity Commission. On November 6, 1990, the Commission
promulgated an Order, dismissing the appeal for lack of merit. On November 14, 1990, the Commission denied
reconsideration.

The Solicitor General, in his rejoinder, argues that Republic Act No. 6727 is intended to correct "wage
distortions" and the salary-ceiling method (of determining wages) is meant, precisely, to rectify wage
distortions.10

ISSUE: W/N Regional Tripartite Wages and Productivity Board, National Capital Region, has the power to
promulgate R.A. 6727? YES.

HELD: The Court is inclined to agree with the Government

Republic Act No. 6727 was intended to rationalize wages, first, by providing for full-time boards to police wages
round-the-clock, and second, by giving the boards enough powers to achieve this objective.
 ART. 124. Standards / Criteria for Minimum Wage Fixing. — The regional minimum wages to be
established by the Regional Board shall be as nearly adequate as is economically feasible to maintain
the minimum standards of living necessary for the health, efficiency and general well-being of the
employees within the framework of the national economic and social development program. In the
determination of such regional minimum wages, the Regional Board shall, among other relevant
factors, consider the following:

(a) The demand for living wages;

(b) Wage adjustment vis-a-vis the consumer price index;

(c) The cost of living and changes or increases therein;

(d) The needs of workers and their families;

(e) The need to induce industries to invest in the countryside;

(f) Improvements in standards of living;

(g) The prevailing wage levels;

(h) Fair return of the capital invested and capacity to pay of emphasis employers;

(i) Effects of employment generation and family income; and

(j) The equitable distribution of income and wealth along the imperatives of economic and social
development.12

The Court is not convinced that the Regional Board of the National Capital Region, in decreeing an across-the-
board hike, performed an unlawful act of legislation. It is true that wage-fixing, like rate constitutes an act
Congress;13 it is also true, however, that Congress may delegate the power to fix rates 14 provided that, as in all
delegations cases, Congress leaves sufficient standards. As this Court has indicated, it is impressed that the
above-quoted standards are sufficient, and in the light of the floor-wage method's failure, the Court believes
that the Commission correctly upheld the Regional Board of the National Capital Region.

The concept of "minimum wage" is, however, a different thing, and certainly, it means more than setting a floor
wage to upgrade existing wages, as ECOP takes it to mean. "Minimum wages" underlies the effort of the State,
as Republic Act No. 6727 expresses it, "to promote productivity-improvement and gain-sharing 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 on investment, expansion and growth," 25 and
as the Constitution expresses it, to affirm "labor as a primary social economic force."

25.

CAGAYAN SUGAR MILLING COMPANY, petitioner, vs. SECRETARY OF LABOR AND

EMPLOYMENT, DIRECTOR RICARDO S. MARTINEZ, SR., and CARSUMCO EMPLOYEES
UNION, respondents.

FACTS: On November 16, 1993, Regional Wage Order No. RO2-02[1] was issued by the Regional Tripartite
Wage and Productivity Board, Regional Office No. II of the Department of Labor and Employment (DOLE). It
provided, inter alia, that:
"Section 1. Upon effectivity of this Wage Order, the statutory minimum wage rates applicable to workers and
employees in the private sector in Region II shall be increased as follows: xxx 1.2 P14.00 per day .... Cagayan
xxx

On September 12 and 13, 1994, labor inspectors from the DOLE Regional Office examined the books of
petitioner to determine its compliance with the wage order. They found that petitioner violated the wage order
as it did not implement an across the board increase in the salary of its employees.
At the hearing at the DOLE Regional Office for the alleged violation, petitioner maintained that it complied
with Wage Order No. RO2-02 as it paid the mandated increase in the minimum wage.
In an Order dated December 16, 1994, public respondent Regional Director Ricardo S. Martinez, Sr. ruled
that petitioner violated Wage Order RO2-02 by failing to implement an across the board increase in the salary
of its employees. He ordered petitioner to pay the deficiency in the salary of its employees in the total amount
of P555,133.41.
Petitioner appealed to public respondent Labor Secretary Leonardo A. Quisumbing. On the same date, the
Regional Wage Board issued Wage Order No. RO2-02-A,[2] amending the earlier wage order, thus:
"Section 1. Section 1 of Wage Order No. RO2-02 shall now read as, "Upon effectivity of this Wage Order,
the workers and employees in the private sector in Region 2 shall receive an across the board wage
increase of P14.00 per day. On October 8, 1996, the Secretary of Labor dismissed petitioner's appeal and
affirmed the Order of Regional Director Martinez, motion for reconsideration was likewise denied.
Private respondent CARSUMCO EMPLOYEES UNION moved for execution of the December 16, 1994
Order. The regional director granted the motion and issued the writ of execution. On March 4, 1997, petitioner
moved for reconsideration to set aside the writ of execution. The DOLE regional sheriff served on petitioner a
notice of garnishment of its account with the Far East Bank and Trust Company. On March 10, the sheriff
seized petitioner's dump truck and scheduled its public sale on March 20, 1997.
Hence, this petition, with a prayer for the issuance of a temporary restraining order (TRO).

