GAA vs.
The Honorable CA, December 3, 1985 so as to ensure the cleanliness, maintenance and orderliness of all guest rooms,
Facts
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. Europhil Industries commenced an action 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.
The court rendered judgment in favor of respondent Europhil Industries, ordering
petitioner to pay the former damages. The said decision having become final and
executory, a writ of garnishment was issued pursuant to which Deputy Sheriff served
a Notice of Garnishment upon El Grande Hotel, where petitioner was then
employed, garnishing her "salary, commission and/or remuneration."
Petitioner then filed 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.
Issue
Whether or not petitioners salary is exempt from garnishment under Article 1708.
Held
We find, therefore, 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"
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.
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. (See Songco vs.
NLRC, case decided in 1990, that holds pay, wages, and salary synonymous.)
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."
We do not think 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.
Millares vs. NLRC, March 29, 1999
Facts
Petitioners 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). PICOP
suffered a major financial setback allegedly brought about by the joint impact of
restrictive government regulations on logging and the economic crisis. To avert
further losses, it undertook a retrenchment program and terminated the services of
petitioners.
Accordingly, petitioners received separation pay computed at the rate of one (1)
month basic pay for every year of service. Believing however that the allowances
they allegedly regularly received on a monthly basis during their employment
should have been included in the computation thereof they lodged a complaint for
separation pay differentials.
The allowances in question pertained to the following
1. Staff/Manager's Allowance
Respondent PICOP provides free housing facilities to supervisory and
managerial employees assigned in Bislig. Owing however to shortage of such
facilities, it was constrained to grant Staff allowance instead to those who live in
rented houses outside but near the vicinity of the mill site. But the allowance ceases
whenever a vacancy occurs in the company's housing facilities. The former grantee
is then directed to fill the vacancy.
2. Transportation Allowance
To relieve respondent PICOP's motor pool in Bislig from a barrage of
requests for company vehicles and to stabilize company vehicle requirements it
grants transportation allowance to key officers and Managers assigned in the mill
site who use their own vehicles in the performance of their duties. It is a conditional
grant such that when the conditions no longer obtain, the privilege is discontinued.
The recipients of this kind of allowance are required to liquidate it by submitting a
report with a detailed enumeration of expenses incurred.
3. Bislig Allowance
The Bislig Allowance is given to Division Managers and corporate
officers assigned in Bislig on account of the hostile environment prevailing therein.
But once the recipient is transferred elsewhere outside Bislig, the allowance ceases.
Issue
Whether or not petitioners regularly, permanently, and continuously receive the 3
allowances mentioned as to form part of their wages.
Held
Irregularly received by petitioners and doesnt form part of their wages.
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. Furthermore they
claim that their availment of the monetary equivalent of those "facilities" on a
monthly basis was characterized by permanency, regularity and customariness.
In order to ascertain whether the subject allowances form part of petitioner's
"wages," we divide the discussion on the following - "customarily furnished;"
"board, lodging or other facilities;" and, "fair and reasonable value as determined by
the Secretary of Labor."
"Customary" is founded on long-established and constant practice connoting
regularity. The receipt of an allowance on a monthly basis does not ipso facto
characterize it as regular and forming part of salary because the nature of the grant is
a factor worth considering. The subject allowances were temporarily, not regularly,
received by petitioners.
In the case of the housing allowance, once a vacancy occurs in the company
-provided housing accommodations, the employee concerned transfers to the
company premises and his housing allowance is discontinued
On the other hand, the transportation allowance is in the form of advances for actual
transportation expenses subject to liquidation x x x given only to employees who
have personal cars.
The Bislig allowance is given to Division Managers and corporate officers assigned
in Bislig, Surigao del Norte. Once the officer is transferred outside Bislig, the
allowance stops.
We add that in the availment of the transportation allowance, respondent PICOP set
another requirement that the personal cars be used by the employees in the
performance of their duties. When the conditions for 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.

