TSPI, INCORPORATION V.

TSPIC EMPLOYEES UNION

G.R No. 163419, February 13, 2008

Collective Bargaining Agreement

A collective bargaining agreement or CBA refers to the negotiated contract between a
legitimate labor organization and the employer concerning wages, hours of work and all
other terms and conditions of employment in a bargaining unit. As in all contracts, the
parties in a CBA may establish such stipulations, clauses, terms and conditions as they
may deem convenient provided these are not contrary to law, morals, good customs,
public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes
the law between the parties and compliance therewith is mandated by the express policy
of the law.

Interpretation of CBA
As a general rule, in the interpretation of a contract, the intention of the parties is to be
pursued. Littera necat spiritus vivificat. An instrument must be interpreted according
to the intention of the parties. It is the duty of the courts to place a practical and realistic
construction upon it, giving due consideration to the context in which it is negotiated
and the purpose which it is intended to serve. Absurd and illogical interpretations
should also be avoided. Considering that the parties have unequivocally agreed to
substitute the benefits granted under the CBA with those granted under wage orders,
the agreement must prevail and be given full effect.

Diminution of benefits
Diminution of benefits is the unilateral withdrawal by the employer of benefits already
enjoyed by the employees. There is diminution of benefits when it is shown that: (1) the
grant or benefit is founded on a policy or has ripened into a practice over a long period;
(2) the practice is consistent and deliberate; (3) the practice is not due to error in the
construction or application of a doubtful or difficult question of law; and (4) the
diminution or discontinuance is done unilaterally by the employer.
 ABS CBN SUPERVISORS EMPLOYEE UNION MEMBERS V. ABS CBN
BROADCASTING CORP.
G.R. No. 106518, March 11, 1999

Attorney’s Fees Arising From CBA

Article 241 of the Labor Code, as amended, must be read in relation to Article 222,
paragraph (b) of the same law, which states:
"No attorney's fees, negotiation fees or similar charges of any kind arising from
collective bargaining negotiations or conclusion of the collective agreement shall be
imposed on any individual member of the contracting union: Provided, however, that
attorney's fees may be charged against union funds in an amount to be agreed upon by
the parties. Any contract, agreement or arrangement of any sort to the contrary shall be
null and void."

Noticeably, Article 241 speaks of three (3) requisites that must be complied with in order
that the special assessment for Union's incidental expenses, attorney's fees and
representation expenses, as stipulated in Article XII of the CBA, be valid and upheld
namely: 1) authorization by a written resolution of the majority of all the members at the
general membership meeting duly called for the purpose; (2) secretary's record of the
minutes of the meeting; and (3) individual written authorization for check-off duly
signed by the employee concerned.

The Court reads the aforecited provision as prohibiting the payment of attorney’s fees
only when it is effected through forced contributions from the workers from
their own funds a distinguished from the union funds. The purpose of the
provision is to prevent imposition on the workers of the duty to individually contribute
their respective shares in the fee to be paid the attorney for his services on behalf of the
union in its negotiations with the management.
 FIVE J TAXI and/or JUAN S. ARMAMENTO V. NATIONAL LABOR
RELATIONS COMMISSION, et al.
G.R. No. 111474, August 22, 1994

Deposits for Loss or Damage

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 employee may
incur in the remittance of his "boundary."

Award of Attorney’s Fee

Article 222 of the Labor Code, as amended by Section 3 of Presidential Decree No. 1691,
states that non-lawyers may appear before the NLRC or any labor arbiter only (1) if they
represent themselves, or (2) if they represent their organization or the members thereof.
Furthermore, the statutory rule that an attorney shall be entitled to have and recover
from his client a reasonable compensation for his services necessarily imports the
existence of an attorney-client relationship as a condition for the recovery of attorney's
fees, and such relationship cannot exist unless the client's representative is a lawyer.
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY AND/OR ERNANI
TUMIMBANG V. HENRY ESTRANERO
G.R. No. 192518, October 15, 2014

Prohibition on Deduction of Wages

It is clear in Article 113 of the Labor Code that no employer, in his own behalf or in
behalf of any person, shall make any deduction from the wages of his employees, except
in cases where the employer is authorized by law or regulations issued by the Secretary
of Labor and Employment, among others. The Omnibus Rules Implementing the Labor
Code, meanwhile, provides that deductions from the wages of the employees may be
made by the employer when such deductions are authorized by law, or when the
deductions are with the written authorization of the employees for payment to a third
person. Thus, any withholding of an employee's wages by an employer may only be
allowed in the form of wage deductions under the circumstances provided in Article 113
of the Labor Code, as well as the Omnibus Rules implementing it. Further, Article 116 of
the Labor Code clearly provides that it is unlawful for any person, directly or indirectly,
to withhold any amount from the wages of a worker without the worker's consent.