ISSUE: WON the Wage Order No. RO2-02-A is valid and effective.
RULING: No, the Wage Order No. RO2-02-A is not valid.

"ART. 123. Wage Order. -- Whenever conditions in the region so warrant, the Regional Board shall
investigate and study all pertinent facts, and, based on the standards and criteria herein prescribed, shall
proceed to determine whether a Wage Order should be issued. Any such Wage Order shall take effect
after fifteen (15) days from its complete publication in at least one (1) newspaper of general circulation in the
region.

"In the performance of its wage-determining functions, the Regional Board shall conduct public
hearings/consultations, giving notices to employees' and employers' groups and other interested parties.

The record shows that there was no prior public consultation or hearings and newspaper publication
insofar as Wage Order No. RO2-02-A is concerned. In fact, these allegations were not denied by public
respondents in their Comment. To begin with, there was no ambiguity in the provision of Wage Order RO2-02
as it provided in clear and categorical terms for an increase in statutory minimum wage of workers in the
region. Hence, the subsequent passage of RO2-02-A providing instead for an across the board increase in
wages did not clarify the earlier Order but amended the same. In truth, it changed the essence of the original
Order.
Petitioner clearly complied with Wage Order RO2-02 which provided for an increase in statutory minimum
wage rates for employees in Region II. It is not just to expect petitioner to interpret Wage RO2-02 to mean that
it granted an across the board increase as such interpretation is not sustained by its text. Indeed, the Regional
Wage Board had to amend Wage Order RO2-02 to clarify this alleged intent.
 In sum, we hold that RO2-02-A is invalid for lack of public consultations and hearings and non-publication
in a newspaper of general circulation, in violation of Article 123 of the Labor Code. We likewise find that public
respondent Secretary of Labor committed grave abuse of discretion in upholding the findings of Regional
Director Ricardo S. Martinez, Sr. that petitioner violated Wage Order RO2-02.
26.
PRUBANKERS ASSOCIATION, petitioner, vs. PRUDENTIAL BANK & TRUST
COMPANY, respondent.
FACTS: On November 18, 1993, the Regional Tripartite Wages and Productivity Board of Region V issued
Wage Order No. RB 05-03 which provided for a Cost of Living Allowance (COLA) to workers in the private
sector who ha[d] rendered service for at least three (3) months before its effectivity, and for the same period
[t]hereafter, in the following categories: SEVENTEEN PESOS AND FIFTY CENTAVOS (P17.50) in the cities of
Naga and Legaspi;FIFTEEN PESOS AND FIFTY CENTAVOS (P15.50) in the municipalities of Tabaco,
Daraga, Pili and the city of Iriga; and TEN PESOS (P10.00) for all other areas in the Bicol Region.

Subsequently on November 23, 1993, the Regional Tripartite Wages and Productivity Board of Region
VII issued Wage Order No. RB VII-03, which directed the integration of the COLA mandated pursuant to Wage
Order No. RO VII-02-A into the basic pay of all workers. It also established an increase in the minimum wage
rates for all workers and employees in the private sector as follows: by Ten Pesos (P10.00) in the cities of
Cebu, Mandaue and Lapulapu; Five Pesos (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.

RespondentPrubankers Association wrote the petitioner 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. Respondent Association then demanded in the
Labor Management Committee meetings that the petitioner extend the application of the wage orders to its
employees outside Regions V and VII, claiming that the regional implementation of the said orders created a
wage distortion in the wage rates of petitioners employees nationwide. As the grievance could not be settled in
the said meetings, the parties agreed to submit the matter to voluntary arbitration. The Arbitration Committee
formed for that purpose was composed of the following: public respondent Froilan M. Bacungan as Chairman,
with Attys. Domingo T. Anonuevo and Emerico O. de Guzman as members. The issue presented before the
Committee was whether or not the banks separate and regional implementation of Wage Order No. 5-03 at its
Naga Branch and Wage Order No. VII-03 at its Cebu, Mabolo and P. del Rosario branches, created a wage
distortion in the bank nationwide.

ISSUE: Whether or not there exists a wage distortion within a region.

RULING: No, there was no wage distortion.