Although it is quite easy to comprehend "board" and "lodging," it is not so with

"facilities." The Staff /Manager's allowance may fall under "lodging" but the
transportation and Bislig allowances are not embraced in "facilities" on the main
consideration that they are granted as well as the Staff/Manager's allowance for
respondent PICOP's benefit and convenience, i.e., to insure that petitioners render
quality performance. In determining whether a privilege is a facility, the criterion is
not so much its kind but its purpose. That the assailed allowances were for the
benefit and convenience of respondent company was supported by the circumstance
that they were not subjected to withholding tax.

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.
Honda vs. Samahang Mangagawa, June 15, 2005
Facts
The case stems from the Collective Bargaining Agreement (CBA) forged between
petitioner Honda and respondent union Samahan ng Malayang Manggagawa sa
Honda (respondent union) which contained the following provisions:
Section 3. 13th Month Pay
The COMPANY shall maintain the present practice in the implementation [of]
the 13th month pay. Section 6. 14th Month Pay
The COMPANY shall grant a 14 th Month Pay, computed on the same basis as
computation of 13th Month Pay.
Section 7. The COMPANY agrees to continue the practice of granting, in its
discretion, financial assistance to covered employees in December of each year, of
not less than 100% of basic pay.
This CBA is effective until year 2000. In the latter part of 1998, the parties started
re-negotiations for the fourth and fifth years of their CBA. When the talks between
the parties bogged down, respondent union filed a Notice of Strike on the ground of
bargaining deadlock. Thereafter, Honda filed a Notice of Lockout.
On November 22, 1999, the management of Honda issued a memorandum
announcing its new computation of the 13th and 14th month pay to be granted to all
its employees whereby the thirty-one (31)-day long strike shall be considered
unworked days for purposes of computing said benefits. As per the companys new
formula, the amount equivalent to 1/12 of the employees basic salary shall be
deducted from these bonuses, with a commitment however that in the event that the
strike is declared legal, Honda shall pay the amount deducted.
Respondent union opposed the pro-rated computation of the bonuses. Honda sought
the opinion of the Bureau of Working Conditions (BWC) on the issue. The BWC
agreed with the pro- rata payment of the 13th month pay as proposed by Honda.
Issue
Whether or not the pro-rated computation of the bonuses is valid.
Held
Such computation is invalid.
Honda wanted to implement a pro-rated computation of the benefits based on the
no work, no pay rule. According to the company, the phrase present practice as
mentioned in the CBA refers to the manner and requisites with respect to the
payment of the bonuses, i.e., 50% to be given in May and the other 50% in
December of each year. Respondent union, however, insists that the CBA provisions
relating to the implementation of the 13 th month pay necessarily relate to the
computation of the same.
A cursory reading of the provisions will show that they did not state categorically
whether the computation of the 13 th month pay, 14th month pay and the financial
assistance would be based on one full months basic salary of the employees, or pro-
rated based on the compensation actually received. The arbitrator thus properly
resolved the ambiguity in favor of labor as mandated by Article 1702 of the Civil
Code.
Under the Revised Guidelines on the Implementation of the 13 th month pay it
provided that the minimum 13 th month pay required by law shall not be less than
one-twelfth (1/12) of the total basic salary earned by an employee within a calendar
year. The guidelines pertinently provides:
The basic salary of an employee for the purpose of computing the 13 th month pay
shall include all remunerations or earnings paid by his employer for services
rendered but does not include allowances and monetary benefits which are not
considered or integrated as part of the regular or basic salary, such as the cash
equivalent of unused vacation and sick leave credits, overtime premium, night
differential and holiday pay, and cost-of-living allowances.
For employees receiving regular wage, we have interpreted basic salary to mean,
not the amount actually received by an employee, but 1/12 of their standard monthly
wage multiplied by their length of service within a given calendar year. Thus, we
exclude from the computation of basic salary payments for sick, vacation and
maternity leaves, night differentials, regular holiday pay and premiums for work
done on rest days and special holidays.
The revised guidelines also provided for a pro-ration of this benefit only in cases of
resignation or separation from work. An employee is entitled to a pay in proportion
to the length of time he worked during the year, reckoned from the time he started
working during the calendar year.