The Court further agrees with the labor tribunals that employers cannot offset the
outstanding balance of an employee's loan obligation with his redundancy pay because
the balance on the loan does not come within the scope of jurisdiction of the LA. The
demand for payment of the said loans is not a labor, but a civil dispute. It involves
debtor-creditor relations, rather than employee-employer relations.
 METROPOLITAN BANK & TRUST COMPANY EMPLOYEES UNION-ALU-
TUCP and ANTONIO V. BALINANG V. NATIONAL LABOR RELATIONS
COMMISSION, et al.
G.R. No. 102636, September 10, 1993

Wage Distortion
The term "wage distortion", under the Rules Implementing Republic Act 6727, is
defined, thus:
(p) Wage Distortion means a situation where an increase in prescribed wage rates
results in the elimination or severe contradiction 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.

The definition of "wage distortion," 10 aforequoted, shows that such distortion can so
exist when, as a result of an increase in the prescribed wage rate, an "elimination or
severe contraction of intentional quantitative differences in wage or salary rates" would
occur "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." In mandating an adjustment, the law
did not require that there be an elimination or total abrogation of quantitative wage or
salary differences; a severe contraction thereof is enough.
BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS V.
NATIONAL LABOR RELATIONS COMMISSION and BANKARD, INC.
G.R. No. 140689, February 17, 2004

Wage Adjustments
Petitioner cannot legally obligate respondent 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:
Article 124. Standards/Criteria for Minimum Wage Fixing.
xxx
Where the application of any prescribed wage increase by virtue of a law or Wage Order
issued by any Regional Board results in distortions of the wage structure within an
establishment, the employer and the union shall negotiate to correct the distortions. Any
dispute arising from the wage distortions shall be resolved through the grievance
procedure under their collective bargaining agreement and, if it remains unresolved,
through voluntary arbitration.

Article 124 is entitled Standards/Criteria for Minimum Wage Fixing. It is found in

CHAPTER V on WAGE STUDIES, WAGE AGREEMENTS AND WAGE
DETERMINATION which principally deals with the fixing of minimum wage. Article
124 should thus be construed and correlated in relation to minimum wage fixing, the
intention of the law being that in the event of an increase in minimum wage, the
distinctions embodied in the wage structure based on skills, length of service, or other
logical bases of differentiation will be preserved.

If the compulsory mandate under Article 124 to correct wage distortion is applied to
voluntary and unilateral increases by the employer in fixing hiring rates which is
inherently a business judgment prerogative, then the hands of the employer would be
completely tied even in cases where an increase in wages of a particular group is
justified due to a re-evaluation of the high productivity of a particular group, or as in the
present case, the need to increase the competitiveness of respondent’s hiring rate. An
employer would be discouraged from adjusting the salary rates of a particular group of
employees for fear that it would result to a demand by all employees for a similar
increase, especially if the financial conditions of the business cannot address an across-
the-board increase.

The mere factual existence of wage distortion does not, however, ipso facto result to an
obligation to rectify it, absent a law or other source of obligation which requires its
rectification.

In fine, absent any indication that the voluntary increase of salary rates by an employer
was done arbitrarily and illegally for the purpose of circumventing the laws or was
devoid of any legitimate purpose other than to discriminate against the regular
employees, this Court will not step in to interfere with this management prerogative.
Employees are of course not precluded from negotiating with its employer and lobby for
wage increases through appropriate channels, such as through a CBA.
 SUPRA MULTI-SERVICES INC., et al. V. LANIE M. LABITIGAN
G.R. No. 192297, August 3, 2016

Wage Distortion
"Wage distortion" was defined under Rule I, Section 2(w) of the Rules Implementing
Wage Order No. NCR-09 and Rule I, Section of the Rules Implementing Wage Order
No. NCR-10, as follows:
“Distortion" refers to a situation where an increase in the prescribed wage rates 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.”

Section 13 of Wage Order No. NCR-10 no longer reproduced the formula for resolving
wage distortions, but required instead the application of the procedure for resolving
wage distortions under Article 124 of the Labor Code, 29 as amended:
Section 13. Where the application of the emergency cost of living allowance prescribed
in this Order results in distortions in the wage structure within the establishment, the
distortion as corrected shall be paid as ECOLA in accordance with the procedure
provided for under Article 124 of the Labor Code of the Philippines, as amended.