The law provides in Art. 124 in the Labor Code that wage distortion shall mean a situation where an
increase in prescribed wage results in the elimination or severe contraction of intentional quantitative
differences in wage or salary rates between and among employee groups in an establishment as to effectively
obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical
bases of differentiation.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.
In the present case, it is clear that no wage distortion resulted when respondent implemented the subject
Wage Orders in the covered branches. 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. Petitioner argues that a wage
distortion exists because the implementation of the two Wage Orders has resulted in the discrepancy in the
compensation of employees of similar pay classification in different regions. Hence, petitioner maintains that,
as a result of the two Wage Orders, the employees in the affected regions have higher compensation than their
counterparts of the same level in other regions. Several tables are presented by petitioner to illustrate that the
employees in the regions covered by the Wage Orders are receiving more than their counterparts in the same
pay scale in other regions.Contrary to petitioners postulation, a disparity in wages between employees holding
similar positions but in different regions does not constitute wage distortion as contemplated by law. As
previously enunciated, it is the hierarchy of positions and the disparity of their corresponding wages and other
emoluments that are sought to be preserved by the concept of wage distortion. Put differently, 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.

27.
DOMINICO C. CONGSON, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION
FACTS: Petitioner is the registered owner of Southern Fishing Industry. Private respondents were hired on
various dates 3 by petition'er as regular piece-rate workers. They were uniformly paid at a rate of P1.00 per
tuna weighing thirty (30) to eighty (80) kilos per movement, that is — from the fishing boats down to petitioner's
storage plant at a load/unload cycle of work until the tuna catch reached its final shipment/destination. They did
the work of unloading tuna from fishing boats to truck haulers; unloading them again at petitioner's cold storage
plant for filing, storing, cleaning, and maintenance; and finally loading the processed tuna for shipment.
Furthermore, respondent company, per the petitioner’s request, were entitled to retrieve the tuna intestines and
liver as part of their compensation. They worked seven (7) days a week.

During the first week of June 1990, petitioner notified his workers of his proposal to reduce the rate-per-tuna
movement due to the scarcity of tuna. The petitioners resisted to the said deductions. The following week, the
respondents have replaced them with another new set of workers.

On 15 June 1990, private respondents filed a case against petitioner before the NLRC Sub-Regional
Arbitration Branch No. XI in General Santos City and non-payment of overtime pay, 13th month pay, holiday
pay, rest day pay, and five (5)-day service incentive leave pay; and for constructive dismissal. With respect to
their monetary claims, private respondents charged petitioner with violation of the minimum wage law, alleging
that with petitioner's rates and the scarcity of tuna catches, private respondents' average monthly earnings
each did not exceed ONE THOUSAND PESOS (P1,000.00).

The labor arbiter rendered a decision assailing that the petitioners are illegally dismissed the respondents to be
directed to pay, jointly and severally, their respective separation pay and monetary claims for salary
differentials, 13th month pay and service incentive leave pay, as computed above, in the total sum of P
502,865.00. The claims for overtime pay, holiday pay and rest day pay are, however, dismissed for lack of
factual basis and for reasons aforecited.
On appeal by petitioner, respondent NLRC found petitioner guilty of illegal dismissal. Hence, the present
recourse by petitioner.

ISSUE: Whether or not the retrieving of the tuna intestines and liver is part of compensation.

RULING: No, it is not a part of the compensation.

The Labor Code expressly provides:

Article 102.Forms of Payment. —No. employer shall pay the wages of an employee by means
of, promissory notes, vouchers, coupons, tokens tickets, chits, or any object other than legal
tender, even when expressly requested by the employee.

Payment of wages by check or money order shall be allowed when such manner of payment is
customary on the date of effectivity of this Code, or is necessary as specified in appropriate
regulations to be issued by the Secretary of Labor or as stipulated in a collective bargaining
agreement.

Undoubtedly, petitioner's practice of paying the private respondents the minimum wage by means of
legal tender combined with tuna liver and intestines runs counter to the above cited provision of the
LaborCode. The fact that said method of paying the minimum wage was not only agreed upon by both parties
in the employment agreement but even expressly requested by private respondents, does not shield petitioner.
Article 102 of the Labor Code is clear. Wages shall be paid only by means of legal tender. The only instance
when an employer is permitted to pay wages informs other than legal tender, that is, by checks or money
order, is when the circumstances prescribed in the second paragraph of Article 102 are present.

28.

EUFROCIO BERMISO, ET AL., petitioners, vs. HIJOS DE F. ESCAÑO, INC., ET AL., respondents.

FACTS: The Hijos de F. Escaño, Inc., hereafter referred to as Escaño or Company, is a domestic engaged in
the business of carrying or transporting passengers and goods by water for compensation within the
Philippines . .