Considering the foregoing, the computation of the 13 th month pay should be based
on the length of service and not on the actual wage earned by the worker. In the
present case, there being no gap in the service of the workers during the calendar
year in question, the computation of the 13th month pay should not be pro-rated but
should be given in full.

More importantly, it has not been refuted that Honda has not implemented any pro-
rating of the 13th month pay before the instant case. Honda did not adduce evidence
to show that the 13th month, 14th month and financial assistance benefits were
previously subject to deductions or pro-rating or that these were dependent upon the
companys financial standing. A full month payment of the 13 th month pay is the
established practice at Honda.
Prubankers vs. Prudential Bank, January 25, 1999
Facts
The Regional Tripartite Wages and Productivity Board of Region V issued Wage
Order 1 which provided for a Cost of Living Allowance (COLA) to workers in the
private sector who had rendered service for at least three (3) months before its
effectivity, and for the same period thereafter.
Subsequently, the Regional Tripartite Wages and Productivity Board of Region VII
issued Wage Order 2, which directed the integration of the COLA mandated
pursuant to Wage Order 1 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.
The petitioner then granted a COLA of P17.50 to its employees at its Naga Branch,
the only branch covered by Wage Order 1, 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 2.
Respondent Prubankers 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.
Issue
Whether or not the banks separate and regional implementation of Wage Order 1 at
its Naga Branch and Wage Order 2 at its Cebu, Mabolo and P. del Rosario branches,
created a wage distortion in the bank nationwide.
Held
No wage distortion.
Wage distortion presupposes a hierarchy of positions at various levels in terms of
wages and other emoluments. Where a significant change occurs at the lowest level
of positions in terms of basic wage without a corresponding change in the other level
in the hierarchy of positions, negating as a result thereof the distinction between one
level of position from the next higher level, and resulting in a parity between the
lowest level and the next higher level or rank, between new entrants and old hires,
there exists a wage distortion.
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 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. Employees in the affected regions
have higher compensation than their counterparts of the same level in other regions.
The Court is not persuaded.
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. A 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.
Petitioners claim of wage distortion must also be denied for one other reason. The
difference in wages between employees in the same pay scale in different regions is
not the mischief sought to be banished by the law. A disparity in wages between
employees with similar positions in different regions is necessarily expected. In
insisting that the employees of the same pay class in different regions should receive
the same compensation, petitioner has apparently misunderstood both the meaning
of wage distortion and the intent of the law to regionalize wage rates.
It must be understood that varying in each region of the country are controlling
factors such as the cost of living; supply and demand of basic goods, services and
necessities; and the purchasing power of the peso. Other considerations underscore
the necessity of the law. Wages in some areas may be increased in order to prevent
migration to the National Capital Region and, hence, to decongest the metropolis.
Therefore, what the petitioner herein bewails is precisely what the law provides in
order to achieve its purpose.

Petitioner also avers that the implementation of the Wage Order in only one region
violates the equal-pay-for-equal-work principle.
Bankard vs. NLRC, February 17, 2004
Facts
Bankard, Inc. (Bankard) classifies its employees by levels, to wit: Level I, Level II,
Level III, Level IV, and Level V. Its Board of Directors approved a New Salary
Scale for the purpose of making its hiring rate competitive in the industrys labor
market to be applied retroactively. 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.
Bankards move drew the Bankard Employees Union-WATU (petitioner), the duly
certified exclusive bargaining agent of the regular rank and file employees of
Bankard, to press for the increase in the salary of its old, regular employees.
Bankard took the position, however, 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.
As the continued request of petitioner for increase in the wages and salaries of
Bankards regular employees remained unheeded, it filed a Notice of Strike.
Issue
Whether or not the new Salary Scale resulted in a wage distortion.
Held
Didnt result in a wage distortion.
Prubankers Association v. Prudential Bank and Trust Company 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. The differing wage
rate for each of the existing classes of employees reflects this classification.