The Katubsanan sa Mamumuo, hereafter called the Union or simply Katubsanan, is a labor organization duly
registered with the Department of Labor and with office address in Cebu City. It is composed mainly of laborers
from the Visayas and Mindanao and has respondent Jose Muaña and Vitaliano Sabay as its general president
and general treasurer, respectively.

The Sabay group was organized in 1947. Its members generally perform work similar to that done by laborers
of stevedoring and arrastre firms. They load and unload vessels in the port of Cebu and haul or transport
discharged cargo.

One of the carriers for whom the Sabay men regularly serve as stevedores is the Escaño. Their relation had its
inception in 1947 when, through the representation made by Muaña and Sabay, Salvador Sala, general
manager of said carrier, permitted the Sabay group to do the work of loading and unloading its vessels to the
exclusion of all other persons. From the beginning the Company has not directly paid Muaña, Sabay or the
group any compensation for the loading or unloading services rendered by Sabay men. Neither has it received
any payment for the exclusive privilege enjoyed by the group.

Aside from Sabay, the group has a collector, a timekeeper, a paymaster, and several capataces and
subcapataces. In the hauling of the cargo, checkers or agents of the shippers and consignees accompany
them and look over their work.
Generally, only Sabay men are permitted to take part in this work. But when it is voluminous, the group, to
avoid delay, enlists the services of non-members. These recruits are treated as casual laborers and paid on
daily basis.

The amount collected from the shippers and consignees is considered as the gross income of the group. The
net income is then divided into equal shares in accordance with the sharing plan under which each common
laborers is entitled to one share depending on the lenght of membership and importance of the position held in
the group. This division of the group's income is done every Saturday and the shares received by the
participating members constitute their wages for the week.

Before the Minimum Wage Law (R. A. No. 602) went into effect, the number of hours each laborers worked
was not taken into account by the group. Even members who did not actually render any service were given
shares if their failure to work was found to have been due a reasonable cause. Certain records were made of
the disposition of the group's income but they, together with some payrolls, were destroyed by water when
Cebu was visited by a strong typhoon in 1951. After August 4, 1951, the share was given a fixed value: P0.39,
at first P0.40, later, and, finally, P0.50 per hour of work or service. Under this modified plan, if the computation
would result in wages falling short of the legal minimum because there were many laborers who worked, the
group collected additional charges from the shippers and consignees. If further payment was refused for the
reason that the work was delayed by the workers, the group covered the deficit from its so-called sinking fund
which was accumulated from the small undivided or invisible amounts remaining after each distribution of net
income.

ISSUE: W/N claimants are entitled to reinstatement, overtime pay, wage differentials, vacation and sick leave,
free hospitalization, accident insurance?

HELD: The court below also found that the claimants failed to establish any reasonable basis for all their
claims except that for their reinstatement and, therefore, denied them for lack of merit. Claims for overtime pay,
wage differentials, maximum load of 50 kilos, minimum wage of P5.00 a day were dismissed. So were the
claims for vacation and sick leave, free hospitalization, accident insurance.

There is no question that the work of stevedoring was undertaken by the laborers, not in their individual
capacities, but as a group. The leadership must be paid for and it was not shown that the head of the groups
got the lion's share of the cost of the service rendered. Under the circumstances we are not prepared to say
that the provision of law on direct payment of wages has been violated. The lower court did not find sufficient
evidence to show that racketeering was employed by the leaders. If any existed the remedy can not be found
in this court; it is for the group or organize into a closely knitted union which would secure the privileges that
the selves who would not exploit them.

Lastly, the respondent Hijos de F. Escaño did not pay for the stevedoring charges. These were collected by the
group from the shippers themselves, without the intervention of the respondent Escaño.

We also find no ground for requiring the respondent Hijos de F. Escaño to pay back wages. The latter
respondent did not deal with the petitioners individually, entering into a contract of employment with them. Said
respondent dealt with the group thru its leaders. If the group, thru its leaders, did not allow the petitioners to
work and share in the price paid therefor, the one responsible is not the respondent Escaño but the leader thru
whom the group itself made the contract for work and apportioned the time of work for each member and the
pay therefor.

29.

ERNESTO M. APODACA, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, JOSE M. MIRASOL and INTRANS PHILS.,
INC., respondents.
FACTS: Petitioner was employed in respondent corporation. On August 28, 1985, respondent Jose M. Mirasol
persuaded petitioner to subscribe to 1,500 shares of respondent corporation at P100.00 per share or a total of
P150,000.00. He made an initial payment of P37,500.00. On September 1, 1975, petitioner was appointed
President and General Manager of the respondent corporation. However, on January 2, 1986, he resigned.

On December 19, 1986, petitioner instituted with the NLRC a complaint against private respondents for the
payment of his unpaid wages, his cost of living allowance, the balance of his gasoline and representation
expenses and his bonus compensation for 1986. Petitioner and private respondents submitted their position
papers to the labor arbiter. Private respondents admitted that there is due to petitioner the amount of
P17,060.07 but this was applied to the unpaid balance of his subscription in the amount of P95,439.93.
Petitioner questioned the set-off alleging that there was no call or notice for the payment of the unpaid
subscription and that, accordingly, the alleged obligation is not enforceable.

In a decision dated April 28, 1987, the labor arbiter sustained the claim of petitioner for P17,060.07 on the
ground that the employer has no right to withhold payment of wages already earned under Article 103 of the
Labor Code. Upon the appeal of the private respondents to public respondent NLRC, the decision of the labor
arbiter was reversed in a decision dated September 18, 1987. The NLRC held that a stockholder who fails to
pay his unpaid subscription on call becomes a debtor of the corporation and that the set-off of said obligation
against the wages and others due to petitioner is not contrary to law, morals and public policy.

Hence, the instant petition.

ISSUE: W/N Does the National Labor Relations Commission (NLRC) have jurisdiction to resolve a claim for
non-payment of stock subscriptions to a corporation? Assuming that it has, can an obligation arising therefrom
be offset against a money claim of an employee against the employer?

HELD: Firstly, the NLRC has no jurisdiction to determine such intra-corporate dispute between the stockholder
and the corporation as in the matter of unpaid subscriptions. This controversy is within the exclusive jurisdiction
of the Securities and Exchange Commission. 1

Secondly, assuming arguendo that the NLRC may exercise jurisdiction over the said subject matter under the
circumstances of this case, the unpaid subscriptions are not due and payable until a call is made by the
corporation for payment. 2 Private respondents have not presented a resolution of the board of directors of
respondent corporation calling for the payment of the unpaid subscriptions. It does not even appear that a
notice of such call has been sent to petitioner by the respondent corporation.

Lastly, assuming further that there was a call for payment of the unpaid subscription, the NLRC cannot validly
set it off against the wages and other benefits due petitioner. Article 113 of the Labor Code allows such a
deduction from the wages of the employees by the employer, only in three instances, to wit:

ART. 113. Wage Deduction. — No employer, in his own behalf or in behalf of any person, shall make any
deduction from the wages of his employees, except:

(a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense
the employer for the amount paid by him as premium on the insurance;

(b) For union dues, in cases where the right of the worker or his union to checkoff has been recognized by the
employer or authorized in writing by the individual worker concerned; and

4
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.

Judgment is hereby rendered ordering private respondents to pay petitioner the amount of P17,060.07 plus
legal interest computed from the time of the filing of the complaint.
 30.

DENTECH MANUFACTURING CORPORATION and JACINTO LEDESMA in his capacity as General

Manager, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, CCLU, BENJAMIN MARBELLA, ARMANDO TORNO,
JUANITO TAJAN, JR. and JOEL TORNO, respondents.

FACTS: The herein petitioner Dentech Manufacturing Corporation is a domestic corporation organized under
Philippine laws. Before the firm became a corporate entity, it was known as the J.L. Ledesma Enterprises.

The herein private respondents Benjamin Marbella, Armando Torno, Juanito Tajan, Jr. and Joel Torno are
members of the Confederation of Citizens Labor Union, a labor organization registered with the Department of
Labor and Employment. They used to be the employees of the petitioner firm, working therein as welders,
upholsterers and painters. They were already employed with the company when it was still a sole
proprietorship. They were dismissed from the firm beginning February 14, 1985.

On June 26, 1985, the private respondents filed a Complaint with the arbitration branch of the respondent
National Labor Relations Commission (NLRC) against the petitioners for, among others, illegal dismissal and
violation of Presidential Decree No. 851.1 They were originally joined by another employee, one Raymundo
Labarda, who later withdrew his Complaint.

At first, they only sought the payment of their 13th month pay under Presidential Decree No. 851 as well as
their separation pay, and the refund of the cash bond they filed with the company at the start of their
employment. Later on, they sought their reinstatement as well as the payment of their 13th month pay and
service incentive leave pay, and separation pay in the event that they are not reinstated.

On the other hand, the petitioners alleged that the private respondents abandoned their work without informing
the company about their reasons for doing so and that, accordingly, the private respondents are not entitled to
service incentive leave pay and separation pay.

The petitioners also argued that the private respondents are not entitled to a 13th month pay.

Thereafter, the labor arbiter assigned to the case rendered a Decision hereby orderING the reinstatement of
complainants and complainants are entitled to receive from respondents at least the unprescribed 13th month
pay for the last three years based on their uncontroverted pleadings. This order includes the money value of
the service incentive leave pay of complainants and the cash bond ... .