Petitioner maintains that for purposes of wage distortion, the classification is not one
based on levels or ranks but on two groups of employees, the newly hired and
the old, in each and every level, and not between and among the different levels or
ranks in the salary structure. However, the employees of private respondent have
been historically classified into levels, i.e. I to V, and not on the basis of their
length of service. Put differently, the entry of new employees to the company ipso
facto place[s] them under any of the levels mentioned in the new salary scale which
private respondent adopted retroactive. Petitioner cannot make a contrary
classification of private respondents employees without encroaching upon
recognized management prerogative of formulating a wage structure, in this case,
one based on level.
It is thus clear that there is no hierarchy of positions between the newly hired and
regular employees of Bankard, hence, the first element of wage distortion provided
in Prubankers is wanting.
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.
The formulation of a wage structure through the classification of employees is a
matter of management judgment and discretion.
This Court finds that the third element provided in Prubankers is also wanting. Even
assuming that there is a decrease in the wage gap between the pay of the old
employees and the newly hired employees, said gap is not significant as to obliterate
or result in severe contraction of the intentional quantitative differences in the salary
rates between the employee group.
Further, 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. Article 124 should 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, 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.

Petitioner cites Metro Transit Organization, Inc. v. NLRC to support its claim that the
obligation to rectify wage distortion is not confined to wage distortion resulting from
government decreed law or wage order. Reliance on Metro Transit is however
misplaced, as the obligation therein to rectify the wage distortion was not by virtue
of Article 124 of the Labor Code, but on account of a then existing company
practice that whenever rank-and- file employees were paid a statutorily mandated
salary increase, supervisory employees were, as a matter of practice, also paid the
same amount plus an added premium. Thus this Court held in said case:

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.

Unlike in Metro Transit then where there existed a company practice, no such
management practice is herein alleged to obligate Bankard to provide an across-the-
board increase to all its regular employees.
Arco Metal vs. Samahan, May 14, 2008
Facts
Petitioner is a company engaged in the manufacture of metal products, whereas
respondent is the labor union of petitioners rank and file employees. Sometime in
December 2003, petitioner paid the 13 th month pay, bonus, and leave encashment of
three union members in amounts proportional to the service they actually rendered
in a year, which is less than a full twelve (12) months.
Respondent protested the prorated scheme, claiming that on several occasions
petitioner did not prorate the payment of the same benefits to seven (7) employees
who had not served for the full 12 months. The payments were made in 1992, 1993,
1994, 1996, 1999, 2003, and 2004. According to respondent, the prorated payment
violates the rule against diminution of benefits under Article 100 of the Labor Code.
Thus, they filed a complaint before the National Conciliation and Mediation Board
(NCMB). The parties submitted the case for voluntary arbitration.
Issue
Whether or not the prorated payment scheme violates the rule against diminution of
benefits.
Held
Violates the rule.
Petitioner granted, in several instances, full benefits to employees who have not
served a full year. Petitioner claims that its full payment of benefits regardless of the
length of service to the company does not constitute voluntary employer practice. It
points out that the payments had been erroneously made and they occurred in
isolated cases.
According to petitioner, it was only in 2003 that the accounting department
discovered the error when there were already three (3) employees involved with
prolonged absences and the error was corrected by implementing the pro-rata
payment of benefits pursuant to law and their existing CBA. It adds that the seven
earlier cases of full payment of benefits went unnoticed considering the proportion
of one employee concerned (per year) vis vis the 170 employees of the company.
Petitioner describes the situation as a clear oversight which should not be taken
against it. To further bolster its case, petitioner argues that for a grant of a benefit to
be considered a practice, it should have been practiced over a long period of time
and must be shown to be consistent, deliberate and intentional, which is not what
happened in this case. Petitioner tries to make a case out of the fact that the CBA has
not been modified to incorporate the giving of full benefits regardless of the length
of service, proof that the grant has not ripened into company practice.
We disagree.
Any benefit and supplement being enjoyed by employees cannot be reduced,
diminished, discontinued or eliminated by the employer. Jurisprudence is replete
with cases which recognize the right of employees to benefits which were voluntarily
given by the employer and which ripened into company practice.