Premises considered, judgment is hereby rendered ordering respondents to reinstate complainants to their
former positions, without backwages and to pay them the following amounts

1. Benjamin Marbella - P3,921.00; 2. Armando Torno - 3,828.00; 3. Juanito Tajan Jr. - 3,270.00; 4. Joel Torno -
878.00= P1 1,897.00

Both parties filed their respective appeals with the NLRC. In a Resolution dated November 4,1987, the Third
Division of the NLRC affirmed the Decision of the labor arbiter.

On January 29, 1988, the petitioners elevated the case to this Court by way of the instant Petition.

ISSUE: W/N RESPONDENTS ARE ENTITLED TO REFUND OF THE CASH BONDS AS IT IS PROHIBITED
UNDER ART. 114 OF LABOR CODE? YES.
HELD: Presidential Decree No. 851 was signed into law in 1975 by then President Ferdinand Marcos. Under
the original provisions of Section 1 thereof, all employers are required to pay all their employees receiving
a basic salary of not more than Pl,000.00 a month, regardless of the nature of their employment, a 13th month
pay not later than December 24 of every year. Under Section 3 of the rules and regulations implementing said
Presidential Decree financially distressed employers, i., e., those currently incurring substantial losses, are not
covered by the Decree. Section 7 thereof requires, however, that such distressed employers must obtain the
prior authorization of the Secretary of Labor and Employment before they may qualify for such exemption.

From the foregoing, it clearly appears that the petitioners have no basis to claim that the company is exempted
from complying with the pertinent provisions of the law relating to the payment of 13th month compensation.

The refund of the cash bond filed by the private respondents is in order. Article 114 of the Labor Code prohibits
an employer from requiting his employees to file a cash bond or to make deposits, subject to certain
exceptions, to wit-

Art. 114. Deposits for loss or damage.- No employer shall require his worker to make deposits from which
deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment
supplied by the employer, except when the employer is engaged in such trades, occupations or business
where the practice of making deductions or requiring deposits is a recognized one, or is necessary or desirable
as determined by the Secretary of Labor in appropriate rules and regulations.

The petitioners have not satisfactorily disputed the applicability of this provision of the Labor Code to the case
at bar. Considering further that the petitioners failed to show that the company is authorized by law to require
the private respondents to file the cash bond in question, the refund thereof is in order.

The allegation of the petitioners to the effect that the proceeds of the cash bond had already been given to a
certain carinderia to pay for the accounts of the private respondents therein does not merit serious
consideration. As correctly observed by the Solicitor General, no evidence or receipt has been shown to prove
such payment.

31.

Five j taxi and/or juan s. Armamento, petitioners,

Vs.
National labor relations commission, domingo maldigan and gilberto sabsalon, respondents.

Facts:
Private respondents domingo maldigan and gilberto sabsalon were hired by the petitioners as taxi
drivers 2 and, as such, they worked for 4 days weekly on a 24-hour shifting schedule. Aside from the daily
"boundary" of p700.00 for air-conditioned taxi or p450.00 for non-air-conditioned taxi, they were also required
to pay p20.00 for car washing, and to further make a p15.00 deposit to answer for any deficiency in their
"boundary," for every actual working day.

In less than 4 months after maldigan was hired as an extra driver by the petitioners, he already failed to
report for work for unknown reasons. Later, petitioners learned that he was working for "mine of gold" taxi
company. With respect to sabsalon, while driving a taxicab of petitioners on september 6, 1983, he was held
up by his armed passenger who took all his money and thereafter stabbed him. He was hospitalized and after
his discharge, he went to his home province to recuperate.

In january, 1987, sabsalon was re-admitted by petitioners as a taxi driver under the same terms and
conditions as when he was first employed, but his working schedule was made on an "alternative basis," that
is, he drove only every other day. However, on several occasions, he failed to report for work during his
schedule.
 On september 22, 1991, sabsalon failed to remit his "boundary" of p700.00 for the previous day. Also,
he abandoned his taxicab in makati without fuel refill worth p300.00. Despite repeated requests of petitioners
for him to report for work, he adamantly refused. Afterwards it was revealed that he was driving a taxi for
"bulaklak company."

Sometime in 1989, maldigan requested petitioners for the reimbursement of his daily cash deposits for
2 years, but herein petitioners told him that not a single centavo was left of his deposits as these were not even
enough to cover the amount spent for the repairs of the taxi he was driving. This was allegedly the practice
adopted by petitioners to recoup the expenses incurred in the repair of their taxicab units. When maldigan
insisted on the refund of his deposit, petitioners terminated his services. Sabsalon, on his part, claimed that his
termination from employment was effected when he refused to pay for the washing of his taxi seat covers.

Issue: Whether or not an employee may be made to make deposits to defray for losses and damages?
Ruling:
No, respondent nlrc held that the p15.00 daily deposits made by respondents to defray any shortage in
their "boundary" is covered by the general prohibition in article 114 of the labor code against requiring
employees to make deposits, and that there is no showing that the secretary of labor has recognized the same
as a "practice" in the taxi industry. Consequently, the deposits made were illegal and the respondents must be
refunded therefor.

Article 114 of the labor code provides as follows:

Art. 114. Deposits for loss or damage. — no employer shall require his worker to make deposits from
which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment
supplied by the employer, except when the employer is engaged in such trades, occupations or business
where the practice of making deposits is a recognized one, or is necessary or desirable as determined by the
secretary of labor in appropriate rules and regulations.

It can be deduced therefrom that the said article provides the rule on deposits for loss or damage to tools,
materials or equipments supplied by the employer. Clearly, the same does not apply to or permit deposits to
defray any deficiency which the taxi driver may incur in the remittance of his "boundary." also, when private
respondents stopped working for petitioners, the alleged purpose for which petitioners required such
unauthorized deposits no longer existed. In other case, any balance due to private respondents after proper
accounting must be returned to them with legal interest.
On the matter of the car wash payments, the labor arbiter had this to say in his decision: "anent the issue of
illegal deductions, there is no dispute that as a matter of practice in the taxi industry, after a tour of duty, it is
incumbent upon the driver to restore the unit he has driven to the same clean condition when he took it out,
and as claimed by the respondents (petitioners in the present case), complainant(s) (private respondents
herein) were made to shoulder the expenses for washing, the amount doled out was paid directly to the person
who washed the unit, thus we find nothing illegal in this practice, much more (sic) to consider the amount paid
by the driver as illegal deduction in the context of the law."
Consequently, private respondents are not entitled to the refund of the p20.00 car wash payments they made.
It will be noted that there was nothing to prevent private respondents from cleaning the taxi units themselves, if
they wanted to save their p20.00. Also, as the solicitor general correctly noted, car washing after a tour of duty
is a practice in the taxi industry, and is, in fact, dictated by fair play.

32.

South motorists enterprises, petitioner,

Vs.
Roque tosoc, et al., and hon. Secretary of labor and employment, respondents.

Facts:
Sometime in january of 1983, complaints for non-payment of emergency cost of living allowances were
filed by 46 workers, tosoc, et als., against south motorists before the naga city district office of regional office
no. 5 of the then ministry of labor. On 10 january 1983 a special order was issued by the district labor officer
directing its labor regulation officers to conduct an inspection and verification of south motorists' employment
records.

On the date of the inspection and verification, south motorists was unable to present its employment
records on the allegation that they had been sent to the main office in manila. The case was then set for
conference on 25 january 1983 but had to be reset to 8 february 1983 upon the request of south motorists to
enable it to present all the employment records on such date. However, on 7 february 1983 south motorists
asked for another deferment to 16 february 1983 due to its lawyer's tight schedule. On 16 february 1983, south
motorists again requested for a resetting to 3 march 1983 because of the alleged voluminous records it had to
locate and its desire to submit a memorandum regarding complainants' claims. On 2 march 1983, south
motorists once again requested an extension of 30 days on the ground that the documents were still being
prepared and collated and that a formal manifestation or motion would follow. Nothing did.
The court resolved to give due course to the petition and to decide the case.

Issue: Whether or not the employment records of the employees may be kept in a place other than the
workplace?
Ruling:
No. All employment records of the employees of the employer shall be kept and maintained in or about
the premises of the workplace. The premises of a workplace shall be understood to mean the main or branch
office or establishment, if any, depending., upon where the employees are regularly assigned. The keeping of
the employee's records in another place is prohibited.

As to the matter that the respondent secretary of labor and employment erred in affirming the award
based on a mere inspection report, we see no reason for south motorists to complain as it was afforded ample
opportunity to present its side. It failed to present employment records giving as an excuse that they were sent
to the main office in manila, in violation of section 11 of rule x, book ii of the omnibus rules implementing the
labor code providing that:

South motorists also caused the resettings of all subsequent hearings—from 25 january 1983 to 8
february 1983, then to 16 february 1983, then to 3 march and finally, again requested for another 30-day-
extension on the ground that the documents, were still being prepared and collated. Having been given the
opportunity to put forth its case, south motorists has only itself to blame for having failed to avail of the same
(adamson and adamson, inc. Vs. Judge amores, g.r. No. 58292, 23 july 1987,152 scra 237). What is more, its
repeated failure to attend the hearings, and to submit any motion as manifested may be construed as a waiver
of its right to adduce evidence to controvert the worker's claims.