In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy
of freely, voluntarily and consistently granting full benefits to its employees
regardless of the length of service rendered. True, there were only a total of seven
employees who benefited from such a practice, but it was an established practice
nonetheless.
Jurisprudence has not laid down any rule specifying a minimum number of years
within which a company practice must be exercised in order to constitute voluntary
company practice. Thus, it can be six (6) years, three (3) years, or even as short as
two (2) years. Petitioner cannot shirk away from its responsibility by merely
claiming that it was a mistake or an error, supported only by an affidavit of its
manufacturing group head
In cases involving money claims of employees, the employer has the burden of
proving that the employees did receive the wages and benefits and that the same
were paid in accordance with law.
Indeed, if petitioner wants to prove that it merely erred in giving full benefits, it
could have easily presented other proofs, such as the names of other employees who
did not fully serve for one year and thus were given prorated benefits.
Experientially, a perfect attendance in the workplace is always the goal but it is
seldom achieved. There must have been other employees who had reported for work
less than a full year and who, as a consequence received only prorated benefits. This
could have easily bolstered petitioners theory of mistake/error, but sadly, no
evidence to that effect was presented.
Metropolitan Bank vs. NWPC, February 6, 2007
Facts
The Regional Tripartite Wages and Productivity Board, by virtue of Republic Act
No. 6727 (R.A. No. 6727), otherwise known as the Wage Rationalization Act, issued
Wage Order No. R02- 03 (Wage Order), as follows:
Section 1. Upon effectivity of this Wage Order, all employees/workers in the private
sector throughout Region II, regardless of the status of employment are granted an
across-the-board increase of P15.00 daily.
In a letter - inquiry to the NWPC, the Bankers' Council for Personnel Management
(BCPM), on behalf of its member- banks, requested for a ruling on the eligibility of
establishments with head offices outside Region II to seek exemption from the
coverage of the Wage Order since its member- banks are already paying more than
the prevailing minimum wage rate in the National Capital Region (NCR), which is
their principal place of business.
The NWPC stated that the member-banks of BCPM are covered by the Wage Order
and do not fall under the exemptible categories listed under the Wage Order. Also,
the RTWPB clarified that the Wage Order covers all private establishments situated
in Region II, regardless of the voluntary adoption by said establishments of the wage
orders established in Metro Manila and irrespective of the amounts already paid by
the petitioner.
Issue
Whether or not Wage Order No. R02-03 is void and of no legal effect
Held
The Wage Order is void and of no legal effect.
There are two ways of fixing the minimum wage: the "floor- wage" method and the
"salary- ceiling" method. The "floor-wage" method involves the fixing of a
determinate amount to be added to the prevailing statutory minimum wage rates. On
the other hand, in the "salary-ceiling" method, the wage adjustment was to be
applied to employees receiving a certain denominated salary ceiling. In other words,
workers already being paid more than the existing minimum wage (up to a certain
amount stated in the Wage Order) are also to be given a wage increase.
To illustrate: under the "floor wage method", it would have been sufficient if the
Wage Order simply set P15.00 as the amount to be added to the prevailing statutory
minimum wage rates, while in the "salary-ceiling method", it would have been
sufficient if the Wage Order states a specific salary, such as P250.00, and only those
earning below it shall be entitled to the salary increase.
In the present case, the RTWPB did not determine or fix the minimum wage rate by
the "floor-wage method" or the "salary- ceiling method" in issuing the Wage Order.
The RTWPB did not set a wage level nor a range to which a wage adjustment or
increase shall be added. Instead, it granted an across- the -board wage increase of
P15.00 to all employees and workers of Region 2. In doing so, the RTWPB
exceeded its authority by extending the coverage of the Wage Order to wage earners
receiving more than the prevailing minimum wage rate, without a denominated
salary ceiling. As correctly pointed out by the OSG, the Wage Order granted
additional benefits not contemplated by R.A. No. 6727.
Thus, the Court finds that Section 1, Wage Order No. R02-03 is void insofar as it
grants a wage increase to employees earning more than the minimum wage rate; and
pursuant to the separability clause of the Wage Order, Section 1 is declared valid
with respect to employees earning the prevailing minimum wage rate. Only
employees earning the above -stated minimum wage rates are entitled to the P15.00
mandated increase under the Wage Order.