33.

Rosario a. Gaa, petitioner,

Vs.
The honorable court of appeals, europhil industries corporation, and cesar r. Roxas, deputy sheriff of
manila, respondents.

Facts:
It appears that respondent europhil industries corporation was formerly one of the tenants in trinity
building at t.m. Kalaw street, manila, while petitioner rosario a. Gaa was then the building administrator. On
december 12, 1973, europhil industries commenced an action (civil case no. 92744) in the court of first
instance of manila for damages against petitioner "for having perpetrated certain acts that europhil industries
considered a trespass upon its rights, namely, cutting of its electricity, and removing its name from the building
directory and gate passes of its officials and employees" (p. 87 rollo). On june 28, 1974, said court rendered
judgment in favor of respondent europhil industries, ordering petitioner to pay the former the sum of
p10,000.00 as actual damages, p5,000.00 as moral damages, p5,000.00 as exemplary damages and to pay
the costs.
 The said decision having become final and executory, a writ of garnishment was issued pursuant to
which deputy sheriff cesar a. Roxas on august 1, 1975 served a notice of garnishment upon el grande hotel,
where petitioner was then employed, garnishing her "salary, commission and/or remuneration." petitioner then
filed with the court of first instance of manila a motion to lift said garnishment on the ground that her "salaries,
commission and, or remuneration are exempted from execution under article 1708 of the new civil code.
Said motion was denied by the lower court in an order dated november 7, 1975. A motion for reconsideration
of said order was likewise denied, and on january 26, 1976 petitioner filed with the court of appeals a petition
for certiorari against filed with the court of appeals a petition for certiorari against said order of november 7,
1975.

On march 30, 1976, the court of appeals dismissed the petition for certiorari. In dismissing the petition,
the court of appeals held that petitioner is not a mere laborer as contemplated under article 1708 as the term
laborer does not apply to one who holds a managerial or supervisory position like that of petitioner, but only to
those "laborers occupying the lower strata." 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 other manual occupation and usually employed to distinguish the sums paid to persons
hired to perform manual labor, skilled or unskilled, paid at stated times, and measured by the day, week,
month, or season," citing 67 c.j. 285, which is the ordinary acceptation of the said term, and that "wages" in
spanish is "jornal" and one who receives a wage is a "jornalero."

Issue: Whether or not the respondent's wage shall not be subject to execution or attachment as provided in
article 1708?

Ruling:
No, the court opined that the legislature intended the exemption in article 1708 of the new civil code to
operate in favor of any but those who are laboring men or women in the sense that their work is manual.
Persons belonging to this class usually look to the reward of a day's labor for immediate or present support,
and such persons are more in need of the exemption than any others. Petitioner rosario a. Gaa is definitely not
within that class.

The court found and so hold that the trial court did not err in denying in its order of november 7, 1975
the motion of petitioner to lift the notice of garnishment against her salaries, commission and other
remuneration from el grande hotel since said salaries, commission and other remuneration due her from the el
grande hotel do not constitute wages due a laborer which, under article 1708 of the civil code, are not subject
to execution or attachment.

Art. 1708. The laborer's wage shall not be subject to execution or attachment, except for debts incurred for
food, shelter, clothing and medical attendance.

It is beyond dispute that petitioner is not an ordinary or rank and file laborer but "a responsibly place
employee," of el grande hotel, "responsible for planning, directing, controlling, and coordinating the activities of
all housekeeping personnel" (p. 95, rollo) so as to ensure the cleanliness, maintenance and orderliness of all
guest rooms, function rooms, public areas, and the surroundings of the hotel. Considering the importance of
petitioner's function in el grande hotel, it is undeniable that petitioner is occupying a position equivalent to that
of a managerial or supervisory position.

In its broadest sense, 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. That is the sense in which the courts generally apply the term as applied in exemption acts,
since persons of that class usually look to the reward of a day's labor for immediate or present support and so
are more in need of the exemption than are other. 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 (35 am. Jur. 496).

The distinction between wages and salary was adverted to in bell vs. Indian livestock co. (tex. Sup.), 11
s.w. 344, wherein it was said: "'wages' are the compensation given to a hired person for service, and the same
is true of 'salary'. The words seem to be synonymous, convertible terms, though we believe that use and
general acceptation have given to the word 'salary' a significance somewhat different from the word 'wages' in
this: that the former 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." annotation 102 am. St. Rep. 81, 95.
There are many cases holding that contractors, consulting or assistant engineers, agents, superintendents,
secretaries of corporations and livery stable keepers, do not come within the meaning of the term.