Although the concomitant effect of the nullity of the Wage Order to those employees
who have received the mandated increase was not put in issue, this Court shall make
a definite pronouncement thereon to finally put this case to rest.
In regard to the refund of the disallowed benefits, this Court holds that petitioners
need not refund the benefits received by them based on our rulings in Blaquera v.
Alcala, De Jesus v. Commission on Audit and Kapisanan ng mga Manggagawa sa
Government Service Insurance System (KMG) v. Commission on Audit. When all the
parties acted in good faith, we cannot countenance the refund of subject incentive
benefits, which amounts the petitioners have already received believing they were
legally entitled to the same.
Employees, other than minimum wage earners, who received the wage increase
mandated by the Wage Order need not refund the wage increase received by them
since they received the wage increase in good faith, in the honest belief that they are
entitled to such wage increase and without any knowledge that there was no legal
basis for the same.
Considering the foregoing, the Court need not delve on the other arguments raised
by the parties.
LMG Chemicals vs. The Secretary, April 17,2001
Facts
Petitioner has three divisions, namely: the Organic Division, Inorganic Division and
the Pinamucan Bulk Carriers.
Sometime in December 1995, the petitioner and the respondent started negotiation
for a new Collective Bargaining Agreement (CBA) as their old CBA was about to
expire. They were able to agree on the political provisions of the new CBA, but no
agreement was reached on the issue of wage increase. The economic issues were not
also settled.
In the course of the negotiations, respondent union pruned down the originally
proposed wage increase quoted above to P215 per day.
With the CBA negotiations at a deadlock, respondent union filed a Notice of Strike.
In an attempt to end the strike early, petitioner, made an improved offer of P135 per
day, spread over the period of three years. Respondent rejected the offer.
The Secretary of Labor and Employment, finding the instant labor dispute impressed
with national interest, assumed jurisdiction over the same. In its position paper,
petitioner made a turn-around, stating that it could no longer afford to grant its
previous offer due to serious financial losses during the early months of 1996.
Issue
Whether or not the Secretary of Labors order for a wage increase is tainted with
grave abuse of discretion.
Held
This Court, therefore, holds that respondent Secretary did not gravely abuse his
discretion in ordering the wage increase. Grave abuse of discretion implies
whimsical and capricious exercise of power which, in the instant case, is not
obtaining.
Petitioner asserts that the decreed amount of P140 wage increase has no basis in fact
and in law. Petitioner insists that public respondent Secretary whimsically presumed
that the company can survive despite the losses being suffered by its Inorganic
Division and its additional losses caused by the strike held by respondent union.
Petitioner further contends that respondent Secretary disregarded its evidence
showing that for the first part of 1996, its Inorganic Division suffered serious losses.
Hence, by awarding wage increase without any basis, respondent Secretary gravely
abused his discretion and violated petitioners right to due process.
We are not persuaded.
Verily, petitioners assertion that respondent Secretary failed to consider the
evidence on record lacks merit. It was only the Inorganic Division of the petitioner
corporation that was sustaining losses. Such incident does not justify the
withholding of any salary increase as petitioners income from all sources are
collated for the determination of its true financial condition. As correctly stated by
the Secretary, the loss in one is usually offset by the gains in the others.
Moreover, petitioner company granted its supervisory employees, during the
pendency of the negotiations between the parties, a wage increase of P4,500 per
month or P166 per day, more or less. Petitioner justified this by saying that the said
increase was pursuant to its earlier agreement with the supervisors. Hence, the
company had no choice but to abide by such agreement even if it was already
sustaining losses as a result of the strike of the rank-and-file employees.
Petitioners actuation is actually a discrimination against respondent union members.
If it could grant a wage increase to its supervisors, there is no valid reason why it
should deny the same to respondent union members. Significantly, while petitioner
asserts that it sustained losses in the first part of 1996, yet during the May 9, 1996
conciliation meeting, it made the offer of P135 daily wage to the said union
members.